Talks aim to avert trade war with US over EU’s banana import regime

Date: 04/01/1996

THE first full week of Commission activity in 1996 could be decisive for the future of the EU's controversial banana import regime.

The issue will be high on the agenda when Agriculture Commissioner Franz Fischler meets his US counterpart Dan Glickman on 10 January, the day after the 60-day 'consultation period' for the two sides to sort out their differences expires.

Under World Trade Organisation (WTO) rules, Washington must decide whether to call for an official dispute settlement panel if bilateral discussions with the EU fail to result in a satisfactory compromise.

Ralf Möhler, Deputy Director-General of DGVI (agriculture), was in Washington shortly before Christmas for talks with US Trade Representative Mickey Kantor. But Commission officials stressed he had no new proposals to offer.

The Commission is well aware that the EU's banana regime is far from perfect, but believes it is probably the best compromise available given the diverse views within the Union.

Its hopes of averting a trade war with Washington rest on persuading member states to accept what are, in essence, cosmetic changes to the import licensing system which would redistribute licences slightly more in favour of “traditional” importers.

Apart from the fact that this is unlikely to impress the US, the proposals have remained stalled for several months, with the views of EU member states remaining as far apart as ever.

On one side of the argument are those countries, led by Germany, which have traditionally imported large volumes of Latin American 'dollar' bananas and claim that consumer prices have been forced up by the limited dollar banana quota.

On the other side of the fence is a group led by the UK and France, which is concerned to protect banana producers in their former colonies, who they claim have few alternative sources of income.

The request for a dispute panel originally came from Chiquita Brands International and the Hawaii Banana Growers Association. Chiquita claims its US employment has fallen by 30&percent; as a result of the EU's import policy, an assertion denied by the Commission.

Industry experts suggest that a WTO panel would probably declare the Union's distribution of import licences illegal, and that this might just persuade EU agriculture ministers to change the system.

But past experience suggests that a panel is far from certain. Just before the end of last year, a potential trade war over the EU's cereals import system was averted when Washington and several other countries were offered compensation for the raising of import tariffs in Austria, Sweden and Finland when they became EU members at the start of 1995.

As ever, the New Year looks set to begin amid controversy. Alongside the banana dispute, the US is piling on the pressure over the EU's ban on meat produced using naturally-occurring hormones and over the recent court decision that duties are payable on imports of US corn gluten feed worth more than a billion ecu every year.

Close attention will be paid to Fischler and Glickman when both speak at a farming conference in Oxford today (4 January) for any shift in either man's stand on these issues.