Time runs out for EU banana regime

Date: 22/10/1998

By Myles Neligan

IN THE long-running EU-US banana dispute, the European Commission has portrayed itself as the fearless defender of small Caribbean banana growers in danger of being wiped out by much larger US-backed producers in Latin America.

The Union's ill-fated banana import arrangements, which gave preferential market access to Caribbean fruit, were designed to provide producers with a fair living in the face of overwhelming competition from more cost-effective Latin American rivals.

Now, with just three months to go before the EU must scrap the regime which the World Trade Organisation condemned last year as discriminatory, the Commission is desperately looking for a way to meet its WTO obligations while still holding out a helping hand to beleaguered Caribbean growers.

Willem Kokkeel, a director of Atlanta AG of Bremen, Europe's largest fruit importer, feels that the time is right to correct the impression that the banana import regime was an entirely worthy policy with wholly benign effects.

As the main supplier of bananas to ten EU countries, the company traditionally purchased its fruit from Latin America, the cheapest and most reliable source. All this changed in 1993 with the entry into force of the EU banana import regime which, through a complex system of quotas and licence allocation rules, effectively obliged Atlanta to source some of its bananas, at greater cost, from the Caribbean.

"Since 1993, we have suffered heavy losses. We have been forced to close our discharge facility in Rostock and the volume of our imports to Bremerhaven is down by 50%. Altogether, about 300 of our employees have been laid off," says Kokkeel, emphasising the sense of injustice that Atlanta management and staff feel over the issue. "Basically, they are telling us where we may or may not get our bananas."

Although the firm has deep pockets, with annual sales of about 1.2 billion ecu, the sudden downturn came as a shock.

Atlanta, as a German-based company, has a deep understanding of the sentimental attachment that the German people feel for the humble banana.

Deep-rooted memories of the first shipments of the fruit to arrive in the country after the acute food shortages of the Second World War have made bananas nothing less than a symbol of liberation for many Germans.

To this day, the country's consumption far exceeds that of any other EU nation and any measure that might result in an increase in banana prices meets with a hostile reaction.

German consumer organisations are eagerly awaiting the outcome of Atlanta's legal challenge to the banana regime, currently awaiting a final decision in the German constitutional court.

If the court agrees with Atlanta's claim that the regime harms the interests of German companies, and is therefore in breach of the country's constitution, the decision would put an end to all attempts at regulating the EU banana market. Atlanta would interpret the ruling as carte blanche to resume imports from Latin America, and it would be next to impossible to prevent cheap banana supplies from making their way into other member states.

"We expect a ruling before the end of the year, and believe that we are on very solid legal ground," says Kokkeel.

For the time being, however, he is focusing his efforts on the EU's plan for complying with last year's WTO decision. He considers the banana regime reforms agreed by Union farm ministers in June to be inadequate and accuses the Commission of underhand tactics in its negotiations over future import arrangements with the banana industry.

"The reforms are being carried out in a secretive and, I believe, illegal manner. The new import licence allocation system is being discussed behind closed doors by technical experts instead of openly by politically accountable politicians, and it is easy to see why. The reforms are a total whitewash," he says.

Kokkeel believes that the Commission's planned overhaul of the import licence allocation system will perpetuate the old practice of reserving a large proportion of the available licences for importers specialising in Caribbean bananas, forcing companies with historical ties to Latin America to buy up import licences from their rivals at inflated prices.

He stresses that he does not want to see Caribbean banana producers go bankrupt, but insists that the EU can better achieve its aim of supporting them through a combination of import quotas and direct assistance.

The present approach, he believes, costs too much and causes too much conflict between the Union and its trading count erparts. "The EU runs the risk of losing its credibility as a trade partner," he says.

Interview with Willem C.C. Kokkeel, a director of Atlanta AG of Bremen, Europe's largest fruit importer.