Consumer Prices Could Drop as Banana Wars End

November 19, 2009

by AQ Online

The 16-year-long trade dispute between European and Latin American officials could be over by the end of this week, the European Commission announced today.  A draft settlement obtained by the Financial Times requires the European Union (EU) to gradually cut tariffs on bananas from $260 per ton to $114 if Latin American countries drop all pending litigation in the World Trade Organization (WTO). The agreement could clear the way for more individual trade agreements between the EU and countries in Central and South America.

The “banana wars” constitute the longest trade dispute in WTO history.  When the EU established a preferential policy for imports from former British and French colonies in 1993, countries in Latin America that produce bananas at lower prices than Caribbean and African countries objected.  Ecuador launched the most recent round of complaints at the WTO, seconded by the United States, home of Dole Food Company and Chiquita Brands, Inc.  Banana producers in Ecuador have voiced their support for the new EU proposal.

The draft proposal calls for a gradual reduction of tariffs over the next seven years, although the exact rate of reduction is still being disputed.  As the lower tariffs would end the advantage that exporters in Africa, the Caribbean and the Pacific have in European markets, the EU will negotiate an increase in development aid to the affected countries.

EU tariffs on other tropical products, including sugar and pineapples, could also be reduced depending on Doha negotiations in the WTO.  Some observers say ending preferential treatment would devastate small farmers in Caribbean countries, and urge European consumers to keep buying fair trade fruit from smaller markets. 

Tags:: Ecuador, European-Latin American relations, WTO

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