Tag: European Union

US tariffs on Chinese EVs

Posted on By Sino Uganda Research Centre

By Talwana Ernest

On October 4th, 2024, the European Union, in line with US tariffs on Chinese EVs, voted to place tariffs on the same. This is a growing trend courtesy of the perceived threat of Chinese EVs disrupting Western markets and creating stiff competition with Western manufacturers who lack the production capacity of domestic Chinese car manufacturers.

However, these tariffs are par on course with growing western anxiety towards the behemoth that is Chinese manufacturing which has proven an unshakable force against growing Western tariffs. Outside markets like the EU and North America, Chinese EVs have popularity in larger economies in South America including nations like Brazil, Chile and Argentina, as well as a loyal middle-class customer clientele in South East Asia and mainland China itself.

In Europe as well, the voting pattern of EU members shows that not everyone agrees with imposed tariffs, Nations like Luxembourg, Sweden, Portugal and Spain abstained from the vote to impose tariffs while Germany and Hungary voted outright against imposing tariffs on Chinese EVs. It should be noted that Germany has a strong relationship with China in the automotive sector, especially due to its reliance on Chinese materials and Volkswagen, a leading German car manufacturer having a huge shareholding from China. Equally, BYD ( a Chinese EV carmaker) is establishing a plant in Hungary, which would provide plenty of jobs to the Central European nation that is seeking to limit emigration to the West by its younger populace.

Western consumers are equally receptive to Chinese EVs due to their relatively cheaper prices. Norway, a non-EU member but a member of the EEA is a particularly friendly market for Chinese EVs as the Norwegian government seeks to transition towards green mobility which includes electric and hybrid vehicles.

Generally, Western attitudes over the past decade have been towards the transition to cleaner and smarter energy which has less toll on the environment. This has spurred on a whole industry of smart technologies and vehicles in particular in an effort to combat climate change. Majority of Western car manufacturers have taken on this task with the creation of hybrid vehicle options. However, as aforementioned, industrial capacity in the West pales in comparison to Chinese industrial might which has near quadrupled Western European Industrial Capacity.

The above-mentioned tariffs can thus be perceived as a creature of American trade conflicts with an emerging power in the East. China presents as a power which can spearhead the energy transition which has the potential to leave majority of the West behind in its wake. This is a product of both Chinese output as mentioned and a coherent Chinese government policy to promote Chinese industry to both its neighborhood in South East Asia and other industrialised high income states ranging from Australasia to the Americas.

American influenced sanctions therefore can be perceived as a means to stall the Chinese wave while building internal capacity to match Chinese output.

However, this does not seem to scupper Chinese innovation, which is growing stronger and finding ways to circumvent American and EU pressure. With BYD building plants in Mexico and Brazil, there is an effort to work around tariffs placed by Western actors. Equally, China filed a complaint with the WTO questioning the parameters by which the EU determined tariffs on Chinese EVs and questioning whether any transparency existed in setting said tariffs. Equally, in a circular circulated to EU members and Turkey, China seeks to query whether said subsidies are not discriminatory towards Chinese products which, according to vehicle reviewers, are produced to the same standards as Western vehicles. The Financial Times on 2nd March 2024 reported that Chinese EVs have been found to be more reliable than US and European EVs. Their charging times are often faster and display more durability. As evidenced by market preferences.

In such an environment, it is clear that Chinese manufacturers and the Chinese government are keeping themselves adaptable in the face of the West’s anxiety concerning Chinese innovation and industrial might. Western consumers are equally receptive to Chinese EVs, which underlines the futility of Western governments’ resistance to Chinese vehicles entering their markets.

In conclusion, it seems more than likely that this chapter of Chinese-Western industrial relations is not closed, as there are more than likely plenty of sub-plots unfolding on both sides of the aisle. China equally seems unfazed in the face of impediments from the West, choosing to push on with her objectives despite hurdles presented by Western governments. The next half of this decade will determine whether the above measures will yield much or, if the West is delaying the inevitable.

The writer is a Research Fellow at the Development Watch Center.

