Ecuador threatens banana agreement

Ecuador rejects EU-US agreement to end banana dispute and threatens to return case to WTO

Ecuador rejected on April 17 an EU-US agreement to end the long-running banana trade dispute on the grounds that it breaks multilateral trade rules. It threatened to take the dispute back to the World Trade Organisation (WTO) unless changes are made to the agreement. Ecuador is especially critical of the EU's failure to offer market access to new exporters from developing 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 this regime illegal in 1997 which led to the introduction of a revised regime in January of 1999. This in turn was declared to be illegal by the WTO which in April 1999 authorised the US to impose sanctions on the EU to a value of $191 million.

A new proposal made in November 1999 was also rejected by the US. In March 2000 Ecuador was authorised by the WTO to impose $201.6 million of sanctions on EU products, 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.

 


The announcement of an agreement between the EU and the US appeared to signal an end to the banana dispute, subject to approval from the Council and the European Parliament. Ecuador's rejection of the deal means that the dispute will continue. Ecuador is supported in its position by Dole Foods, the US marketing giant. The other major US player in Latin America, Chiquita Brands International, has been a vocal supporter of the EU-US agreement.

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