The US vs Rwanda Trade War

Before the introduction of western-style clothing, Africans and many other nations had their own style of clothing. It is difficult to name just one Traditional African clothing, because contrary to what you have been told by the media, the list of African clothing is as extensive as the size of the continent itself. The known traces of clothing in Africa dates as far back as 180,000 years ago, they were made out of animal skins(leather and fur baby!), also jewelry adornments made from seashells, ostrich shell pieces, and feathers. But history also suggests that the earliest form of clothing in the continent was made out of bark fibers, people who lived in the modern day Uganda used the bark from fig trees to produce cloth, they would dye the fiber to make patterns on it.

Examples of Traditional African Clothes:
The Swahili Kanzu, Kanga, and the gomes.
Southern Africa’s Madiba shirt or Zimbabwe’s Safari shirt
Ethiopian suit and Habesha Kemis
Somalia’s Khamis and Koofiyad
Northwest Africa’s Djellaba, Grand boubou, the Dashiki, and Senegalese Kaftan just to mention a few.

The first Portuguese explorers who arrived in the East African coast at around 16th century described KIlwa(an island off the coast of Tanzania) that:

This island is small, near the mainland, and is a beautiful country. The houses are high like those of Spain. In this land there are rich merchants, and there is much gold and silver and amber and musks and pearls. Those of the land wear clothes of fine cotton and of silk and many fine things and they are black men

Industrialization helped Europeans to mass produce their product and thus creating a surplus, with the surplus they needed to look for or create new markets. These markets were other countries around the globe, but you can’t sell your products in countries that already produce the same products which fit their culture and traditions unless you:

1. Sell your products to them at a very cheap price
2. Teach them to hate and as a result, abandon their culture and traditions.
3. Tell them their products are inferior compared to yours.
4. Force them to use your products.

There are many other things that they did, but the above mentioned are the major ones. Using these techniques, such as the introduction of new religion, which forced people to abandon their own religion and thus culture, which means adopting the new image, they will sell their clothes to the said region. Impose a tax on the local manufacturers to drive the price up, while offer tax-free to your products to lower the cost of your products. Local manufacturers will lose their clients and be forced to change their careers, most of them became sustenance farmers and future clients for the new products.

The disadvantage of the new products was that it was of low quality, and to make matters worse, it was not durable. This was deliberate to ensure that people will be buying the products every now and then. During colonialism, many societies lost their culture and adopted the new culture, as it was a quest for civilization. Adopting new culture and religion, meant a better job, better living conditions, more opportunities under the colonial system.

After independence, African countries, with an abundance of natural resources, a population eager to work and good leaders, too many people predicted that it was time for Africa(Oh, you thought it was Shakira who first said that~). But many African leaders soon discovered that the independence was just symbolic. Kwame Nkrumah for example accurately predicted how the former colonizers would manipulate newly independent countries through disadvantageous aid and trade relations.

The essence of neo-colonialism is that the state which is subject to it is, in theory, independent and has all the outward trappings of international sovereignty

About aid he said:

Aid is merely a revolving credit, paid by the neo-colonial master, passing through the neo-colonial state and returning to the neo-colonial master in form of increased profit

People like Kwame Nkrumah were a threat to the economies of the former colonial masters. Since the former colonists only gave Africans flag-independence, but in reality, state sovereignty was stripped off from these nations, and they were still benefiting a lot from their former colonies. Most of the leaders like Kwame Nkrumah were targeted and later disposed of, leaving countries with puppet leaders and/or leaders who still thought that former colonial masters had good intentions for their former colonies. Trade relations within African countries were not good and in turn to buy something from the neighboring country was much difficult and expensive than to buy things from former colonial masters. It costed more to make a telephone call from Kenya to Congo than to make a telephone call from Kenya to the UK.

