The EU and the Latin American countries are close to ending the trade war that has been going on for more than 15 years on access to the European ‘dollar banana’ market. “We are now in the final stages of negotiations in Geneva in order to bring together a deal. We are not there yet, but it could be later this week or early next week,” Trade Commissioner Catherine Ashton said. A parallel agreement is also about to be finalised with the United States, which was associated with the complaint lodged by the Latin American countries before the World Trade Organisation, since these bananas are produced by American companies (Chiquita and Dole). On the Latin American side, a source close to the talks told Europoliticsthat “we are close to a viable agreement”.

The agreement, which could be initialled in the coming days in Geneva at ambassador level, would end a conflict that has dragged on since 1993, when the Latin American countries decided to dispute the EU’s preferential customs scheme for the ACP (African, Caribbean and Pacific) states. Once initialled, the agreement will be on the agenda of the next WTO General Council, on 16 December, to make sure it is not opposed by any of the organisation’s members. The 27 member states will then have to authorise its signature and it will have to be ratified by the European Parliament.

According to a Commission internal memorandum summing up the agreement, the compromise provides for an initial reduction in customs duties from €176 to €148 a tonne upon signature of the agreement (retroactive to the date of initialling), followed by an annual decrease for seven years resulting in a rate of €114 a tonne in 2017. In exchange, the Latin American suppliers agreed to drop their action against the EU in the WTO, which has several times ruled in their favour.

The EU will also help the ACP banana producer countries (which are exempted from customs duties under the economic partnership agreements or EPAs) to cope with this increased competition by granting additional aid of €190 million over four years. According to Eurostat, 72.6% of the 5.4 million tonnes of bananas sold in the EU in 2008 already came from the dollar zone (mainly Ecuador, Colombia, Costa Rica and Panama), 17% from the ACP states (primarily Cameroon, Côte d’Ivoire, the Dominican Republic, Belize and Suriname) and 10.5% from the EU itself (mainly the Canary Islands, Guadeloupe and Martinique).

DOHA DEAL ON TROPICAL PRODUCTS

The EU and the Latin American countries also agree not to call this agreement into question as part of the global Doha round talks open since 2001. According to the Commission’s memo, “Bananas will not be subject to further cuts in the multilateral WTO round and will in particular not be subject to the deeper tariff cuts which apply to tropical products” (a long list, from pineapple to sugar). Before initialling the deal, the EU is awaiting the conclusion this week of an agreement between the Latin American and the ACP countries on the list of these tropical products and the extent of the customs reductions, one of the key issues in the agriculture chapter of the Doha round.

The ACP states, which enjoy free access to the EU for these projects under the EPAs (with the exception of rice and sugar), fear an ‘erosion’ of their advantages if these products are liberalised speedily under Doha, as sought by the Latin American states, which often produce the same goods. This agreement on tropical products will only be implemented if the Doha round talks are brought to successful conclusion, unlike the banana agreement. This explains why the ACP states, which are also interested in a Doha agreement for the export of their agricultural products to the United States and other Southern markets, obtained a two-year freeze from 2013 on the customs duties cuts in the event the Doha round has not concluded an agreement by this date.

Lastly, the agreement on bananas is expected to facilitate the conclusion of the free trade agreements being negotiated by the EU with Colombia, Peru and Ecuador (see separate article), where bananas were one of the toughest issues.