International Trade Reporterr TM
Reproduced with permission from International Trade Reporter, 34 ITR 1045, 7/20/17. Copyright 姝 2017 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
Trade Policy
Hand-Me-Down Clothing Dispute Prompts Pushback Diplomats and U.S. business interests July 13 rebuked efforts by the Office of the U.S. Trade Representative to investigate three East African countries moving to phase out imports of secondhand clothing. The hearing came in response to a complaint filed by the Secondary Materials and Recycled Textiles (SMART) industry group in March, which said that Rwanda, Tanzania, Uganda, and Kenya were violating the African Growth and Opportunity Act (AGOA) by establishing barriers to U.S. Trade. AGOA, which was adopted by Congress in 2000 and extended to 2025 in 2015, establishes trade benefits for eligible sub-Saharan African countries. The USTR excluded Kenya from the ongoing review after it reversed tariff increases and committed to not banning used clothing. The majority of the three-hour hearing was testimony arguing against revoking U.S. trading privileges with Rwanda, Tanzania, and Uganda as a result of the newly adopted secondhand import restrictions. U.S. Business Interests at Stake Jeremy Lott, president of a U.S. clothing company which imports about 10 million shirts a year from Tanzania, said any retaliatory imposition of tariffs by the U.S. on the East African countries would mean millions of dollars of lost business. Lott’s company, SanMar Corp., took seven years to build up its current production capacity in Tanzania and would have to turn to China for production needs if AGOA’s duty-free benefits were revoked, according to Lott. But if secondhand clothing is restricted by Rwanda, Tanzania, and Uganda, 40,000 U.S. based jobs that rely on the collection, processing, and distribution of used clothing would be negatively affected, according to SMART. The trade organization also estimates that $124 million in revenues from export trade would be lost, affecting charities such as Goodwill and St. Vincent de Paul that rely on selling donated used clothing. Lawrence Bogard, representing SMART at the hearing, said that U.S. secondhand clothing distributors had no
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other markets to turn to if East African countries put up import barriers. But representatives on the subcommittee overseeing the hearing questioned SMART’s statistics and whether some blame belonged to long-term downward business trends in the secondhand clothing market. Bogard said there are downward trends in the secondhand clothing market but new import restrictions are also hurting business. ‘A Phaseout, Not a Ban’ Representatives of the African countries under review said that their new policies on used clothing did not amount to a ban but rather a phaseout of used clothing that will allow domestic textile manufacturing to increase and improve quality of life. The phaseout did not target the U.S. and remained in line with AGOA obligations by aiming to reduce poverty, witnesses at the hearing said. Uganda Minister of Trade, Industry, and Cooperatives Amelia Kyambadde said during the hearing that secondhand clothing raised sanitary concerns and kept individuals impoverished by necessitating the frequent purchasing of clothes because of used clothing’s shorter lifespan and decreased quality. ‘‘If we’re talking about poor people, we’re actually impoverishing them with these second-hand clothes,’’ Kyambadde said. Using tariffs to decrease dependence on used clothing is not a ban, according to Tanzania Ministry of Industry, Trade, and Investment Permanent Secretary Adelhelm Meru. A ban would require items to be codified in law as prohibited and seized at the border, which the tariffs do not require. Instead, such import restrictions encourage local manufacturing, Meru said. Multiple government officials, including Meru and Kyambadde, urged SMART to end the used clothing business and set up manufacturing centers for new clothing instead. ‘‘Leave the secondhand. Come and make new clothes. I’ll be by your side,’’ Kyambadde said.
BY ANDREW WALLENDER To contact the reporter on this story: Andrew Wallender in Washington at awallender@bna.com To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com
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