20 Years Banana War Ends as EU Lowers Tariff by 30% in Next Five Years

Fall in Differential between Low Duty Former Colonies and MNC Based Low Cost Caribbean Producers Seen

The European Union and 10 Latin American countries signed an agreement on 8 November 2012 settling the longest-running series of disputes in the history of the multilateral trading system.

Mr Lamy distributed to the countries concerned legally certified copies of the EU’s revised commitments replacing, with tariffs only, a complicated and WTO-illegal banana import regime. These banana import tariffs decline annually to 114 euros per tonne. The EU’s revised commitments include the 2009 Geneva Banana Agreement. The WTO is the depository of these revised commitments, which have now been accepted by the WTO’s membership.

Dispute Settlement Body chairperson Shahid Bashir, who is Pakistan’s ambassador, presided when the EU and the 10 Latin American countries signed a “mutually agreed solution”, officially closing the legal disputes over bananas (cases DS16, DS27, DS105, DS158, DS361 and DS364) between the EU and Latin American countries

One positive feature of the disputes is that they have provided a “rich source of jurisprudence” on WTO law, he said.

The deal

The Latin American countries present were: Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Venezuela and Peru (which did not sign the mutually agreed solution because it was not directly involved in the disputes but participated in some key negotiations. Some had brought legal dispute cases against the EU, others were involved in other issues, including negotiating the EU’s new commitments to take into account its enlargements to include new members.

The Geneva Banana Agreement was agreed by the EU, the Latin American countries and the US in December 2009.

Since then a number of legal steps were required, including each country ratifying the 2009 agreement and the EU introducing legislation and regulations to implement it. Having been accepted by the WTO’s membership as part the EU’s new commitment, it is now multilateral.

The new EU commitments were circulated on 27 July 2012 as a revision to the EU’s list (officially its “schedule”) of commitments. WTO members were then given three months under WTO regulations to object. Since there were no objections, the director-general certified the “schedule” at the end of October.

The agreed maximum tariff rates are:

· 15 December 2009–31 December 2010 — 148 €/tonne

· 1 January 2011 — 143 €/tonne

· 1 January 2012 — 136 €/tonne

· 1 January 2013 — 132 €/tonne

· 1 January 2014 — 127 €/tonne

· 1 January 2015 — 122 €/tonne

· 1 January 2016 — 117 €/tonne

· 1 January 2017 — 114 €/tonne

If there is no agreement on a framework deal (or “modalities”) in the Doha Round agriculture negotiations by 31 December 2013, these annual tariff cuts for the remaining years can be delayed by up to two years.