Stiffer Competition Ahead for African and Caribbean Banana Producers

www.acp-eucourier.info


16/12/2009 - By Debra Percival

The longest running global trade dispute in history - over bananas – may well have have been brought to an end with the deal done at a meeting 15 December at the World Trade Organisation (WTO) in Geneva between ambassadors from the EU and Latin American countries. But for African and Caribbean nations who export to the EU market duty and quota-free under separate trade agreements, stiffer competition lies ahead with Latin American banana producers.

The core of the EU-Latin America deal, which is seen as a boost for the Doha Round of world trade talks, is a gradual reduction by the EU of its import tariff on bananas from Latin America from €176 per tonnes presently to €114 by 2017 at the earliest. The EU has agreed to immediately cut its tariff by €28 per tonne to €148 on the signing of the deal by all parties. This has triggered the United States to settle its related trade dispute with the EU.

“This is the best possible deal we could achieve. It reconciles all parties’ legitimate interests. I know ACP producers will face challenges in adjusting to the new situation. But the EU will do its best to help. With a more stable environment, all stakeholders will be able to focus more on the improvement of production conditions in banana supply chains,” said EU Development Commissioner, Karel De Gucht.

As compensation, the EU says that it will offer funding of up to €200M to help the main African and Caribbean exporting countries to adjust. They include several small islands Caribbean countries who still rely on bananas for a big part of their income including; Dominica, St Lucia and St. Vincent and the Grenadines who have already paired back their production in recent years because of tougher competition from Latin American exporters.

African and Caribbean banana exporters to the EU remain concerned that any cut in the EU tariff makes Latin American bananas cheaper in the EU market, thereby reducing demand for their own bananas which are more costly to produce.

Further, under the deal done, the EU has guaranteed that it will not cut its banana tariff any further in the current Doha Round of WTO talks. EU member states still have to sign the agreement reached. Under the EU’s newly-ratified Lisbon Treaty, the European Parliament must give also give its consent.

For more information:

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/1938

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/09/557

Banana wars: the fruits of world trade

By Nigel Cassidy
Europe business reporter, BBC News, Brussels


Bananas are one of the world's favourite fruits, a staple of almost everyone's supermarket shopping. Europeans munched their way through 5.4 million tonnes of them in 2008.

Yet the way bananas are grown by often poor workers in hot places and sold to richer consumers in colder countries tells us a lot about the nature of world trade today.

The eventual "initialling" in Geneva of a stand-alone banana trade agreement between the European Union and Latin American countries not only ends what the EU itself acknowledges was "the longest trade dispute in history", it also breaks one of the many stalemates in the stalled Doha round of world trade talks.

The first shots were fired in the banana wars decades before Latin America and the African, Caribbean and Pacific (ACP) trade negotiators set out their respective stalls at the current World Trade Organisation in Geneva.

Frozen out
Since 1975, each Caribbean country has been given a generous import quota for bananas. The idea was to enable the economies of former European colonies or dependencies to grow independently without recourse to overseas aid.

Tariff-free entry to the EU was extended to a string of ACP countries. Meanwhile, banana producers on Spain's Canary Islands and in the French overseas departments of Martinique and Guadeloupe also enjoyed tariff-free status.

But the effect of the agreement was to freeze out competitors from Latin America, or at least make their EU imports more expensive.
So called "dollar" bananas are generally cheaper to start with because they are grown on larger mechanised plantations run by giant US corporations such as Chiquita, Dole and Del Monte.

Eurobananas
Not everyone in the EU was happy with the Brussels banana regime; Germany for one. For a start, the country had lost all its colonies after World War I, so had no favoured supplier to champion.

In the 1990s, German Chancellor Helmut Kohl pledged to try and get the EU import regulations liberalised. His election campaign played on the simple fact that Germans seemed to prefer the larger bright yellow dollar bananas from Latin America.

Some turned up their noses at the smaller, paler "eurobananas".
Bananas have mattered to Germans ever since hunger overtook war-torn Germany, the fruit symbolised luxury.

When the Berlin wall crumbled, jubilant East Germans were seen sporting car stickers featuring two bananas forming the letter D for Deutschland. The banana was a symbol of better times to come.

Soaring prices
Certainly one of the dire predictions about the likely impact of the EU's banana policies bore fruit. Prices soared 63% in 1994 and demand fell by a quarter.

For some the banana became the symbol of the EU's hypocritical refusal to act on its own free-trade rhetoric. Yet now the EU is starting to phase out its tariff "banana split", there will be be others who complain that desperately poor family farmers will be disadvantaged at the expense of wealthy American-owned agribusinesses.

Meanwhile, the banana will doubtless continue to feature in jokes about its curvature, or its uncanny ability to trip up their canniest trade negotiator. But, as banana specialist and writer Peter Chapman once wrote, nobody laughs at the banana in its areas of origin: "It is too serious a business, on which jobs and lives depend."


http://news.bbc.co.uk/2/hi/business/8413979.stm