Donald Trump’s other trade war—with Rwanda—over used clothes
East Africans seek to defend their garment-makers from American cast-offs
THE second-hand clothes trade often starts with a gift: an old dress or unwanted shirt, passed on for another to use. Along the way it becomes a multi-billion-dollar industry spanning several continents. It ends at a market stall, usually in Africa. And now it is the cause of President Donald Trump’s unlikeliest trade war.
Private companies in America and Europe buy up surplus donations from charities and export them to the developing world. In 2016 east African countries resolved to phase out the trade, complaining that cheap cast-offs hurt their own nascent garment industries. America responded by threatening to impose tariffs on east African goods. Kenya, Uganda and Tanzania backed down. But Rwanda has stood fast. So on March 29th Mr Trump said he would suspend duty-free access for Rwandan apparel in 60 days.
Technically, Rwanda has no grounds for complaint. Like 39 other African countries, it enjoys access to American markets under the African Growth and Opportunity Act (AGOA), enacted in 2000. One of the eligibility criteria is that countries progressively eliminate barriers to American goods. Rwanda has done the opposite, hiking duties on second-hand clothes 12-fold. “That is almost a de facto ban on these products,” complains an American official.
East Africa accounts for over a fifth of the used-clothes market. Rwanda is only a small part of that. Its stand-off with America is not very costly for either side. In 2016, according to official statistics, Rwanda’s total used-clothes imports were only $18m (against $274m for east Africa as a whole). Its exports under AGOA were just $2m.
But the case has wider resonance. African countries once nurtured their industries behind protective barriers. From the early 1980s they reluctantly opened their markets as a condition of foreign loans. Ghana lost four-fifths of its textile and clothing jobs. In Kenya, the number of big garment manufacturers fell by half. Garth Frazer of the University of Toronto estimates that second-hand imports account for 40% of the collapse in African apparel production from 1981 to 2000 (though the underlying data are fuzzy).
Slapping tariffs on used clothes is unlikely to help. Several countries have already tried import bans; smugglers just carry clothes across the border in a suitcase, passing them off as their own. Most local manufacturers, burdened with patchy power and costly credit, cannot produce clothes cheaply enough for domestic consumers. Rwanda’s biggest textiles firm churns out uniforms, but not the trendy T-shirts worn by young men in Kigali.
The gap in the Rwandan market will probably be filled by imports from China, already worth $12m in 2016. The immediate losers will be consumers, who will pay more. A survey by the American government finds that 95% of used-clothing imports in east Africa are bought by the poorest 40% of the population.
Still, Rwanda seems determined to push on. A special economic zone in Kigali hopes to attract garment-makers. Reducing imports is part of a broader industrial strategy. In economic policy, too, Rwanda is pursuing its own style.
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