Leaked documents suggest US can impose sanctions
The year 2008 has brought another loss to the European Union in its more than a decade-old tariff dispute with Latin American banana producers and the US, as a leaked interim report from the World Trade Organization (WTO) clearly sided with the US on who can then levy sanctions on European imports equal to damages incurred by US companies.
Have patience, do not react and this too shall pass! The mantra advocated by many in the labyrinths of power in Brussels seems to have slipped badly as 11 years down the road the “Banana Wars” of the late 1990s came back knocking on the doors of the European Commission.
Joining the fray, the US had said in a statement: “The US request relates to the EU’s apparent failure to implement the WTO rulings in a 1996 proceeding initiated by Ecuador, Guatemala, Honduras, Mexico and America.”
After the 1996 WTO ruling, the EU had committed to bring its tariff-quota regime for bananas in compliance with the ruling no later than January 1, 2006, said the US statement, lamenting the fact that “the EU banana regime put in place on January 1, 2006 features a zeroduty tariff quota that is allocated exclusively to bananas from African, Caribbean and Pacific (ACP) countries. Bananas of Latin American origin do not have access to this duty-free tariff rate quota and are subject, instead, to a 176 Euro/ton duty.”
During a press conference later, the European Commissioner for Agriculture and Rural Development Mariann Fischer Boel had wondered why in the first place the US was interested in the banana sector as it is not a banana producer, but then she answered her own doubts with the mention of Chiquita, a major banana company, as the possible cause for US to intervene.
The Commissioner, however, added that the EU will look into the matter and take appropriate steps. Chiquita, based in Cincinnati in the US, could not be contacted for their immediate reaction but it had said in its annual report last year that the tariff added USD 75 million in net costs in 2006.
European banana sector sources told New Europe that other US exporters, including Del Monte and Dole, are also affected, adding that the European Commissioner has her facts correct that no bananas are grown in the US, but in the trade circle of today’s era of globalisation everyone is aware of the large farming interests of these leading world exporters globally, especially in the Latin American region.
The US statement pointed out that WTO ruling had said “the EU’s regime discriminates against bananas originating in Latin American countries and against distributors of such bananas, including several US companies,” adding “The EU was under an obligation to bring its banana regime into compliance with its WTO obligations by January 1999.”
The EU’s tariff-only banana policy took effect in 2006, after a nearly five-year transition from a license-and-quota system that the US and Latin American producers had fought since its introduction in 1993.
The WTO ruled against the old system in 1997 and upheld US sanctions of European goods in 1999.During negotiating for a single tariff system to modify its complex web of duties and quotas for imports, the European Commission had suggested EU duties of 230 Euro and then scaling them down to 187 Euro, but WTO panels had rejected the proposals arguing that those were discriminatory against Latin American (Latam) nations.
Out of that deadlock emerged the figure of 176 Euro, but the conflict simmered on.Even after the introduction of the new EU single tariff system, there was widespread dissatisfaction, and Norwegian Foreign Minister Jonas Gahr Stoere got into the driver’s seat to find a political solution based on a thorough monitoring of the EU banana imports and various price systems in force.
But, after waiting nearly for a year, Ecuador decided to go ahead with the WTO route culminating in a victory late last year. On November 23, 2006 Ecuador was joined by Colombia as a third party. Panama and the US followed and more countries are set to join in the fray according to sector insiders.
The EU’s current banana import policy significantly differentiates access treatment as a tariff-quota volume of 775,000 tonnes is exclusively reserved for bananas of ACP origin. ACP bananas within the quota enter duty-free (i.e., at a 176 Euro/tonne margin of preference), with unlimited ACP over-quota access authorised at a tariff of 176 Euro/tonne.
On the other hand, an “autonomous” tariff of 176 Euro/tonne (a rate more than double the previously-applicable rate of 75 Euro/tonne) applies to all other bananas.Bananas are the most important agricultural product in Ecuador, and its exports account for 25 percent of all Ecuador’s agricultural exports. Some 22 percent of all banana output is aimed for the European Union market but this share to EU 27 today is down by 3.3 percent.
On the other hand, in Europe it is a “sensitive” commodity and there is a protection regime for the sector.While bananas grown within the bloc have shrunk to only 11 percent of the total EU supply, highly-subsidised production is important to the Spain’s Canary Islands, the French overseas departments of Martinique and Guadeloupe and Portugal’s Madeira and Azores islands.In 2007, Europeans ate some 4.9 million tonnes of bananas, making the bloc the world’s biggest banana market but consumption per capita remains two kilogrammes below the average consumed in the US.
