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EU, Latin America move closer to deal on banana

(Xinhua)
Updated: 2008-07-28 13:40

BRUSSELS -- The European Union (EU) and Latin American countries moved closer on Sunday to a deal on their long-standing trade dispute over banana, hopefully removing a major hurdle on the way to a global trade deal.

Under a preliminary agreement reached early today, the EU would reduce its import duty on bananas from Latin American countries to114 euros ($179 dollars) per ton by 2016 after an initial cut to 148 euros in 2009 from 176 euros now.

The figure is slightly lower than a compromised offer presented by the World Trade Organization (WTO) Director-General Pascal Lamy, which had required Brussels to gradually reduce its import tariff on bananas to 116 euros per ton by 2015.

The deal also contained a so-called "peace clause," which committed Latin American countries to ending legal challenges in exchange for lower tariff.

The banana issue, one of the world's oldest trade disputes, was dated back dozens of years. It was centered on the EU import rules for bananas, involving two groups of developing countries, namely the African, Caribbean and Pacific (ACP) countries and Latin America.

ACP countries, which are mainly former European colonies, have been given duty-free access to the EU markets when it comes to a wide range of products including bananas.

However, Latin American countries have not enjoyed the unilateral preferential treatment, and they alleged that the discriminatory practice has put their bananas at a disadvantage on the EU markets when competing with their ACP peers.

After successfully challenging the EU's banana import regime within the WTO framework several times, the Latin American countries now demand fair treatment.

Though the EU and Latin America could sign a deal between themselves, it would risk angering ACP countries and threaten the current crucial bid for a breakthrough in the Doha Round of global trade talks here.

Ministers from over 30 WTO major members have been engaged in an effort since Monday to bridge their lingering divergences on agriculture and industrial goods so as to wrap up the Doha Round this year. Banana was one of the thorny issues that need to be solved.

Cameroon, speaking on behalf of ACP countries, said Sunday the deal between was unacceptable in its current form, warning there was a "real risk" of the dispute blocking the wider talks.

"There is a real risk but trade negotiations should not be about blackmail," he told reporters before going into a meeting with EU officials. "We want healthy discussions."