TRALAC - Trade Law Centre

Agoa's Tricky Side

Thursday, 07 November 2002

Source: New Vision (Kampala)

The gathering expectations surrounding AGOA, are leading Ugandan exporters into the unfortunate position of placing too many eggs in one basket.

The United States government's offer of quota free/duty free access to its domestic market under the African Growth and Opportunity Act (AGOA)is very welcome. Thanks in part to former President Bill Clinton's efforts and that of the Black caucus in the US Congress.

But the pitfalls before Uganda can fully exploit this initiative are being underestimated. Especially for fresh food produce.

Although Uganda is one of the 34 benefiting countries, its exported produce will receive no preferential treatment before entry to the US market.

Apparently too many local business people are not aware that their fresh fruits and vegetables have to satisfy the extremely stringent conditions of the United States Department of Agriculture/Animal and Plant Health Inspection Service (APHIS), before acceptance.

Already, one Ugandan businesswoman who recently exported 400 kilogrammes of pineapples to America without going through the APHIS quarantine system, had to have them incinerated at her own expense.

Steven Humphreys the High Value Crop Production and Marketing Advisor with the USAID funded Uganda's Investment in Developing Export Agriculture (IDEA) Project told Business Vision in an exclusive interview that it will take Uganda a minimum of three years and maximum of 15 years and more, to gain export clearance for its fresh produce from APHIS.

"People thought AGOA was carte blanche for exporting to the USA but they are now confused. Any fresh produce going to the American market has to go through the APHIS body. Requesting phytosanitary clearance from APHIS is no simple task and usually takes many years to obtain," Humphreys said.

"First the government of the requesting country has to submit details reports to APHIS on all known pests and diseases of that crop, after which a Pest Risk Analysis (PRA) is carried out. If this goes smoothly, it usually takes around three years during which time APHIS officials may visit the country, and carry out an initial survey of that particular crop over the whole country as well as thoroughly investigating the local phytosanitary services. Once APHIS are satisfied with this initial survey, they will then focus on one or more pests of particular quarantine importance such as the fruit fly," Humphreys said.

He gave an example of Australia,

which was granted permission to export fresh produce to the US after 30 years. Even though it is an agriculturally advanced country.

For China, that has for several years been exporting "almost everything to the US except apples" got an APHIS license after 15 years.

At present APHIS has approved 19 crops for export from Uganda. However, most of them are very minor crops of questionable commercial significance except groundnuts where Uganda cannot claim any competitive advantage.

Ugandan exporters have requested the Ministry of Agriculture, Animal Industries and Fisheries (MAAIF) to request clearance for a further 13 crops. Of these 5 including avocado, pineapples, apple banana, matooke and passion fruits were submitted to APHIS in July 2002.The remaining eight on the wish list are papaya, onions, garlic,mangoes, oranges, bugoya, tomatoes and Irish potatoes.

IDEA's Chief of Party, Clive Drew, said it was not just the implications involved in obtaining phytosanitary clearance that is a major constraint, but economic costs in exporting to the US market would not be viable to the Ugandan exporter. One snag is the distance.

"We are too far in terms of distance. Most of the products grown here are grown in Mexico. Meaning that they can be driven by truck from there to the United States of America. For us here, being landlocked and the fact that we have no direct routes to the United States of America, means our mangoes will stand no competitive advantage in America," Drew said.

"An exporter will have to pay at least US$3 for every exported kilo. That means that his mango will sell at more than its wholesale price and you would not even be recovering the airfreight costs let alone the packaging costs and in America, such things are sold cheaply," Drew said further.

He advised Ugandan exporters to concentrate on our traditional markets in Europe where they have a competitive advantage.

"They are closer and the price you are paid for the commodity is almost the same you would get in America. Let us look at Europe as our primary market," advised Drew.

He said vanilla and papain are the only products Uganda is profitably selling in the United States of America. These are allowed duty free into the American market and have been selling there even before AGOA was introduced.

"America is a huge market with a large number of wealthy consumers.However its market has been attractive to every country. It has a huge agricultural industry which it has to protect from cross infection from foreign diseases. It also has a large number of consumers to protect," said Drew.

He said intending exporters should "first do their sums or come to us for advice on what is and what is not possible."