Bananas Hold Up WTO Trade Talks

by Finding Dulcinea    July 29, 2008

Posted by Rachel Balik to findingDulcinea

Disagreement over the fairness of reduced EU banana tariffs for Latin American countries may delay agreement in Doha talks.

The World Trade Organization’s long-awaited Doha global trade pact is being stymied by a number of issues. One of the most pressing may be the African, Caribbean and Pacific Group of States' (ACP) position on banana tariffs. Currently, countries in the ACP enjoy a tax-free banana trade with the EU, a business that accounts for a large portion of those countries’ economies.

In the current trade talks, 11 Latin American countries are negotiating for lower banana tariffs in the EU, an agreement that would grant them a larger share of the banana market currently dominated by the ACP. An initial proposal recommended that tariffs be reduced to 116 euros per ton by 2016, but Panama stated that the Latin American countries “are willing to be reasonable in the interest of settling this long dispute, but will need to see a better starting reduction, phase-in period and final rate than the one the EC [European Commission] is willing to accept.”

Conversely, the ACP is refusing to accept the lowered tariff, and has offered a counterproposal changing the target year for lowered tariffs from 2016 to 2020. The ACP has stated that a lower tax on Latin American bananas “would severely damage the interests of Caribbean producers.” They will not agree to the current global trade pact unless their demands are met.

The global trade pact may also run into trouble in other areas, because while the United States feels it is making tremendous compromises, China and India feel the deal is unfair, and has allowed the richer nations to protect industries most important to them.

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