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EU hopes for cessation of hostilities in banana feud

By Anthony Fletcher , 07-Dec-2005

The European Union, which was left fuming after a second WTO rebuttal earlier this month, has finally agreed to a new import tariff of €176 per tonne.

The new tariff will apply from 1 January 2006 to bananas imported from countries - mainly in Latin America - enjoying Most Favoured Nation (MFN) status.

The new import regime will also include a duty-free annual import quota of 775,000 tonnes for ACP bananas, also to apply from 1 January 2006. The decision was taken by EU governments on a proposal of the European Commission and comes after months of negotiations.

 

"The agreement by Member States to a tariff only system is an important signal for traders," said Peter Mandelson, EU Trade Commissioner.

 

"The door is not closed to further negotiation with our Latin American partners in order to reach a mutually satisfactory solution. The Commission will continue to monitor carefully the impact of this decision on prices and trade flows."

 

The EU hopes that this marks the beginning of the end of this matter. In an effort to put an end to the long-standing banana dispute, the EU agreed with Ecuador and the United States in 2001 to move from a complex import system based on a combination of tariffs and quotas for MFN bananas to a regime solely based on a tariff by 1 January 2006.

 

It obtained two waivers from its WTO obligations for the preference granted to bananas from the ACP countries under the terms of the ACP-EC Partnership Agreement.

 

The Commission originally proposed a single tariff of €230/tonne. However, following a request from a number of Latin American banana producing countries, a WTO arbitrator found in August 2005 that the proposed tariff would not result in at least maintaining total market access for suppliers under the Most Favoured Nations (MFN) clause.

 

On 12 September, the EU presented a revised proposal in the light of the arbitrator's award, for an import duty of € 187/tonne for MFN suppliers and a tariff quota of 775,000 tons at zero duty for bananas originating in ACP countries. Again, the arbitrator found that the proposal did not rectify the matter.

 

Throughout this process the Commission had several rounds of consultations with the Latin American countries concerned, as well as with the ACP countries concerned. The EU claims that on none of these occasions did the Latin American countries concerned engage in a meaningful discussion or present a counter proposal that could have led to a negotiated solution.

 

With the arbitration procedure now over, the EU had to set the rate that would apply as from January 2006, as agreed at the WTO Doha Ministerial held in 2001.