EU DEAL WITH LATIN AMERICANS THREATENS
CARIBBEAN BANANA TRADE

The EU are about to conclude a deal with Latin American banana exporting countries designed to end the long running dispute over the tariff preference for bananas form Caribbean and other ACP countries. This deal entails a very substantial cut in the preference on which ACP banana exports depend. This will fall, over an eight-year period, from the present level of 176 euros to 114 euros per tonne. Moreover, the EU are currently negotiating free trade area agreements with most Latin American countries, which are likely to entail still further reductions in the level of tariff applying to most Latin American bananas.

Some reduction in tariff may have been inevitable in the light of WTO rulings in recent disputes and the further enlargement of the Community to 27 member states. But the schedule of cuts which the EU are now to implement were agreed in Geneva in July 2008 during the negotiations in the WTO for a general liberalisation of tariffs under the Doha Development Round by all WTO member countries on products across the board. The schedule of reductions for bananas was intended to form part of that deal. But those wider negotiations broke down for reasons unrelated to bananas. It is therefore illogical, unreasonable and unfair to impose the entire schedule of cuts on the EU banana tariff in isolation from the more general deal to which it was related.

The loss of traditional ACP tariff preference would have been more acceptable in the context of similar liberalisation across the globe. There is no justification for imposing this sacrifice solely on Caribbean and other ACP banana exporters to the EU. The EU proposal for a brief pause in reductions after the fourth successive cut, if no general Doha agreement, has been reached by them, does not right this wrong. After the initial, substantial tariff cut, there should be no further cuts unless and until there is a general settlement under the Doha Round.

The EU have offered an "Adjustment Package" intended to help ACP suppliers mitigate the consequences of the reduced tariff protection. Limited sums of aid will be available to enable those suppliers with the capacity to remain in the market to improve their competitive ability. This should also provide aid for diversification and to help those forced out of business as a result of the loss of preference. But for these schemes to be of any real benefit, the aid must be disbursed as rapidly as possible, to meet the immediate need that will arise when the first - and largest - tariff cut comes into force. This will require a big change to the bureaucratic procedures that have applied to the FAS or comparable schemes in the past, with long delays in agreement of projects and many years passing before receipt of any funds.

The proposed new regime will have a severe adverse effect on the trade of Caribbean countries and the livelihood of banana growers in particular. A radical new approach is needed to meet his challenge.