Update on East African Community Ban on Importation of Used Clothing

SMART first started hearing of this ban in early 2015, when EAC Heads of State representing Burundi, Rwanda, Uganda, Tanzania and Kenya announced during an annual summit that they were looking at a ban on the importation of used clothing and shoes, claiming that these imports were hindering their ability to develop their own domestic textile and apparel industries.

SMART immediately jumped to attention and engaged senior U.S. government officials at the Department of Commerce and Office of the United States Trade Representative (USTR). Officials at these agencies were highly responsive and armed with the information we provided them, expressed U.S. concerns about the pending ban to senior level African officials during both face to face meetings and in formal written correspondence.

Unfortunately, these concerns apparently fell on deaf ears in Africa because EAC officials announced in March of this year that they had decided to move forward with the ban, and would be phasing it in over a period of three years.

Since that announcement, SMART has been leading efforts to roll back this ban. Unfortunately, despite these efforts, the EAC countries appears to be moving forward with the ban, to varying degrees within each country, taking a variety of steps aimed at phasing in the ban. In June of 2016, the Tanzanian legislature voted to approve a budget that doubles import duties on secondhand clothing, increasing these tariffs from $0.2 per kilogram to $0.4 per kilogram. That same month, Kenya and Uganda announced similar tariff increases while Rwanda raised import duties on secondhand clothing by more than a whopping 1,100 percent. As SMART members know, these tariff increases are so high that they amount to a de facto ban on our industry and have made clear that these countries are moving full steam ahead on implementing the ban.

The one bit of good news is that SMART does have some leverage in dealing with these EAC countries and that leverage is the African Growth and Opportunity Act also known as AGOA. The AGOA is a law periodically renewed by Congress that provides unilateral trade benefits to sub-Saharan African countries including these EAC countries primarily in the form of duty free access to the U.S. market with a specific emphasis on African textiles and apparel coming into the U.S.

In order to be eligible for benefits under the AGOA, African countries must demonstrate they are meeting several key criteria and requirements, among them, showing that they are making “continual progress toward eliminating barriers to U.S. trade and investment”. A ban on secondhand clothing imports would clearly contradict the requirement that AGOA beneficiaries work towards eliminating barriers to U.S. trade and investment.

Fortunately, in devising the AGOA program lawmakers foresaw that there would need to regularly monitor whether the beneficiary countries were achieving their requirements so they instituted an annual review process in order to give impacted stakeholders the opportunity to weigh as to whether the AGOA beneficiaries were meeting their obligations.

Additionally, the most recent AGOA renewal legislation renewing also created an opportunity for stakeholders to petition the government outside of the annual review cycle to seek removal of AGOA benefits for those countries that are not meeting their obligations.

SMART seized the 2016 annual AGOA review to submit a formal written submission laying out our numerous objections to the ban which we echoed in testimony that Jackie King delivered during an Aug. 22, 2016 hearing examining this same issue.

In these comments and testimony, SMART told the government that we were asking the EAC countries to either repeal the ban and reverse any additional duties by an EAC heads of state summit that was supposed to be held in Nov. 2016, or we would move to file an out-of-cycle review (OCR) petition seeking to suspend AGOA duty free benefits until they do repeal the ban.

That summit ended up being pushed back until March of 2017 but ultimately, the countries refused to roll back the ban, prompting SMART to move forward with its petition for an out-of-cycle review. In its petition, SMART asked the U.S. government to temporarily suspend the EAC AGOA duty-free access for textile and apparel products until the EAC countries roll back their additional duties and ban. U.S. trade officials agreed to accept the petition and scheduled a public hearing on July 13. SMART did participate in this hearing and made a very strong case for why the AGOA benefits should be suspended for those EAC countries that refuse to remove the additional tariffs and halt the ban.  In the meantime, SMART again submitted comments for the Annual AGOA Review of eligibility benefits for all AGOA beneficiary countries earlier this month, reiterating the positions made in earlier submissions and during the OCR hearing.  To read the comments, click here.

While it is too early to tell what the OCR process will ultimately yield, SMART remains hopeful that a solution to this matter can be negotiated. As always, SMART will keep its members apprised of key developments.