Uganda Coffee

ARE EU TRADE RULES HOLDING BACK UGANDA COFFEE?

This article has been updated with new information which we received from several sources. The wording below the bold text is the original article.

Since writing this article, we’ve learned that although, when we did our initial research, we could not find Uganda listed under the General Systems of Preferences (GSP), they are listed separately under the ‘Everything But Arms’ (EBA) treaty. Under the EBA, Uganda in fact pays 0% tariff for all coffee exports. This makes Rwabwogo’s argument look either very ill-informed, or given his position as a Senior Agricultural Advisor to the President of Uganda, more likely that he’s purposefully spreading misinformation.

It’s difficult to parse the intent, but we suspect the article, followed by Uganda’s Media Communication of the reasons they left the ICO, are connected, and it makes us wonder about the legitimacy of what was claimed in that Media Release. Politicians, will I suppose play politics, but when they are involved in campaigns to purposefully mislead, it only serves to undermine their own status when the lie is discovered. Whatever their motives, the ‘Optics’ as politicians are fond of saying don’t look good for them, and more significantly detracts the conversation from important issues of trade and farmer livelihoods.

Odrek Rwabwogo, who is a senior advisor to the Ugandan President on exports and enterprise building for young people, as well as an agricultural entrepreneur,  wrote a combative article in African Business last week.

Rwabwogo argues that the trading rules between the EU and African countries are unfair and represent ‘bullying’  by the EU and in which he says.

“It is difficult to distinguish such relationships from the colonial-era protectorates of the past.”

Rwabwogo picks on coffee as one of the best examples. 

The EU slaps Africa with a punishing 7.5% tariff charge on processed, roasted coffee, but not unroasted, raw green beans. Naturally, this deters our coffee producers from investing in the technology to process the commodity while bullying them into exporting it raw.”

Odrek Rwabwogo

Mr Rwabwogo has a point about the impact this has on restraining investment in developing countries, and this is not a new argument.  However, to label it as colonialism or infer racist motives is melodrama that may pander to the crowds at home, but does little to actually inspire the changes he says they need.

Worldwide trade tensions are not a unique problem to African countries. In January 2020, the US and the EU were at loggerheads of trade rules, and the coffee industry was dragged into the fight. Roasted coffee imported from the EU during 2018 totaled $171 million.  The tariffs discussed at the time could have added 10-25% to the cost, or even 100% in some cases, prompting Bill Murray, President of the National Coffee Association to write to politicians about his concerns.

During Brexit negotiations the British Coffee Association was also concerned about the cost to British industry of a no-deal Brexit.  Applying WTO rules would hurt Britain’s coffee industry they wrote, citing the need for a trading arrangement.

Intracen has a  page that summarises the EU’s tariff’s here and the EU’s 7.5% tax on roasted coffee looks modest compared to Russia’s 10%, or Japan’s 20%.

Uganda’s imports to the EU in 2018 represented 5.4% of the blocs total coffee imports. Brazil, which has been an independent country since 1822, exported 900,193 tonnes of green coffee in 2018  to the EU or 30.1% of total imports, and paid the same tariff as Uganda.

It is difficult to distinguish such relationships from the colonial-era protectorates of the past.

Global trade arrangements are notoriously complex, and it’s right to ask the question of whether they work and if they are contributing to the EU’s stated desired policy outcome, but this is not the right way to go about it.

So I put it to Mr Rwabwogo that instead of framing the argument as a form of economic colonialism,  they should get on with building a better infrastructure and tapping new markets if they don’t like the terms with the EU.

They could enact reform internally while making a reasoned argument for improved tariffs. But simply lamenting ‘it’s not our fault’,  is a poor strategy with little hope of improving the outcome for the coffee industry.

In fact, Mr Rwabwogo acknowledged that Uganda could have done more to invest and modernise their agricultural practices in the 60 years since they became independent, and cites recent success at the Dubai Expo, where $650m of investment was secured in just 2 weeks. Bravo – do more of that!

An improvement of Good Agricultural Practices is another good start, and as we wrote last week, the Hanns Neumann Stiftun organisation, recently concluded a 2 year programme.

What about considering tax incentives for local roasters, and stimulating interest in the internal market for their own products? Brazil and Vietnam, the two largest exporters of green beans to the EU both have an active domestic roasting market.

The focus for Uganda should be on taking ownership to build a better future, not bringing up the ghosts of the past to excuse current shortcomings.

Photo by CGIAR Climate https://www.flickr.com/photos/cgiarclimate/

Author

  • Nick Baskett

    organisation:

    Nick Baskett is the editor in Chief at Bartalks. He holds a diploma from the Financial Times as a Non Executive Director and works as a consultant across multiple industries. Nick has owned multiple businesses, including an award-winning restaurant and coffee shop in North Macedonia.

Leave a Comment

Your email address will not be published. Required fields are marked *

en_GBEnglish