Bridges Weekly Trade News Digest • Volume 13 • Number 42 • 9th December 2009

Ongoing Tropical Products Talks Could Slip Up Banana Deal

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The WTO has included the issue of trade in bananas on the agenda of next Thursday’s General Council meeting, trade sources said, with the EU and Latin American countries apparently poised to sign an accord on tariff cuts for the controversial fruit. However, ongoing talks on other tropical products could still slip up the deal, as the EU is linking an eventual banana agreement to these related negotiating topics.

Confirming persistent media reports in recent weeks, sources confirmed that the banana deal is essentially done, with formal signature awaiting conclusion of talks on other tropical products (see Bridges Daily Update, 2 December 2009, http://ictsd.org/i/wto/geneva/daily-updates-2009/geneva-2009-bridges-daily-updates/63433/). After detailed negotiations with the EU on the tariff lines of interest to them, Latin American countries are now trying to finalise talks with other major developed country markets, delegates said.

The EU and Latin American countries are believed to have reached tentative agreement on a deal under which the EU would cut its current most-favoured-nation tariff from €176 per tonne to €148. Over the next seven years, the tariff would be further reduced to €114 per tonne. In exchange, Latin American producers are to drop all outstanding WTO litigation on the matter. The accord is broadly similar to the one the EU conditionally offered in July 2008, but withdrew when the wider talks collapsed.

Banana-producing countries in the African, Caribbean and Pacific (ACP) group of states, which have limitless duty-free access to the EU’s banana market, are believed to be considering whether to accept the deal. While the EU has offered ACP countries between €190 and €200 million in aid to help these countries’ economies adjust, the latter are reportedly seeking €250 million.

Developed country importers indicated that they were in talks with Latin American exporters aimed at establishing whether progress achieved in 2008 on tariff cuts for other tropical products would still apply. Some sources were optimistic that the talks could be concluded by the General Council meeting next Thursday.

US role?

Still uncertain, said delegates, was the role of the US in talks on the controversial issue. While the EU’s agriculture commissioner, Mariann Fischer-Boel, told press last week that US Trade Representative Ron Kirk has offered his support for an eventual deal, negotiators queried whether the US might in fact be stalling on the accord for tactical reasons.

“The US has many problems,” sighed one official, pointing to domestic political priorities that are widely seen as preventing the Obama administration from showing more leadership on the troubled Doha Round of talks. Despite the fact that its firms would stand to gain new market access under the proposed deal, delegates speculated that the US may be reluctant to endorse an accord that would create new impetus for them to give ground on other negotiating issues that have held up the Doha talks.

“If they solve bananas, they have to solve cotton,” said the source, who cautioned that a breakthrough by EU negotiators would create strong pressure for the US to make new concessions too. Steep cuts in US cotton subsidies have been a key demand of African countries in particular, although the US has yet to put forward a counter-proposal on the troubled question.

Others suggested that the US legal analysts may also still be assessing the broader implications of the banana accord, which would involve the EU presenting a new tariff schedule to the General Council. Other WTO members would then have 90 days in which to object to the EU proposal.

ICTSD reporting.

One response to “Ongoing Tropical Products Talks Could Slip Up Banana Deal”

Aurelia Allen 13th December 2009 at 03:00
Belize econonomy, is already on a thin thread. Why prioritize on other countries when our Belize is already in much need?