The Trump administration may be about to throw spikes under the tires of three small but growing East African economies because they don’t want to import unlimited quantities of Chinese-made clothing that has been worn and tossed in charity bins by American consumers.
Middlemen who profit from these donations insist they have a right to swamp African nations with American worn but foreign-made cast-offs even if it means undercutting those nations’ efforts to grow their own garment industries. It appears that Trump’s US Trade Representative (USTR), in a fit of misguided America First-ism, has bought the argument and will shortly announce sanctions against Rwanda, Tanzania and Uganda suspending their access to the American market.
Organized as the Secondary Materials and Recycled Textiles Association (SMART), the middlemen contend that duties on pre-owned Chinese t-shirts levied by the three nations, the combined GDP of which is smaller than Hawaii’s, are threatening close to 200,000 US jobs. SMART members have refused to supply financial documentation to corroborate their outlandish fake news claim, insisting that USTR rely purely on self-serving member surveys.
In any event, they have no way of knowing how much of what they export goes to East Africa because only a small proportion is shipped directly. SMART’s second-hand clothing that many Americans believe is going to charity, is actually sold to dealers in third countries, notably India, which bans imports of used clothing — with impunity — but allows them to be processed for re-export in special trade zones.
To better grasp the perversity of caving to SMART’s demands — and how inimical they are to the longterm interests of American businesses and workers — let’s take a step back and consider the context.
We need Africa to prosper not simply out of good conscience, but for the sake of our own prosperity. If Africa prospers, it stands to become a vast new market for American goods, ideas and services. If, on the other hand, it stagnates and cannot provide employment for the 15 million young people now entering its job markets each year, the continent could easily become a cauldron of instability and mass migration.
Africa will not prosper so long as it remains primarily an exporter of raw commodities adding little or no value locally. The continent’s future, and to a considerable extent ours also, lies in the growth of African companies that generate jobs and wealth by supplying the region’s own market of a billion plus people.
In 2000, Republicans and Democrats came together to pass the African Growth and Opportunity Act, exempting duties on virtually all products sourced from African nations who met certain conditions including protecting human rights and intellectual property; and establishing or making continual progress towards democracy. The idea was to help African economies attract investment into local manufacturing, initially for export but in the expectation, based on East Asian experience, that rising incomes and living standards would grow domestic African markets as well.
The three countries now in USTR’s cross-hairs have been making good use of the AGOA benefits they now stand to have stripped from them. They have recognized that as important as access to major developed markets may be, the real prize for Africa’s economies lies in removing the barriers that prevent them trading with each other. As a mass of small individual markets separated by “thick” borders that are hard both to reach and cross, Africa is far less interesting to investors than it would be as a large and unified market.
Regional integration is among Africa’s most pressing priorities. Few countries have been addressing it more urgently that members of the East African Community, which include the target trio along with Kenya, Burundi and South Sudan. They want to attract investment into a vertically integrated textile and apparel industry using the region’s high quality cotton. A combined local market of 168 million is at the heart of their value proposition.
The US should be helping them realize their vision. Instead, Trump’s USTR seems intent on smashing it by telling them that their products won’t be welcome in the US unless they agree to swallow what they justifiably consider the economic poison of cheap Chinese imports transshipped through America’s laundry baskets and dumpsters. Further, it is unfathomable that the same USTR who is seeking a requirement of 85 percent regional value content and a minimum of 50 percent U.S. value in products in the NAFTA agreement, seems to feel that having Americans merely put garments on their backs, somehow confers origin and deserves to be treated as a product of the United States.
Of course, SMART denies it is hurting these economies, arguing that its members are supplying affordable clothing for Africa’s poor and supporting a thriving informal retail sector. While there may be some beneficiaries in Africa who eke out a living selling SMART’s Chinese-made hand-me-downs, who is SMART to dictate development strategy and priorities to sovereign nations adopting trade policies that are entirely legal under internationally accepted rules of origin to which the US subscribes? What SMART is exporting does not contain US components (unless you count grime and sweat) and was not “substantially transformed” in this country.
Besides, the three governments are fully conscious there will be losers as well as winners as they phase in tariffs. They are actively working to see that the displaced land better livelihoods. They are accountable to their citizens. They are looking to the future, a future from which the US stands to benefit. And we, it seems, want to trap them in the past, keeping them poor so that the only clothes they can afford are the used Chinese rags we sell them off our backs.
Rosa Whitaker is president and CEO of The Whitaker Group. She is a former assistant U.S. trade representative for Africa in the administrations of Presidents Bill Clinton and George W. Bush.
Gail Strickler is president for Global Trade at Brookfield Associates, LLC. U.S. She is a former assistant United States Trade Representative for textiles in the administration of President Barack Obama.
Source: The Daily Caller