EU adopts new banana system to end US trade war

Ulhas Joglekar ulhasj at
Mon Dec 25 18:23:32 MST 2000

21 December 2000

EU adopts new banana system to end US trade war
BRUSSELS: The European Union adopted a new import system for bananas on
Tuesday to try to end a damaging trade row with the United States that has
led to US sanctions worth $191 million a year.
The new system, presented by EU Farm Commissioner Franz Fischler and agreed
by EU farm ministers, has a "first come, first served" method of
distributing banana importing licences. It switches to a tariff-only
approach in 2006.
"This proposal is the best available solution to a problem which has lasted
too long," Fischler told the ministers.
"There was a strong majority (of ministers) in favour," Fischler's spokesman
Gregor Kreuzhuber told Reuters.
Under the new system import licences will be distributed as ships arrive at
the port instead of a system that used previous distribution patterns to
allocate new licences.
The EU has been embroiled in battle over its banana regime with the United
States and Latin American producers for years.
The World Trade Organisation ruled last year that EU's system unfairly
favoured growers in EU territories and the Caribbean over Latin American
producers, which are marketed by U.S. multinationals Chiquita Brands
International Inc and Dole Foods Co.
The WTO ruling prompted retaliation from Washington in the form punitive
duties worth $191 million a year on unrelated EU goods ranging from handbags
to bed linen.
Fischler's spokesman said earlier on Tuesday once the new system was
operational, the United States would be expected to end the sanctions.
"Once the regime is in place, obviously we consider ourselves in line with
WTO requirements which means we would expect the U.S. to lift the
sanctions," he said.
"If they don't do so ... the EU would have to demand a (WTO) panel in order
to get the sanctions lifted."
EU efforts to come up with a new way of organising its imports have been
hampered by internal divisions -- member states have been divided between
the "liberalisers" such as Germany, which wants a totally free market and
the "growers" such as France and Spain seeking to protect their own
Countries like Britain also want to see continued protection for African,
Caribbean and Pacific (ACP) state, many of which are former colonies with
fragile banana-dependent economies.
Under the new plan, bananas will continue to be imported within quotas,
attracting differing tariff rates. The main quota of some 2.5 million
bananas will have a 75 euro per tonne tariff. Within a second quota ACP
countries will get a 300 euro a tonne reduction from wherever the tariff is
Britain, the only country to vote against the new plan, said it did not
think it was a solution to the trade dispute.
"It won't satisfy the WTO, the United States or the Caribbean producers.
This will be back before too long," a government spokesman told reporters.

U.S. companies are also divided on the merits of a first come, first served
system, which Washington has already indicated it was also unhappy with.
Ecuador, the world's largest banana exporter has signalled it would accept
the new first-come, first served plan.
The banana dispute is one of a series of high-profile trade row between
Brussels and Washington.
Another, over the EU's ban on beef from cattle reared using hormones, has
also led to sanctions. The United States imposed punitive duties worth $117
million on EU exports last year, focusing the sanctions on food products.
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