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2017 Annual and out-of-cycle AGOA eligibility reviews: Transcripts from the Public Hearings

2017 Annual and out-of-cycle AGOA eligibility reviews: Transcripts from the Public Hearings

31 Aug 2017

The Trade Preferences Extension Act (TPEA) of 2015, which extended the AGOA trade preference program through 2025, requires that the Administration annually publish a Federal Register notice announcing the Country Eligibility Review and a request for public comment whether beneficiary sub-Saharan African countries are meeting AGOA’s eligibility requirements.

The TPEA also requires that the AGOA Subcommittee of the Trade Policy Staff Committee (TPSC) hold a public hearing to receive testimony regarding the eligibility of countries under AGOA. This was the purpose of the hearing on August 23, 2017, which was also announced in the Federal Register notice published on July 11, 2017.

On June 20, 2017, the Administration published a Federal Register notice announcing the initiation of an out-of-cycle review to determine whether Rwanda, Tanzania, and Uganda are meeting the AGOA eligibility requirements in response to a petition filed by the Secondary Materials and Recycled Textiles Association, or SMART.

Rwanda, Tanzania, and Uganda are also subject to the AGOA Annual Review, to determine whether they are meeting all of the AGOA eligibility requirements and not only those raised by SMART in its petition. The public hearing for the out-of-cycle review of the three countries was held on July 13, 2017.


Annual Review of the eligibility of the Sub-Saharan African countries to receive the 2018 benefits of the AGOA

Oral testimony by Ms. Celeste Drake, American Federation of Labor & Congress of Industrial Organizations (AFL-CIO)

I thank you for your consideration of the AFL-CIO’s petitions regarding Swaziland’s and Mauritania’s failure to establish or make continual progress toward establishing internationally recognized worker rights pursuant to Section 3701(1)(F) of the United States Code and for the opportunity to testify today.

We note that progress has been made in Swaziland since we initially filed our petition, including the registration of TUCOSWA, a union federation, the release of jailed union activists, and amendments to the labor law. This is very clear evidence that AGOA conditionality, once utilized, can play a very important role in ensuring respect for workers’ rights.

Additionally, after we filed our pre-hearing brief, Parliament passed and the King approved revisions to the Pubic Order Act and the Suppression of Terrorism Act., 

As to these laws, we understand that improvements were made that responded to some of the unions’ concerns. However, since neither the AFL-CIO nor our partners in Swaziland have had an opportunity to actually review the new legislation, we will reserve judgment on them until we can review them. We will provide our analysis on these laws in our post-hearing brief, and we may accordingly revisit our ultimate recommendation regarding the reinstatement of AGOA benefits for Swaziland.

Today, however, I would like to provide a brief update on Swazi laws and practices that remain inconsistent with internationally recognized worker rights.

In 2014, President Obama withdrew Swaziland’s AGOA eligibility because, despite extensive consultation and engagement, Swaziland had failed to demonstrate progress toward protecting freedom of association and the right to organize.

“Of particular concern,” wrote the United States Trade Representative’s Office at the time, was “Swaziland’s use of security forces and arbitrary arrests to stifle peaceful demonstrations.”

Unfortunately, despite other recent legislation, Swaziland’s Public Service Bill of 2015 remains out of compliance with international norms. The law continues to interfere with the right of working people to organize and act together to defend their interests, and the government had ignored TUCOSWA’s recommendations to fix it.

Moreover, the Government of Swaziland continues to brutalize workers and interfere with legitimate trade union activities. In April 2016, the police commissioner issued a statement urging the police to kill trade unionists on sight. This vicious directive cannot be dismissed as mere hyperbole given that the police have apparently taken the commissioner’s anti-worker attitude to heart.

In August and September of 2016, police attacked striking workers at Swaziland plantations, forcing 30 to seek medical treatment, including 8 who has suffered fractured bones. In October 2016, police assaulted union activist Samkelisiwe Gladys Matsebula. The assault included placing a plastic bag over her head, an act which under U.S. law would be treated as attempted murder, and it required her eventual hospitalization. Whether the police were actually trying to end her life or just trying to scare her into thinking so is immaterial. The terror inflicted is the same.

These events demonstrate an utter lack of respect for internationally recognized worker rights, not progress toward establishing them.

Further, it is clear and alarming evidence that the Code of Good Practice on Protest and Industrial Action is not yet being fully respected by the authorities. It is clear that frontline police forces are not appropriately informed, trained, or monitored for use of best practices.

Apart from perpetrating violence against working people, the Swazi government also continues to erect barriers to worker organization. In June 2016, the Commissioner of Labor interfered with the recognition of the Amalgamated Trade Unions of Swaziland by urging an employer, Swaziland Meat Industries, in writing not to recognize the union.

In April of this year, the commissioner doubled down on his effort by meeting with some ATUSWA members, urging them to leave ATUSWA in order to revive a now defunct union.

The government has also supported an apparently yellow union, FESWATU, in an apparent effort to weaken and marginalize TUCOSWA. The union, mostly active in the timber and textile sectors, has grown not by member organizing but largely through deals cut directly with employers.

The union’s publications make it clear that it supports the monarchy and will not cause problems for employers.

Regardless of your determination of AGOA benefits, we urge the U.S. government to continue engagement with Swaziland through monitoring and assistance as it has yet to demonstrate compliance with the rights to freedom of association and collective bargaining in practice.


Public Hearing to review the Republic of Rwanda’s, United Republic of Tanzania’s, and Republic of Uganda’s eligibility to receive the benefits of the AGOA

Introduction by Ms. Constance Hamilton, Assistant U.S. Trade Representative for African Affairs and Chair of the AGOA Implementation Subcommittee

On March 21, 2017, the Secondary Materials and Recycled Textiles Association, SMART, submitted a petition to USTR requesting an out-of-cycle review to determine whether Kenya, Rwanda, Tanzania, and Uganda are meeting the AGOA eligibility criteria.

