COMMODITIES: Brazil Opposes EU Coffee Tariffs

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Aug 23 1996 (IPS) - The European policy of tariff relief on coffee from the Andean and Central American nations to encourage the substitution of coca plantations has brought a wave of protests from Brazil.

The Brazilian Instant Coffee Industry Association (Abics) wants the government to raise the issue of what it sees as trade discrimination with the World Trade Organisation (WTO), as its product is charged a tariff of nine percent while others are freely imported.

The current concern of the Brazilian industrialists on a measure introduced in 1991, is due to the fact that its exports fell by 3.5 percent last year and the tariff charged rose to 10.1 percent from January, under the new European General Preferences System.

The differentiated treatment reduces the competivity of Brazilian instant coffee, said Abics president, Sergio Coimbra, arguing that support for coca substitution cannot be used to explain why Venezuela has been included.

Mexico is also favoured by a lower tariff, of five percent, adn the zero rate tariff was extended to the Central American nations in 1992 as development aid for the poorest countries, according to the justification received from the European Union (EU), added Mauro Malta, director of the same industrial association.

The Brazilian leaders attributed these measures to the loss of markets for their Latin American competitors, whose exports had stagnated at 60,000 tons, equivalent of 2.6 million 60 kg sacks of coffee beans.

In 1990 Brazil produced 67 percent of the 3.6 million sacks exported by the producer countries, and last year this fell to 57.9 percent out of a total of 4.5 million sacks, according to Abics.

From 1989 to 1994, Ecuador increased its exports to the EU and Colombia by 58.5 percent, while Brazil only expanded 21.5 percent, said Malta. And Colombia is building a new plant to supply the European market, he added.

Brazil still exports more than these two nations together, but “the important thing is the tendency, the world changes so quickly,” he said.

As well as discriminating against Brazil, the EU is importing coffee beans and exporting it in instant form to eastern Europe, in competition with the coffee producing countries annulling its supposed development and antidrug aid, added Malta.

This competition is also unequal, as the European industry takes advantage of its free access to the cheapest coffee, produced by a workforce which earns extremely low wages, like in Vietnam and the African nations, he said.

Meanwhile, the Brazilian industry is still dependent on exclusively national coffee, for while there has been no import ban since 1990, the local health authorities have consistently blocked attempted imports in recent years.

Eastern Europe is a great emerging market to be fought over, said Malta. Russia is the main consumer of Brazilian instant coffee, taking 42 percent of the total exports.

The instant coffee faces specific problems, because of its total dependence on exports which take 95 percent of the production – which totalled 63,000 tons last year.

Internal consumption is insignificant compared with coffee beans and roasted beans.

The ingrained Brazilian habits ignore instant coffee, and changing this has shown itself to be near impossible.

People who live abroad or who appreciate the practicality of the product are few, especially as new technologies make the preparation of the traditional brew ever easier, said Malta.

The sector managers argue they are dealing with a product with a great added value, one dollar for every dollar of raw materials.

The nation has only 11 companies, employing 2,600 workers, but their exports were worth 474 million dollars in 1995.

As it is sold in jars with the trade mark and country of origin clearly marked, the instant coffee carries an image with it which could help encourage other exports, said Malta.

Brazilian coffee bean exporters also complain of the four percent tariff charged by the EU, but this difference will end in the year 2000, said Osvaldo Aranha, president of the Brazilian Coffee Exporters Federation.

A gradual reduction will lead to the exemption already granted to the other Latin Americans, he said, adding that the tariff difference is small, but the losses are significant as the EU imports more than half Brazil’s coffee bean exports.

COMMODITIES: Brazil Opposes EU Coffee Tariffs

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Aug 23 1996 (IPS) - The European policy of tariff relief on coffee from the Andean and Central American nations to encourage the substitution of coca plantations has brought a wave of protests from Brazil.
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