Uncertainty over the banana deal

According to press reports Latin American banana exporters tabled a counter-proposal to that earlier advanced by WTO director-general Pascal Lamy and accepted by the EC. This called for a cut in 2009 to €141 (compared to €150), falling to €109 (compared to €116) by 2014. In exchange Latin American exporters agreed to ‘leave bananas out of a list of products for which they are pushing duty-free access to the EU’. According to ICTSD on the fringes of the WTO mini-Ministerial on July 26th ‘eleven Latin American banana exporters and the USA … reached an agreement with the EU’ on the import regime for bananas. ‘The EU would cut its MFN tariffs on bananas to €114 per tonne by the beginning of 2016, with a €28 per tonne down-payment reduction in the first year’. In exchange bananas would not be included in tariff-reduction commitments in the Doha Round and no further disputes would be initiated ‘until the new tariff is fully phased in’.

However the ACP have refused to accept this compromise, with the ACP ministerial spokesperson arguing for greater financial compensation for the export-revenue effects of the proposed measure and a two- to three-year grace period on any tariff reductions. With the collapse of the Doha talks press reports indicate that the EC’s initial agreement to the Lamy proposal is now off the table. Ecuador is insisting that the EC stick to the deal struck on the fringes of the Geneva mini-Ministerial and is reportedly threatened to ‘continue legal action against the bloc if there was no agreement to end the long-standing dispute’. Indeed, press reports suggest a concerted Latin American action could well be possible following the EC’s perceived ‘U-turn’.

On the related issue of tropical products the ICTSD reported an emerging consensus, with tariffs on tropical products below 20% being reduced to zero and those above being cut by 80% over five years. Sugar however would be slated as a sensitive product and not be included in this deal, with gentler cuts being introduced. Again linked to the banana deal, Latin American countries agreed to longer transitions in products where ACP suppliers feared preference erosion, although discussions on rum and arrowroot are still ongoing.

Meanwhile the Jamaican government is placing emphasis on encouraging local use of bananas both for direct consumption and as value-added products, with exports being focussed on ‘fair trade’ markets, now that some 60 to 70% of suppliers have received certification.