The EAC must take a common stand on US trade sanctions against Rwanda

Introduction

Beginning 17 November 2016, soon after US presidential elections, I wrote a series of six weekly articles for Pambazuka News on my reflections on the US elections. [[i]] In the first issue I said:

“Trump is an avant-garde – unconventional but also, in some odd ways, innovative. To my knowledge there has never been a phenomenon like him in American political history….Trump is a ‘nationalist’; his campaigning slogan was: ‘Make America Great Again!’”

I am an internationalist (not globaliser), but I am also a nationalist. I argued a case for making Africa self-reliant, and then the following words:  

“Trump does not have Africa on his map. He has criticised the notion of “exporting democracy”; it is not his business, he says, to tell Africans how to run their countries. That is good. We in Africa need allies, yes, but we do not need the Anglo-American Empire or Europe to tell us how to run our countries. Yes, we have problems – and these arise from centuries of exploitation and oppression, from the days of slave trade to today’s so-called globalisation…. If Trump defies the World Trade Organisation (WTO) and introduces protection for local American industries to create jobs, then he is on my kind of nationalism. We in Africa need to do the same. If he rejects (as he says) the Transatlantic Trade and Investment Partnership (TTIP) and the Trans Pacific Partnership (TPP) pushed by Obama, then he can count on my support. He might scrape the African Growth and Opportunity Act (AGOA) (which is divisive of Africa) and Obama’s “Power Africa” US $7 billion initiative. That is good too. These “initiatives” of Obama are to help corporate America, not Africa.

In the fifth part of the series I examined the phenomenon of the “deep state”. Trump may want to change America and the world, but can he?  Would the entrenched interests in the body politic of America allow him to do as he wishes? Trump did scrap the TTIP. But my misgivings about Trump having his own way in respect of Africa proved correct. He is pushed by strong corporate lobbies entrenched in the American body politic.

Trump suspends Rwanda’s participation in AGOA

AGOA provides for quota and duty-free entry into the United States for certain goods, especially textile and clothing. However, there is a catch. The Act allows the President to decide which sub-Saharan African countries would be eligible for AGOA on an annual basis.

I was never in favour of AGOA and similar trade agreements with the Empire, such as the Economic Partnership Agreements (EPA) between Africa and the European Union.  Our organisation – Southern and Eastern African Trade Information and Negotiations Institute (SEATINI) founded in 1997 – has been battling against EPA, AGOA and similar imperial trade instruments of domination and exploitation of Africa for years. [[ii]]

Trump knows practically nothing about Africa, but he does care for job losses in the United States. In March 2017, the US used (second-hand) clothing industry complained that Kenya, Rwanda, Tanzania, and Uganda were introducing restrictions on the entry into their countries of foreign-made used clothing and footwear. Rwanda, for example, raised its per-kilogram import tax in 2016 from 20 cents to US $2.50.  The American lobby complained that East African trade barriers were responsible for the loss of 24,000 jobs in the United States on top of a loss of US $124 million in American export of used clothing and footwear shipped to Africa via third countries.   These are all ballpark figures with no clear analysis.  But the figure of 24,000 American jobs losses was like a red flag to a bull, and Trump charged.

On 29 March 2018, Trump suspended Rwanda’s participation in AGOA. [[iii]] Based on the results of a review of US-Rwanda trade, the President determined that “Rwanda is not making sufficient progress toward the elimination of barriers to US trade and investment, and therefore is out of compliance with eligibility requirements of AGOA”. In a letter to Congress, he said that unless Rwanda backpedals on its stance on US second-hand clothing, exports duty-free status under AGOA would end in 60 days. He said that the suspension (instead of outright termination) of AGOA “would allow for continued engagement with the aim of restoring market access and thereby bringing Rwanda into compliance with the AGOA eligibility requirements.”

So the question is: why did Trump suspend only Rwanda’s participation in AGOA?

Why only Rwanda?  Why not Uganda and Tanzania?

Rwanda was sanctioned, but then how did Uganda and Tanzania escape Trump’s wrath?  Did they drop the import limitations of the kind that Rwanda had imposed? This is what Africa News reported:

“A statement to that effect as published on the website of the Office of the United States Trade Representative also referred to two other African countries – Uganda and Tanzania, who the office said had toned down on [their] stance on the second-hand clothes ban”. [[iv]]

The above may or may not surprise you, but it came as a bolt from the blue for me. Why did it surprise me?  Between the two it was Tanzania that surprised me more. How so?  

