MediaHound

EU and Latin America lock horns over bananas
Fri Sep 23, 2005 10:13 AM BST

By Jeremy Smith

BRUSSELS (Reuters) - Europe's battle over bananas with its chief Latin American suppliers has taken a new twist as Brussels faces demands to postpone revamping a complex import system or fight endless World Trade Organisation disputes.

The European Union, which lost the 1990s banana wars to Latin America, has pledged to replace its tariff-and-quota import system from January 2006 with a single-tariff regime. The problem throughout this year has been to agree a tariff level.

The latest proposal is 187 euros (127 pounds) a tonne, a figure that the EU had to lower after a world trade arbitration panel ruled that its previous 230-euro idea discriminated against Latin America.

Latin America's suppliers, led by the world's top banana exporter Ecuador, are still unhappy. They now pay 75 euros, within set quotas, to get their fruit into Europe. Anything above quota is hit with a hefty duty of 680 euros a tonne. Pitted against the Latin Americans are a group of former European colonies in the African, Caribbean and Pacific (ACP) group that enjoy an exclusive EU duty-free quota.

While Latin America wants a duty of no more than 75 euros, the less competitive ACP states want 275 euros for their rivals to stop cheaper Latin fruit from flooding lucrative EU markets.

If the Latin Americans remain unhappy with the EU's latest figure they can request a second arbitration round to determine whether the EU "has rectified the matter," in WTO jargon. A second ruling would be binding on both parties.

LATINS LOOKING FOR ROLLOVER

But while more arbitration had for a long time looked inevitable, there are now rumblings from Latin America that it might be better to extend current EU policy rather than end up with a tariff that both supplier groups think is disastrous.

"We are prepared to negotiate a transitional period from the quota system to a system of tariff-only...a period of three or five years of decreasing the (out-of-quota) tariff until we get to one that is acceptable to all parties," said Nicolas Echavarria, Colombia's ambassador to the EU.

"It's a way we think all the economic agents can adjust to the new system: the importers, producers, multinationals and the domestic producers," he told Reuters. "But it's very difficult because we don't have time to negotiate."

So far, the main Latin producer countries have not agreed on whether they favour extending EU policy. Colombia, Costa Rica, Ecuador, Panama, Honduras and Nicaragua are thought to be working on an offer to present EU negotiatiors.

Earlier this week, Panama's chief farm negotiator Estif Aparicio said his government would be willing to look at the idea of a transitional regime. "We could accept the existence of a transitional period prior to getting to tariff only," he said.

In this, Latin America coincides with the lower-yielding Caribbean ACP producers, the most vulnerable to being squeezed out of the EU market if they face more competition from Latin American or African ACP fruit from Cameroon or Ivory Coast.

Edwin Laurent, special banana envoy for the Windward Islands -- Dominica, St Lucia, Grenada and St Vincent -- said earlier this month that it seemed impossible to agree a tariff within the coming months that would satisfy the various suppliers.

"All parties should...work expeditiously for the retention of the current quota arrangements until a workable and equitable arrangement has been devised that would safeguard the interests of all suppliers including the most vulnerable," he said.

EU STILL AIMING FOR REGIME CHANGE

Details of what the Latin Americans might agree among themselves have yet to emerge. Another idea is to increase quotas while the out-of-quota tariff fell gradually, but this might have to be accompanied by a slow rise in in-quota charges.

In public at least, the European Commission -- which negotiates foreign trade for the EU's 25 governments -- says it still wants a tariff-only system to start in January 2006.

Officials are reluctant to talk of any rollover of the banana import regime, which would also involve some complicated legal manoeuvring by Commission experts.

"We haven't heard anything officially from any of the Latin Americans about a transition period. As far as we are concerned, we are aiming for January 1 for a single-tariff for Latin bananas," one Commission official told Reuters.

http://today.reuters.co.uk/news/news...archived=False

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Bananachris

This battle will go on. The US-Monopoly (Chiquita, Dole & Del Monte) dominate a 75 % of all banana sales on the world. 18 % are Fyffes (Ireland/UK) and Noboa (EC). And the rest is ACP.

This solution of the EURO 230 /metric ton is a fair solution. Before this you needed import licenses. These were very rare. I treated to receive some of them. But the EU only gave them to companies and people that earlier bought licenses. So we were out, because the big companies didn't sell them. These times were the golden years of Chiquita.

Then came the EURO 230 solution. This was no discrimination. All in Ecuador thought, now it would be easier to export directly to Europe, a market with more/less 5.000.000 boxes 22XU weekly.

I remember well the discussions in Ecuador as we started to export to Europe. I had the contracts, the contacts, ... But the big Lion of the Monopoly awakes and always offered better prices to the farms and de buyers then we could.

150000 boxes with a deficit of USD 0.20 = USD 30000 is a much for a middle sized company. A big company that exports 1,000,000 boxes absorbs this and recovered this money later in less than a couple of days.

I remember a case (Not my company) where a new banana company (some small producers with less the 200 hectares of production and buying at a fair price from other farmers) shipped a full vessel (more than 100.000 boxes 22XU) to a country. The monopoly reacted by loading a vessel and sends it to the same port. The new company wanted to save money and contracted an older vessel running 11 knots. The monopoly sent one running 19 knots. Their vessel arrived some day earlier and the banana was sold. The market couldn't absorb the 2nd vessel and the new company entered into bankruptcy.

So I also was a victim of them. But they show me their strategy and so I am still planning in my banana future being a farmer when I will retire from today’s translation job.

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