UNDERSTANDING THE USED CLOTHES BAN IN THE EAC

An Appeal to President Trump.

The East African Community (EAC) in a bid to improve the economic livelihood of the citizens and the region decided to phase out imports of used clothing while boosting the local cotton and textile industry. The countries in this region like many other African nations import used clothing and shoes from mostly Western countries. In effect, African countries serve as the dumping ground of no-longer-needed clothing from the West as well as electronics and other hazardous waste.

Why Ban Used Clothing?

This relationship (importation of used clothing from the West by African countries) saves the West from having to properly dispose of these items at a cost. It also harms the local cotton and textile industry. But is that the only reason why importation is bad. No, there is more:

  1. Imports = foreign exchange leaving a country’s shores and going to exporting country
  2. Exports = foreign exchange coming into exporting country from importing country
  3. When African states import used clothing from the West, they serve as a disposal ground for used clothing from the West
  4. The West receives money from African states when they dump their used clothing in Africa

It’s a win-win situation for Western exporting countries and lose-lose from the African importing countries. There needs to be a leveling of the playing field.

The Response From The U.S.

The response from the US government to the decision of the ECA is as follows:

USTR Announces AGOA Out-of-Cycle Review for Rwanda, Tanzania, and Uganda

Washington, DC – The Office of the U.S. Trade Representative today announced the initiation of an out-of-cycle review of the eligibility of Rwanda, Tanzania, and Uganda to receive benefits under the African Growth and Opportunity Act (AGOA).

The launch of the review is in response to a petition filed by the Secondary Materials and Recycled Textiles Association (SMART), which asserts that a March 2016 decision by the East African Community, which includes Rwanda, Tanzania, and Uganda, to phase in a ban on imports of used clothing and footwear is imposing significant economic hardship on the U.S. used clothing industry.

Through the out-of-cycle review, USTR and trade-related agencies will assess the allegations contained within the SMART petition and review whether Rwanda, Tanzania, and Uganda are adhering to AGOA’s eligibility requirements.

A public hearing will take place July 13, 2017 in Washington, DC. A Federal Register notice containing information related to this review is available at http://www.regulations.gov under docket number USTR-2017-0008.

This is known as soft power—meant to alter the behavior of African countries in favor of the U.S.’s economic interest which on other issues may be okay but in this case in particular is devoid of fairness, morality and reciprocity.

How does phasing in a ban on imports of used clothing and footwear, impose significant economic hardship on the U.S. used clothing industry? Have you considered the impact of this so-called industry on African industry? Have you considered how one-sided this relationship has been in favor of the U.S. all these decades—to the detriment of most sub-Saharan African nations?

In non-politically correct language, this is plain bullying. Paraphrased, what the U.S. government is saying, by giving this questionable petition a hearing and review is, “if you will not allow us to dump our old clothes in your countries, then we do not want to trade with you or offer you access to our markets”. This is incredibly childish of those who sent the petition. Africa is neither a colony of the West nor a dumping ground for used clothing. It is a group of independent states who are equal to any other and have the same rights to have the dreams and aspirations of their peoples actualized without fear. African governments should stand together and refuse the carrot and stick strategy—if they ever want to taste prosperity for their masses.

According to Mukhisa Kitui, the Secretary General of the United Nations Conference on Trade and Development (UNCTAD), adherence to the ban will create domestic demand for textiles and increase the share of manufactured exports.

“My home country Kenya, for example, imports Boeing planes from the US at a very high cost, so the reciprocity on trade should not be at the level of used clothes.

Therefore, East Africa should stand with one voice and resist importation of used clothes into the region,” he said, during the second Manufacturing and Business Summit at the Kigali Serena Hotel recently.

The forgoing was taken from here.

The following are the comments of an ex-president of Africa’s largest economy:

Speaking on the sidelines of the ongoing Afreximbank Annual General Meeting in Kigali, Obasanjo said, as long as the move was in the country’s best interest, Rwanda should not be cowed.

“The country should do what is in their best interest and be unafraid to stand by it. The continent should always ask itself what is in our best interest. We should not be afraid to cut some ties if it is in our best interest,” he said.

EAC member countries have moved to phase out importation of used clothes and shoes as part of an industrialisation policy to give rise to the growth of the local textile industry.

As part of the move, Rwanda last year increased taxes on used clothes from $0.2 to $2.5 per kilogramme, while taxes on used shoes will increase from $0.2 to $3 per kilogramme.

