TRALAC - Trade Law Centre

Trade war brews between Uganda and Nestle

Friday, 07 June 2002

Source: Business Report

Durban- Ugandan President Yoweri Museveni has declared a trade war on one of the world's leading coffee producers, Nestle.

He told delegates at the World Economic Forum (WEF) Africa summit in Durban his country was tired of not benefiting from its status as the fourth largest coffee-bean producer in the world.

"We are the fourth largest in the world... but we get very little money from that production."

Companies such as Nestle had decided to build their factories in Europe, and were not prepared to relocate to the central African state.

Museveni

said that when he had approached representatives from the company at a recent trade summit about this, the reaction was "too bad for you".

"Of course, we are not going to accept this, so what we are going to do is arrange a trade war with Nestle."

The country planned to produce its own coffee and sell it directly into the United States market, thus taking advantage of the African Growth and Opportunities Act (AGOA), he said.

The act allows for duty-free imports into the US of some 1800 products from African economies.

"We are going to use this to fight Nestle, to produce from Africa and we are going to compete with them in the American market by dealing directly with the consumers.

"And, I must say to the American government, this (AGOA) is the first good action that they have done in the last 50 years," the Ugandan President added.

Museveni said in 1996 Uganda produced two million bags of coffee beans, earning about $500-million. It had since expanded production to about four million bags but was now only generating $100-million. The world volume of trade in the product, however, was about $25-billion, he argued. - Sapa