TRALAC - Trade Law Centre

'US needs to avoid casting off Africa'

Friday, 04 August 2017 Published: | Rosa Whitaker and Gail Strickler

Source: US News

For well over a decade, it has been increasingly difficult to find issues on which Republicans and Democrats in the U.S. can agree, but this is one:

Since 2000, there has been a strong bipartisan consensus – in Congress and the White House – that increasing economic engagement with Africa furthers our country's strategic, financial, political and humanitarian objectives.

Views and opinions from around the world.

This widely held belief has led to many years of advances for all sides. Unfortunately, this progress may be about to grind to a halt, and the catalyst will probably surprise most people. It's the articles of used clothing that millions of us donate annually to charitable organizations, generally with the understanding that they will go to needy Americans or be resold in second-hand stores around the U.S.

Instead, a thriving industry in our country is reaping the financial rewards of routinely selling tons of these hand-me-downs in East Africa. That's problematic for a number of reasons. Most critically, it undermines the efforts of "receiving" nations to jump-start their own garment sectors – which, it's important to point out, are often the means by which women escape from dire poverty in what is already the world's poorest region.

Both parties understood these realities when Congress passed the African Growth and Opportunity Act (AGOA) of 2000, which became the centerpiece of U.S. policy toward sub-Saharan Africa by changing the economic engagement model from one based on American aid to a trade-and-investment approach in which commerce and respect for the African nations' own development needs became paramount. In practice, it aims to benefit all parties by removing U.S. import duties on virtually all goods produced or finished in the region.

Almost from the start, lobbyists for the trade association for used clothing resellers – called SMART, for Secondary Materials and Recycled Textiles – have tried to upend AGOA. They have argued that it costs American jobs (a claim with no evidence behind it); hurts American charities (ditto); and could be bad for the environment because usable clothing, if not resold in Africa, could wind up in landfills (suggestion: give donated clothing to the needy instead of profiting from it).

Republican and Democratic administrations alike have turned a deaf ear to those claims, both because they are speculative, at best, and because the mutual benefits of AGOA are so clear. Until now. In response to yet another SMART petition, the Office of the U.S. Trade Representative (USTR) last month announced – for the first time – that it would launch an "out-of-cycle" review of whether to revoke the import duty waiver for Rwanda, Uganda and Tanzania in response to their announcement that they planned to phase out the import of used clothing by 2019.

In its petition, the clothes-reselling organization alleges those three nations are not complying with AGOA's terms, which include making "continual progress" on either "the elimination of barriers to U.S. trade and investment" or "economic policies to reduce poverty."

The reality is more complicated, of course. In fact, what those three countries are doing is prioritizing the development of their domestic apparel industries, while acknowledging there may indeed be some short-term compromises in order to build a secure future; that is, one that not only serves the long-term interests of their own people, but also creates a vibrant market for high-value American goods – not just for our hand-me-downs. Moreover, in focusing on their clothing industries, these nations are creating an entry point for manufacturing that has been successfully used for a very long time in very many places, from New England and the American South to East Asia, Mexico and the Caribbean.

Past U.S. trade representative have made these nuanced realities a central factor in past reviews of AGOA, and we strongly urge the current one to do the same. Here are two additional points in support of maintaining the regrettably rare, bipartisan status quo on this issue:

  • Even at a time when many people differ about what it means to put America First, it's important to stress that the clothes being resold in East Africa may be shipped from the U.S. (and therefore may appear to do good for our economy), but 97 percent of these garments or their components are made in countries other than our own, especially China; and
  • A 2016 report by the McKinsey Global Institute calculates that over the next decade, spending by African consumers and businesses could reach $5.6 trillion, with manufacturing output on that continent nearly doubling from $500 billion to $930 billion.

That's quite a potential market for the United States, but there's one big caveat in the McKinsey analysis. The projected numbers will only be achieved, it says, if "countries take decisive action to create an improved environment for manufacturers." So let's stop flooding African nations with our cast-offs or punishing them when they say, "No, thank you." Instead, let's help to build that environment.