In the 2017/18 Budget, the Government eased taxes on inputs to the Made-in-Rwanda campaign, which is expected to facilitate the growth of the local textile industry

Responses from EAC

In the face of threats, Rwanda continues to stand firm by the decision of the EAC with respect to the proposed ban but Kenya has retreated. The reason for this stance by Kenya is probably because of the volume of trade between the U.S. and Kenya. It remains to be seen how other members of the EAC will act in the face of U.S. threats.

Africa needs more Kagame’s who will say what they mean and mean what they say—sticking to their word—no matter the threat.

President Donald J. Trump

In the remarks of President Donald J. Trump in his inaugural address, to the America public and to “the people of the world”, he stated unequivocally that, “We will seek friendship and goodwill with the nations of the world – but we do so with the understanding that it is the right of all nations to put their own interests first“.

Mr. President, the response of the US government to the decision of the EAC in exercising the right to put their own interests first by phasing in a ban on the importation of used clothing is distasteful. It does not show that your administration seeks the good will of the EAC and the greater AU. The second hands goods from your country has hurting local industry across generations. It is a key barrier to the cotton planting in the area. It takes away much needed foreign exchange and in exchange provides citizens in this area with sub-standard clothing and shoes. There should be a way to push for America’s interests without harming that of other nations as some of your predecessors did.

I for one am happy that you won the election because I believe it means good things for our globe. But this step is a wrong step because it shows that you’d like to continue the perpetuation of the impoverishing of the world’s poorer populations. Please do not let this continue.

Do not allow the debris from the deep state to influence your policies towards Africa. Already there are news headlines such as, “Was Agoa always a poisoned chalice from the US?”. This is not how you want your administration to be remembered in academia and by the people of the world—specifically Africa. Harming African economies and initiatives will not promote growth thus making Agoa an oxymoron. Allow righteousness and justice to prevail. On the 13th of July when the review is being done, influence it for good. God bless America and the nations of Africa and the World.

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Why Africa is relevant to the U.S.?

Fig1
This article was originally published on the Africa Progress Panel Website HERE
This graph is taken from the 2013 Africa Progress Report and is here used with permission. Click on image twice to enlarge. On the left-hand side we have the growth rate of SSA compared to those of other regions. On the right-hand side we have a depiction of the fasted growing economies in the world. It is easy to see that Africa is doing very well.

According to the White House, the President of the United States of America has scheduled a weeklong trip to sub-Saharan Africa (SSA) specifically Senegal, South Africa and Tanzania from June 26 to July 3. This will be the longest single trip of Obama’s presidency according to the NY Times Politics blog, the Caucus. The question is why is Obama visiting Africa and why now? Prior to this Africa trip, Obama met with Xi Jinping, President of China on June 7 and 8 at a summit in Southern California. It seems the USA Today got it right when they wrote beforehand, “President Obama is planning major diplomatic initiatives with China and Africa…”

International affairs is always about strategic interests. Why is Obama meeting up with Xi Jinping? Among other reasons, it might have something to do with China’s growing importance economically in the globe plus the fact that China holds the greatest percentage of US debt. How about Africa? What is the USA’s strategic interest in Africa? This is a golden question. If African leaders understood the answer to this question, they would begin to think differently, lead responsibly and take advantage of the shifts taking place in the global landscape to the benefit of their citizens. Africa has the opportunity if she manages the competing interests in her political economy well to lift millions out of systemic poverty while providing them with better standards of living.

What is special about sub-Saharan Africa?

Officially, the press statement from the White House states the trip “will reinforce the importance that the United States places on our deep and growing ties with countries in sub-Saharan Africa…” To decode this statement, one must cast their minds back to statements made by Secretary of State John Kerry a while back when as yet the public was unaware of this SSA trip. These statements were captured in a C-SPAN video and in the Politico . Here are John Kerry’s statements with regards to Obama’s trip to Africa:

“Africa we need to be deeply engaged in and intend to be. And the president will travel there. We have a lot to do,” Kerry said in response to questions from Rep. Karen Bass (D-Calif.) Kerry continued, “Six of the 10 or 12 fastest growing countries in the world are in Africa.” The Secretary of State added “We all are concerned about our economic future. China is investing more in Africa than we are and it doesn’t have to be a zero-sum game. We have to recognize where our future economic interests and capacity may lie.”

The US President is visiting Africa because the US sees the continent as important for its economic future. President Obama’s trip is about safeguarding America’s economic future and her economic interests bearing in mind where her future capacity may lie. This is what the press statement loosely framed as “to discuss our strategic partnerships on bilateral and global issues…” while “…broadening and deepening cooperation between the United States and the people of sub-Saharan Africa”. Africa is the new economic frontier and the US doesn’t want to be left out whiles China is capitalizing on her Africa partnerships.

