Governments strive for early end to banana war

Date: 27/01/2000

By Simon Taylor

HOPES are rising that EU governments could agree changes to their disputed banana import regime by the end of June, paving the way for an end to one of the Union's biggest and most embarrasing trade disputes with the US.

EU officials say the Portuguese presidency is not pushing hard for an early deal because of concerns about the impact of any reforms on its own producers. Lisbon has set up a special working group to thrash out the details of a possible solution, but it is only due to hold its first meeting tomorrow (28 January).

However, industry representatives believe member states are anxious to reach an agreement by June to settle the long-running dispute with Washington. The US imposed sanctions on imports of EU goods worth h191 million last year after the World Trade Organisation ruled that the Union's banana regime broke international trade rules.

Industry experts say a deal depends on member states agreeing on how to protect vulnerable producers in the Caribbean who would be hit hard by a European Commission plan to phase out the current quota-based system which gives them access to the EU market.

According to diplomats, most Union governments support a proposal tabled by the Commission in November which would see the Union move gradually to a tariff-only system over six years. But five member states which either grow bananas or have strong links with former colonies have expressed various degrees of opposition to the plan, with France, Greece and Spain most strongly opposed to the Commission's approach.

At the centre of the dispute lie arguments over how the EU can continue to provide market access for growers in Caribbean states such as Dominica and the Windward Islands. These countries are expected to lose out under the Commission's plan because they are less competitive than banana producers in Africa and the Pacific, and would therefore lose market share under plans to auction import licences for a specially reserved quota to the highest bidders.

Caribbean producers have submitted their own reform proposals, accepting the move to a tariff-only system but calling for the quota for ACP producers to be based on their recent trading history. Industry sources claim this approach has won broad support from the US and the UK, but other member states remain sceptical.

The Commission's reform plan envisages a six-year first phase during which there would be three quotas, with preferential access for ACP growers. After that, the EU would scrap all quotas and introduce a flat-rate tariff.

The need for a swift solution to the dispute was underlined last week when Ecuador, one of the banana-growing countries which challenged the Union's import rules, applied for WTO approval to impose €450 million of sanctions on the EU to compensate for losses caused by the current regime.

Hopes are rising that EU governments could agree changes to their disputed banana import regime by the end of June 2000, paving the way for an end to one of the Union's biggest and most embarrasing trade disputes with the US.