EU Will Try To Favour ACP Bananas Despite WTO Ruling

by Ulrika Lomas, for LawAndTax-News.com, Brussels

05 August 2005

The European Commission said on Tuesday that it still plans to give preferential access to bananas from ACP nations even after the WTO ruled on Monday that the EU's proposed tariff of 230 euros per tonne, which would be applied mainly to imports of bananas from Latin American countries, would be too high to allow those countries to maintain their European market share in line with WTO rules.

"The idea remains to offer preferential access to ACP countries," said European Commission spokeswoman for trade issues Claude Veron-Reville. "We are allowed to consider maintaining a preference for ACP countries."

The EU currently applies a tariff rate of 75 euros per tonne for Latin American bananas covered by quotas and 680 euros per tonne for bananas not covered by quotas. Nine Latin American countries - Brazil, Costa Rica, Colombia, Ecuador, Guatemala, Honduras, Nicaragua, Panama and Venezuela - brought a case against the EU's proposed new regime at the WTO.

Earlier this year, however, banana producers in the ACP (African, Caribbean and Pacific) countries countered with a request for tariff-free access for themselves and a EUR275 per tonne level for all other banana producing countries, arguing that when the quotas are removed next year, Latin America is likely to flood the market.

The Commission said it would study carefully the arbitrators’ report and examine available options for taking this
process forward. The intention remains to have a tariff only system in place on 1 January 2006, as agreed at the WTO Doha Ministerial held in 2001. The Commission will shortly initiate consultations with the countries concerned and expects their constructive engagement in these consultations.

Mariann Fischer Boel, EU Commissioner for Agriculture and Rural Development, said “The EU has calculated the MFN import duty for bananas in a neutral and transparent manner and has engaged in consultations with the Latin American countries concerned and in this arbitration in a constructive spirit. It has always been our intention that the form of the EU banana import regime would change but that the level of protection would not increase. We are currently evaluating the options available for putting into place the new import regime for bananas as from 1 January 2006”.

Peter Mandelson, the EU’s Trade Commissioner, said “The tariff proposed by the EU was designed to be a neutral and fair conversion that would maintain current market access for all banana suppliers to the EC. We remain committed to follow the procedures established in the Cotonou Waiver agreed in Doha in 2001 as the best means to facilitate a
solution to the longstanding “banana saga”. We will start consultations with interested parties without delay. I hope that everyone will cooperate in finding a mutually acceptable solution within the strict deadline set by the WTO”.

The WTO's arbitrators said that as regards the reference period and the price data used for the calculation, it is important to use the most recent representative reference period, and criticized the data used by the EU for internal prices, namely FAO data. The arbitrators acknowledged the difficulties of finding fully reliable data, but offered no further guidance in this respect.

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