The Agoa dilemma standing in the way of Uganda-US trade 

However, now that there has been no solution regarding the lifting of the Agoa suspension and the threat of the 10 percent duty, Ugandan exports to the US are now facing an existential danger. 

“After we were removed from Agoa, we faced serious headwinds," he says, noting that with the suspension still holding and the 10 percent duty now hanging over Uganda, there is need to reassess the country’s trade strategy with the US. 

In the days leading to and after the suspension of Uganda from Agoa, many government officials had indicated that Uganda could take advantage of the suspension to find alternative markets in other countries. 

It is still the argument among some quarters, but Mr Rwabwogo, who has been involved in canvassing markets for Uganda’s exports for more than 10 years now, thinks otherwise because of the unique value that the US market offers Uganda and the global economy, and the need to consolidate existing markets. 

“In the last 40 years, I don’t know of any newly industrialised country, be it Turkey, Malaysia, China, or Japan, which has grown without a strong presence in the US market,” he argues in an interview, in which he also says he is worried that with the threat of a new 10 percent tariff regime slapped by the Trump administration on Ugandan exports to the US, will make the country’s exports extremely expensive and uncompetitive. 

Thus, he argues, Uganda needs to retain markets it currently has, as it struggles to find new ones. 

Through Agoa, Uganda, before the suspension, was exporting goods worth $8.2m, which was about 11 percent of the country’s total exports of $70.7m to the US. 

However, over a year after the country was suspended from Agoa, the conversation has shifted to finding new markets without providing a direction on how to win back opportunities under Agoa. 

In an interview last week requesting an update on the status of Agoa and the suspension by extension, Ms Susan Muhwezi, the Senior Presidential Advisor on Agoa and Trade, said she was in Malaysia “seeing what Uganda can export”. 

“Currently, I am in Malaysia seeing what Uganda can export, and it is a lot,” she said. 

But in pursuing other markets, in the opinion of Mr Rwabwogo “will not solve the problem” of the Agoa window through which Uganda was exporting selected goods under a preferential tariff regime to one of the most influential and uniquely important markets. 

For more than a year now, Uganda has not been eligible for trade benefits under Agoa, from which the country was suspended on January 1, 2024. 

Thus, Mr Rwabwogo says it is time government reassesses its export strategy to maintain its presence in the US market. 

“After we were removed from Agoa, we faced serious headwinds. Any disruption in a key market like the US shakes our economy. And while some talk about turning to China, the reality is that these moves take years of preparation,” he says. 

However, Uganda has maintained a footprint in the US through partnerships with cities such as Detroit, Atlanta, and Chicago, as well as finding independent representation in those markets, which is now being threatened by the 10 percent duty. 

It is not clear whether Uganda has mapped out a strategy to reverse the suspension from Agoa. 

But Ms Muhwezi says there are ongoing negotiations to reverse the suspensions,  noting that talks are, however, guided by “realism and determination to stand on [our] principles. 

“We are working closely with our Ambassador Robbie Kakonge in Washington (US) to see that Uganda is reinstated,” she says, before referencing President Museveni’s statement, in which, on April 22, he said: “We passed a law discouraging homosexuality, Mr [Joe] Biden (USA) removed us from [Agoa] list, the World Bank stopped giving us loans, but our economy grew by 6 percent. Now they have come back saying we are good people. So, we also say they are most welcome!” as the guide on matters related to Agoa. 

“… you saw our President speak .. we still stand by our principles, and I believe this Agoa suspension will be reversed since it was not done in good faith,” she says. 

Uganda, according to Ms Muhwezi currently exports goods that were previously exported under Agoa through the Generalised System of Preferences, which subjects such goods to a prescribed duty. 

However, it is the subject of duty that Mr Rwabwogo wants government to resolve because exports have become extremely expensive. 

“Without Agoa, even the few products we export to the US are now more expensive. This affects everyone in the value chain from producers to consumers,” he says, noting that historic strides in value addition, such as roasted Ugandan coffee exported to US, could be derailed if no solution is provided. 

Mr Rwabwogo also points out that the 10 percent duty will make Ugandan goods more expensive, with a kilogramme of coffee, which now costs about $15, increasing by $1.5 or more. 

This, he says, exposes Uganda’s coffee to a difficult choice with cheaper alternatives from Colombia or Brazil, which have geographic and cost advantages, presenting serious competition.

Not alone

However, Uganda is not alone. Vietnam, which is the world’s largest producer of Robusta coffee, faces tariffs as high as 46 percent. 

But still, Mr Rwabwogo cautions that Uganda will struggle to compete even on an equal tariff footing unless the country improves its product profiles, branding, and marketing efforts.

He also notes that access to the US market offers Uganda an opportunity to attract high-level technology and investment, as well as help the country build its business capacity to attract quality foreign direct investment. 

“When Amazon or Walmart source bananas or coffee from Uganda, it signals to the world that this is a viable trade partner. That kind of validation brings in competition, investors, and long-term growth. This is exactly what we need to reach the President’s vision of tenfold economic growth,” he says. 

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