Union ‘closer’ to deal with US on bananas

Date: 16/03/2000

By Simon Taylor

EUROPEAN Commission officials claim that they have moved closer to finding a solution to the Union's banana dispute with the US after Washington responded positively to proposals for sharing out import licences.

But American officials are playing down reports of a breakthrough, insisting that many other key details have yet to be agreed.

Commission officials told a meeting of member-state farm experts last week that the US had indicated that it could accept a system of allocating licences which offered a compromise between the opposing positions of the two biggest US banana-exporting companies.

They claimed Washington had reacted warmly to plans to base the share-out of licences on operators' trading records between 1994 and 1996. Chiquita has called for licences to be based on pre-1993 levels, while Dole would prefer an open-auction system.

But banana industry sources say that US Deputy Trade Representative Peter Scher has written to the Commission's Deputy Secretary-General Bernard Zepter warning that many crucial issues will have to be settled before a final deal can be struck.

For the US, other key questions include the length of time it would take the Union to move from a quota-based system to a tariff-only scheme, and the level of tariff duty. EU farm ministers, who will debate the draft reform plan next Monday (20 March), remain divided over the transition period, with France and Spain calling for longer than the six years proposed by the Commission.

But diplomats suggest that Spain could ease its position now that the country's general election is over, as Prime Minister José Maria Aznar had to take a tough line as he campaigned for a second term of office to win support in the Canary Islands, a significant banana grower.

Most member states are also opposed to the Commission's plan to make an additional quota of 850,000 tonnes open to all suppliers on a 'first come, first served' basis. They want this quota to be based instead on past trading records as well to ensure vulnerable growers in the Caribbean are not forced out of the market.

Given the large number of issues still to be resolved, Union diplomats believe a final deal on banana reform might not be struck until after France takes over the EU presidency on 1 July, although they say the issue could be resolved more quickly if the US had the will to do so.

The Union is under intense pressure from European companies to settle the dispute, as a deal would mean Washington lifting the €192-million worth of penalty import duties it imposed on EU goods after the World Trade Organisation ruled that the Union's banana regime broke international trade rules by discriminating against Latin American producers.

European Commission officials claim that they have moved closer to finding a solution to the Union's banana dispute with the US after Washington responded positively to proposals for sharing out import licences.