Explaining Used Clothing Import Bans
It is important to know how used clothing trade is managed because it allows a deeper understanding of the global nature of today’s apparel industry. The patterns of the used clothing trade is deeply connected with complex political, social and economic factors that have designed the used clothing trade regulations. By knowing about the function of used clothing import bans, trade agreements and apparel sourcing can be better understood. Hopefully, this knowledge can inspire how taking actions can look different for everyone by engaging in different factors.
In 2017, world used clothing export was worth $3.2 billion and growing by a compound annual growth rate of 7.6%. Used clothing trade has increased by ten times since the 1990’s and has reached 2.8 billion pounds annually. The main suppliers of used clothing are developed economies. In 2017, 40% of the world’s used clothing exports came from the following:
United States: 15%
United Kingdom: 13%
Germany: 10%
Between 2005 and 2017, the United States and EU accounted for 65% of the value in used clothing exports. However, it is important that most of the used clothing is consumed by the least developed countries. This has created a challenge in the community because of the unbalanced trade patterns and the complexity of political, social and economic factors.
U.S- EAC Trade Dispute
On 30 July, 2018, President Trump suspended Rwanda’s ability to export apparel duty free to the United States This arose from the problems in the used clothing ban. The program was under the African Growth and Opportunity Act (AGOA), a trade preference program to help countries in Sub-Saharan Africa to grow their economy by expanding exports to the United States. Losing AGOA meant that Rwanda would have to export under the most-favored- nation (MFN) tariff rate. In 2017, the average MFN tariff for woven apparel was 10.1% and knitted apparel was 12.8%.
To give context to President Trump’s decision, in March 2016, the East African Community (EAC) announced that they would phase out used clothing so that its local textile and apparel industry could develop and grow. The countries in EAC include Burundi, Kenya, Rwanda, Tanzania and Uganda. This revitalization of their local apparel and textile industry was their strategy to develop their economy. It could be a key driver in job creation and allow the countries in EAC to embark into the industrialization process. The clothing manufacturing and textile production has a very long industrial history that has been credited with kickstarting modern industrialisation in developing economies. However, EAC proposed import ban caused backlash from SMART, the Secondary Materials and Recycled Textiles Association. This was because EAC was the largest export market of used clothing for SMART. The case was brought to the attention of the Office of U.S Trade Representatives (USTR), which caused reevaluation of EAC countries eligibility for AGOA. The goal of AGOA was to make the EAC countries repeal their proposed import ban on used clothing. Although some members made deals with the US, Rwanda decided to continue the clothing import ban despite the consequence of losing AGOA privileges.
Rwanda
Rwanda’s decision was important because of their strong national pride and focus on revitalizing their own local apparel and textile industry. In addition, all of the Sub-Saharan African countries had started to feel overwhelmed by all the garments being rapidly dumped into their land. Although they experienced a major increase in used clothing, the growth rate of EAC countries apparel exports dropped 1.7 percent annually under AGOA. The program was intended to help develop their economies through trade versus than aid.
In addition, EAC countries felt like their countries had become a dumping ground and it started to hurt their national pride. EAC countries also understood that a country never achieved industrialization by consuming used clothing. USTR took action against Rwanda in July 2018 when negotiations couldn’t be resolved. They suspended their apparel products, which was 4% of Rwanda’s total merchandise exports to the U.S. However, Rwanda can still export apparel under the MFN import duties.
Before the initiative to ban imports, EAC countries had implemented high ad valorem equivalent import tariff rates for used clothing. The following are some rates:
Rwanda: 349.5%
Kenya: 34.8%
Uganda: 32.7%
Tanzania: 32.8%
To give context, the tariff rate for new clothing was 15.3%. The high tariff was not a success since rich, western countries were willing to pay any rate and still be able to make a profit.
Consequences of Banning Used Import Goods to Developing Countries
If used clothing had effectively been banned, it could have resulted in a loss of jobs globally and would negatively affect the environment because the textiles would end up in landfills. However, a lot of US fashion brands and apparel retailers did agree with EAC countries decision to ban used clothing imports. They supported their efforts in developing the local textile and apparel sector and believed that the suspension of AGOA would undermine the region’s export-orientation development strategy. Yet, it is important to consider that there is no concrete data about the relationship between used clothing imports and the decline of local textile and apparel industries in developing countries. In addition, a major concern for EAC countries was that if their import ban had been successful, they could have experienced smuggling of used clothing in their countries. This would have meant the loss of tariff revenue and a loss of jobs for locals.
Consumers in Developed Countries
If you are an EU or US consumer, you may want to reconsider donating to thrift stores. It is only a good decision to a certain extent. There is still little awareness of where most of the donations truly end up. However, most used clothing do end up being exported to the Sub- Saharan African countries. This for-profit export business is actually the single largest source of profit that supports initiatives from non-profits. Although this a profit generator, it negatively affects the EAC countries pride and negatively affects their stance of economic development, environment and standards of living. Clothing that arrive in EAC countries are of low quality, stained and dirty. There is little value for local resellers that purchase bulks of used clothing upon arrival. The majority of the garments have to be thrown away. It is normal for them to be burned in piles. This ruins the soil of the ground that otherwise could have been used for agriculture.
Reconsider how to reuse and rework the clothing in your closet, how to donate your clothing and the implications it has globally. It is no easy task but every little step is important. Keep informed and find ways to see value in what you already own. Learning more about clothing import bans will allow for a deeper understanding of the interconnection and complexity of the apparel industry.
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