Pending trade deal gives an edge to Latin America in the EU

Well-intentioned it may have been, but the EU’s 1993 decision to slap tariffs on bananas from Latin America while allowing bananas from African, Caribbean and Pacific (ACP) countries to enter its markets duty-free began a trade war that has resulted in far-ranging retaliatory tariffs on EU products imposed by the U.S. and approved by the WTO.

The EU had hoped to “level the playing field” for the small farmers of the ACP competing against such big multinationals as Dole and Chiquita. (According to UNCTAD, small independent growers are now predominant in banana exports from the Caribbean and Ecuador; national companies are top players in Colombia and Ecuador; multinationals hold sway in Central America and, increasingly, Africa and Asia.) The first complaint against the EU banana import regime was lodged with the WTO by Guatemala, Honduras, Mexico and the U.S. in 1995. Subsequent complaints were also filed by Ecuador, Colombia and Panama.

Now an end to the banana war is in sight. The deal just approved by the EU Parliament’s international trade committee was reached in December 2009 between the EU and the U.S., Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela. If the agreement carries in the full Parliament on February 3, the EU will gradually cut its import tariffs on bananas from Latin America in eight stages, from €176 a ton at the outset to €114 in 2017. The ACP countries will get up to €200 million to help them defend their share (about 20%) of the world’s largest banana market in the face of stiffer competition from Latin America (source for 70% of bananas sold in the EU).

You can track the expected shifts in the banana trade (and dig into the details of the companies shipping and buying the fruit) with Datamyne: Our database covers the import-export trade of top markets EU and U.S., top exporters including Brazil, Colombia, Ecuador as well as our most recent data acquisition: the CA-5 of the Central American Common Market and CAFTA-DR: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

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