Banana import licence reform branded ‘complete whitewash’

Date: 15/10/1998

By Myles Neligan

OFFICIALS responsible for reforming the EU's banana regime have run into a barrage of criticism from Latin American banana producers and the US as they prepare to unveil a new import licence allocation system.

The new mechanism, which is due to be finalised tomorrow (16 October), is the centrepiece of reforms designed to bring the Union's regime into line with international trade rules, following the World Trade Organisation's judgement last year that the current rules discriminate against Latin American imports.

This week's renewed criticism from the regime's opponents is the strongest indication yet that they regard the reforms as unsatisfactory, and makes fresh legal action against the EU a near certainty.

"The reforms that they are discussing now will make the situation worse. The European Commission seems determined to prolong the dispute," said Ecuador's ambassador to the Union Alfredo Pinoargote.

Under the new system, import licences for Latin American fruit will be allocated preferentially to operators who can prove that they held similar permits between 1994 and 1996.

But critics claim the standard of proof required is not sufficient to prevent traders with no history of importing Latin American bananas from acquiring licences, which they would then sell on to legitimate importers.

Latin American countries argue that this would perpetuate the injustices of the present system, which officially reserves 30% of all available import licences for specialists in ACP fruit. "It's a complete whitewash," said Pinoargote.

Latin American exporters and traders also protest that plans under the new system to reserve 10% of available licences each year for operators entering the banana import industry for the first time will cut profit margins to unsustainably low levels, unless the annual banana import quota is increased at the same time.

"This will destroy the industry. The import quota must be raised in line with the annual arrival of newcomers," said Willem Kokkeel, a director of Atlanta AG, Europe's largest banana importer.

The five main Latin American exporters and the US plan to increase the pressure on the EU to suspend its import regime and launch a more thorough overhaul at a meeting of the WTO dispute settlements board in Geneva next Thursday (22 October).

The US administration announced this week that it would draw up a list of retaliatory trade restrictions by 15 December, which would be applied to the EU from 1 February next year if the WTO finds that the Union's banana reforms are inadequate.

But for the moment the Commission remains unmoved. "We have had numerous technical discussions on the import licence allocation system and are satisfied that the reforms are consistent with WTO rules," said a spokesman.