John Kerry alluded to the fact that some of the fastest growing economies are found in SSA. This is correct according to the World Bank’s Africa’s Pulse Volume 7 released April 2013 and its predecessor from the previous year. SSA economies have maintained a consistent solid expansion for over a decade right through what is termed the global downturn. The International Monetary Fund’s April 2013 World Economic Outlook (p.67) forecasted similar growth trends for SSA as the World Bank did. Figure 2 in the World Bank Africa’s Pulse is a brilliant graph depicting how seven SSA countries outgrew China last year and ten out-performed India. This is history in the making and Africa could miss it if she is not awake and focused on what is transpiring in the table of nations. Africa needs desperately to harness her strengths and exploit the opportunities now available in such a way that it generates better Human Development dividends for her masses who are projected to double in a mere 37 years according to the United Nations Statistics Division. We’ll leave the reasons for the phenomenal growth for later discussion but let us take a look at one of the principal sources of the growth.

What is the source of this growth?

To understand this adequately one needs to consult the fantastic Africa Progress Report launched by the Africa Progress Panel chaired by Mr. Kofi Annan, on the sidelines of the World Economic Forum on Africa in Cape Town. The report states that, “On one estimate, extractive industries have accounted for around one-third of regional GDP growth over the past decade – more than transport, telecommunications and manufacturing combined.” It further clarifies that the 20 countries the IMF identified in their Regional Economic Outlook on Sub-Saharan Africa April 2012 as resource intensive in SSA account for about 56 per cent of the region’s population and around a whopping 80 per cent of its GDP. The good thing is that the SSA growth phenomenon is not limited to resource intensive countries. It extends to much of SSA according to Fig 2.15 of the April 2013 IMF’s World Economic Outlook. Naturally China is a big part of the increased economic activity in this region. It makes absolute sense then that the Obama led US presidency will allocate its longest single journey during the summer season to go politik in Africa.

A great opportunity for Africa: Sagacity required

It is high time Africa realises the shiftings taking place in the globe and the unique opportunities they present. African leaders, civil society and the many youths that make up majority of SSA’s population must “wise-up” and “shine their eyes” to use a Nigerian colloquial expression. A better future could be within reach in less than one generation if SSA leaders will continue to improve state capacity, promote good governance, transparency, accountability, and long-ranged public policies aimed at promoting industrialization, alleviating poverty, creating jobs, eliminating illiteracy etc. All of this and more are elucidated in the 2013 Africa Progress Report which champions equity in extractives. At the end of the day, if the wealth generated from the solid expansion is not equitably redistributed to the benefit of the all, development will remain at best but a mirage and that would be a huge travesty which future generations would hold the present generation accountable for.

I end this piece with the words of the US Secretary of State to his Rep. Karen Bass (D-Calif.). Do ponder on them:

“We have to recognize where our future economic interests and capacity may lie.”

At the end of the day, relations between states otherwise known as international relations is all about national interests. As the USA considers her interests and rightly so, African leaders should also consider the interests of their people and negotiate on a peer to peer basis.

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This article was originally published on the Africa Progress Panel Website. The author Solomon Appiah is a native of Ghana and ardent advocate for strategic public policies that advance the development of sub-Saharan Africa.

Twitter: @s_apiah

Blog: https://solomonappiah.wordpress.com

Email: phronesis@hushmail.com


Joseph Stiglitz on Inequality and the cost to society

Joseph Eugene Stiglitz is an Economics professor at Columbia University and 2001 recipient of the Nobel Memorial Prize in Economic Sciences. He is also the former senior vice president and chief economist of the World Bank.

I’d like to share 3 very interesting and in my opinion thought provoking articles of his entitled the “The 1 Percent’s Problem” and “Inequality: Of the 1%, by the 1%, for the 1%” and “The price of inequality“.

The sub-statement of the first reads,

Why won’t America’s 1 percent—such as the six Walmart heirs, whose wealth equals that of the entire bottom 30 percent—be a bit more . . . selfish? As the widening financial divide cripples the U.S. economy, even those at the top will pay a steep price.

This first piece was adapted from his: The Price of Inequality, by Joseph Stiglitz, Published in June by W.W. Norton & Company, Inc. (U.S.), and in July by Allen Lane (U.K.); © 2012 by the author.

Another article worth taking a look at is :  Joseph Stiglitz: ‘ This Deficit Fetishism is Killing Our Economy