Rwandan garment exporters to the US market are banking on other existing trade instruments including the Generalised System of Preference (GSP) to access the US market.

This follows withdrawal of African Growth and Opportunity Act (AGOA) exemptions for Rwandan clothing exports effective July 31.

GSP is a US trade programme designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories, it was instituted on January 1, 1976, by the Trade Act of 1974.

“We have a shipment that we sent to the US last week and we are counting on the GSP duty exemption, which we applied for,” said Janet Nkubana, the co-founder and managing director of Gahaya Links.

She added that the post AGOA cancellation has been a time of re-assessing markets and looking at other alternatives, especially in the African continent and locally.

“We are trying to venture into the Alibaba online platform since it is also has access to the global market, while also focusing on “Made in Rwanda,” she said.

As the African market increasingly becomes attractive, Ms Nkubana is also trying to position her business to tap into the continental market.

Going online

Inzuki designs continue to export to the US market through orders they get on e-mail and Instagram. They say that although the suspension does not affect them since it doesn’t affect non-apparel exporters, their small export quantities mean they cant benefit from AGOA, but they are looking at opening an online shop before the year ends.

Rwanda, Kenya, Tanzania and Uganda increased tariffs on imported used clothes in 2016 with the aim of boosting their local textile industries and eventually phasing out second-hand apparel. But Kenya, Tanzania and Uganda capitulated, abandoning the joint position after threats by the US to review their Agoa status.

The exclusion from Agoa was estimated to affect about three per cent of Rwanda's total exports to the US, which totalled to $1.5 million last year. The country’s apparel exports to the US will now attract tariffs as high as 30 per cent.

As a way of cushioning its exporters under Agoa-facilitated contracts, the government is setting up a Rwf1.3 billion facility to absorb tax expenses for traders with ongoing contract obligations.

The two-year facility, which is awaiting Cabinet approval, is intended to ease the transition as exporters search for markets in Europe and Asia. Kigali plans to expand the facility into a revolving fund that will cushion local industries against external shocks.

There are other trade treaties that Rwandan exporters can benefit from, such as the 2008 USA signed Trade and Investment Framework Agreements with the East African Community and with the Common Market for Eastern and Southern Africa. Rwanda is a member of both regional organisations.

The USTR’s Africa Office is also leading US efforts to forge a new trade and investment partnership with the East African Community.