Over two-thirds of the fruits consumed come from Latin America, earning a total of approximately 637 million Euro in tariffs for EU coffers and a further “duty-free” 16.3 percent from Africa and Caribbean countries.
It’s interesting to note that only on Colombian bananas is there a taxation of 200 million Euro, and social pundits along with market observers agreed that this money could be utilised to aid rural communities, such as Colombia, where former presidential candidate and Colombian-French citizen Ingrid Betancourt is kept as a hostage.
Bananas are set to be prominent in the upcoming finalisation of Association Agreements with Central American and Andean countries while appearing on the radar of WTO Development Round but according to reliable WTO sources in Geneva, the latest leaked ruling can be appealed against by the European Union only when these are finalised and published.
Showing posts with label Canary. Show all posts
Showing posts with label Canary. Show all posts
Saturday, April 12, 2008
Tuesday, November 13, 2007
EU expresses `surprise` as US joins `Banana War`
Have patience, do not react and this too shall pass! The mantra advocated by many in the labyrinths of power in Brussels seems to have slipped badly as eleven years down the road the "Banana Wars" of late 90s are back knocking on the doors of the European Commission. The US, latest to join the fray at World Trade Organisation said in a statement, "The US request relates to the EU's apparent failure to implement the WTO rulings in a 1996 proceeding initiated by Ecuador, Guatemala, Honduras, Mexico and America."
Launching the formal step saying, "We are hopeful that this formal step will facilitate the removal of that discrimination," the US Trade Representative Susan C Schwab added, "We regret that efforts between the EU and its Latin American trading partners to negotiate a solution to the banana issue have not been successful. We share the concern of Ecuador and several other Latin American banana exporters regarding the continued existence of a discriminatory tariff rate quota in the EU's current banana regime."
The US statement pointed out that WTO ruling had said "the EU's regime discriminates against bananas originating in Latin American countries and against distributors of such bananas, including several US companies," adding "The EU was under an obligation to bring its banana regime into compliance with its WTO obligations by January 1999."
After the 1996 WTO ruling, the EU had committed to bring its tariff-quota regime for banana in compliance with the ruling no later than January 1, 2006, said the US statement, lamenting the fact that "the EU banana regime put in place on January 1, 2006 features a zero-duty tariff quota that is allocated exclusively to bananas from African, Caribbean and Pacific (ACP) countries. Bananas of Latin American origin do not have access to this duty-free tariff rate quota and are subject, instead, to a 176 Euro/ton duty."
The European Commissioner for Agriculture and Rural Development Mariann Fischer Boel introduced a personal element of surprise to a more than decade old dispute last week.
Answering a question from New Europe about the new WTO banana dispute with US joining others, the Commissioner wondered why at the first place the US is interested in banana sector as it is not a banana producer but then she answered her own doubts with the mention of Chiquita as the possible cause for US to intervene. The Commissioner however added that the EU will look into the matter and take appropriate steps.
Chiquita, based in Cincinnati in the US could not be contacted for their immediate reaction but European banana sector sources told New Europe that other US exporters including Del Monte and Dole are also affected adding that the European Commissioner has her facts correct that no bananas are grown in the US but in the trade circle of today's era of globalisation everyone is aware of the large farming interests of these leading world exporters globally especially in the Latin American region.
Coming back to the US request to WTO panel to review whether the EU banana import regime breaches the obligations of the international trade body, the EU this week in Geneva as a defending party may veto under WTO rules the request but the WTO will comply with the US request a month later unless the complaint is withdrawn.
The US is following the footsteps of Colombia and Panama which this year decided to follow the beaten track of Ecuador.
December 15, 2006 saw the first day of the proceedings at Geneva of revival of the "1990s banana wars" with the then-winner Ecuador coming back to haunt the European Union. Ecuador, the world's largest banana exporter, complained to the WTO against the EU's single tariff of 176 Euro that came into force on January 1, 2006, terming it "high."
