By IPS Correspondents
BRUSSELS, Aug 2 2005 (IPS)

Latin American banana-producing countries welcomed the World Trade Organisation’s decision Monday that the European Union’s proposed tariffs on imported bananas is illegal.

Three arbitrators appointed by World Trade Organisation (WTO) ruled Monday (Aug.. 1) that the European Union’s (EU) proposed import tariffs on bananas – 230 euros per tonne (278.3 dollars) – would be discriminatory for Latin American banana producers, and asked the bloc to propose a lower level of duty..

The EU was asked by the WTO to introduce a new set of tariffs for the fruit by Jan. 1 2006.

The present EU regime was designed to help producers in former European colonies in African, Caribbean and Pacific (ACP) states which have a preferential trade agreement with the EU to compete with larger growers in Latin America, many of which are controlled by U.S.-based multinational companies.

But nine Latin American countries – Brazil, Costa Rica, Colombia, Ecuador, Guatemala, Honduras, Nicaragua, Panama and Venezuela – challenged the EU at the WTO in March and April saying the EU tariff would have a “devastating effect” on their economies and exports.

The countries said the tariff did not comply with the “multilateral commitments of the European Union of fixing a tariff that guarantees at least maintaining total access to the European market for the bananas of Latin America.”

Corbana, which represents the interests of Costa Rican banana growers, said hundreds of thousands of jobs in Latin America depend on the banana industry.

“We are pleased that the WTO arbitrators concur with our position and we look forward to collaborating with the EU authorities to ensure an outcome that is satisfactory for all parties,” Corbana president Romano Orlich said Monday.

But ACP producers who have higher production costs want the duty for Latin American producers to be even higher to give them a better chance of competing.

“Latin producers have already captured two-thirds of the European market. They are the exclusive suppliers of bananas in the United States. It is critical that we do not introduce a system that allows them to also flood the European market at the expense of ACP countries,” Philippe Mavel from the Organisation Centrale des Producteurs-Exportateurs d’Ananas et de Bananes de C- te d’Ivoire (OCAB), which represents banana producers in the Côte d’Ivoire said Monday.

The European Commission, the executive arm of the EU, says it will study the arbitrators’ report.

“It has always been our intention that the form of the EU banana import regime would change but that the level of protection would not increase. We are currently evaluating the options available for putting into place the new import regime for bananas as from 1 January 2006,” Mariann Fischer Boel, EU commissioner for agriculture and rural development said shortly after the WTO announcement.

ACP countries currently have a 20 percent share of the EU banana market. EU producers – mainly Spain – have 20 percent, while Latin American producers dominate the market with 60 percent.

The EU now has ten days to open a fresh round of talks with Latin American producers on a new tariff. If no deal can be reached on a revised tariff, then either side can ask for a further round of arbitration.

Excerpt: