Uganda: Responding to the US threat to remove AGOA preferences

Policy brief Firms and Trade

  • The second-hand clothing ban in the East African Community (EAC) is a policy aimed at spurring the development of the local EAC apparel industry. However, the US government has threatened to remove trade preferences that are provided to EAC countries if they do not reverse the tariff increases on second-hand clothing imports.
  • Kenya decided to unilaterally revert to the pre-2016 tariffs which poses a challenge for the collective EAC position.
  • This brief evaluates the options available to Uganda and the potential impacts of reverting to pre-2016 tariffs and not rescinding the ban on second-hand clothing.
  • The researchers conclude that Uganda has little to gain but much potentially to lose by proceeding with their increased tariffs and eventual second-hand clothing import ban due to the strong incentives for apparel firms to relocate to Kenya.
  • The researchers recommend that Uganda and other EAC countries follow the lead of Kenya in dealing with the US as this would allow time for member countries to agree a medium-term strategy for developing the apparel industry while maintaining preferential access to US markets.