EU banana dispute ends in favor of Latin American exporters | Europe | News and current affairs from around the continent | DW | 15.12.2009

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EU banana dispute ends in favor of Latin American exporters

Bananas will likely be a few cents cheaper for European shoppers as a result of the settlement of the 'banana war' between Latin American banana exporters and the EU.

Chiquita bananas are piled on display at the Heinen's grocery store in Bainbridge, Ohio

The end of the 16-year banana dispute could mean cheaper bananas for Europeans

The longest trade dispute between the European Union and Latin American countries at the World Trade Organization (WTO) was settled on Tuesday.

Since 1993, the EU had discriminated against Latin American growers, favoring bananas from former European colonies in Africa, the Caribbean and the Pacific - a bloc known as the ACP states.

The so-called "banana dispute" focused on the import tariffs on bananas and other tropical fruits that the EU had imposed on Latin American banana imports, while fruit from former European colonies in ACP countries came to Europe tariff-free.

The European Union confirmed on Tuesday that it had clinched a deal with Latin American countries to end a long-running trade war over banana tariffs.

Big producers have most to gain

"In the deal ... the EU will gradually cut its import tariff on bananas from Latin America from 176 euros per ton to 114 euros ($255 to $165)," the European Commission, the EU's executive arm, said.

"The EU has also offered to mobilize up to 200 million euros for the main African and Caribbean banana-exporting countries to help them adjust to stiffer competition from Latin America," it said.

These EU funds should be distributed over several years and mitigate the negative consequences for small farmers in the former colonies.

US-based companies like Chiquita, Dole and Del Monte, with the largest plantations in Latin America, have the most to gain from the settled dispute. Last year the EU imported bananas with a total value of approximately 3 billion euros ($4.4 billion).

World Trade Organisation (WTO) director general French Pascal Lamy gestures during a press conference after crucial trade talks collapsed, during the World Trade Organisation ministerial summit on trade liberalisation talks, at the World Trade Organization (WTO) headquarters, in Geneva

WTO director general Pascal Lamy welcomed the settlement

"This has been one of the most technically complex, politically sensitive and commercially meaningful legal disputes ever brought to the WTO," World Trade Organization director general Pascal Lamy said. "It has also been one of the longest running 'sagas' in the history of the post-World War II multilateral trading system."

"This proves that there is no trade issue which lies beyond the reach of WTO members," Lamy added.

Loss of protection?

But MEP Sven Giegold with the Greens criticized the working conditions in Latin America's large-scale plantations. Human rights and environmental standards, he said, are often abused by these large multinational corporations.

"No, we're not happy with it because our preference was always to maintain the tariff levels in order to provide some protection for small farmers," Giegold said.

The deal is likely to reduce prices for consumers in Europe, increase competition in the banana market and strengthen the Latin American position as low-cost exporters.

According to Ecuadorian delegates at the talks, full signatures would take place about four months after the document was initialled on Tuesday when all sides complete their respective national legislative processes.

Editor: Trinity Hartman

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