Deal signals end of banana dispute

EU – Ecuador agreement signals end of final act in banana imports drama

The EU will introduce a licensing system based on historical trade patterns from 1 July 2001 at which time the US will suspend trade sanctions. The EU will adjust quota quantities in order to expand market access for Latin American countries whilst securing market share for a specific quantity of bananas from ACP countries. Once these changes receive WTO approval, US sanctions will be lifted permanently. The new tariff-based system for managing banana imports to the EU is scheduled for introduction on 1 January 2006.

The EU – Ecuador deal does not affect the above dates agreed in the EU – US deal.

 

The EU and Ecuador reached an agreement on 30 April that will resolve the long-running dispute over EU banana imports. The deal abolishes the EU's country quota basis for imports, increases import volumes from Latin America by 100,000 tonnes, and improves market access to importers from Ecuador. A joint statement by the Commission and the Ecuadorian government described the deal as "a clear victory for the WTO as it helped in resolving a difficult dispute between developing and developed countries."

 

The dispute began in 1993 when the EC introduced a new import regime for bananas that favoured ACP countries at the expense of Latin American producers. The WTO declared it illegal on several occasions following adjustments before finally authorising the US to impose sanctions on the EU to a value of $191 million in April 1999. In March 2000 Ecuador was authorised by the WTO to impose $201.6 million of sanctions, although it never exercised this option due to concerns of hurting its own consumers.

A new EU proposal in October 2000 to base banana imports on a "first come first served" basis was supported by Ecuador but rejected by the US. This position was reversed early last month when a deal between the EU and the US that appeared to have resolved the dispute was rejected by Ecuador.

 


The deal is subject to approval from the Council and the European Parliament. It is also necessary to have authorisation for the deal from the WTO, something that both Ecuador and the US have pledged to assist the EU in getting.

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