TRADE-EU/ACP: Caribbean Banana Producers Fight For Their Livelihood

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Brian Kenety

BRUSSELS, Jul 26 2000 (IPS) - Sir James Mitchell is on a mission.

The prime minister of St. Vincent and the Granadines is working to preserve a market for banana producers in Europe for fear of great ‘social unrest’ if it were to collapse.

‘Our mission today, and over the next few weeks, in Europe is to try and resolve the outstanding issues on the European Union’s (EU) banana regime in compatibility with World Trade Organisation (WTO) rules,’ the 69-year-old statesman told a news conference here Tuesday evening.

‘If it fails immediately, there could be social disruption in our countries. If it fails in 10 years, it won’t be that bad – so time is of the essence,’ he said, speaking as president of the regional Caribbean Community and Common Market (CARICOM).

Banana exports to the EU are crucial to the economies of the African, Caribbean and Pacific (ACP) states’ producers.

Under the Lome Convention, which governed trade and aid relations between the 15 EU member states and the now 77 ACP states, most of which are former European colonies, ACP banana producers enjoyed a system of preferences.

The EU regime has ensured both access and a viable price for Caribbean bananas.

This has been achieved, in recent years, through the mechanism of a tariff quota allocated on the basis of past trade. Limiting the volume on the market has kept prices up, whilst the historically based licensing system has guaranteed access for traditional Caribbean and other ACP imports.

However, the WTO has ruled that these must be scrapped, following complaints from Latin American producers backed by US multinationals.

Under the new EU-ACP Partnership Agreement, which replaced by Lome in June, the two sides are seeking a WTO waiver in order to ease the transition for the Caribbean states.

An ‘orderly transformation’ from Lome to full WTO compatibility is ‘key, because we cannot afford social unrest, which would not only impact on banana producers, but also on tourism and other sectors,’ stressed Ambassador Edwin Laurent of the Eastern Caribbean States office in Brussels.

The ACP Secretariat sees a real risk that either the waiver, currently being sought for the post-Lome EU-ACP Partnership Agreement, will be delayed until after the banana dispute has been settled; or that it will be granted but with bananas specifically excluded from it, with only other commodities enjoying a waiver.

A joint EU-Caricom committee was meeting this week to examine the technicalities of the various proposals and their possible impact on ACP banana producers.

In the Winward Island states of Dominica, St. Lucia and St. Vincent, they account for over half of all export earnings and over one third of employment.

In Jamaica and Belize, where bananas play a smaller role in the economy as a whole, they are nevertheless crucial to the economic life of specific regions.

Moreover, because of the close interdependence of trade among CARICOM members, even those Caribbean countries that do not directly depend on the banana export trade would ‘suffer severe economic consequences,’ according to a memo by the ACP General Secretariat.

The EU executive Commission and the Caribbean producers have yet to agree on a WTO-compliant system that safeguards the sector yet is acceptable to the United States, which charges that US multinationals, such as Chiquita and Dole Foods, are losing business.

In March last year, Washington imposed duties of 100 percent worth over 200 million euros a year on a wide range of EU exports, triggering the transatlantic ‘banana war’ which has pitted Latin American banana-producing countries such as Ecuador and Honduras against the ACP states.

On Tuesday, the WTO ruled that Washington had acted illegally by effectively moving on the duties six weeks before the Geneva- based trade organisation had authorised them, but this has had no immediate effect on negotiations.

‘We have a great deal of sympathy for the people of Ecuador and their difficult economic situation,’ said Mitchell.

‘The situation in Latin America is what creates the US strategy, where land ownership is by US muiltinationals – not just the people of Ecuador and Honduras.’

He said that in his own country, a small island nation in the eastern Caribbean, some 25,000 people were involved in banana production, most of whom are largely self-employed. Guaranteeing a position on the market of the United Kingdom, which accounts for 10 percent of the European market, would be enough for such Caribbean producers to survive, he said.

Unlike the major traders in ‘dollar bananas,’ the Caribbean producers are not established in the Eastern Europe market.

‘(Our) production is functioning in a democracy, a property owning democracy – as distinct from absentee ownership – and people on the ground running it are very poor,’ said Mitchell, referring to the US giants.

At a joint news conference Tuesday, the EU commissioners for trade and agriculture said that Brussels’ proposal that import licences be allotted on a ‘first-come, first-served’ basis was not ‘set in stone.’

If adopted, it would mean that historical preferences would give way and producers and marketers first to bring the bananas to the European market would win.

If that system proves untenable, the EU foresees moving directly to a tariff-only system.

The ACP Secretariat said that under the first-come, first served system the Caribbean, in particular, would be placed ‘at a massive disadvantage in competing for access with dominant trading companies,’ even with the benefit of a proposed tariff preferences of 275 euros per tonne of the fruit coming from ACP states.

ACP production is based mainly on small farms, often on steep and difficult terrain, and ‘cannot compete on price with the vast, flat, plantations of Latin America, many controlled by the dominant US companies, in highly integrated operations, and benefit from major economies of scale.’

If the EU opts for the immediate introduction of a tariff-only system, it would have to adopt substantial and effective supplementary measures to honour its commitment to ACP suppliers, said the ACP Secretariat.

Preferential access ‘must be looked at as a development issue,’ said Laurent.