Bridges Weekly Trade News Digest • Volume 13 • Number 39 • 11th November 2009

Banana Deal Expected Next Week with Promise of Aid for ACP

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Trade officials have been meeting intensively for the last two weeks in an ongoing effort to finalise a deal to conclude a long-running dispute over banana tariffs at the WTO. Officials say they hope to conclude the talks ahead of the WTO’s ministerial conference, which is set to begin on 30 November, and an announcement outlining the framework of the potential deal is expected in the middle of next week.

EU banana import policies have been the subject of a decade-long row at the WTO, pitting Brussels against several Latin American banana producers and the US. At issue is the EU’s current import regime: a €176 per tonne tariff on bananas from most-favoured nation (MFN) suppliers, alongside a 775,000 tonne duty-free import quota reserved for African, Caribbean, and Pacific (ACP) states, many of which are former European colonies.

An official participating in the talks this week suggested that a deal was unlikely to emerge in time for Tuesday’s meeting of the WTO’s General Council. Rather, negotiators are hoping to make an announcement about the compromises reached by the “middle of next week.”

The deal now on the horizon - nominally titled the Geneva Agreement on Trade in Bananas - is expected to resemble the package that was provisionally tabled when trade ministers met in Geneva in July 2008 in an attempt to bring the Doha Round to a close. At that point, the EU offered to reduce its MFN tariff to €114 per tonne from the current €176 per tonne over eight years if a Doha Round deal were struck. The agreement would have allowed the EU to continue to give preferential duty-free access to countries from the ACP group. As a down payment to Latin American exporters, the EU would reduce MFN tariffs by €28 at the start of the implementation period.

The agreement now on the table would mandate that bananas receive ’stand-alone’ treatment and be excluded from the Tropical Products list — a list of products that will receive the ‘fullest liberalsation’ –, settle all pending disputes with Latin American exporters, and provide a ‘credit clause’ to mark the lowered MFN tariff as the EU’s final market access commitment in the Doha Round.

Officials have been tight lipped about the specifics of a deal. The EU is in a delicate position, as it must strike a balance between the competing interests of efficient Latin American exporters and ACP countries that largely rely on preferences to maintain their banana exports. According to an EU communication obtained by Bridges, the Commission will provide a substantial amount of aid, through ‘Banana Accompanying Measures’ (BAMs), to the ACP as part of a deal that would reduce MFN tariffs on bananas. The aid, which would be provided between 2010 and 2013, will be aimed at “improving competitiveness, economic diversification and mitigating the social consequences of adjustment.” To ease the transition, the EU will provide €190 million for ACP countries beyond the support offered through the European Development Fund.

Any potential deal on bananas will be presented to WTO members at a meeting of the General Council. Delegates will then have 90 days to raise objections before the new MFN tariff is certified. In case any objections arise, the EU will “no longer consider itself bound by the commitment to follow through on a new support programme,” according to the leaked EU communication.

ICTSD reporting.

One response to “Banana Deal Expected Next Week with Promise of Aid for ACP”

Ammad Bahalim 12th November 2009 at 10:12
For analysis of how a WTO banana deal could affect different countries and groups, see ICTSD’s issue paper no. 21, by Giovanni Anania, “How would a WTO agreement on bananas affect exporting and importing countries?”, online at http://ictsd.net/i/publications/50782/
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