The massive influx of aid created a bubble in most countries, abundance of natural resources instead of being a blessing, ended up transforming the nations into the most corrupt nations on earth, power struggle lead to civil wars and many other problems. Under these conditions, Africa, instead of what many predicted, suffered the most, and images of poor Africans started circulating around the globe. Organizations and charities like Oxfam and the Salvation Army picked up the hype and started collecting donations, second-hand clothes etc from the citizens in the developed countries to distribute them to the underdeveloped or developing countries — Except, they didn’t give them out for free as many believe. They sold them cheap than local new textiles.

But this noble act comes with a very big loophole. These second-hand clothes, mostly branded, are sold at a cheap price in the recipient countries, but they serve bigger purposes in turns, such as to promote foreign brands and countries. For example, an Adidas t-shirt will be bringing Adidas brand awareness to the recipient country and a t-shirt with a “New York” pictures or words, will be promoting New York city. Perhaps, for now, you know why most Africans know much about foreign countries and brands but know very little about own African countries and brands. Then we go back to the local economy, these cheap almost tax free clothes(“Kafa Ulaya” as referred to in Nigeria, “Roupa da calamidade” as referred to in Mozambique, “Cagua” as referred to in Rwanda, and “Mitumba” as referred to in Tanzania) influx in African countries kills the local textile industry and in turn we are back to the 16th century. It is very clear that we did not learn from history, same song different tune. Examples of these are as follows:

A study found that market liberalization in Ghana in the 1980s led to a sharp drop in textile and clothing jobs, i.e from 25,000 in 1977 to just 5000 in 2000.

Kenya had a half a million garment workers a couple of decades ago. Today that number is in the tens of thousands.

Considering the impact of second-hand clothing to the economy, the dignity of the nations and their people, East African countries’ governments announced the ban of second-hand clothes from their markets from 2019. Rwanda in turn, could not wait, and increased tariffs on imported used clothes to $2.5 per kg. According to the Rwandan government, the move will help nurture their garment industry and create more than 25,000 jobs. Surprisingly, a trade organization in the US filed a petition with the office of the US Trade Representative. Their claim was that:

East African Community decision to phase out used clothing would impose “significant economic hardship” on America’s used clothing industry

This East African Community decision could cost 40,000 US workers jobs and $124 million in exports. In 2017, the US Trade Representative(USTR) threatened to remove four East African countries – Kenya, Uganda, Tanzania, and Rwanda – from Agoa , and this was enough for Kenya, Uganda, and Tanzania to back away from the plan. But what is Agoa?

Agoa stands for African Growth and Opportunity Act. The act allows exporters in Africa and several other developing countries duty-free access to the US market. Kenya benefits much from Agoa than Rwanda, for example, Kenya’s exports to the US was nearly $600 million, while that of Rwanda was $43 million. According to Rwanda’s President Paul Kagame:-

This is the choice we find that we have to make. As far as I am concerned, making the choice is simple we might suffer consequences. Rwanda and other countries in the region that are part of Agoa, have to do other things – we have to grow and establish our industries.

In March this year, the USTR gave Rwanda a 60-day notice that it would be suspending the country from exporting clothes to America duty-free. The 60-day grace period expired on May 28th.

UTEXRWA garment factory in the capital city Kigali is one of the textile producers in the country. The manager of the factory says that the facility is running at 40% capacity and second-hand garments, which can sell at well below his production costs, are at least to blame. To be able to recover from the hardship, it will take time, but like any other tough decisions, when that tough period ends, the one who will benefit from this decision will be the Rwandan themselves.

This will take time, admits Clare Akamanzi, CEO of the Rwanda Development Board, but early results are encouraging.

Just in the last two or three years… we’ve seen almost three times growth in production of garments and textiles for the economy

 

Our intention is to work with them to find alternative markets. We will find duty-free opportunities in the European Union as well as Asia and Africa where we can find markets

Rwanda estimated that, if everything is implemented according to plan, this could create 25,655 jobs, increase exports to $43 million and decrease imports to $33 million by 2019 (from $124 million in 2015).

The impact on trade balance will result in savings of $76 million over a 3-year period

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