EU producers retaliate in banana dispute

Date: 05/10/1995

By Michael Mann

A NEW report commissioned by European Union banana producers totally rejects US claims that the EU's controversial banana import regime has undermined fair competition and damaged American companies.

The report comes in the wake of confirmation from Washington that it has filed a complaint with the World Trade Organisation (WTO) alleging major banana trader Chiquita Brand has lost its market share as a result of the restrictive regime operated by the EU.

The report, commissioned from Arthur D Little International by the Association of European Banana Producers and officially unveiled today (5 October), concludes that Chiquita Brand's problems were caused by “a less systematic strategy of acquisitions and access to production volumes in African, Caribbean and Pacific (ACP) zones”.

Dole and Fyffes, two other major players on the market, make no secret of their distaste for the system, but stress that good corporate planning enabled them to limit the harm it caused them.

“Although Dole would be quite happy to get rid of what is a crazy system, it's also true to say that it saw its chances to understand the new system and work within it to its own advantage,” according to a representative of the company.

A Fyffes spokesman said: “Except for the framework agreement with four Latin American countries, we could easily have lived with the regime. As it is, Fyffes foresaw that the EU market would be protected and worked out how to make the best of it.”

The regime, introduced on 1 July 1993, allows duty-free entry to the EU market for up to 857,000 tonnes of 'traditional' imports from ACP countries. For 'non-traditional' ACP and Latin American 'dollar' bananas, there is a special tariff quota of 2.2 million tonnes, with heavy tariffs on imports above this quantity.

From its very inception, the regime has brought with it an unprecedented degree of lobbying and a merciless transatlantic war of words.

Farm ministers' attempts to negotiate even minor changes have failed as the Union remains split over the issue.

According to both Dole and Fyffes, the regime hurt the large multi-national companies in three ways: by setting the quota below normal import levels, limiting their access to the quota to 66.5&percent; and then splitting this further between importers and ripeners.

As far as Dole is concerned, Chiquita's complaints mark a continuation of its “attack, attack, attack strategy” as opposed to the “more conciliatory approach” of other banana traders.

Fyffes finds the proposed increase in the quota to account for EU enlargement fully justifiable, but the “lousy prices” this year suggest that the quota is basically too high and that the market could certainly not survive another “arbitrary increase in the quota simply to get the US off our backs” without further depressing prices.

Fyffes is also convinced that despite its challenge, the US government is fully aware that it cannot do anything which will threaten the livelihoods of potentially volatile Caribbean countries. Many of these have no alternative industries.

Delays in the final publication of an internal Commission report on the sector reveal the sensitivity of the matter within the Union.

No amount of tinkering will stave off the threat of a WTO panel, the final outcome of which is unlikely to appear before the end of 1996. “The WTO will probably find the licensing arrangements illegal. This might finally persuade EU agriculture ministers that they can't just continue to act with impunity,” concluded one industry insider.