Commenting on the decisions, Michael Mann, European commission spokesman for agriculture had said, "This is very regrettable. We had a consultation process going which we felt was making good progress."Over the past years negotiating for a single tariff system to modify its complex web of duties and quotas for imports, the European Commission, the executive arm of the EU, had suggested EU duties of 230 Euro and then scaling them down to 187 Euro, but WTO panels had rejected the proposals arguing that those were discriminatory against Latin American (Latam) nations. Out of that deadlock emerged the figure of 176 Euro, but the conflict simmered on.
Eurostat data of the first quarter 2007 compared to the same period 2005 made it clear how Latam share compared to ACP banana growing countries is slipping down the banana ladder. The imports of the latter are climbing double as fast as their counterparts in Latin America.The EU's current banana import policy significantly differentiates access treatment as a tariff-quota volume of 775,000 tonnes is exclusively reserved for bananas of ACP origin. ACP bananas within the quota enter duty-free ( i.e., at a 176 Euro/tonne margin of preference), with unlimited ACP over-quota access authorised at a tariff of 176 Euro/tonne.
On the other hand, an "autonomous" tariff of 176 Euro/tonne (a rate more than double the previously-applicable rate of 75 Euro/tonne) applies to all other bananas.Prior to the General Affairs and External Relations Council (GAERC) May 15, 2007, Spain threatened to veto the EU-ACP commitments unless its domestic producers were better protected from an expected rise in banana imports. The fallout was immediately visible when the GAERC endorsed the commission proposal to fully open European to imports from the ACP, with phased-in access for rice and sugar but the banana sector was shelved.
Debating in early December last year in the European Parliament on the need for an assistance to EU farmers, Jean-Claude Fruteau, Member of European Parliament argued, "The assistance provided for banana producers in the EU is necessary in order to compensate for the dysfunctions within the world trade system, in particular the current gap between the social and environmental standards of European countries and those of Central and Latin American countries. To be effective, these internal regulatory measures need to be in line with external regulatory tools by increasing budget allocations as and when any decrease in the customs tariff occurs."
The MEP was pointing to the fact that money coming in through import tariffs goes in to fill the coffers of EU's Common Agriculture Policy (CAP) from where the money goes to EU farmers.Boel had said that the current system of handouts to banana farmers was hard to justify in world trade talks and that it needed to be brought in line with EU agricultural reforms in other sectors.
While bananas grown within the European bloc account for only 16 percent of the total EU supply, production is important to the Spain's Canary Islands, the French overseas departments of Martinique and Guadeloupe and Portugal's Madeira and Azores islands.Europeans eat some 4.6 million tonnes of bananas every year, making the bloc the world's biggest banana market.
Over two-thirds of the fruits consumed come from Latin America and a further 17 percent from Africa and Caribbean countries.To meet all these requests the only way out is to grant duty free quotas to all regions or countries but that seems difficult with the arrival of French President Nicolas Sarkozy for whom the big chunk of winning votes came from French farmers and traders. It may have been a coincidence that Sarkozy went for his post-victory yacht trip with Vincent Bolore whose companies are loading bananas for Europe in Ivory Coast, Ghana and Cameroun.
Written on July 9, 2007 for New Europe, the European Weekly - Issue : 737
Launching the formal step saying, "We are hopeful that this formal step will facilitate the removal of that discrimination," the US Trade Representative Susan C Schwab added, "We regret that efforts between the EU and its Latin American trading partners to negotiate a solution to the banana issue have not been successful. We share the concern of Ecuador and several other Latin American banana exporters regarding the continued existence of a discriminatory tariff rate quota in the EU's current banana regime."
The US statement pointed out that WTO ruling had said "the EU's regime discriminates against bananas originating in Latin American countries and against distributors of such bananas, including several US companies," adding "The EU was under an obligation to bring its banana regime into compliance with its WTO obligations by January 1999."
After the 1996 WTO ruling, the EU had committed to bring its tariff-quota regime for banana in compliance with the ruling no later than January 1, 2006, said the US statement, lamenting the fact that "the EU banana regime put in place on January 1, 2006 features a zero-duty tariff quota that is allocated exclusively to bananas from African, Caribbean and Pacific (ACP) countries. Bananas of Latin American origin do not have access to this duty-free tariff rate quota and are subject, instead, to a 176 Euro/ton duty."
The European Commissioner for Agriculture and Rural Development Mariann Fischer Boel introduced a personal element of surprise to a more than decade old dispute last week.
