WTO prepares banana verdict

By David Cronin

Date: 28/07/05

The World Trade Organization (WTO) is to rule in the coming week on the validity of the EU's reform of its banana import regime.

Ecuador, Panama, Colombia, Guatemala, Costa Rica and Honduras are contesting a 2004 European Commission proposal for a tariff of €230 per tonne on banana imports. Their case is being assessed by an arbitration panel at the WTO's Geneva headquarters, which is scheduled to give its verdict on Monday (1 August). Because that day is a public holiday in Switzerland, the ruling might come earlier or later.

The Commission is likely to appeal against the ruling if the panel finds in favour of the six Latin American governments. It argues the tariff-only regime is necessary to replace the current complex system of import quotas and tariffs which differentiates between fruit from the African, Caribbean and Pacific (ACP) bloc and 'dollar' bananas from multinational firms operating in Latin America.

"It is clear we have to have a tariff-only system in place by the beginning of next year and we want to do that as quickly and painlessly as possible," said Michael Mann, the Commission's agriculture spokesman. "We believe our proposal will keep access [for banana exporters to the EU's markets] around about the current level."

But Estif Aparicio, Panama's chief negotiator on international trade, complained that the Commission's proposal would involve a 300% increase on the levy currently imposed on Latin American producers. He expressed the hope that the ruling would be followed by an "amicable solution" to the dispute.

A diplomat representing the Eastern Caribbean states said a high tariff would be necessary to shield his region's typically small-scale banana growers from an upsurge in imports from Latin Americans, with far cheaper production costs.

The diplomat added that if the Latin American campaign for a zero-rate or €75 per tonne tariff proved successful, the pace of job losses in the Windward Islands over the past few years could quicken.

A study by the Overseas Development Institute in London has predicted that the Commission's plan could see 67,000 people - 18% of the working population - losing their jobs in Dominica, Saint Lucia, Grenada and Saint Vincent and the Grenadines.

Jacqui Mackay from the organisation Banana Link said she feared that the Commission's proposal could spark a "race to the bottom" for labour and environmental standards in the banana industry.

Article anticipates a ruling by an arbitration panel of the World Trade Organisation on the validity of the EU's reform of its banana import regime, scheduled for 1 August 2005. Ecuador, Panama, Colombia, Guatemala, Costa Rica and Honduras were contesting a 2004 European Commission proposal for a tariff of €230 per tonne on banana imports.

The European Commission was likely to appeal against the ruling if the panel was to find in favour of the six Latin American governments. It argued the tariff-only regime was necessary to replace the current complex system of import quotas and tariffs differentiating between fruit from the African, Caribbean and Pacific (ACP) bloc and 'dollar' bananas from multinational firms operating in Latin America.

• Primary Source

ESO: Background information: Commission presents revised banana tariff proposal http://www.europeansources.info/record/commission-presents-revised-banana-tariff-proposal/

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