15th December 2009
EU Agrees to Cut Tariffs on Banana Imports from Latin America
DIGITAL JOURNAL
By Chris Dade
A 15-year-long dispute at the World Trade Organization (WTO) was finally brought to an end in Geneva on Tuesday with the signing of a deal which will see tariffs cut on bananas imported in to the EU from countries in Latin America.
Bananas imported in to the 27 states within the European Union from Africa and the Caribbean attract no duties, but for the last 16 years similar imports from countries in Latin America have attracted duties, a situation which has, according to RTT News, angered not just the banana-producing nations of Latin America but also the U.S., and in addition has led to regular legal challenges to the EU policy during the last 13 years.
But the European Commission, the executive arm of the EU, released a statement in Brussels on Tuesday confirming that a deal has been struck, which Bloomberg reports will see the duty on banana imports from Latin America cut from the current €176 ($256) per metric ton to €114 ($166) per metric ton in seven years time, with an initial reduction to €148 ($215).
As the current competitive advantage enjoyed by the African, Caribbean and Pacific banana producers will be considerably reduced the EU has agreed to provide €200 million ($291 million) in support to the affected countries in those regions.
The Irish Times notes that a “related dispute” between the EU and the U.S. was settled as a result of the agreement to cut tariffs for banana imports originating in Latin America, without giving actual details of that dispute.
However it may be connected to sanctions on European goods, worth $191 million, that Bloomberg says were imposed by the U.S. in 2001.
Pascal Lamy, director general of the WTO, spoke of the benefits Tuesday’s deal will offer to the Doha round of trade negotiations. He also said:
I welcome the news that a comprehensive agreement on bananas has now been reached. This has been one of the most technically complex, politically sensitive and commercially meaningful legal disputes ever brought to the WTO
Jose Manuel Barroso, European Commission President, welcomed the deal too, as did EU trade commissioner Benita Ferrero-Waldner, who agreed with Mr Lamy that the Doha Round talks will be boosted by the long-running dispute being ended.
RTT News explains that all states within the EU, reportedly the world’s largest banana importer, sourcing many of those bananas from Latin America, have to approve the deal agreed in Geneva, the Swiss city in which the WTO has its headquarters, before it can be implemented.
Professor Giovanni Anania, from the University of Calabria in Southern Italy, told Bloomberg that following the deal banana prices should fall by 11 percent in the EU, whilst prices in the U.S. will rise fractionally, seemingly because there will be a cut in the supply of bananas in the U.S. as companies such as Dole Food Co. and Chiquita Brands International Inc. ship more of a food crop that the UN considers less valuable than only three other crops - wheat, rice and corn - to Europe.
The Latin American banana-producing countries - Ecuador, Costa Rica and Guatemala are just three countries who rely heavily on bananas for export revenue - can, in the opinion of Professor Anania, expect to see exports to the EU grow by close to 17 percent once the new tariff is in place.