EU agrees to reduce tariff on banana imports

A LONG-RUNNING trade dispute over banana tariffs was brought to an end yesterday when EU and US negotiators struck a deal with Latin American, African and Caribbean producers of the fruit.

World Trade Organisation (WTO) director general Pascal Lamy said the pact, under which the EU will reduce the tariff it imposes on banana imports from Latin America, should provide fresh impetus to the stalled Doha round of trade negotiations.

Irish banana importer Fyffes, which currently absorbs about €100 million per year from the cost of the EU tariff, stands to be one of the prime beneficiaries of the deal.

While there was no comment from Fyffes yesterday, it will receive at least part of the benefit of the initial 15 per cent per reduction in the EU tariff. Suppliers and customers are also expected to share in the gain.

“I welcome the news that a comprehensive agreement on bananas has now been reached. This has been one of the most technically complex, politically sensitive and commercially meaningful legal disputes ever brought to the WTO,” Mr Lamy said.

The deal, agreed at the WTO in Geneva, will see the EU gradually cut its import tariff on bananas from Latin American countries such as Ecuador and Costa Rica from €176 per tonne to €114.

In response, the US agreed to settle a related dispute with the EU.

In addition, the EU also offered to mobilise up to €200 million for the main African and Caribbean banana-exporting countries to help them adjust to stiffer competition from Latin America.

Mainly former European colonies, these countries enjoy preferential treatment on exports to the EU.

However, their relative advantage will be eroded under the deal.

Often described as the longest trade dispute in history, the banana dispute has festered for years with various attempts at resolution proving fruitless.

“After years of tedious negotiations the deal reached will provide an important push for progress in the Doha Round talks and for the multilateral trading systems in general,” said EU trade commissioner Benita Ferrero-Waldner.

The EU will cut its tariff in stages, from the current rate of €176 per tonne to €114 per cent tonne in 2017 at the earliest.