Bananas: Unpeeling the Banana Trade - The Fairtrade Foundation

More documents

Recommendations

Info

2.Banana trade warsThe European Union is a hugely significant player in theworld banana trade, importing about a third of all tradedbananas – about the same amount as North America –and more than three times that of Japan and Russia, thethird and fourth biggest importers. EU policies thereforehave a major impact on the world trade in bananas. Whilethe EU banana import system of quotas and tariffs hasbeen at the centre of global trade disputes, reformsintroduced on 1 January 2006 have drastically reducedthe level of market intervention.2.1 The story so farThe formation of the Single European Market in 1992meant that the European Union had to consolidate thevarious tariff and quota arrangements across Europeancountries for the importation of bananas. 10 Followinglengthy debates, a system of both quotas and tariffs wasadopted in July 1993.The EU arrangements however were non-compliant withWorld Trade Organization (WTO) rules which promotetrade liberalisation by removing trade barriers such asquotas, tariffs, and subsidies. Latin American bananaexporting countries and the USA lodged a series of legalchallenges at the WTO claiming that the EU regimediscriminated against Latin American producers andhampered the expansion of, mainly US, multinationalcompanies.In response, the EU agreed to end the quota systemand introduce a single tariff for all banana imports. As aninterim measure, the WTO agreed that the EU could waivethe single tariff and continue tariff-free entry for bananasfrom African, Caribbean and Pacific (ACP) countries inorder to honour long-term commitments that would endin 2008. 11The crux of the argument regarding the tariff was thatLatin American governments and companies wantedto ensure that the single tariff was set at a level theybelieved would be low enough to make it remunerativefor their businesses. However small farmers’organisations, plantation workers’ unions and manyNGOs argued that by simply removing quotas and usingtariffs, the market would be flooded with cheaperbananas, pushing import prices down, threateningmillions of livelihoods as multinational banana companiesabandoned higher-cost producing countries in searchof cheaper production. On top of that, if the tariff wasfixed too low, higher-cost producers like the smallfarmers of the Windward Islands were under threat ofbeing squeezed out of the market altogether.Following multiple rounds of consultation and debate theEU eventually implemented in 2006 a single tariff ofg176/tonne which in effect only applied to LatinAmerican imports as duty-free entry for ACP imports wasmaintained for a volume which effectively covered all theirEU exports. As predicted, since 2006 import volumesfrom both Latin America and West Africa have grownwhile prices inside the EU fell and, as feared, price-cuttingby major European retailers is further squeezing the payand conditions of plantation workers at the bottom of thebanana supply chain. 12However the matter didn’t end there. In 2007, Ecuadorand Colombia lodged complaints that the EU reformshad hit their EU banana sales and the US againcomplained that duty-free access for ACP countries wasdiscriminatory. The EU protested that the US action wouldonly damage ongoing talks with all parties, includingnegotiations with ACP governments to sign newEconomic Partnership Agreements (EPAs) that wouldresolve these issues.EU and Latin American ministers were on the verge ofsigning a historic breakthrough deal at the WTO DohaRound meeting in Geneva in July 2008 that would seeincremental cuts in the tariff. This could spell the end ofthe banana export industry for Caribbean growers, buthaving run out of options, the ACP group accepted thedeal on the understanding that it came with additionaldevelopment aid to restructure remaining industries andassist those forced out of business. However the deal fellthrough amidst the collapse of wider trade negotiationsto slash tariffs and subsidies for farm products.A prospective meeting for December 2008 failed tomaterialise so whether or not trade ministers can reachagreement on the Doha Round in 2009 – includingreviving the deal on bananas – now remains tobe seen.10Import tariffs are taxes imposed on internationally traded goods whilst quotas limit the volume of goods that can be imported.11ACP countries are the 46 African, Caribbean and Pacific countries that are signatories of the Cotonou agreement with the European Union.12According to EUROSTAT figures, imports of the big four Latin American exporting countries taken together rose by 9% from 2005 to 2006, although Ecuador’svolume fell; West African exports rose by over 15%.page 4 Unpeeling the banana trade
Banana wars: a timeline1992 Formation of a single European market1993 Harmonisation of banana import arrangements into the EU using a tariff and quotasystem which maintains preferential treatment for ACP countries1993 The US, Honduras, Guatemala, Ecuador, Panama and Mexico lodge complaint at GATT 13(predecessor of the WTO)2001 EU agrees to end preferential access arrangements and put in place single tariff by 2006which continues to deliver existing protection and market access until 20082004 EU announces tariff negotiations will begin at g230/tonne2005 EU finally agrees a single tariff of g176/tonne2006 New single tariff regime implemented2007 Ecuador and Colombia lodge complaints at WTO that new regime is discriminatory2008 (Jul) Breakthrough banana deal agreed which would see incremental cuts in tariff to g114/tonneby 2016 but WTO Doha Round negotiations in Geneva collapse along with banana deal2008 (Nov) WTO rejects EU appeal against its decision that EU banana regime is inconsistentwith global trade rules2.2 What role EPAs?In parallel talks starting in 2002, the EU and ACPgovernments have been negotiating regional EPAs toreplace the trade sections of the Cotonou and Loméagreements that date back to 1975 and which enshrinethe preferential treatment for ACP imports.The EPAs are intended to put in place new free tradedeals that are compatible with WTO rules from the outset.Under WTO rules, trade deals must open up ‘substantiallyall trade’ between partners but they also allow for thegradual opening up of markets for sensitive and emergingACP country industries.However, the EU has been accused by NGOs, civilsociety groups, think tanks and prominent academics ofusing bullying tactics to push through an aggressive tradestrategy with ACP countries that goes beyond WTOrequirements and forces them to open up their marketsin a way that could be disastrous for local economiesand the livelihoods of millions of people. So far only theCaribbean regional grouping has officially signeda ‘comprehensive’ EPA (covering goods and servicesand investment) but, with indications of a change ofnegotiating style on their part, the EU hopes to concludenegotiations with all ACP countries by the end of 2009.Nevertheless, significant concerns remain about the termsof the agreements currently on the table and who willbenefit most.13The General Agreement on Tariffs and Trade whose main objective was the reduction of barriers to trade.page 5 Unpeeling the banana trade
Page 1 and 2: Unpeeling the banana tradeA Fairtra
Page 3 and 4: Executive summaryThe banana: cheap,
Page 5: In response to growing consumer dem
Page 9 and 10: Higher shipping, distribution and l
Page 11 and 12: Since the 1990s, Latin American ban
Page 13 and 14: 5.2 EmpowermentEmpowerment is at th
Page 15 and 16: 6.Going furtherThere is no doubt th
Page 17 and 18: 8.Fairtrade: Tipping the BalanceAlt
Page 20: Fairtrade Foundation3rd Floor, Ibex

Bananas: Unpeeling the Banana Trade - The Fairtrade Foundation

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?