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LATIN AMERICA: Banana Producers Go to WTO

by Raphael Minder and Frances Williams Financial Times
March 30th, 2005

Ecuador and four other Latin American banana producers sought World Trade Organisation arbitration on Wednesday in their dispute with the European Union, raising the prospect of another long trade battle over the EU's banana import regime.

WTO banana arbitration could also have a wider impact on world trade negotiations. Brussels recently accused the Latin Americans of deliberately delaying the arbitration request, with the aim of dragging out the whole procedure until a key WTO ministerial meeting in Hong Kong in December.

Trade diplomats fear a repeat in Hong Kong of events in Doha in November 2001, when Latin American producers threatened to block an interim global trade deal until their demands were met on bananas.

A last-minute deal providing for arbitration on the introduction of a new EU tariff-only banana import regime was eventually reached, satisfying Latin American banana producers unhappy with the EU's transitional arrangements.

The EU, which is due to introduce a new banana import regime from 2006, has been caught between the competing wishes of Latin American nations and banana producers among the African and Caribbean (ACP) countries essentially former European colonies that benefit from a preferential tariff treatment from the EU.

Latin American producers have been angered by an EU proposal for a common tariff of €230 ($298, £158) per tonne, arguing that the EU should switch instead to a zero-tariff policy, or at worst maintain a regime equivalent to the current tariff level of €75.

ACP countries want a higher tariff of €275. The arbitration will also take the WTO into unchartered legal waters. Special rules will have to be devised, for instance, to allow the US and ACP countries to participate.

Under the Doha accord, the arbitrator must be appointed within 30 days of the arbitration request and will then have 90 days to decide whether the new EU tariff can guarantee “total market access” to Latin American banana exporters.

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