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What’s next about Rwanda and USA controversy on AGOA?

The President determined the eligibility of Rwanda, Tanzania, and Uganda for trade preference benefits under the African Growth and Opportunity Act (AGOA).

In response to a petition filed by the U.S. used clothing industry in March 2017, the Administration initiated an out-of-cycle review of Rwanda, Tanzania, and Uganda’s AGOA eligibility regarding their decisions to phase in a ban on imports of used clothing and footwear. The review found that this import ban harms the U.S. used clothing industry and is inconsistent with AGOA beneficiary criteria for countries to eliminate barriers to U.S. trade and investment.

Based on the results of the review, the President determined that Rwanda is not making sufficient progress toward the elimination of barriers to U.S. trade and investment, and therefore is out of compliance with eligibility requirements of AGOA. Consequently, the President notified Congress and the Government of Rwanda of his intent to suspend duty-free treatment for all AGOA-eligible apparel products from Rwanda in 60 days.

The President believes suspension of these benefits, instead of termination of Rwanda’s status as an AGOA beneficiary, would allow for continued engagement with the aim of restoring market access and thereby bringing Rwanda into compliance with the AGOA eligibility requirements.

“I commend Tanzania and Uganda for taking corrective steps to address the United States’ concerns”.

The President is not suspending benefits for Tanzania and Uganda because each has taken steps toward eliminating prohibitive tariff rates on imports of used clothing and footwear and committed not to phase in a ban of these products. The United States will continue to monitor whether Tanzania and Uganda implement these commitments and demonstrate compliance with all of AGOA’s eligibility requirements.

“The President’s determinations underscore his commitment to enforcing our trade laws and ensuring fairness in our trade relationships,” said Deputy U.S. Trade Representative C.J. Mahoney. “I commend Tanzania and Uganda for taking corrective steps to address the United States’ concerns. We have and will continue to work with Rwanda to resolve this situation.”

Following the decision by the US, which was announced Thursday, the Government of Rwanda has said that they are still open to talks to find a mutually agreeable solution, according to the New Times.

The Minister for Trade and Industry, Vincent Munyeshyaka, noted that Rwanda has exercised a lot of flexibility in the negotiation process to ensure that the process was favourable to both parties.

“Rwanda has already exercised flexibility by providing written proposals to accommodate both sides. We look forward to a response to the proposals as well as a productive dialogue with the United States on these important trade and development matters. Rwanda remains committed to finding a mutually agreeable resolution to the outstanding issues,” he said.

Munyeshaka said that developing the local textile industry remains a priority for the country, hence the planned phase-out of second hand clothes import.

“Developing manufacturing capacity in apparel and other industries is a high priority for Rwanda’s economic development. The announced intention to suspend AGOA eligibility for apparel exports from Rwanda is unfortunate, but the maintenance of eligibility for other sectors is welcome,” he said.

The move to phase out second-hand clothes imports is a regional initiative.

In 2015, the East African Community (EAC) Heads of State adopted a three-year gradual process to phase out the importation of second-hand clothes and footwear to promote textile, apparel and leather industries in the region.

Rwanda’s strategy to develop the textiles, apparel and leather industrial sectors aims to increase the quality and quantity of textile, apparel and leather for both local and foreign markets.

Rwanda’s estimated that, if everything is implemented, 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 the 3-year period.

The Express News

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