“I see America picking trade battles, but I was surprised we would have time to pick one with Rwanda. We are talking about such a small amount of trade,” said Rosa Whitaker, who had helped in developing and implementing the AGOA.
She made this statement while reacting to the suspension of certain benefits that Rwanda had under the African Growth and Opportunity Act (AGOA), which allows sub-Saharan African countries to export to the United States without facing tariffs. Rwanda would, for example, lose the right to export duty-free apparel to the United States.
This trade conflict between Rwanda and the US began when the Rwandan government started imposing import duties on used clothing from the United States, increasing it from $0.25 to $2.50 per kilogram. The idea was to create about 25,000 jobs by protecting its domestic garment and textile industry that was losing its trade to the cheap second-hand apparels imported from the US.
However, this step did not go down well with US President Donald Trump’s ‘America First’ stance, who gave a 60-days’ notice to Rwanda to back down or face suspension from selling clothes to America duty free.
The 60-days expired and Rwanda refused to budge.
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“This is the choice we find that we have to make. As far as I am concerned, making the choice is simple [although] 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,” Rwanda’s President Paul Kagame had said.
According to experts, the real winner in this dispute would be China. The locals buying the clothes won’t have the means to buy domestic-made apparel, so will turn to cheap, ready-made clothes from China. The trade war will just open up more market space and greater dependency on them.