The joint venture will test the market and give teeth to Uganda's efforts to reduce the tariff regime, since the Chinese partner will also desire profitability. Kampala is negotiating with Beijing to reduce current Chinese import tax rates that range as high as 37 percent to 52 percent.
Although the trade battle is an important part of Uganda's efforts to revive its struggling economy, it also may benefit the United States. For instance, Starbucks is now seeking a Chinese partner in order to open a store in China's southern Guangdong province, which is one of the richest in the country and has a population of 70 million. China's coffee consumption is skyrocketing, Bloomberg reported in October. Starbucks already has stores in Beijing and Hong Kong, and getting coffee beans into China more cheaply could boost the company's profits.
Uganda's trade negotiations with China will serve as a test case for the U.S. tactic. If Washington can force China to concede a reduction in trade tariffs on coffee beans, it be an important victory for the U.S.
China enjoys an extremely advantageous position, since it can exploit its attractiveness as one of the world's largest markets to boost revenue. With the global coffee market saturated, competition among producers -- including Brazil, Colombia, Cote d'Ivoire, Ethiopia, Guatemala, Indonesia, India, Mexico, Uganda and Vietnam - trying to break into new markets is stiff, and this gives buyers the advantage. But China relies on its close relationship with many Third World countries to sell goods that aren't competitive in more advanced economies. Denying market access to many of the world's leading coffee producers could undercut China's self-proclaimed position as the leader of the Third World.
Although the trade battle is an important part of Uganda's efforts to revive its struggling economy, it also may benefit the United States. For instance, Starbucks is now seeking a Chinese partner in order to open a store in China's southern Guangdong province, which is one of the richest in the country and has a population of 70 million. China's coffee consumption is skyrocketing, Bloomberg reported in October. Starbucks already has stores in Beijing and Hong Kong, and getting coffee beans into China more cheaply could boost the company's profits.
Uganda's trade negotiations with China will serve as a test case for the U.S. tactic. If Washington can force China to concede a reduction in trade tariffs on coffee beans, it be an important victory for the U.S.
China enjoys an extremely advantageous position, since it can exploit its attractiveness as one of the world's largest markets to boost revenue. With the global coffee market saturated, competition among producers -- including Brazil, Colombia, Cote d'Ivoire, Ethiopia, Guatemala, Indonesia, India, Mexico, Uganda and Vietnam - trying to break into new markets is stiff, and this gives buyers the advantage. But China relies on its close relationship with many Third World countries to sell goods that aren't competitive in more advanced economies. Denying market access to many of the world's leading coffee producers could undercut China's self-proclaimed position as the leader of the Third World.