After 15 years, banana fight ends between EU, Latin America

The curtain came down today on one of the oldest trade disputes between the European Union and major Latin American producers at the World Trade Organization (WTO). It concerned bananas.

Raging for 15 years, it had become a sore thumb in global trade negotiations.

After protracted talks, the EU, which has provided preferential access for some products like this one to its erstwhile colonies in African, Caribbean and Pacific (ACP) regions, has agreed to reduce its current duty of ¤176 ($260) to ¤114 ($168) on every tonne of bananas exported by Latin American producers.

Two American companies — Chiquita and Dole — dominate the production of bananas in the Latin American countries, in which Ecuador is the largest producer, followed by Colombia, Costa Rica, Guatemala, Honduras, Mexico, Panama, Brazil and Venezuela.

In return for the EU’s decision to climb down from its preferential regime, the South American producers would stop their dispute settlement proceedings against Brussels. The outgoing EU trade envoy, Ecart Guth, had worked tirelessly to bring this dispute to a close.

After the signing, the two sides would place the agreement before their governments for review, which is expected to drag on for some months, analysts said.

In all probability, the final deal will be sent to the WTO’s General Council for approval this week. Brussels is expected to compensate its traditional preferential suppliers through financial assistance of about ¤200 million, subject to the ACP countries’ approval.

As soon as the agreement comes into force, the EU will cut the import tariff to ¤148 a tonne on South American banana producers. The final tariff reduction commitment on bananas would hinge on the Doha negotiating modalities on agriculture and market-opening for industrial goods, analysts said.