Banana tariff proposal on the table

On June 24th US and EU negotiators agreed to allow more time for the EU to formulate a response to the WTO banana ruling. The new deadline for the adoption of the compliance panel report is August 29th 2008. Ecuadorian diplomats have concurred with this agreement. The EC has argued that the new deadline will provide more scope for concluding a negotiated solution. In June press reports suggested that the EC was looking to introduce reductions in the MFN duty from ‘€176/tonne to €141/tonne from 1st January 2009 and to €115/tonne in six to eight years’. ACP representatives firmly rejected this approach, arguing that under the current tariff Latin American exporters had increased their exports by over 679,000 tonnes up to December 2007, while ACP exports have increased by only 74,000 tonnes. The ACP have called on the EU to ensure that ACP banana suppliers are not sacrificed in the interests of achieving a final WTO deal. Indeed Caribbean heads of government went further, arguing ‘if the outcome of the WTO Doha Development Agenda negotiations are to be balanced, there must be suitable treatment for bananas and other products that are the subject of long-standing preferences and that if this were not to be the case, Caribbean countries would find it impossible to join in any consensus that may emerge in the current talks’.

Meanwhile on July 16th 2008 the EC announced its willingness to accept proposals put forward by WTO director-general Pascal Lamy which proposed:

• a tariff of €116 per tonne, a big cut from the existing tariff of €176 per tonne’;
• delay in implementation of MFN tariff reductions over the period until 2015 in order to allow ACP banana producers to adapt;
• an initial tariff cut of €26 per tonne in the first year (from January 1st 2009), a further cut of €9 per tonne in the second year (from January 1st 2010) and then a €5 cut in each remaining year to 2015 (to reach €116 per tonne by January 1st 2015).

If this formula were accepted then ‘bananas will not be subject to additional cuts in the Doha Round’ and both sides would agree a ‘peace clause which will commit them to not reopening the issue’.

The EC also reiterated its willingness to work ‘with both Latin American and ACP countries to find a workable solution for both sides’. Trade Commissioner Peter Mandelson has stressed that resolving the banana dispute ‘must be part of a final Doha deal’. Indeed, according to press reports he went so far as to argue that director-general Lamy’s proposal was made ‘on a take-it-or-leave-it basis’ and that ‘if it was not accepted there would be no accord on trade in tropical agricultural products and so no wider WTO accord’, thus ‘if others wanted to reject it, then they had to take responsibility for the failure of the whole Doha Round’.

ACP representatives have described the Lamy offer as ‘an unacceptable threat to its producers’, since it would give ‘undue advantage to the Latin American producers’ and ‘deal a lethal blow to the ACP banana industry’. In contrast Latin American diplomats said “we are positive we can agree something. We are very close but not yet there’. However according to Panama’s WTO ambassador Latin American exporters ‘are willing to be reasonable in the interest of settling this long dispute but will need to see a better starting reduction, phase-in period and final rate than the one the EC is willing to accept’

Against this background the importance of Caribbean exporters ‘branding’ their banana exports to facilitate marketing of exports into premium-priced markets has been highlighted. This comes at a time when ‘WIBDECO has announced a reduction in banana prices to farmers … by one dollar for large carton boxes’.