EU seeks to break deadlock in banana dispute

By Anthony Fletcher

- Last updated on GMT

Related tags: International trade

A second round of WTO arbitration on the EU's proposal for a new
import tariff for bananas could finally put an end to a
long-running trade dispute.

The move follows the WTO's decision last month not to endorse the EU's tariff level of €230 /tonne for banana imports, which forced the Commission to initiate a new consultation process.

The WTO arbitrators concluded that the new import regime did not take into account ACP (African, Caribbean and Pacific) preference.

The long-running banana dispute is highly complex. Some companies have expressed fears that changes in the EU banana tariff import system could adversely affect their European business and overall operating results.

Chiquita for example has said that any change could result in its bananas being more expensive than imports from countries exempted from a higher tarrif system.

As the new tariff system would not apply to bananas imported from certain countries in Africa, the Caribbean and the Pacific, it would put Latin-America-based Chiquita at a disadvantage, the company said.

The Commission says that it has now carefully analysed the first arbitration, and is confident that its revised proposal for an import duty of € 187/tonne for MFN suppliers and a tariff quota of 775,000 tonnes at zero duty for bananas originating in ACP countries maintains market access for Most Favoured Nation (MFN) suppliers and an equivalent level of preference for ACP suppliers as the current regime.

"The EU has carefully analysed the arbitration award, revised its proposal accordingly, and initiated consultations with our Latin American and ACP partners on this basis,"​ said Mariann Fischer Boel, EU commissioner for agriculture and rural development.

"Despite our efforts, we were not able to come to an agreement with our partners. Nor did they present an alternative proposal of their own.

"Time is now running out for the introduction of the tariff only regime by the beginning of next year. This is why we are requesting a second round of arbitration today. I still hope we can find a solution to this long-running dispute which will be acceptable to everyone."

The intention remains to have a tariff only system in place on 1 January 2006, as agreed at the WTO Doha Ministerial held in 2001.

"We now need to bring an end to this dispute,"​ said Peter Mandelson, the EU's Trade Commissioner. "For too many years it has poisoned relations between the developing countries that sell bananas to Europe."

Attempts to end the long-standing banana dispute began in 2001 when the EU agreed with Ecuador and the United States 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.

The current arbitration was established after a request of Brazil, Colombia, Costa Rica, Ecuador and Guatemala, Honduras, Nicaragua and Panama and Venezuela. The arbitration award issued last month found that the proposed tariff of €230/tonne would not result in at least maintaining total market access for MFN banana suppliers.

The same arbitrator will now be asked to determine whether the EU has rectified the matter. The arbitration procedure must be completed in time for the entry into force of the new regime next year.

Related topics: Policy

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