Banana import plan set to trigger new US sanctions

Date: 05/04/01

By Simon Taylor

THE European Commission will take the first step next week to put in place a controversial banana import system which could prompt Washington to hit the EU with new trade sanctions.

Farm chief Franz Fischler and his trade counterpart Pascal Lamy will table a detailed plan for a "first-come, first-served" import scheme, offering licences to the first operators to deliver their fruit to EU ports by set target dates and at a specified price.

But new US Trade Representative Robert Zoellick has warned that the system breaks world trade rules and has threatened to apply carousel sanctions against a new range of EU exports.

The US has already been levying 100% duties on €200-million worth of EU products; if implemented, a US law would extend the existing sanctions to other industries on a rotating basis - effectively doubling the impact on European firms in the US market.

Commission officials stress that the EU is engaged in intense negotiations with Washington to find a solution. If a workable alternative can be found the Union will drop plans to implement the contested system and head off escalation of the eight-year dispute.

If the EU is to meet its own 1 July deadline for introducing the new system, trade officials will have to publish details soon of how the scheme will work to give market operators time to adjust to it.

EU diplomats add that the window for negotiating a settlement will remain open only until 1 May, when the Union must make a final decision on a new regime.

Talks are focusing on finding a solution that would award licences based on traditional market share, but there have been difficulties in agreeing which reference periods to use.

The first-come, first-served system has been attacked by growers in the Caribbean for favouring multinational banana firms at the expense of smaller producers.

The European Commission is to take the first step to put in place a controversial banana import system which could prompt Washington to hit the EU with new trade sanctions.