The SMART petition asserts that a March 12, 2016 decision by the East African Community which includes these countries to phase in a ban on imports of used clothing and footwear is imposing significant economic hardship on the U.S. used clothing industry and is in violation of the AGOA eligibility criteria of making progress to establishing a market-based economy and eliminating barriers to U.S. trade and investment.

In response to the SMART petition, USTR determined that an out-of-cycle review of Kenya’s AGOA eligibility is not warranted at this time due to recent actions Kenya has taken, which include reversing tariff increases effective July 1, 2017, and committing not to ban imports of used clothing.

We will continue to closely monitor Kenya’s actions to ensure that Kenya follows through on its commitments.

With respect to Rwanda, Tanzania, and Uganda, USTR determined that there are exceptional circumstances warranting an out-of-cycle review of these countries’ AGOA eligibility, which is the subject of today’s hearing. Notably, despite robust engagement to address concerns related to the decision to phase in a ban on imports of used clothing since it was first proposed in 2015 and memorialized in 2016, Rwanda, Tanzania, and Uganda continue to implement the ban, which, as I have noted, SMART contends is having a negative impact on U.S. trade and investment.

In today’s testimony we will hear that the partner states of the East African Community are committed to the U.S.-EAC Trade and Investment Partnership, where matters such as those subject to today’s hearing should be discussed and resolved.

We agree. We note that these matters have been discussed at length within the context of the Trade and Investment Partnership and have not been resolved, which is why SMART filed its petition and why we are holding this hearing today.

This is the first petition received requesting an AGOA out-of-cycle review. This hearing is being held to gather information regarding the issues raised in the petition.

Oral testimony by Hon. Amelia Kyambadde, Minister of Trade, Industry and Cooperatives of Uganda and Chair of the Council of Ministers in EAC

As you are all aware, East African Community attaches great importance to the trade and investment relations with the U.S. as reflected in the Trade and Investment Framework Agreement and AGOA that we have been negotiating for some time.

The Trade and Investment Framework has been negotiated between U.S. and East Africa for some time, and we are in the final stages. And we are committed. We are pledged to continue nurturing these initiatives, including adhering to the objectives stipulated under those schemes which would lead to mutually beneficial, sustainable development outcomes for our country and also for U.S.

EAC is a regional economic community of 169 million people currently operating a common market with a harmonized trade regime. I would like to state our response to this petition.

The Community as a key holder wishes to state that industrialization is a strategic pillar of EAC integration. And that is why the heads of state decided that textiles and footwear manufacturing is a priority. The decision did not slap a ban on the importation of textiles but is an initiative to promote the textile and footwear industry while progressively phasing out used textiles on a gradual basis.

The common external tariff is compliant with the WTO requirements in regard to tariff binding, and the two trade policy reviews undertaken by the WTO in 2006 and 2012 fully endorsed the EAC trade regime as satisfactory and compatible with the World Trade Organization. The rate on used clothing was thereafter revised downwards to 35 percent or 0.20 dollars after realizing that the rise of the rate would negatively impact on the garment sector in the region.

It should be noted that the adoption of specific rate alternative, the ad valorem rate, was to address the challenges of valuation of used clothing. The review of the specific duty threshold from $0.20 to 0.40 per kilogram while maintaining the 35 percent was not a tariff increment but a realignment made after 11 years to reflect the realistic landing price of used clothing to be compatible with the ad valorem rate of 35 percent.

The review also covered chicken and rice. It is not only used clothing. Chicken and rice where the rates were revised from 100 percent to $200 per metric ton, to 100 percent or $450 per metric ton, and from 75 percent or 200 per metric ton, to 75 percent or $335 per metric ton respectively because we wanted to promote our industry. Other items such as cement, prime coats, and matchboxes were dropped from the sensitive list.

So it does not only apply to secondhand clothes. The sensitive rate on worn clothing is not discriminatory to imports from USA but applies to all imports of used clothing from all countries globally, globally. EAC is desirous of job creation that will arise from revamping its textile footwear manufacturing value chain and income growth of the people involved in cotton growing, ginning, weaving, garment manufacturing, leather tanning, shoemaking, and retail business. That’s the value chain. And all these are jobs. The fear of environmental impact caused by the discarding of used clothing in U.S. is equally concern of EAC since eventually the used clothes will also be discarded after use in the East African Community.

East African Community has export promotion schemes where tax incentives are accorded to manufacturers for export, particularly apparel and garments for AGOA. Development of the local textile industry do not undermine the market-based economy stipulated under AGOA as it will boost more production for export and local market that will see EAC countries enhance its export values to U.S.

East African Community countries import a range of goods from U.S., including capital goods, plants and machinery, agrochemicals, aircrafts and parts, petroleum equipment, and these products do not attract duty. It is a thriving business of the importation of new garments and apparel into East Africa from U.S. and businesswomen and other business communities. All EAC countries have established open market-based economies as provided in the treaty. The prohibition of importation of used undergarments in the EAC is for hygienic purposes, and we do not allow it. We have to ban those underwear.

A review is being undertaken of the tariff structure and rates to align it to the economic environment. This review would cover all products, including used clothing. Stakeholders are being consulted, including those involved in the trade of used clothing. The review will be completed in September 2017. But I must state that EAC is committed, fully committed to the ongoing trade and investment partnership where such matters should be discussed and resolved.

Source Regulations.gov
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Date 31 Aug 2017
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