Increased Duties for Used Textiles Among Issues Discussed at AGOA Hearing
The U.S. should press the East African Community (EAC) to lower duties on recycled and used textiles, industry members said to the Trade Policy Staff Committee, an interagency group led by the Office of the U.S. Trade Representative, during an Aug. 22 hearing on African Growth and Opportunity Act (AGOA) eligibility. Among other issues discussed were the removal of the Republic of the Congo from the list of AGOA beneficiaries, and whether to keep Lesotho on the AGOA beneficiary list. The hearing was part of USTR's annual review of country eligibility for AGOA benefits in 2017.
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The EAC in March issued a joint communique announcing a ban on imports of used clothing into member countries, to be phased in until full entry into force in 2019. Since the announcement, several EAC member countries, including Kenya, Tanzania and Uganda, basically doubled duties on used textiles. Meanwhile, Rwanda increased duties on used clothes by 1,000 percent, Secondary Materials and Recycled Textiles (SMART) Association Executive Director Jackie King said. King said these increases could precipitate a loss of 150,000 nonprofit jobs and 40,000 U.S. private sector jobs, including from the approximately 40 U.S. secondhand clothing exporters involved in direct trade with the EAC. “This situation is untenable for our industry,” she said. “Having exported our goods to the East African Community for decades, the EAC has become one of the most important export destinations for U.S.-sourced used clothing.”
King said SMART wants the EAC to scale back the raised duties no later than the next summit of EAC countries’ leaders in November, and would seek reversal of AGOA benefits if the heads fail to make reductions. She urged the U.S. government panel -- comprising representatives from USTR, the International Trade Administration, the State Department, the Agriculture Department, the Labor Department and the Treasury Department -- to engage AGOA beneficiaries Kenya, Tanzania, Uganda and Rwanda to reduce used clothing tariffs.
Lesotho is “highly dependent” on “AGOA-related” trade, but only exports products that together compose under 1 percent of U.S. tariff lines, so great diversification potential exists, Lesotho Minister of Trade and Industry Joshua Setipa told the panel. Lesotho would like to boost trout exports to the U.S. under AGOA, as that country’s sector has benefited from high exports to the Middle East's Gulf region and Japan already. In addition to pointing out potential losses for Lesotho industry that would come with denial of AGOA benefits, the country is taking seriously a U.S. commission’s recommendations for Lesotho to make reforms in line with facilitation of democracy, including charting a new course for its defense regime, he said. While Lesotho would look toward the EU market if denied AGOA benefits, replacing the lost business wouldn’t be a seamless transition, as investors would learn that a simple “swap” of the U.S. market for the EU market isn’t possible, Setipa said.
The USTR should also press the Congo to curb unfair business practices and consider eliminating the country as an AGOA beneficiary, said Francis Vasquez of White and Case, who represents the firm Commissions Import Export SA. Vasquez complained of a "sham" proceeding in the Congo involving his client and said cutting off the route for the Congo might pressure officials from the nation to resolve overseas conflicts.