Ecuador fighting EU banana tariffs

The EU imports more than a third of the bananas on the world market. That means the union’s rules affect banana producers all over the world. Here in Ecuador, the EU:s import rules are a disadvantage. Latin American bananas are taxed in the EU. That means an extra cost of 176 euros per ton for example for Asoguabo’s bananas. It’s cheaper to produce bananas in Ecuador than on the islands in the Caribbean, but in stead it’s more expensive to import the bananas into the EU.

Bananas from theold european colonies in Africa, the Caribbean and the Pacific are imported tariff-free.

Latin American banana exporters have been fighting for over 15 years against the tariffs. The quarrel is the longest in the history of the World Trade Organization WTO, and it still goes on.

-For a developing country like Ecuador, this legal battle has involved million of dollars in lost sales, excessive duties and litigations costs. These resources could have been directed to the fight aginst poverty and the development of my country, said the Ecuadoran representative of the World Trade Organization’s dispute settlement body according to AFP last winter.

Now the EU is proposing a tariff cut to 114 euros per tonne in 2019. The Latin American countries still protest, because the offer was better last summer when the negotiations collapsed in the WTO. But the countries who now import tariff-free are also worried. For them, the change can be decisive. Many of them, especially the small island nations in the Caribbean, are even poorer than the Latin American countries, and totally dependent on the banana trade to survive. Now they fear that the tariff cuts will increase competition on the European market as the cheaper Latin American bananas become even cheaper.

-It will have negative impact on us. The European Commission are sacrificing development to trade liberalisation, said Gerhard Siwat, ambassador for Surinam, to AFP in April.

The Banana Wars

  • In july 2003, the EU adopted a common set of rules for the banana market, to protect the member countries’ own banana production (for example in the Canary islands and the French Caribbean), and to insure preferential treatment for their traditional trading partners in Africa, the Caribbean and the Pacific. Latin American bananas were taxed at 75 ecus per tonne.
  • The rules broke the World Trade Organization WTO:s policies of free trade. The USA and many Latin American countries complained against the EU:s tariffs, which according to them were discriminating.
  • The EU agreed to abolish all import quotas and establish a single tariff for all countries. But the level of the tariff became a problem. The Latin American countries wanted a tariff low enough to be profitable to them, while small producers, trade unions and NGO’s wanted a tariff high enough for high-cost producers to survive the competition.
  • In 2006 the EU decided on a tariff of 176 euros per tonne. The traditional trading partners in the ACP countries got a tariff-free quota that in practice covers all their exports to the EU.
  • In 2007, the USA, Ecuador and Colombia complained that the rules hurt their banana industries.
  • In summer 2008 the countries nearly reached an agreement within the framework of the WTO negotiations in Doha, but the negotiations and thus the agreement collapsed. It would have meant a tariff cut to 114 euros per tonne in 2016.
  • In spring 2009 the EU proposed a new deal that would cut tariffs to 114 euros in 2019 in stead of 2016.

Sources: Fairtrade Foundation’s report  ”Unpeeling the Banana Trade” , UNCTAD:s website , EU Business.

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3 Comments

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3 responses to “Ecuador fighting EU banana tariffs

  1. Scott

    Very interesting and informative post Annika. From what you have observed at the coal-face do you have any sense that there is a solution to this issue?

    FYI @SharedInterest tweeted your post!

  2. Scott

    Thanks for this informative and interesting post. From your perspective do you sense that there is any realistic resolution to the issues with tarrifs.

    FYI @SharedInterest twittered your post!

  3. Annika

    Whatever the decision, someone will be unhappy! But personally I feel more sympathy for the small producers in the Caribbean who depend so much on the banana industry and the trade with Europe, and I hope they will not be in a worse position than before… The Latin American producers have better resources and other markets to fall back on, it seems like to me… But I’m no expert on this issue!

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