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Muhwezi, Kyambadde, EAC officials Challenge US Proposed Sanctions over Mitumba Ban

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Trade Minister Amelia Kyambadde (in cream jacket) and Susan Muhwezi (next right) with other participants in Washington

Uganda Trade Minister Amelia Kyambadde and other representatives of the three East African Community (EAC) countries have opposed an effort by a US business association to restrict their eligibility for the trade initiative known as the African Growth and Opportunity Act (Agoa).

Agoa provides for duty-free entry of goods into the US from designated sub-Saharan African countries, including the EAC partner states, and it applies to both textiles and non-textile goods.

The three East African countries that were represented at the Washington meeting last week on Thursday are Rwanda, Tanzania and Uganda.

The Secondary Materials and Recycled Textiles Association (Smart) filed a petition with US trade authorities in March urging that the three states, along with fellow EAC member Kenya, be deemed ineligible for Agoa’s allowance of duty-free textile and apparel exports to the US market.

Following the petition, EAC officials asked to meet with American officials before the next US review for Agoa eligibility.

According to the US, the EAC presidents’ directive to ban importation of used clothing will not spur additional US textile and apparel investment in the region, which is largely export-oriented and based on Agoa tariff preferences.

The petitioners also argue that the ban directly contradicts requirements that AGOA beneficiaries work towards eliminating “barriers to United States trade and investment” and promote “economic policies to reduce poverty”.

President Donald Trump, in his “American First” Policy has vowed to oppose any trade initiative that he deems injurious to American interests.

Speaking at the conference, Kyambadde however explained that the EAC countries decided to adopt the used clothing import phase-out as a means of encouraging development of their own textile manufacturing sectors.

“Industrialization is a strategic pillar of EAC integration,” Kyambadde clarified, adding: “the heads of state decided that textiles and footwear manufacturing is a priority.”

Other representatives, in defense of Kyambadde’s submission held that growth of those sectors will likely create many more jobs in East Africa than will be lost through the shutdown of local businesses involved in the used-clothing trade.

The trade minister suggested that jobs would be produced all along in the form of cotton growing, ginning, weaving, garment manufacturing, leather tanning, shoe making and retail businesses.

Susan Muhwezi, the Senior Presidential Advisor on AGOA and Trade related matters is also among the top officials in Washington.

Representatives during the meeting in the Washington

Representatives during the meeting in the Washington

EAC and the banning of second-hand clothes

EAC member countries resolved to outlaw the importation of used clothes and shoes across the East African Region by 2019.

The resolution is part of the industrialization policy fostered by the various East African Heads of State to transform the manufacturing sector in member states.

The member states also intend to restrict the importation of used motor vehicles.

To effect the move, the Tanzanian Parliament voted in June 2016, to approve a budget that doubled import duties on second hand clothing.

During the same month, Kenya and Uganda announced tariff increases on used clothing imports similar to those announced by Tanzania while Rwanda raised import duties on second hand clothing by from 0.2 to 2.5 US dollars per kilogramme.

The tariffs for Kenya, Tanzania and Uganda were increased from 0.2 to 0.4 US dollars per kilogramme

What the petitioners see

The petitioners observe that the tariff increases are so high that they amount to a de facto ban on second hand clothes and make it clear that EAC member states are moving towards banning used clothes importation.

They therefore seek the reversal of the ban and the roll back of the recently increased duties in EAC member nations.

The US business fraternity estimates that the implementation of the interim duty increases by EAC countries led to a loss of 5,000 jobs in the private sector of the U.S. used clothing industry and the loss of another 19,000 jobs in the not-for-profit sector.

Agoa effects

Signed into law in 2000, AGOA promotes trade and investment in sub-Saharan Africa, including through substantial trade preferences.

It designates sub-Saharan African countries as beneficiaries eligible for duty-free treatment for certain products as well as for the preferential treatment for certain textile and apparel articles.

In order to qualify for AGOA trade benefits, partner countries are required to meet certain statutory eligibility requirements, including making continual progress toward establishing market-based economies, the rule of law, political pluralism, and elimination of barriers to U.S. trade and investment, among others.

The East African Community nations are one of the most important markets for U.S. industry’s used clothing exports, with direct American exports to the EAC member countries totaling to approximately $24 million in 2016.

U.S. imports under AGOA from Uganda, Rwanda, Tanzania, totaled to $43 million in 2016, up from $33 million in 2015 while her exports to the three countries rose from $ 257 million in 2015 to $ 281 million in 2016, according to a statement by the Office of the U.S. Trade Representative.

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