| Author (Person) | Thomson, Ian |
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| Publisher | ProQuest Information and Learning |
| Series Title | In Focus |
| Series Details | 9.7.00 |
| Publication Date | 09/07/2000 |
| Content Type | News, Overview, Topic Guide | In Focus |
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The European Commission has announced that following eight months of intensive discussions to resolve the banana dispute, it has not proved possible to reach a compromise with third countries at this stage. Since the negotiations on maintaining a tariff quota regime on the basis of managing import licences on a historical basis have reached an impasse, and taking into consideration the discussions within the Council of the European Union and the European Parliament, the Commission has proposed a revised strategy. The European Commission will continue to study a transitional system of tariff quotas, but at this stage on a 'first come, first served' basis for the three tariff quotas. A tariff preference of 275 euro per tonne for the ACP countries would apply. The Commission will retain its proposal for an automatic transition, on 1 January 2006, to a system based on tariffs only. In addition, the Commission has asked the Council to give its authority to begin negotiations under Article XXVIII of the GATT with the relevant suppliers in order to implement a flat tariff system, in case no solution can be found on the tariff quota basis. Background Bananas are a fruit that generate deep and passionate feelings at a personal and corporate level. The largest distributors of bananas in the world, the US company Chiquita, states on its website that 'bananas are the world's favourite fruit'. Bananas are grown in tropical areas: two of the key areas in terms of the dispute being the Windward Islands in the Caribbean and countries such as Ecador, Guatemala, Honduras and Mexico in Latin America. Bananas are also grown in countries such as the Ivory Coast, Cameroon, Martinique, Guadeloupe and the Canary Islands. The Philippines is a further major grower. The European Union adopted in 1993 Council Regulation (EEC) No 404/93 on the common organization of the market in bananas (Official Journal L47, 25.2.93, p1). This sought to replace the earlier disparate national rules for importing bananas introduced by individual Member States by a common set of rules as part of the programme to create a single market. In the past, for example, the United Kingdom and France generally favoured bananas from former colonies in the Caribbean and Africa, Spain was supplied by the Canary Islands, while Germany favoured the countries of Latin America. The new regime introduced a complex multilayered system of quotas and tariffs to safeguard the supply of bananas from the ACP countries, which traditionally rely to a considerable degree on this trade. In September 1994 the US company, Chiquita Brands International, Inc filed a section 301 petition with the US Trade Representive arguing that the EU banana import regime unfairly restricted its entry into the EU market, as it harmed its ability to import bananas from Latin America into the EU. In 1996, the US, along with the Latin American countries of Ecador, Guatemala, Honduras and Mexico, filed a request for the establishment of a World Trade Organisation dispute settlement panel. The WTO banana panel issued its ruling (scroll down the list) in April 1997. It found that certain aspects of the regime (although not all) were discriminatory. The EU appealed, but the WTO's appeals panel in a ruling in September 1997 essentially supported the earlier ruling. Following further arbitration, the EU was given until 1 January 1999 to comply with the WTO ruling. This it attempted to do by the adoption of Commission Regulation (EC) No 2362/98 of 28 October 1998 laying down detailed rules for the implementation of Council Regulation (EEC) No 404/93 regarding imports of bananas into the Community (Official Journal L 293, 31.10.98 p32). The United States rejected the new EU import regime in December 1998 and announced that it would impose punitive duties on US imports of EU products. The revised scheme introduced in 1999 was also found to be illegal by the WTO because the new regime still set aside a quantity of imports solely from ACP countries and the allocation of licences on a 'historical' basis (ie. reflecting past sales). In April 1999 the WTO authorised the US to impose sanctions to an annual value of $191m and this scheme is now in operation. In an effort to resolve the question the Commission issued a Communication [PDF] in May 1999 with a range of options and proceeded to negotiate with all the parties concerned. In November 1999 the Commission adopted a proposal for a Council Regulation (COM (1999)582 final). It advocated a two-stage approach. During a transitional period a system of tariff quotas would apply, accompanied by a tariff preference for the ACP countries. At the end of that period, a flat tariff would replace the tariff quota system. The flat tariff would be implemented following negotiations under GATT Article XXVIII. The flat tariff system should be introduced not later than 1 January 2006. Information on the progress with this proposal can be seen in The Regulation (EC) 216/2001 was adopted on the 29 January 2001. The issue is one of the most complex that the EU has to deal with as it is virtually impossible to satisfy all the interests concerned: the Latin American banana producing countries, the major US companies that market and distribute bananas from these countries, the United States government, the Caribbean banana producing countries, their traditional supporters in certain EU Member States, and various environmental, consumer, human rights and other NGOs. Even within the EU there is disagreement. Germany, in particular, dislikes the restrictions on imports of its traditional Latin American source of bananas and has challenged the regime on a number of occasions in the European Court of Justice. Other Member States and many MEPs want to support their former colonies in the ACP Group. Within this Group, the Caribbean countries, in particular, have strongly argued their case. The sanctions imposed by the US against EU exports have also divided interests in the US. As an article in the Seattle Times in 1999 said:
Further background information on the issue can be found in:
The new strategy Since the end of 1999 the European Commission has been trying to negotiate a compromise solution with third countries, as well as satisfy interests within the EU. The announcement made on 5 July 2000 essentially says that this has not proved possible and that a new strategy will be needed. The Commission intends to introduce a system of 'first come, first served' for the management of its tariff quota system. Detailed proposals on these lines are expected during late July 2000. Further information within European Sources Online: European Sources Online: Topic Guide: European Sources Online: European Voice Further information can be seen in these external links: European Commission: DG Trade European Parliament: Factsheets United States: Mission to the European Union United States: Office of the United States Trade Representative Congressional Research Service Caribbean Banana Exporters Association Embassies of the Eastern Caribbean States and Missions to the European Communities World Trade Organisation Food and Agriculture Organisation: Committee on Commodity Problems: Intergovernmental Group on Bananas and on Tropical Fruits Ecuador: Ministry of Agriculture and Livestock: Agricultural Information System United Kingdom: House of Commons: European Standing Committee A Major banana importing companies and related organisations (it's perhaps significant that little information on the issue appears on the websites of these companies) Ethical Consumer Journal of Commerce Oneworld (various original authors) Global Issues International Confederation of Free Trade Unions Banana Link European Journal of International Law, Vol.9, No.1, 1998 BBC News FT.com (many of the above hyperlinks have further links leading to more information) Further and subsequent information on the subject of this week's In Focus can be found by an 'Advanced Search' in European Sources Online by inserting 'banana' in the keyword field.
Ian Thomson Background and reporting on the week's main stories in the European Union and the wider Europe. |
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| Subject Categories | Business and Industry, Trade |
