Trump suspends duty-free status for clothes imports from Rwanda

By Clement Uwiringiyimana

KIGALI (Reuters) - President Donald Trump has suspended Rwanda's right to export clothing duty-free to the United States over Kigali's decision to increase tariffs on imports of used clothing and footwear, the U.S. Trade Representative's office said.

The move, initially threatened in March and confirmed on Monday, was seen by many in Washington and Africa as foreshadowing how the Trump administration planned to apply its 'America First' trade ideology on the continent.

Despite the suspension, Rwanda will maintain its other duty-free benefits under the African Growth and Opportunity Act (AGOA), America's flagship trade legislation for Africa.

"We regret this outcome and hope it is temporary," Deputy USTR C.J. Mahoney said in a statement, adding that the move would affect about $1.5 million in Rwandan exports, or about three percent of its total exports to the United States.

Clare Akamanzi, CEO of the Rwanda Development Board, told reporters on Tuesday that companies producing garments for export were already approaching European buyers.

"We expect some Rwandan companies to be affected," she said. "We have a plan for them. We have engaged them and we will be helping with the transition to new markets."

Akamanzi said the government would also assist them financially, though she declined to give details.

On the streets of Kigali, where residents say the increased duties on used clothing imports have driven up prices, condemnation of the U.S. decision was muted.

"The 'Made in Rwanda' clothes are expensive," said Jean-Marie Nsengimana, a hotel worker and father of four. "It used to be cheaper with second-hand clothes. Rwanda should try and negotiate with the U.S."

Kenya, Tanzania, Rwanda and Uganda all increased duties on used clothing and shoes in 2016 to nurture their local textile industries.

But in March 2017, the Secondary Materials and Recycled Textiles Association (SMART), a trade group representing U.S. used clothing exporters, filed a petition, arguing that the increase violated AGOA.

Though they contested SMART's assertions, Kenya, Tanzania and Uganda backed down and agreed to roll back the duty increases.

But Rwanda refused and, as a result, joined the ranks of Canada, Mexico, the European Union and China, all of which have been the targets of Trump's aggressive trade tactics.

Andrew Mold, head of the United Nations Economic Commission for Africa's East Africa office, said he was disappointed by the USTR's announcement.

"We know the current U.S. administration has a different position on international trade than previous administrations, particularly with countries with which the U.S. sustains large trade deficits," he said.

"But in this case the U.S. actually has a trade surplus with Rwanda."

(Additional reporting by David Lawder in Washington; Additional reporting and writing by Joe Bavier in Johannesburg; Editing by Richard Balmforth)