April 7, 2008 / 2:41 PM / 12 years ago

EU loses battle in WTO "banana wars"

GENEVA (Reuters) - The European Union is still breaking international trade rules with its import regime for bananas, the World Trade Organisation (WTO) said on Monday.

In this file photo a Haitian worker carries bananas at the frontier line between Malpase in Haiti and Jimani in Dominican Republic April 10, 2007. The European Union's contentious import regime for bananas still breaks international trade rules, a World Trade Organisation (WTO) panel said on Monday. REUTERS/ Eduardo Munoz

The ruling by a WTO panel, confirming a preliminary judgement made last November, shows that EU regulations are blocking access to the world’s biggest banana market for fruit from Ecuador despite attempts by Brussels to reform them.

If upheld, the ruling would allow Ecuador to seek sanctions against the EU.

The EU’s executive commission dismissed the panel report as “formalistic” and said it was considering an appeal.

But a senior Ecuadorean diplomat, noting this was now the seventh time that Brussels had been faulted in the dispute, said the WTO had agreed with all of Ecuador’s arguments.

“It’s a big victory for us,” Cesar Montano Huerta of Ecuador’s WTO mission, told Reuters. “But we are still hoping to come out with a solution and negotiations for this issue.”

The “banana wars” are one of the longest-running and most complex international trade disputes, pre-dating the creation of the WTO in 1995.

EU producers in Spain’s Canary Islands, the French overseas departments of Martinique and Guadeloupe and Portugal’s Madeira and Azores provide about one fifth of EU consumers’ bananas, and most of the rest come from Latin American growers.

Ecuador, the world’s biggest banana exporter, brought the current case in 1996 with Guatemala, Honduras, Mexico and the United States. Three more Latin American producers — Colombia, Nicaragua and Panama — later joined the dispute.

The United States does not export bananas to the EU, but three of the biggest distributors with plantations in Latin America are U.S. multi-nationals: Chiquita Brands International, Del Monte Foods and Dole Food.

The case is also of interest to Irish fruit distributor Fyffes.

DISCRIMINATION

Ecuador says EU import duties of 176 euros (139 pounds) a tonne discriminate against its banana industry.

That is because the EU had previously granted preferential treatment to African, Caribbean and Pacific (ACP) countries, mainly former European colonies, allowing them to import a duty-free quota of 775,000 tonnes a year.

“The European Communities’ current banana import regime, in particular its preferential tariff quota reserved for ACP countries, is inconsistent with (WTO rules),” the WTO panel said in a 409-page report.

That system was announced in 2005 in another effort by Brussels to reform a regime originally found illegal by the WTO in 1999.

Because the ACP preferences in general discriminated in favour of some exporters, they were only allowed under a WTO waiver, which expired at the end of 2007.

Brussels has since negotiated interim new economic partnership agreements (EPAs) with most of the affected countries intended to comply with WTO rules.

The EPAs eliminate the tariff-free quota for ACP countries, but Ecuadorean banana exporters say they may challenge the new regime at the WTO anyway because they believe it unfairly favours EU producers and the tariffs are too high.

Monday’s ruling arose from a review sought by Ecuador in 2006 challenging the EU’s implementation of the 1999 ruling. The WTO had already ruled against Brussels in February in a similar review sought by the United States.

EU imports of bananas rose to 2.40 million tonnes in the first half of 2007 from 2.25 million a year earlier, EU figures show. Within that figure, imports from ACP countries rose to 439,000 from 433,000 tonnes.

In value terms banana imports rose to 1.40 billion euros from 1.34 billion, with imports from ACP countries slipping to 272 million from 279 million euros.

Additional reporting by Jeremy Smith in Brussels; Editing by Catherine Evans

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