Peace in Our Time Over Bananas at the WTO

♠ Posted by Emmanuel in ,,,, at 12/04/2009 07:04:00 AM
And so we may finally reach the end of a trade dispute which predates the formation of the WTO (and me completing college even): Reuters reports that the banana wars are nearing completion with a deal at hand. If you will recall, it involves European countries giving former ACP countries (Africa, Cabbibean and Pacific colonies) better access to their markets for bananas. While some say this is an appropriate guilt expatiation exercise for the sins of imperialism, the flip side is that Latin American producers of bananas like Ecuador and the Honduras have been slapped with comparatively fat tariffs. Think of it as a four-sided trade dispute with North-South pairings at either end: The EU and ACP member countries versus the US and (mostly Latin American) non-ACP banana exporters. The US plays a part here insofar as major American food companies like Chiquita and Dole source their bananas from these non-ACP states.

For more background information on this conflict, read my long-running banana wars never end series [1, 2, 3]. If you have time to kill, you can read years and years' worth of WTO rulings and reports, too on DS 27. This old TIME article does alright in a jiffy. Anyway, on to the newswire report:
A deal to end the world's longest running trade dispute over import tariffs on bananas is expected to be signed on Friday between the European Union and Latin American countries, diplomats involved in the talks said. The deal to end the 16 year-old "banana wars" -- which also includes African Caribbean and Pacific states (ACP) and the United States -- will cut the tariff paid on bananas from Latin America and shield the European Union from further legal action at the WTO, which has condemned its import regime. "Everybody is on board. The last obstacles have been cleared and closure is expected in the next 24 hours allowing for an initialling of the deal on Friday," a diplomat told Reuters.

The essential element was that the tariff on bananas would fall to $114 a tonne by 2016 from $176, with an initial cut to $148. Poorer ACP growers in mostly former European colonies will get around 200 billion euros ($301.4 billion) in compensation as part of the pact, diplomats said.

EU Agriculture Commissioner Fischer Boel said earlier on Wednesday agreement had been reached between the two main parties -- Latin American producers and less efficient ACP growers which have preferential access to EU markets.

Although the United States does not export bananas, it is a party to the agreement because several big distributors and processors such as Chiquita, Dole and Del Monte are U.S. corporations. Another big distributor is the Irish company Fyffes. "There are some minor housekeeping points to be finalised with the U.S., but this should happen in the next 24 hours," one diplomat said.

Ministers from Caribbean countries, who say their economies will be devastated by an agreement they recognise as inevitable, said they had not seen details of the deal and raised concerns about its possible economic effects. Banana exports are the mainstay of many Caribbean economies and adjusting to the loss of markets is already hurting producers and communities on the tiny islands. "The ACP are now on board. We have reached a breakthrough," another diplomat involved in the negotiations said.

Diplomats said a compromise, or so-called "peace clause", had been reached over an EU demand that the 27-nation bloc should be exempt from further legal challenges as soon as the deal is signed rather than when the tariff changes have been registered at the WTO.
The bleeding hearts are already bellyaching over what this action holds for ACP countries and the "fair trade" movement. All I can say is that they've had years and years to prepare for this eventuality. There is little reason for me to take sides when one set of LDCs is disadvantaging another, so there you have it. May there be peace in our time over bananas.