Rwanda shields local companies from Trump’s trade war

Rwanda will not be cowered into reducing its tariff on used clothing and foot wears from the United States by President Donald Trump’s suspension of the East African country’s duty-free clothing export to the US. Although the suspension will affect 3% of Rwanda’s exports to the United States, the East African country has plans on to cushion the effect of the move on local companies.

“We expect some Rwandan companies to be affected,” said Clare Akamanzi, CEO of the Rwanda Development Board. “We have a plan for them. We have engaged them and we will be helping with the transition to new markets.”

The East African Community head of states (comprising Uganda, Kenya, Tanzania, Rwanda, Burundi and South Sudan) had in 2016 agreed to ban the import of used clothes and footwear in the region by 2019, as part of the EAC’s vision 2050 and the Industrialization Policy to enhance manufacturing sector that currently contributes 8.7 percent of the regional Gross Domestic Product. That year, Rwanda increased duties on used clothing from the United States from $0.25 to $2.50 per kilogram. However, early 2018 witnessed countries like Tanzania, Uganda and Kenya chicken out of the pact after the United States, backed by the Africa Growth and Opportunity Act (AGOA) threatened to cut East African countries from the Act for non-compliance.

Although the suspension will not apply to Rwanda’s other duty-free benefits of AGOA, it will however affect 3 percent of its total exports to the United States, noted U.S. Trade Representative’s office.

According to the deputy United States Trade Representative C.J. Mahoney, “We regret this outcome and hope it is temporary, but if the AGOA eligibility criteria are to have any meaning, they have to be enforced—particularly where, as here, other AGOA members took action in order remain in compliance”.

Despite threats, Rwanda remained unfazed as it still has its eyes on becoming a substantial exporter of clothing with the help of its Chinese friends who would open factories in the country.

Andrew Mold, who heads the United Nations Economic Commission for Africa’s East Africa office expressed disappointment at the USTR’s announcement. “We know the current U.S. administration has a different position on international trade than previous administrations, particularly with countries with which the U.S. sustains large trade deficits,” he said.

The US recorded trade deficit of $13.7 million from January to May 2018.

used clothing