Banana deal raises chances for WTO breakthrough

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A week of intense discussions in Geneva has brought World Trade Organisation countries closer to a global trade pact. But disputes between the world’s emerging economies threaten to scupper chances of achieving a deal this week.

Negotiations appeared to move a step closer towards successful completion on Sunday (27 July) when Latin American countries announced they had reached a deal with the EU, resolving a long-standing trade dispute on banana imports. 

“The 16-year-old bananas wars are finished. We can finally leave behind the most difficult dispute in the history of the GATT and the WTO,” Costa Rica’s WTO ambassador Ronald Saborio Soto told Reuters. 

The banana dispute had been a key sticking point in agricultural negotiations, preventing a wider deal on the treatment of tropical goods and the question of erosion of preferences that are crucial to the conclusion of an overall global trade pact (EURACTIV 18/07/08). 

“For the moment one of the most divisive disputes in the Doha round has been settled,” said Soto. But EU officials were more prudent, saying only: “There is very substantial progress on bananas.”

Indeed, African, Caribbean and Pacific countries immediately denounced the deal as unacceptable, threatening to block the whole negotiations unless they saw changes. The problem is that EU tariff cuts for Latin American producers automatically imply a loss of market share for ACP producers, who currently have preferential access to the EU. 

But the EU and the US are adamant a deal be reached by the end of July and US Trade Representative Susan Schwab has accused emerging economies of attempting to scupper a fragile balance of compromises put on the table on Friday. 

“We had a path on Friday for a successful outcome…It wasn’t perfect, but it was delicately balanced and had a strong endorsement,” she said adding: “Unfortunately a few emerging markets have decided that somehow they want to re-balance it in favour of one or another issue.”

The USTR was also targeting China with her statements, after Beijing negotiators angered other developing countries by demanding that some of its key agricultural and manufacturing sectors be excluded from tariff cuts. 

EU Trade Commissioner Peter Mandelson said India also represented a “potential pothole” after the country’s “fiery negotiator” caused outrage with African and Latin American nations by insisting on a special safeguard mechanism allowing it to raise its farm tariffs if imports surge. 

Mandelson also conceded that the EU is under pressure from its own members to gain important concessions from its partners, with countries like Ireland, France and Hungary saying the average 60% cut in farm tariffs it has offered is excessive compared to the possible gains in non-agricultural market access (NAMA). 

But he pointed to progress in the area of services – which “make up the bulk of the European economy and they are one of our most important comparative advantages in global trade” – that weighed in favour of an overall deal. The talks will continue this week. 

If a deal is clinched by the 35 countries currently represented in Geneva, it would still have to be backed by all 153 WTO members. 

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