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There is something very disturbing happening in a number of developing countries, and what makes it so troubling is that it is being done under the auspices of charity.

Donated clothing has long been a way for people to get rid of their unwanted clothes and other household items, giving them to someone who needs them more.  Frequently these goods are dropped in a bin at the corner of a grocery store parking lot, or are picked up by a truck from your front door. Often done with the best of intentions, what happens next is where the story turns ugly.  The CBC had a well-written expose on the topic last winter so I hesitate to re-write their words, but in short, these goods are sold to exporters at a per-kg rate, packed into shipping containers heading back to Asia, and dropped in African, Central American and Asian markets along the way.

To properly describe why this trend is disturbing it must be examined on the micro and macro levels. From a macro (country) level perspective, bulk-clothing exports are a way of increasing a country’s exports and thus negating some of the effects of being a net importer (Canada runs a small trade deficit, aka imports more than it exports to the displeasure of many)

Here is a crash course in trade balances: trade surplus is good; trade deficit is bad.

Broadly (and very simplistically speaking) higher exports mean that there is a greater demand for a country’s goods abroad – read: economic growth. Higher imports mean more consumption, higher debt, less savings – read: economic stagnation/shrinkage.  Economists, bankers, and stock traders use the figures to evaluate the health of an economy –both domestically and internationally– and make determinations on investments, and interest rates.

As I am sure you have deduced, these signals can be easily manipulated. Namely, by exporting any excess product (at a value as high as possible) that a country may have to boost export figures and reduce a trade deficit.  There are (theoretically) very strict rules from the World Trade Organization (WTO) regulating this practice to protect against dumping and export price manipulation. However, as any Canadian knows (remember softwood lumber), WTO litigation can be costly, time-consuming, unfair, and likely out of reach for any developing nation.

Figuring out the export price per kg was something that was not readily available. However, through some deduction it would appear within the US it is roughly $1/kg (total exports in USD divided by total number of KGs exported). This figure may seem low. Yet when you consider the level of wastage that will never be sold because items are of such poor quality, or because supply far outweighs demand, this price is staggeringly high.

All of this says nothing about the diplomatic pressure put on smaller nations to accept unlimited imports, forcing nations to run massive trade deficits of their own (with knock-on effects that impact international loan rates, inflation, currency exchange, as well as the impact on local markets.) For example, Tanzania (a popular destination for used clothing) currently runs, on average, a $297.25 million dollar trade deficit every month. This is despite steadily increasing and promising export figures. Since 2006 they have not once carried a trade surplus, despite exports of many western consumer goods (tobacco and coffee among them).  This in part has resulted in interest rates of 12% (compared to 1% in Canada), an inflation rate of 7.6% (0.7% in Canada), and a debt to GDP ratio of 47.7. In addition, Tanzania suffers from an unemployment rate of nearly 11%, figure that likely doesn’t truly represent the number of unemployed and underemployed, or the roughly 1/3 of the population living below the poverty line (2002 estimate).

At a micro level these imports have a devastating effect on local clothing markets.  Prices for used clothes in large markets in East Africa (where my experience has been) vary from anywhere $0.20 for a t-shirt, to $2-$5 for a dress shirt. These prices represent a washed, perfectly maintained, designer shirt.  Where then does the local clothing maker fit into the equation? Likely she or he will abandon her business and open a store or booth to sell these imported clothes.  But what about the fabric maker?  Or the person who makes the dye for the fabric?  Or the farmer who grows the cotton for the fabric?

The supply chain is nearly endless and these individuals are all either out of a job, working in a different industry, or continuing their work and living in poverty.

A side effect that most don’t ever consider is the working conditions these clothing vendors work in, which would horrify many who think they are giving their clothing for charitable means.  In Kampala (where I currently live) the main market, Owino burns down so often it barely makes the news anymore (it has burnt down twice since I arrived in March).  This not only endangers people’s lives, but also burns thousands of dollars in merchandise, creating desperate individuals needing cash to restock their stalls. This doesn’t even touch on the issues of riots and fights that arise on a regular basis when vendors find themselves disenfranchised or being taken advantage of.

Understanding this, it is fairly evident how dangerous Canada’s exports of $192, 133, 000 (CND) in “worn clothing and other worn textile articles” is (2012 figure). Most of these clothes are dumped in foreign developing world economies (Tanzania representing 12.5%, Angola 10.9%, Kenya 10.3%, Pakistan 6.4%, India 6%, Ghana and Congo 5.8%). Americans tend to send much less of their $636 million exports of used clothes to Africa, instead shipping more to Central America. Tanzania is only their 6th most popular destination. However, for reference the US exports roughly the same amount to Tanzania as Canada despite an overall export market being 3.3 times larger. The combined total of this is a staggering $60 million (for ease I am considering equate parity between the USD and CND).

Even worse are stories like this one about Romney giving t-shirts away in Africa. It shows how out of touch western businesses are with how their actions impact global communities.  In places where an individual may own one or two shirts, flooding the market with free merchandise equates to taking money out of someone’s pocket and destroying their livelihoods.

We can critique the failures of development dollars, the role of corruption in underdevelopment, and how to make aid more effective till the cows come home but until we consider how our trade policies and practices impact these countries we will always be limited in what can be accomplished. There is a great blog post from Fraser Reilly-King in the Ottawa Citizen Development blog that argues that unfettered trade liberalization does not aid development. Rather, a certain amount of protectionism is necessary for countries to grow.  In this light, many developing countries have banned the importation of used clothes.  It’s time we stop punishing countries for protecting local markets, and stop dumping our unwanted items on other countries all the while calling it “free trade”.

But then again, don’t we always love to see our favorite Toronto Maple Leafs shirt when we travel abroad…

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*Because I know many will very legitimately question the alternative, or ask which charities are the best, my suggestion would be to ask the charity where the clothes go.  The Salvation Army for one sells its merchandise in its own stores.  Many homeless shelters or shelters for abused families donate these clothes directly needy individuals in your communities.  While not a charity, Value Village won’t accept materials it cannot sell, and is a good way to determine if something is worth donating in the first place (sometimes garbage is just garbage).  Generally speaking it is best to do some research, ask some questions and make sure that your actions are what you intended.

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