27th Jan 2020

Bananas at centre of Latin American fight with EU

A dispute launched by Latin American banana producing countries against the European Union’s proposed new tariff regime risks sparking a new trade war between developing nations.

If the Latin Americans get their way in the World Trade Organization dispute, which is currently awaiting the appointment of an official mediator, a 75 euro per tonne tariff would help Latin American industries to survive and to continue to supply the EU market.

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  • Latin American banana producers and those in Africa, Caribbean and Pacific countries are fighting each other for EU market share (Photo: Corbana)

Developing countries in Africa, Caribbean and Pacific (ACP) countries risk losing the little market share they have in the lucrative EU market and being forced out of business under new EU proposals, they say.

The EU has suggested a tariff-only regime of 230 euro per tonne, replacing an old regime which included low tariffs for a certain quota and extremely high tariffs for above-quota loads.

The ACP is asking for 275 euro per tonne for everyone else while ACP countries would get tariff-free access.

Meanwhile, the Least Developed Countries will get tariff-free access to the EU market under the Everything But Arms initiative from January 2006.

Both sides of the debate are developing countries who rely on their banana industries to supply water, housing and education in remote locations.

Awaiting Arbitration

"This is the first time in ten years that the Latin American countries are working together," Mariano Jiménez Zeledón, legal and corporate affairs manager for Costa Rica’s Corpación Bananera Nacional, or Corbana, told EUobserver in an interview.

Nine Latin American countries including Ecuador, Columbia, Costa Rica, Panama, Honduras and Guatemala requested WTO arbitration on March 30 and expect the appointment of a mediator in the next few days, he said.

Costa Rica has the highest production cost for bananas in the group but also has the highest rate of productivity. Corbana believes the EU’s proposed tariff will cripple if not destroy the sector.

West African producers Cameroon and Ivory Coast have petitioned the WTO to participate in the arbitration procedure directly, not as observers, because they feel the issue is too important to their industries to let others decide their futures.

"If the tariff is too low, we will be kicked out of the market," Ebanda Alima Anatole of the Association of Banana Producers of Cameroon told EUobserver in an interview.

"Latin America will flood Europe and we will not be able to sell at all," said Mr Anatole.

Dole vs. Pineapple

Latin America’s dominance of the world banana market is in large part due to massive plantations owned by American companies such as Dole and Del Monte. Economies of scale allow these countries to produce millions of tons of bananas annually for global consumption.

According to Mr Jiménez Zeledón, Costa Rica alone supplies roughly 28 per cent of the EU banana market.

On the other hand, Cameroon and the Ivory Coast produce roughly half a million tons of bananas a year, combined, and supply on average 10 per cent of the EU market, said Mr Anatole.

"It is madness to think we can invade the market," he said. "We just wish to keep our own market share."

Both sides say they do not want to war with each other and that as developing countries they should be working together, but globalisation and trade politics is getting in the way.

Once a WTO arbitrator, or team of arbitrators, is appointed, according to WTO procedures, a binding decision will be made within 90 days.

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