Banana peace slips through fingers

4 September 2008

 Just in the nick of time, it seemed, all the warring parties - with the exception of a minority of European governments led by Spain - accepted the banana agreement brokered at the world trade talks in Geneva in late July. The WTO General Council of July 30 was set to enshrine an agreement to reduce EU banana import tariffs for so-called ‘third country' (non African, non-Caribbean) fruit by 35% over the next seven years.
The Geneva Agreement on Trade in Bananas, dated July 27 2008, represents an historic breakthrough for this controversial commodity sector, after more than 15 years of challenges to the European Union's import policy in the GATT and the WTO.2  The signatories to the Geneva Agreement, which includes a clause settling all existing disputes in the WTO, are the European Communities, Colombia, Panama, Ecuador, Costa Rica, Honduras, Guatemala, Peru, the United States, Brazil, Mexico, Nicaragua and Venezuela.
On the eve of the agreement, Cameroon led an ACP group counter-proposal, seeking a grace-period before cuts were implemented. However, at the eleventh hour they accepted that, provided the African and Caribbean exporting governments could negotiate a satisfactory aid package to restructure their industries, they would accept the agreement - albeit grudgingly.
There would be no problem finding the funds: the European Commission alone has earned well over €400 million in banana tariff income since the last major reform of January 2006, whilst the EU member states where bananas are landed have reaped a handsome €1.2 billion over the same period. The key would be to ensure that this money goes to those involved in the banana chain who need the support most.
Spain's Rural Environment Secretary, Josep Puxeu, signalled his opposition to the deal, noting that any agreement had to be ratified by the EU Council of Ministers: "Spain wants to maintain high tariff protection for bananas for as long as possible," he told Spanish language news agency EFE on July 28. However, the Council of Ministers had already approved a marginally different European Commission negotiating mandate for a 34% cut in the €176 per tonne tariff over six years on July 18, so it was highly improbable that more than a handful of banana producing governments would vote against the agreement in Brussels.3 These countries would be unable to block ratification by the EU's top decision-making body, even if the current EU President, Nicolas Sarkozy, who has recently entered into an angry war of words with European Trade Commissioner Peter Mandelson, would choose to throw his country's weight behind the Spanish rejection.

Then came the words that broke one of the shortest peace agreements in history: just hours after 15 years of banana trade wars appeared to be over, on the evening of July 29, the EU Trade Commissioner told the press that in light of the general failure to advance on other agriculture topics in Geneva, the banana peace deal would have to be renegotiated from scratch. Banana peace and progress in the Doha Round were inextricably linked, it was claimed. But the July 27 text of the agreement, however, does not say any such thing. Paragraph 4 states: "The other WTO Members signatory to this Agreement agree that this Agreement shall constitute the EC's final market access commitments for bananas for inclusion in the final results of the next multilateral market access negotiation for agriculture products successfully concluded in the WTO (including the Doha Round)."
So, it seems that Mandelson's rejection of the deal can only be explained by other factors, beyond the world of trade arrangements in the multi-billion euro banana business. Lamy, who had spent so long setting the stage behind the scenes for a breakthrough in the months leading up to the Geneva talks, has not yet stated the WTO Secretariat's position on whether the deal has to be renegotiated. The Latin American producers are angry that the EU is using the Geneva ‘break-down' to scotch the deal, and are exerting as much diplomatic pressure as they can muster during the European summer recess. Outside the EU itself, only the small vulnerable Caribbean island states like St. Vincent & The Grenadines, which really do stand to lose under the agreement, have spoken out against the agreed tariff reductions.
For the current and future African exporting countries, the duty-free quota-free treatment under the EPAs - and the bilateral interim agreements scrambled together with Brussels before the December 31 2007 deadline - will enshrine the preferences that have been under attack for so long.4 The multinationals that control the trade from there into the EU can in fact live with a tariff of €114 per tonne.
However, on August 26, the African, European and Dominican Republic producers issued the ‘Yaoundé Appeal', calling on the European Commission to go to an appeal in the WTO rather than resurrect the deal they were rather happy to see sink four weeks before.5 On August 29, the Commission announced it would indeed be appealing the Ecuador and USA panel rulings, claiming they were "outdated."
In all this fighting over tariffs (which are, after all, paid by traders not governments) it is important to remember what is really at stake. The ‘breaking out' of banana peace would actually give all the players along the chain - from plantation and packhouse workers to global retailers - the chance to put into practice all the fine declarations of recent years in favour of a transition to a genuinely sustainable banana economy.5
If, on the other hand, it should turn out that a deal on bananas has been sacrificed on the altar of cotton and other fights over Northern agricultural subsidies and free access for Northern service corporations in the South, then this unsavoury story will have to be told one day soon.
Long live the banana peace!
 
 
1 Alistair Smith is the International Coordinator of Banana Link, a small co-operative that campaigns for a fair and sustainable banana trade. www.bananalink.org.uk 
2 To read the full document see: www.iatp.org/tradeobservatory/library.cfm?refID=103211
3 The handful of countries would be Spain, France, Portugal, Greece and Cyprus.
4 Cameroon, Ivory Coast and Ghana currently; Angola and Mozambique by 2010.
5 Appel de Yaoundé des producteurs de bananes d'Afrique, des Caraïbes et du Pacifique et de l'Union Européenne, august 26 2008.
6 See the "Declaration of Participants" from the second International Banana Conference in 2005 at www.ibc2.org

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