Green Beans, Red Tape: EU Climate laws may have unintended effects on Ugandan Coffee Farmers

Posted on By Sino Uganda Research Centre

By Shemei Ndawula

For the past three years the European Union has been drafting and polishing a set of legislations that will potentially have great impact on the lives of many Ugandan coffee farmers once they come into effect at the end of this year. As a country, we have relied on Coffee as our major export cash crop for decades. Right from colonial times when Uganda boosted of a surplus budget most of the national revenue came from agricultural exports of coffee and Cotton. At the moment we export close to 1 billion USD worth of coffee annually mainly to the European markets (Italy alone takes up to 33% of coffee exports).

The legislation, a result of climate change campaigns seeks to implement a stringent import cap on goods like coffee, cloves, rubber from non European countries if their importers can not prove that the land on which they are grown is a product of deforestation. This is definitely a good idea because the rate of deforestation across the globe is worrying. Uganda; thrust to the forefront of the war on climate change because of our location along the equator needs to take more intentional steps towards mitigating widespread deforestation. We are already experiencing record breaking levels of water rising in Lake Victoria as well as flash floods and mud slides in different parts of the country.

However, what this legislation misses out on is that most coffee growers in Uganda are smallholder farmers who are already struggling to meet the quality controls in regards to bean quality and organic farming practices. It will be impossible for the same farmers to put in place the necessary tracking mechanisms to prove that their farmlands comply with the legislation and convince the European Union that they meet the required standards. Needless to say that many of the smallholder farmers are either semiliterate or illiterate and will require a significant amount of time for training and adjustment of their farming practices to fully comprehend the purpose and subject of the legislation let alone implement them.

In fact, many of the prominent coffee producing regions like the Bugisu sub-region and the Kasese region are surrounded by forest reserves with the farmlands coexisting within the trees. In many ways this is a standard farming practice because the root system of the trees holds the soil so that the fertilisers used in the coffee are not swept away by the rain and the fallen foliage from the trees acts as mulch. My family has had a similar agricultural scheme for decades  at our farm in Kasangati(in the outskirts of Kampala) where the coffee is grown alongside timber trees.

It is imperative for the European governments to understand that the most likely scenario that will play out when the legislation comes into effect may not be increased compliance in Africa but rather most multinational coffee exporters will shift their focus to more developed countries like Brazil which can comply with the necessary red tape.  This can spur a domino effect with coffee farmers when deprived of the coffee market resorting to cutting down the trees on the farms to cover their daily needs.

As a profession relying heavily on nature, Ugandan and African farmers have got all the reasons to lead the war on climate change. Our agricultural systems are heavily dependent on weather patterns and many farmers are one or two bad weather seasons from a crisis.

Additionally, setting up these traceability mechanisms will also come with unprecedented compliance costs to provide verifiable proof that the coffee supplied to the European market comes from none deforested areas. This will involve adopting traceability systems, certification processes and quite possibly new farming methods.

The European Union may be better served by simply equipping the farmers with the necessary skills and technology to implement sustainable farming practices. European research has made leaps and bounds in sustainable high impact farming and technological sharing between the two countries would be a huge boon for the coffee sector.

This has been done before by the Chinese in Uganda who set up a large rice growing scheme in Lukaya along the Lwera stretch to set a practical farming standard for Ugandan rice growers to emulate. In the end, Ugandan farmers earn better from their agricultural investment while the Chinese import better quality grain for their population.

The EU’s legislation banning coffee imports from deforested areas is a commendable step towards global environmental sustainability. It unfortunately however;  presents significant challenges for Ugandan coffee farmers  who must navigate increased compliance costs, potential loss of market access, and broader socio-economic implications. To address these concerns, the European Union countries need to implement a multifaceted approach involving international aid, government support, and market diversification strategies. If together we can foster sustainable agricultural practices and provide the  necessary support, it is possible to mitigate the adverse impacts on Ugandan farmers and ensure a more resilient and sustainable future for the coffee industry.

Shemei Ndawula is a senior research fellow at the Development Watch Centre.