European Parliament Approves EU-Latin America Banana Trade Agreement

10 February 2011

One of the WTO's longest running trade disputes formally came to an end last Thursday, when the European Parliament ratified an agreement between the EU and Latin American banana producing countries over Brussels' banana tariff policies. Many MEPs, however, called for additional financial aid to EU banana growers as well as to producers in the African, Caribbean, and Pacific (ACP) group of countries that have traditionally benefited from preferential access to the European market.

The "Geneva Agreement on Trade in Bananas," originally concluded in December 2009 and formally signed last summer, will incrementally cut the EU's multilateral banana tariff from €176 per tonne to €114 per tonne by 2017. A series of bilateral deals concluded on the margins of that agreement will see tariffs on bananas from Colombia, Peru, Costa Rica, Guatemala, Honduras, El Salvador, Nicaragua and Peru drop to €75 per tonne by 2020.

Ratification of the accord by the European Parliament was necessary because of the demands of the Lisbon Treaty, the EU's constitutional agreement that entered into force in December 2009.

The Geneva Agreement calls a truce to years of conflict between the EU and Latin American banana producers, often linked to favourable market access terms granted by Brussels to bananas from former European colonies in the ACP group.

According to the European Parliament, the EU sources more than 70 percent of its bananas from Latin America (mainly Ecuador, Colombia, Costa Rica and Panama), while some 20 percent come from ACP countries (chiefly Cameroon, Côte d'Ivoire, Dominican Republic, Belize and Surinam). The rest are grown in the EU itself, primarily in Cyprus, Greece, and overseas territories of Portugal, Spain, and France such as Madeira, the Azores, the Canary Islands, Guadeloupe, La Réunion, and Martinique.

Several MEPs have called for additional aid to both the EU producers and the ACP countries. They warn that the €200 million in adjustment assistance (beyond regular development aid) foreseen for ACP banana producers may prove insufficient. They have called on the Commission to provide additional money, and to ensure that it is not drawn from funds already earmarked for development aid.

Meanwhile, the Association des Producteurs Européens de Bananes (APEB), a European banana growers' group, thinks that the banana trade wars may in fact not be over. Criticising the EU's planned tariff reductions, it pointed to the concessions obtained bilaterally by Colombia and Peru, noting that Brazil was seeking a duty-free import quota of its own while Ecuador and Guatemala were pushing for comparable conditions. "The ‘banana war' might still happen," it warned in a statement.

ICTSD reporting.

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