Splits remain over new banana regime

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Series Details Vol.4, No.24, 18.6.98, p7
Publication Date 18/06/1998
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Date: 18/06/1998

By Myles Neligan

EU FARM ministers will next week make a last-ditch attempt to agree on reforms to the Union's banana import regime in an attempt to avert further humiliation at the hands of their World Trade Organisation partners.

The Union faces the prospect of trade sanctions and possible hefty fines if it does not comply, by January 1999, with last year's WTO ruling that its banana regime is incompatible with international trade rules.

The technical complexity of the regime means that unless farm ministers can agree on the reforms at this month's meeting, which begins on Monday (22 June), there will not be enough time to carry out the necessary overhaul.

"If we don't get an agreement this time, there is no doubt that the January 1999 deadline will be breached," warned a Council of Ministers official.

All 15 EU member states agree on the need to strike a deal, but deep divisions remain over a number of key issues.

Germany, Austria and the Nordic member states are strongly opposed to a European Commission move to charge a higher rate of duty on Latin American bananas shipped in under an extra import quota opened in 1995 to take account of Austria, Sweden and Finland's accession to the Union.

All five governments are pushing for the outright abolition of import quotas in favour of a tariff-only system, with the added proviso that they should be set at as low a level as possible.

At the other end of the spectrum, France, Spain and Portugal are arguing for a reduction in Latin American import quotas and an increase in the level of EU financial assistance to impoverished banana producers in the African, Caribbean and Pacific (ACP) countries.

Observers say that the final outcome of the ministerial negotiations on the banana regime may depend on how parallel discussions proceed on the equally vexed issue of the Commission's proposal to reform the olive oil sector.

Commission officials hope that Spanish Agriculture Minister Loyola de Palacio, the staunchest opponent of the plan, will sign up to a compromise deal under which part of any unused portions of the annual production quotas allocated to Italy, Greece and Portugal would be transferred to Spain in exchange for an increase in aid to EU and ACP banana growers.

Agriculture Commissioner Franz Fischler holds another bargaining chip in the shape of a proposed 70-million-ecu scheme to assist producers of table olives.

The Spanish government is publicly insisting on both an increase in its olive oil production quota and extra assistance for table olive growers. But officials say privately that Madrid may be willing to trade one off against the other.

Meanwhile, the non-olive producing countries, whose only stipulation is that the final deal must not involve any additional expenditure, will be monitoring the negotiations closely.

"There are many pieces on the board, and everything to play for," said one Commission official.

As farm ministers prepare for a meeting which will also include talks on the reform of the EU's tobacco regime and next year's institutional farm prices, including the Commission's controversial proposal to double this year's set-aside rate to 10% of arable land, the only certainty is that the discussions will be long and difficult.

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