Wednesday

1st Feb 2023

EU ends 'banana wars' with Latin America

The European Union has reached an agreement on banana import tariffs with Latin American countries, ending the world's longest running trade dispute.

"So, it's done. Thank you very much," said Eckart Guth, the EU ambassador to the World Trade Organisation who chaired the Geneva ceremony, prompting loud applause and cheers from trade negotiators.

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  • ACP countries will see the end of their banana trade advantage over the next seven years (Photo: Nick Shaw / Banana Link)

The deal – ‘initialed' in the Swiss city on Tuesday afternoon (15 December) – will see the EU gradually end its preferential treatment of banana exporters in African, Caribbean and Pacific (ACP) countries.

Smaller producers such as Thailand and the Philippines are also set to benefit from the agreement, under which the EU will cut duties on bananas from the current level of €176 per tonne to €114 per tonne by 2017.

Latin American countries are expected to drop complaints against the EU at the World Trade Organisation in return, with the deal also expected to facilitate ongoing multilateral trade talks.

Greater levels of competition between producers as a result of the deal are forecast to lower prices for European consumers, who showed their enthusiasm for the yellow fruit by scoffing 5.4 million in 2008.

Ecuadorian President Rafael Correa – whose country has been one of the most vocal critics of the discriminatory tariffs - used a visit to Brussels last month to step up pressure on the EU.

The agreement must now be formally approved by each of the parties before it can be fully implemented.

Colonial hangover

Prior to Tuesday's deal, ACP countries enjoyed tariff-free entry for bananas into the EU as a result of their former colony status, while a similarly troubled history failed to secure the low tariffs for Latin American countries.

The dispute stepped up a gear in 1993 when the EU established a preferential policy for imports from former British and French colonies, but earlier tensions date back as far as the 1970s.

Recent efforts to reach an accord have hit the buffers over the level of compensation the EU will offer ACP countries to soften their landing, with the final figure expected to be in the region of €200m.

Robert Sturdy MEP, international trade spokesman for the European Conservatives and Reformists group in the European Parliament, welcomed the news, but cautioned that money promised to compensate ACP states must reach the producers.

"Whatever the justification, it was wrong for the EU to give preferential treatment to one set of producers over another," he added.

Despite not being a direct banana exporter, the US has been closely involved in the ongoing negotiations, with several of its largest banana distributors and processors based in Latin America.

US corporations likely to benefit from the deal include Chiquita, Dole and Del Monte along with Ireland's Fyffes.

Free trade agreements

Brands such as Chiquita – formerly known as the United Fruit Company – have been repeatedly criticised for poor treatment of workers.

A 1954 coup d'etat in Guatemala – broadly supported by the United Fruit Company, say historians - plunged the country into a 40-year period of dictatorships and civil war, costing the lives of over 200,000 citizens.

The EU is currently negotiating bilateral free trade agreements with a number of countries and trade blocs within Latin America – with the deals set to be facilitated by Tuesday's agreement.

But a number of MEPs – armed with new trade powers under the Lisbon Treaty – last week indicated they would attempt to block an imminent bilateral trade agreement with Colombia as a result of the country's poor human rights record.

A delegation of human rights NGOs from Colombia recently met with representatives from each of the parliaments political groups, urging them to block the Colombian deal on account of the country's high rate of trade unionist murders – the highest in the world.

"Politicians across the political spectrum are really thinking hard about the free-trade agreement with Colombia," Socialist MEP Richard Howitt told EUobserver.

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