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PANAMA: Banana Growers Fear EU Tariffs May Spell End

by Mike PowersReuters
June 14th, 2005

 PUERTO ARMUELLES, Panama On an industrial dump outside town, one-time banana worker Giovanni Morales climbs down into a toxic pit with a blunt pickaxe in search of scrap metal.

Morales is one of about 9,000 former banana workers in Puerto Armuelles, one of Panama's biggest banana-producing regions, who lost their jobs when the industry took its latest downturn in 2003 due to a disease that ruined the crop.

Now, he sells scrap metal foraged from rusting equipment used on plantations decades ago. Almost all the scrap diggers here have chemical burns from scrambling in and out of 6-foot deep pits and tunnels among pools of old diesel fuel and piles of pesticide-ridden bags once used to protect the fruit from plagues.

Tens of thousands of banana workers in Panama and across Latin America fear they could also soon be thrown out of their jobs and forced into a desperate fight for survival.

The European Union (EU) wants to increase import tariffs on Latin American bananas from 75 euros per ton now to 230 euros per ton in 2006. Growers and exporters here say it could lead to the collapse of their industry.

"The price that the EU is talking about would practically remove the majority of Latin America from the market," said Domiciano Cardenas, head of Cosemupar, the co-operative that grows bananas in the Panamanian town of Puerto Armuelles.

The fight could revive the "banana wars" of the 1990s, when the World Trade Organization (WTO) backed claims by the United States and Ecuador that a complex EU system of quotas and import duties barred Latin American fruit from European markets.

Across Latin America, producers say they could now be wiped out by the EU tariffs, which replace the old system of quotas and duties and are aimed at protecting growers in Europe's former colonies in Africa, the Pacific, and the Caribbean.

Those farmers are also unhappy with the proposed new tariff -- they want it set even higher at 275 euros or more.

Fighting back, six Latin American producers recently asked the WTO to rule whether the new tariffs will hit their exports unfairly.

The EU tariff changes are scheduled to go into effect on Jan. 1, 2006, though implementation would be delayed if the WTO agrees to review the Latam banana producers' petition.

If no deal is reached and Latin American nations hold firm, the dispute could hamper negotiations at a crucial round of WTO trade talks late this year in Hong Kong.

Panama's banana trade has shrunk by half in the last decade because of fruit plagues. In 1994, 41 million boxes were exported; last year's figure was a little over 20 million.


Some of Latin America's producer nations are classic "banana republics", where international fruit firms once wielded great political power.

With the help of the CIA, the United Fruit Company -- which later became Chiquita Brands International -- backed a 1954 coup that toppled Guatemala's president after he tried to push land reforms that would have harmed the firm's holdings.

Even now, the banana industry is hugely important to social and economic stability.

In Baru, in Panama's southwest on the border with Costa Rica, there is almost no work other than in bananas. Unemployment is over 40 percent and all sides agree the EU's new tariffs would plunge thousands deeper into poverty.

On the lush Potrero plantation, unemployed men steal metal from a footbridge to sell as scrap, says Saleustiano de Gracia, general secretary of the banana workers' union.

Those lucky enough to still have jobs are desperate for the plantation to be saved.

"This industry cannot fall, it cannot," said worker Julio Garcia Sanchez, calling on the government to search "like an eagle" for a way to save the sector. "I have two sons in college -- I have to fight to support them," he added.

In Puerto Armuelles, pawnbrokers are thriving.

"We've been busy lately," said owner Joseph Castillo as he weighed thin gold chains and small rings. "People are looking for any way they can to make money. Normally there are 70 people (here) in a week. Now, that many sometimes come in a day."

Union leaders say workers will bear the brunt of the decline because international fruit firms will simply leave Central America and set up shop in Africa, where growers would benefit from reduced competition from Latin American farmers.

Already these firms are looking for land in Angola, Cameroon, and Ivory Coast, industry players say.

"If Europe applies this, it will hit Central American countries more than the multinationals. They will just leave," said Cardenas, of the worker's co-operative Cosemupar.

At the dump outside of Puerto Armuelles, life is bleak and accidents are common.

"Last year a young girl was buried up to her neck when the earth fell on her," says Morales, the scrap digger, as sweat streams down his face. "We rescued her but she broke her ribs and blood was pouring from her mouth."

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