EU-US banana dispute resolved

Long-running EU-US banana dispute resolved as agreement is reached on new import regime based on tariff system

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, 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 resolution of the banana dispute so soon after the arrival of the new US administration will give a boost to transatlantic trade relations. However, there are still several outstanding trade disputes, including hormone beef and foreign sales corporations.

 

The EU and the US resolved the long-running trade dispute over bananas on 11 April. A new regime based on a tariff system will be introduced from 1 January 2006. Subject to approval of the deal, the US will suspend the $191 million of trade sanctions from 1 July 2001.

 

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 also 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 was made in November 1999 based on a two phase import system, a transition period based on a tariff quota system to be followed by a flat tariff. The EU and the US were unable to reach agreement on the terms of the transition period which led the EU to propose in October 2000 that it be based on a "first come first served" basis. This was also rejected by the US and led to a new round of negotiations culminating in the agreement of 11 April.

 


The deal is subject to the approval of the Council and the European Parliament.

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