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Trump’s latest trade target: Rwanda

Rwandan President Paul Kagame and President Trump attend a bilateral meeting on the sideline of the World Economic Forum on Jan. 26 in Davos. (Nicholas Kamm/AFP/Getty Images)

President Trump said Thursday that he will soon suspend Rwanda’s participation in a program that allows African countries to export apparel to the United States on a duty-free basis, citing the country’s refusal to permit U.S. exports of used clothing.

The latest sign of Trump’s uncompromising trade policy follows a petition from the U.S. used clothing industry, which complained in March 2017 that Rwanda and three other African nations were introducing a ban on foreign-made used clothing and footwear.

The imposition of steep tariffs was “already having an impact on exports of secondhand clothing from the United States to Kenya, Rwanda, Tanzania, and Uganda,” the Secondary Materials and Recycled Textiles Association told U.S. trade representative last summer.

Rwanda raised its per-kilogram import tax in 2016 from 20 cents to $2.50, amounting to “a de facto ban on our industry,” the trade group said in its complaint to the USTR.

The East African trade barriers were responsible for the loss of 24,000 jobs, the trade group said. Including used clothing and footwear shipped to Africa via third countries, total sales of $124 million were at risk.

U.S. officials began talks with the East African countries during the Obama administration. But with the exception of Kenya, which announced an about-face on the tariffs last year, the barriers remained in place, prompting the complaint from U.S. industry.

After a review, the U.S. trade representative agreed that the import ban “harms the U.S. used clothing industry and is inconsistent” with rules governing the African Growth and Opportunity Act (AGOA). Participating countries are required to adhere to a market economy and move toward the “elimination of barriers to U.S. trade and investment.”

The USTR finding led to Thursday’s letter from the president to Congress announcing his intent to suspend Rwanda from the program in 60 days. Tanzania and Uganda escaped sanction by committing to drop the import limits.

The decision to suspend Rwanda came “despite intense engagement” with the Rwandan government, Trump wrote.

Unlike other countries that Trump has targeted in his trade offensive, the United States runs a small surplus on its goods trade with the poor African country. In 2017, the United States exported $66.1 million to Rwanda and imported $43.7 million in products from there, for a surplus of $22.5 million.

Still, Trump’s move is not unprecedented. President Barack Obama suspended South Africa’s participation in AGOA two years ago in a dispute over bone-in chicken parts.

“This kind of thing happens more than one would think…It’s a relatively small way to ping smaller countries with which we have some small, specific trade disputes,” said William Reinsch, a former Commerce Department official. “It almost always leads to a negotiation and a resolution of the issue.”

Indeed, Trump told Congress that he had decided to suspend rather than terminate Rwanda in hopes that the dispute can be resolved.

The program began in 2000 under the Clinton administration as a way of promoting economic development in some of Africa’s poorest countries. “One hope of AGOA was labor intensive manufacturing would move into these countries,” said Mary Lovely, an economics professor at Syracuse University.

Trump’s decision may hurt economic development in Rwanda, where annual per capita income is around $700. The economy grew last year at a 6.1 percent rate and was expected to accelerate to 7 percent to 8 percent over the next two years, according to the International Monetary Fund.

“It is our hope that Rwanda will reconsider their position on banning secondhand clothing imports as it will impose unnecessary economic harm to its people,” said Jackie King, SMART’s executive director.