The EU Trading Regime

Because of overriding problems of size, climate and terrain, Caribbean banana producers cannot compete on price with the vast, flat plantations and more fertile soil of Latin America, where production and marketing is highly integrated, in many cases controlled by the dominant North American multinationals, and benefits from substantial economies of scale.

But Caribbean banana production was able to flourish under the protective regime historically operated by the UK for their benefit. These arrangements continued following UK accession to the European Community, alongside similar arrangements operated by France. These traditional benefits were guaranteed under successive Lomé Conventions, running from 1975 to 2000, between the EU and ACP (African, Caribbean and Pacific) countries.

The EU was committed to adopting a single market for all products by 1993. It introduced a Community-wide banana import regime from 1 July 1993, which sought to maintain traditional benefits for the Caribbean and other ACP countries through a system of tariff quotas, which was designed to maintain market stability by limiting imports. A complex licence allocation system also provided an element of cross-subsidisation to compensate for the much higher costs of production in ACP countries than in Latin America.

Following a series of challenges by the USA and certain Latin American countries in the GATT and the WTO, that regime was amended 3 times, each time entailing a significant reduction in the support provided for ACP producers. In April 2001 the EU finally reached agreement with the USA and Ecuador, the main critics of the previous regime, on a two stage end to the dispute. This provided for an amended quota regime to apply to the end of 2005; and thereafter for only a flat rate tariff, at a level still to be negotiated.