Tag Archives: Trade Policy

A Worn-Out Trade Deal. RWANDA REFUSES TO REMOVE TARIFFS ON IMPORTS OF USED CLOTHING

The Trump administration wants the African nation to remain open to imports of clothing donated to charities in rich countries

The Economist.  May 31st 2018 | KIGALI AND MANSFIELD

Original Article: A Worn-Out Trade Deal

 For an additional first-hand account of the second-hand clothes market in Kenya see Mitumba 101: The Second Hand Clothing Trade in Kenya” by Katrina Shakarian, in KIVA Stories from the Field, July 22, 2013

IN A market in Kigali, Rwanda’s capital, a cacophonous auction is under way. Sellers hold crumpled T-shirts and faded jeans aloft; traders shout and jostle for the best picks. Everything is second-hand. A Tommy Hilfiger shirt goes for 5,000 Rwandan francs ($5.82); a plain one for a tenth of that. Afterwards, a trader sorts through the purchases he will resell in his home village. The logos hint at their previous lives: Kent State University, a rotary club in Pennsylvania, Number One Dad.

These auctions were once twice as busy, says Félicité Mukarurangwa, a trader. But in 2016 Rwanda’s government hiked import duties on a kilo of used clothes from $0.20 to $2.50. Now she struggles to break even. The traders are not the only ones who are unhappy. Exporters in America claim the tariffs are costing jobs there. In March President Donald Trump warned that he would suspend Rwanda’s duty-free access to American markets for its apparel after 60 days if it did not back down. That deadline expired on May 28th without Rwanda shifting its position.

The dispute tugs at the threads of a trade that knits together charity and business, gift and profit. Globally, about $4bn of worn clothes crossed borders in 2016. The share from China and South Korea is growing, but 70% still come from Europe and North America. Most go to Asia, eastern Europe and Africa, the largest market. The trade clothes the poor and creates retail jobs. But governments worry that cast-offs undercut their fledgling industries. Imports are banned or tightly restricted in 41 countries, from South Africa to India.

A complex supply chain begins with people like Elizabeth Forsythe, stuffing a bag of old clothes into a donation bin in north London. She assumes that they will end up in a charity shop. But in most rich countries the supply of used clothing far outstrips demand. Less than half of donations are sold locally. Most of the rest are sold to exporters. In Britain a tonne of textiles from a bin fetches £170-315 ($225-420). At Savanna Rags, in Mansfield in the English Midlands, 500 tonnes of old clothes glide along conveyor belts each week. The workers, mostly eastern European immigrants, sift items into categories depending on the market, such as “childrenswear” and “Asian clothing”, transforming a jumble of fabric into plastic-wrapped bales.

In Africa, these motley bundles are a valuable commodity. Men’s clothes are pricier, since fewer arrive. American pieces are often too large and have to be resized by tailors. No matter. “A person would rather buy second-hand from America, instead of buying a new Chinese product,” says Nelson Mandela, a Ugandan trader with a suitably second-hand name. Shoppers complain that new Asian clothes damage easily and look like uniforms, without variety. Hucksters sometimes dunk Chinese imports in dirty water to pass them off as used ones from Europe.

Some suspect that high-quality, unworn clothes are smuggled into bales as a way for the rich world’s clothing industry to offload samples and unsold items. “It’s just a form of dumping,” says Belinda Edmonds, the executive director of the African Cotton and Textile Industries Federation, an industry body.

Second-hand imports now dominate African markets. Researchers at the Overseas Development Institute, a British think-tank, reckon that Tanzania imports 540m used items of clothing and 180m new ones each year, while producing fewer than 20m itself. African manufacturing is weak for many reasons, from clumsy privatisations to crumbling infrastructure. But second-hand imports are a major culprit, according to a paper in 2008 by Garth Frazer of the University of Toronto. He estimated that they accounted for half of the fall in employment making apparel in Africa between 1981 and 2000.

Spinning wheels

Loose fibres blow around the idle machines at UTEXRWA, a textiles and garment factory in Kigali. The plant operates at 40% of capacity and employs 600 workers, down from 1,100 in the 1990s. It is hard to compete, sighs Ritesh Patel, its manager, when a used T-shirt sells for the price of a bottle of water. Instead, the company specialises in uniforms for police, soldiers and security guards, which cannot be bought second-hand.

Even so, says Mr Patel, higher tariffs have not helped much. “The big challenge is not second-hand clothes or Chinese clothes,” he says. “It’s buying power.” Although the government is promoting “Made in Rwanda” products, firms like UTEXRWA cannot produce cheaply enough for most local consumers. Zips, dyes and synthetic fibres are sourced from other continents. A new garment-maker has opened in a special economic zone, cutting and sewing Chinese-made fabrics. But it mostly sells abroad. Where nascent industry shows promise, as in Ethiopia, it is often export-led.

Rwandan apparel exports currently enter America under the African Growth and Opportunity Act (AGOA), which eases market access for African countries. The threatened suspension would hurt, but not very much. Last year Rwanda sent a mere $1.5m of apparel to America. Nor, with 12m people, is it a big market. America is more concerned about Kenya, Uganda and Tanzania, which all planned to phase out second-hand imports before yielding to American pressure.

Meanwhile, exporters of used clothes in the rich world, like Savanna Rags, have other worries. Fast-fashion retailers churn out poorer-quality clothes, which do not survive long enough to be worth reselling. Sorting is moving to India, Pakistan or the United Arab Emirates, where wages are lower. Skittish consumerism and ruthless competition have long underpinned the used-clothing trade. They may now be un-ravelling it.

Selling second-hand clothing in Gikomba market in Nairobi

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