Since John Pombe Magufuli became the President of Tanzania in November 2015, he has been acting tough against corruption and ill-advised government spending. He had drastically cut down the budget for lavish state dinners that traditionally marked the opening of parliament – and other such state events – and ordered the money saved to be spent on hospital beds and road works. He reduced his own salary from US $15,000 to US $4,000 a month. [[v]]

Magufuli has been strong, also, in dealing with issues of foreign trade and investments. He declared that Tanzania is in a state of economic war against both internal and external enemies. At the heart of this war is the plunder of Tanzania’s natural resources.  And in the middle of this is the control of the minerals by transnational corporations (TNCs) aided and abetted by corrupt state officials.  About 60 TNCs and their local agents (compradors) effectively control the Extractive Industry Transparency Initiative (EITI).  In March 2017, the Prevention and Combating of Corruption Bureau (PCCB) discovered that major tenders in the Ministry of Energy and Minerals were won by one particular individual.  Magufuli made a surprise visit to the Dar es Salaam port where he found shipping containers filled with undervalued unprocessed rocks camouflaged as “mineral sand”.  Tanzania was losing billions of shillings in unpaid mining royalties, and tax on TNC profits. He acted swiftly. He disbanded the Tanzania Minerals Audit Agency (TMAA) and removed from office the Minister for Energy and Minerals.

Magufuli has been resilient in dealing with the European Union (EU) on the issue of the EPA. Tanzania is the only country in the East African Community (others are Burundi, Kenya, Rwanda, and Uganda) that has refused to sign the EPA until a full analysis is done of the costs and benefits of signing.

It was against this background that I was surprised to read the Africa News report that “Uganda and Tanzania … had toned down on [their] stance on the second-hand clothes ban.”

So where do we go from here?

What should the East African Community do?

1. Obviously, the first thing Uganda and Tanzania might do is to review their position on AGOA.  Unlike the EPA – which is negotiated between Africa and the EU – AGOA is not a negotiated instrument between the USA and Africa. It is a purely unilateral arrangement of the United States Congress based on lobbying by the exports (especially of textiles) industries. 

2. All the East African countries (including Kenya) should carry out an evaluation exercise on the cost and benefit of trading under AGOA.  There is no space to elaborate on this, but the two key issues to analyse are … value addition and subsidies.  Trade and industry in the United States and Europe are highly subsidised. In Trade is War, I deal extensively with the case of the so-called “Cotton-Four” against US subsidies on cotton.  US dumping of second-hand clothes into African markets should be banned.  I am aware that the bulk of our people wear second-hand clothes. That needs to be looked into seriously so that people have access to second-hand clothes domestic market – one not based on imports. But, more importantly, East Africa should produce its own textile and clothing and thus add value to domestically produced cotton.

3. All the East African countries (except Kenya) are classified as Least Developed Countries (LDCs) under the UN system.  The LDCs qualify for what is called “Special and Differential” (S&D) treatment under the WTO trade regime.  Under the so-called “waiver”, S&D allows the LDCs to export their goods to the developed countries duty and quota free. I have argued elsewhere, and I repeat, that Kenya’s classification as a non-LDC is based on purely arbitrary and mathematical concepts; if you look at the condition of poor farmers and city slums in these five countries, there is no existential difference between Kenya and the other four. Hence, the East African Community should strongly argue a case for Kenya that if Kenya should be entitled to the same S&D waiver as the other four countries.

4. The civil society activists in East Africa – including SEATINI have been pursuing and advocating to their governments to resist the hegemons in the WTO and those driving the multilateral trade agreements (MTAs), including EPA and AGOA as well as Bilateral Investment Treaties (BITs). We have found that most African trade negotiators based in Geneva know how the game is played, and have resisted the rule of the EU and the United States.  However, what they lack is support from their capitals.  Ministers of Trade and Industry, and even Heads of State, surrender to the pressure put on them by the imperial countries, and/or sucked into the illusion that the so-called “development aid” from the rich countries would help them develop their economies. It is time that those who are in the seat of power in East Africa should revisit their assumptions about aid and trade.  Aid and trade, in my vocabulary, are instruments of war in the hands of western imperialist countries against the South.

5. The global geopolitics is changing fast. The West is declining – and hence aggressive.  Africa should take advantage of the rise of China to balance the power of the Empire.  Of course, China is also pursuing its own interests, but an interesting paradox is that whilst the West warns African leaders to be cautious of Chinese trade and investments, Western countries are vying with one another to seek Chinese investments, especially European countries most affected by the Euro crisis.

6. Our leaders should be bold and innovative like Kim Jong Un of North Korea. He has finally succeeded in getting Trump to negotiate with him directly.  He played his cards well by going to China and getting President Xi’s support for his negotiating position in the “summit” meeting with Trump. [[vi]]

7. And finally, and this is the title of the paper, based on the above analysis and recommendations, in a situation where Rwanda has been pushed against the wall by Trump’s sanctions, the remaining four member states of the East African Community should take a common stand in solidarity with Rwanda against US trade sanctions against it – whatever it takes.  Starting Trump’s ultimatum to Rwanda there are still 60 days left for the East African Community to take a common stand to oblige Trump to withdraw the sanctions against Rwanda.

If Kim Jong Un can do it, so can we!

* Professor Yash Tandon is from Uganda and has worked at many different levels as an academic, a teacher, a political thinker, a rural development worker, a civil society activist, and an institution builder. He was involved in the democratic struggles in Uganda and was member of the interim Uganda Parliament (1979-80).