29th July 2009

Poor banana producers need targeted aid: trade study

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Reuters

Wed Jul 29, 2009 2:06pm GMT
By Jonathan Lynn

GENEVA (Reuters) - Aid to help banana producers in poor countries improve yields and efficiency could benefit them more than improved access to export markets, according to a new study of trade in the fruit.

And both exporters in relatively more efficient Latin American countries and those in poor former European colonies in the African, Caribbean and Pacific (ACP) states would benefit from a deal on bananas linked to a global trade agreement rather than a standalone pact, according to the study by economics professor Giovanni Anania of Italy’s University of Calabria.

The study examines the impact of various changes to import regimes for bananas, a staple of many developing country economies’ export earnings, that have been proposed to resolve one of the longest-running trade disputes.

Anania noted that ACP exporters, which include some of the least developed countries (LDCs), are less efficient at producing and marketing bananas than producers in Latin America, and crop yields are uncertain.

“This suggests that aid targeted at improving efficiency in banana production in ACP and LDC countries may be as beneficial as granting them preferential market access,” he said.

Anania produced the study, which has not yet been officially published, for the International Centre for Trade and Sustainable Development (ICTSD), a Geneva-based non-governmental organisation that researches trade and development.

The Latin American producers reached agreement with the European Union in July last year to improve access for their bananas to the European market, on the sidelines of a meeting of ministers seeking a breakthrough in the World Trade Organisation’s long-running Doha round.

AGREEMENT

The WTO has ruled that the EU regime for imports for bananas from the Latin American countries was unfair compared with the preferential arrangements for bananas from the ACP countries.

Brussels has replaced these with new “economic partnership agreements” to comply with WTO rules, but the Latin Americans say their fruit still suffers discrimination.

The ACP countries were unhappy with the new deal for the Latin Americans, fearing it could hurt their position in the European market, but made it clear they would go along with it in return for increased aid.

However Brussels refused to uphold the agreement when the overall Doha talks collapsed, saying it was part of the broader deal. So the Latin Americans and European Union are still fighting, with Ecuador, the world’s biggest banana exporter, accusing Brussels of failing to comply with WTO rulings.

The study says preferences for the ACP countries are likely to erode over time, forcing them to become more competitive.

But an overall Doha deal, opening up markets in third countries and offering opportunities in other sectors, could compensate them for losses in the lucrative European market, which imported about 4.6 million tonnes of bananas in 2005.

The study forecasts that, failing a deal with the Latin Americans, ACP exports would nearly double to 1.8 million tonnes in 2016 from 970,000 tonnes now, helped by the new economic partnership agreements with the EU. At the same time Latin American exports would fall to 12.2 from 12.8 million tonnes.

The ACP countries would do best if there is no Doha deal and last July’s banana agreement is not revived, the study said.

For the Latin Americans the best option was a Doha deal creating global opportunities by liberalising trade in tropical products plus a revival of last July’s agreement to give them better access to Europe.

That combination would be good for ACP countries too as they would benefit from global opening, while the full impact on their preferences of last July’s deal would be softened as the Latin Americans targeted markets globally, not just in Europe.

One response to “Poor banana producers need targeted aid: trade study”

Jonathan Hepburn 19th November 2009 at 17:41
The study by Professor Anania, which is referred to in the article above, is online at: http://ictsd.org/i/publications/50782/