President Donald Trump has withdrawn the benefits enjoyed by Rwanda to export apparel duty-free to the United States of America under the African Growth Act (AGOA).
The decision by Trump comes months after Kigali banned the importation of second-hand clothes and shoes from the United States.
The United States had threatened to review the status of Kigali in AGOA if the ban was implemented. Rwanda banned the importation of second-hand clothes in an effort to support local industries.
“The President… 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,” said the deputy US Trade Representative CJ Mahoney.
Kenya, Rwanda, Tanzania, and Uganda had increased tariffs on imported used clothes in 2016 with the main aim being to boost the local textile industries. The increase in tariffs was to later lead to the banning of the importation of the used clothes and shoes.
Of the four East African countries, only Rwanda went ahead to effect the ban despite warnings from the United States of the consequences.
Kenya’s efforts to ban the importation of second-hand clothes faced massive resistance given that the sector has employed more than 200,000 people.
Kenya is yet to state a clear stand on the second-hand clothes and shoes from the United States. Tanzania had shown the intentions of banning the importation but that is yet to come into force.
With the duty-free status revocation, Rwanda will now export to the US with tariffs as high as 30 percent. To help cushion its exporters under Agoa-facilitated contracts, Kigali is setting up a Rwf1.3 billion ($1.5 million) facility to absorb tax expenses for traders with ongoing contract obligations.
Second-hand clothes have been blamed for the staggering of local textile industries in the East African region with the governments in respective countries encouraging their citizens to buy the locally-made products.