C&H Garments has laid off thousands of workers as the company struggles to cope with the on-going stalemate between the government and the US regarding the Africa Growth and Opportunity Act (AGOA).

The company laid off workers from both its factories, including the recent extension intended for local production.

In March, the Office of the United States Trade Representative (USTR) said that Rwanda would lose some benefits under AGOA in 60 days after it increased tariffs on second-hand clothes. The move sent shockwaves throughout the textile industry, with C&H saying some of its US customers have put orders on hold until further notice.

“Many people have been laid off without an explanation, but what we heard from inside sources is that the company lost part of its foreign market,” said a former employee who worked in the embroidery section.

She said the company laid off workers in different departments, but promised to call them back either in two weeks or a month’s time.

The Chinese garment maker, based in the Kigali Special Economic zone, largely depended on the US as its main export market destination, so with customers suspending orders, challenges were bound to happen.

Although Rwanda Today could not confirm the exact number of workers laid off — as C&H did not comment on the issue by press time — a former worker this paper talked to who worked in the cutting department, said the number could be upto 2,000 workers to date.

“In my department we were 240, but they promised to give us certificates,” she said.

C&H has raised its issues with the government, but no consensus has been reached.

The duty-free access to the US market under AGOA that Rwanda has been enjoying along with other sub-Saharan African countries, was one of the key motivations for C&H starting the clothes manufacturing factory in the country. Close sources say the suspension of AGOA seems to be dampening the firm’s prospects in the country.

Although C&H exports to different countries including Europe, the US constitutes its biggest market.

Meanwhile, the government has put up a facility to pay taxes imposed on exporters to the US market for a year, as they look for duty-free market alternatives especially in Asia, Europe and in Africa.

The exporters had contractual obligations in the US before AGOA was suspended and this created complications with suppliers. The tax facility will therefore enable them to meet their existing orders, which is a relief to companies like C&H.

The company plans to start production for the local market, in a bid to respond to the huge demand left behind by the sharp decline in importation of second-hand clothes since the government imposed heavy import duties on them.

The deadline the US gave Rwanda has elapsed but there is yet to be a concrete way forward, since the US has not yet come out with a statement.

Next step

After the deadline elapsed, the Minister of Trade and Industry Vincent Munyeshyaka said the government is waiting for the next step, since the deadline was set by the US.

He said they have not received any communication from the US about the issue and that Rwanda is open to talking to the US at any time.

In a tweet posted on June 2, the US President Donald Trump said it is unfair to charge a country zero rate to sell their goods in the US, yet the same country charges the US up to 25, 50 or even 100 per cent to sell their products.

“The United States must, at long last, be treated fairly on Trade. If we charge a country ZERO to sell their goods, and they charge us 25, 50 or even 100 per cent to sell ours, it is UNFAIR and can no longer be tolerated. That is not Free or Fair Trade, it is Stupid Trade,” tweeted President Trump.

C&H has a capacity to make 70,000 pieces of clothing per month, but it is currently operating below capacity.