Rwanda Agoa exit signals era of reciprocal trading

What you need to know:

It is important that both African governments and private sector begin to address the imminent era of non-reciprocity.

Last week, the Trump administration announced the withdrawal of benefits for Rwanda to export apparel duty-free to the US under the African Growth and Opportunity Act (Agoa). This is largely seen as a response to Kigali’s decision to ban second-hand clothes in its market.

However, there is a larger trend at play here. We are in an era of trade wars and serious global disagreements as to what is deemed fair, or not, in trade practice and agreements.

Economic nationalism has found a new lifeline. The nationalism here refers to a situation in which a country tries to protect its own economy by reducing, for example, the number of imports from other countries.

The largest proponent is of course the US, where Trump has made clear that his America First policy means the introduction of targeted protective trade measures against countries seen to be taking advantage of the US ‘generosity’ in trade.

However, the US is not alone — there is upsurge of nationalistic pride in the Global North aimed at safeguarding national economic sovereignty. The Harvard Gazette makes the point that Trump’s election and Britain’s exit from the European Union are very encouraging to nationalist groups across Europe, because for the first time, there is a shift away from international cooperation, sharing sovereignty, to addressing the sovereign rights of specific countries.

This is exemplified in the rise of Marine Le Pen and other European nationalist party figures in the Netherlands, Hungary and Greece who touted Trump’s win as a positive sign of things to come.

Intermingled with nationalism is anti-globalisation and anti-immigration policies, and economic nationalism that place the economic welfare of the country above all, especially above African nations.

Washington and Europe seem tired of ‘babying’ the continent and being ‘soft’ on sovereign African states. They are acutely aware of the problems and suffering in their own countries and communities, and wonder why these issues remain unaddressed while their governments give Africa generous aid and trade packages.

Africa needs to read the signs and prepare for the future.

In an era of growing economic nationalism, Africa can expect fewer trade deals that are non-reciprocal where Africa gets access to massive external markets while the other party does not benefit from penetration into African markets.

This is not to say there is no concern with the economic nationalist movements.

A KMPG survey revealed that two-thirds of UK CEOs are most worried about the growing use of protectionism, which includes measures such as tariffs and quotas on imports and view populist politics as the greatest threat to growth.

READ: Trump to suspend duty-free benefit for Rwanda clothing under Agoa

That aside, Africa must read the signs and note that the era of non-reciprocity is ending.

Sadly, and frankly, this trend is emerging during a time when Africa is not prepared either in terms robust trade negotiation teams nor industrialised economic structures that can compete with foreign nations demanding access to African markets.

This movement risks relegating Africa to the eternal provider of raw materials as foreign nations push manufactured goods into African markets.

It is important that both African governments and private sector begin to address the imminent era of non-reciprocity.