C&H Garments, a local textile company in Kigali. The US has
suspended duty-free status for clothes imports from Rwanda. PHOTO |
CYRIL NDEGEYA | NMG
President Donald Trump has withdrawn benefits for Rwanda to
export apparel duty-free to the US under the African Growth and
Opportunity Act (Agoa).
In March, the Trump
administration had threatened to review Kigali’s status in 60 days after
the latter banned importation of used clothes and shoes.
“The
President, therefore, has decided to suspend Rwanda’s duty-free access
to the United States for apparel products until Rwanda comes back into
compliance with Agoa’s eligibility requirements,” the deputy US Trade
Representative CJ Mahoney said in a statement on Monday.
“We regret this outcome and hope it is temporary.
“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," he said adding that Trump’s action was
"measured and proportional”.
Rwanda, Kenya, Tanzania
and Uganda increased tariffs on imported used clothes in 2016 with the
aim of boosting their local textile industries and eventually phasing
out second-hand apparel.
But Kenya, Tanzania and Uganda abandoned the joint position after threats by the US to review their Agoa status.
Mr
Mahoney said the exclusion from Agoa would affect about three per cent
of Rwanda's total exports to the US, which totalled to $1.5 million last
year.
Cushion facility
Despite the suspension, Rwanda will remain eligible to receive non-apparel benefits under Agoa.
Contacted for comment by The EastAfrican,
Rwanda’s Minister of Trade and Industry Vincent Munyeshaka said the
government expected the Trump government to implement the suspension
soon after the 60 days lapsed.
Rwandan apparel exports
to the US will now attract tariffs as high as 30 per cent, Assistant US
Trade Representative for Africa Connie Hamilton said earlier this month.
To
cushion its exporters under Agoa-facilitated contracts, Rwanda is
setting up a Rwf1.3 billion ($1.5 million) facility to absorb tax
expenses for traders with ongoing contract obligations.
The
two-year facility, which is waiting cabinet approval, is intended to
ease the transition as exporters search for markets in Europe and Asia.
Kigali plans to expand the facility into a revolving fund that will cushion local industries against external shocks.
Rosa Whitaker, a former Assistant US Trade Representative, said she was disappointed by the Trump decision.
“It comes across as arrogant, it comes across as bullying, and we are further ceding Africa to China,” she said.
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