EAC to continue being US dumping ground for used clothing

When the East African Community (EAC) resolved to prioritise the development of a competitive domestic textile and leather sector to provide affordable clothes and leather products in the region, this was a positive step towards determining its own development path. India’s textile sector is an example of an inward domestic driven structure. By limiting the size of textile and garment producers, India encouraged small business, mostly family run. India produces textile and garments that are uniquely Indian and despite the transformation of the sector since 2000, with increased imports changing clothing styles in India and an increased focus on exports, the textile and garment sector is the second largest employer after agriculture in India in a decentralised manufacturing structure that has localised benefits of the garment value chain.

However in a world dominated by neoliberal globalisation, such inward orientated strategies offering domestic protections and privileges have been under attack. Tanzania, once very insular under Julius Nyerere who focused on development, in particular rural cooperative development, found too impossible to push back on the conservative agenda of global economic powers in the 1980s. A year before Nyerere stepped down from power in 1985, Tanzania succumbed to pressure from the Bretton Woods institutions, liberalising trade policy.

The consequent liberalisation of tariff lines along with structural adjustment policies have created economic sectors based on export based growth and dependent on foreign direct investment. As the result of liberalisation, policy shifted towards export led growth in textile and garment which has not developed the sector; instead Tanzania’s cotton leaves the country unprocessed and second hand clothing, as well as cheap and illegal imports have flooded the country.

Export led growth in the Africa’s garment sector has focused on the Africa Growth and Opportunity Act (AGOA) that has created a complete dependence of African garment workers and the communities they support on the United States market and legislature. This has resulted in high levels of flight risk in foreign producers that have set up shop in African countries to take advantage of the access to the US market under AGOA, resulting in highly vulnerable low paid employment. For Tanzania, garment exports under AGOA to the US was valued at US $25 million in 2015, this is substantial given that all exports are from only two factories, Mazava in Morogoro and Tooku in Dar es Salaam, with a total employment of 4,000 workers.

The development of the industry under current trade dispensations has failed to significantly develop full value chain production in Tanzania from cotton through spinning, weaving, knitting, design and finished goods production processes. The Tanzanian government has been at the forefront of pushing for a shift in the EAC to locally produced garment consumption in order to reduce foreign market and producer dependency and to stimulate economic activity. The EAC announced in 2016 that it would consider a complete ban on the importation of second hand clothing as a vital first step to stimulate a localised value chain and the import tariff was raised on second hand clothing.

In March 2017, the Secondary Materials and Recycled Textiles Association (SMART) submitted a petition to the US Trade Representative requesting an out-of-cycle review to determine whether EAC countries are meeting the AGOA eligibility criteria. The SMART petition asserts a ban on imports of used clothing and footwear is imposing significant economic hardship on the US used clothing industry, and is in violation of the AGOA statutory eligibility criteria to make continual progress toward establishing a market based economy and eliminating barriers to US trade and investment. Acting Assistant US Trade Representative for Africa, Constance Hamilton, told the AGOA Forum held in Togo in August 2017 that the AGOA criteria is very clear about not putting in place bans or restrictions on US products and said if the EAC turns down used clothing from US, 40,000 people would be out of jobs in US.

While the US government is clearly concerned about its own companies and workers in the used clothing sector, in Tanzania there are also tens of thousands of informal sector workers and their families that were dependent on the trade in second hand clothing, already suffering by the sharp decline in second hand clothing imports in Tanzania as a result of the increased tariffs in 2016. The labour market has not been able to absorb the impact of the decline in trade in second hand clothing in Tanzania on informal sector employment

Kenya, which has the largest garment sector amongst the EAC countries and produces predominantly for the US, chose to suspend the tariff on used clothing because of the risk of a backlash from the US which could mean losing AGOA. The outcome of the out-of-cycle review has been the temporarily suspension of Uganda, Rwanda and Tanzania from duty-free access to US and AGOA for all eligible exports until they reverse plans towards a ban.

EAC countries including Tanzania lack a sufficient domestic garment production base to meet domestic need with local or regional production. Thus cheap imports from countries like China will fill the market gap created by the ban in used clothing.  The potential for social and economic deprivation as a result of the withdrawal of AGOA and the lack of a domestic base to absorb the impact of a ban are very real.

However the forces at play show the limited space developing countries have for economic self-determination. This move towards a common action plan aimed at developing regional value chain in the textile and garment industry position indicates a desire in the EAC to articulate and implement an African approach for the best utilisation of African resources within the region, with a greater focus on domestic consumption.  Producing affordable clothes and leather products in the region for local consumption could assist in the reduction of poverty, stabilise employment and improve the social wellbeing and the dignity of East African communities. It could also acknowledge and include informal sector traders in regional value chain developments.

Instead EAC countries have bowed to pressure from the US, announcing in a February 2018 joint statement of EAC presidents that partner states would focus on building the textile and footwear sectors in a manner that does not jeopardise AGOA benefits. The US acting director for Economic and Regional Affairs, Harry Sullivan has patronisingly suggested that it would be most effective if the domestic growth strategy focused on building brands and markets for the middle class rather than banning used clothing. Certainly this is most effective for the US and the used clothing and footwear that they dump on Africa’s poor. 

*Aisha Bahadur is a consultant providing strategic support to civil society organisations including trade unions focussed on African issues.