Europe moves to end banana dispute

The European Commission is expected today to recommend big changes to the EU's banana imports regime to try to resolve a long-running trade dispute with the US and South American countries.

It is likely to abandon efforts to reform existing import licensing arrangements based on individual quotas, in favour of a new distribution method using "first come first served" principles.

This will anger licence holders, who could suffer big losses in income because some will lose the right to trade large fixed numbers of bananas.

But the European Union's executive believes the changes it is suggesting will make the regime fully compatible with international trade requirements.

The Commission is also expected to confirm its preference that, from 2006, the EU should adopt a "tariff-only" system in which neither quotas nor licences would be necessary.

The EU has been in dispute with the US and banana exporting countries including Ecuador, the world's biggest banana exporter, since it introduced the first community-wide imports regime in 1993.

Intended to provide economic assistance to African, Caribbean and Pacific countries, some of which are former European colonies, the regime is viewed by critics as discriminating against other banana exporters.

Last year, a World Trade Organisation disputes panel said the regime contravened international trade rules even after reforms forced by an earlier adverse ruling.

Washington then imposed sanctions of $191 million (€201 million) a year against EU traders and is threatening to spread the pain through a system of "carousel sanctions" in which the target industries would be regularly changed.

Commission officials say they have consulted the US constantly in recent months to try to find an acceptable solution on bananas. But, they added, Washington's reaction was uncertain.