Historic agreement reached over EU Import Tariffs

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After decades of dispute, the world's 'banana wars' are finally set to come to an end.  An historic deal between the EU, Latin America, African-Caribbean-Pacific (ACP) countries and the US was signed at the weekly meeting of the WTO Council Secretariat in Geneva this afternoon, after the last details were agreed yesterday. 

Trade negotiators cheered and applauded as Eckart Guth, the EU ambassador to the WTO, announced, "So it's done.  Thank you very much."  European Trade Commissioner Benita Ferrero-Waldner expressed her relief that the dispute had finally been settled: "I'm very happy to see the longest-running trade dispute finally solved," she said.  "History is being made today because this dispute has soured global trade relations for too long."  The deal signifies a step towards an eventual agreement in the WTO's Doha Round of trade negotiations which aim to reduce barriers to global trade.

Now that it is finalised, the EU will be committed to lowering its current import tariff on Latin American bananas from €176 per tonne to €114 by 2016, with an initial step down to €148, as detailed in a previous deal laid out in July 2008. This cut in tariffs represents a further erosion of the EU’s preferential treatment of ACP banana exporters which has been the subject of legal challenges through the WTO since before the organisation’s creation. The EU has called for an immediate stop to all such legal disputes now that the deal has been signed even though it could be months, if not years, before the formal registration and implementation of the tariff reductions gets pushed through.

Included in the agreement is an EU aid package for ACP countries to be implemented between 2010 and 2013 with the objective of “improving competitiveness, economic diversification and mitigating the social consequences of adjustment" to the loss of competitive advantage in EU banana markets. Another €200m or so in aid has reportedly been allocated by the European authorities for support through “Banana Accompanying Measures (BAM)”. ACP countries are said to be resigned to the deal, despite having called for a smaller cut in Latin American tariffs and a better compensation package. One unnamed ACP trade official reported that, "We don't like the deal, but we have very little leverage to improve it...we can live with it”.

Windward Island farmers' leader Renwick Rose was, however, very critical of the deal: "Those who will suffer most as a result of today's deal are banana farmers and their dependents in the Windward Islands." Family farmers in St Lucia, St Vincent and Dominica only have 1% of the EU market between them, but feel they have been forced to pay the price for international trade rules that do not permit any kind of differentiation on the basis of the conditions in which the fruit is produced.  They also fear that the aid the EU has committed to as part of the deal will not reach the farmers and others affected in rural communities across the islands: "The EU is notorious here for elaborate procedures which are time-consuming.  By the end of January some farmers in the Windwards may well have been forced out of production.  No one with even the faintest understanding of EU procedures can begin to dream of how such farmers will catch their 'BAM'.  WINFA had proposed to Caribbean governments that they should insist that arrangements for compensation be not only simple and flexible, but that farmers’ organisations should have direct access.  That appears to have fallen on deaf ears."

Click here to view a full article by Renwick Rose about the banana deal (English only).

Sources: Reefertrends.com, BRIDGES (ICTSD Geneva), Reuters, WINFA St Vincent & The Grenadines/Searchlight

15 December 2009, Banana Link