Answering a question from New Europe about the new WTO banana dispute with US joining others, the Commissioner wondered why at the first place the US is interested in banana sector as it is not a banana producer but then she answered her own doubts with the mention of Chiquita as the possible cause for US to intervene. The Commissioner however added that the EU will look into the matter and take appropriate steps.
Chiquita, based in Cincinnati in the US could not be contacted for their immediate reaction but European banana sector sources told New Europe that other US exporters including Del Monte and Dole are also affected adding that the European Commissioner has her facts correct that no bananas are grown in the US but in the trade circle of today's era of globalisation everyone is aware of the large farming interests of these leading world exporters globally especially in the Latin American region.
Coming back to the US request to WTO panel to review whether the EU banana import regime breaches the obligations of the international trade body, the EU this week in Geneva as a defending party may veto under WTO rules the request but the WTO will comply with the US request a month later unless the complaint is withdrawn.
The US is following the footsteps of Colombia and Panama which this year decided to follow the beaten track of Ecuador.
December 15, 2006 saw the first day of the proceedings at Geneva of revival of the "1990s banana wars" with the then-winner Ecuador coming back to haunt the European Union. Ecuador, the world's largest banana exporter, complained to the WTO against the EU's single tariff of 176 Euro that came into force on January 1, 2006, terming it "high."
Commenting on the decisions, Michael Mann, European commission spokesman for agriculture had said, "This is very regrettable. We had a consultation process going which we felt was making good progress."Over the past years negotiating for a single tariff system to modify its complex web of duties and quotas for imports, the European Commission, the executive arm of the EU, had suggested EU duties of 230 Euro and then scaling them down to 187 Euro, but WTO panels had rejected the proposals arguing that those were discriminatory against Latin American (Latam) nations. Out of that deadlock emerged the figure of 176 Euro, but the conflict simmered on.
Eurostat data of the first quarter 2007 compared to the same period 2005 made it clear how Latam share compared to ACP banana growing countries is slipping down the banana ladder. The imports of the latter are climbing double as fast as their counterparts in Latin America.The EU's current banana import policy significantly differentiates access treatment as a tariff-quota volume of 775,000 tonnes is exclusively reserved for bananas of ACP origin. ACP bananas within the quota enter duty-free ( i.e., at a 176 Euro/tonne margin of preference), with unlimited ACP over-quota access authorised at a tariff of 176 Euro/tonne.
On the other hand, an "autonomous" tariff of 176 Euro/tonne (a rate more than double the previously-applicable rate of 75 Euro/tonne) applies to all other bananas.Prior to the General Affairs and External Relations Council (GAERC) May 15, 2007, Spain threatened to veto the EU-ACP commitments unless its domestic producers were better protected from an expected rise in banana imports. The fallout was immediately visible when the GAERC endorsed the commission proposal to fully open European to imports from the ACP, with phased-in access for rice and sugar but the banana sector was shelved.
Debating in early December last year in the European Parliament on the need for an assistance to EU farmers, Jean-Claude Fruteau, Member of European Parliament argued, "The assistance provided for banana producers in the EU is necessary in order to compensate for the dysfunctions within the world trade system, in particular the current gap between the social and environmental standards of European countries and those of Central and Latin American countries. To be effective, these internal regulatory measures need to be in line with external regulatory tools by increasing budget allocations as and when any decrease in the customs tariff occurs."
The MEP was pointing to the fact that money coming in through import tariffs goes in to fill the coffers of EU's Common Agriculture Policy (CAP) from where the money goes to EU farmers.Boel had said that the current system of handouts to banana farmers was hard to justify in world trade talks and that it needed to be brought in line with EU agricultural reforms in other sectors.
While bananas grown within the European bloc account for only 16 percent of the total EU supply, production is important to the Spain's Canary Islands, the French overseas departments of Martinique and Guadeloupe and Portugal's Madeira and Azores islands.Europeans eat some 4.6 million tonnes of bananas every year, making the bloc the world's biggest banana market.
Over two-thirds of the fruits consumed come from Latin America and a further 17 percent from Africa and Caribbean countries.To meet all these requests the only way out is to grant duty free quotas to all regions or countries but that seems difficult with the arrival of French President Nicolas Sarkozy for whom the big chunk of winning votes came from French farmers and traders. It may have been a coincidence that Sarkozy went for his post-victory yacht trip with Vincent Bolore whose companies are loading bananas for Europe in Ivory Coast, Ghana and Cameroun.
Written on July 9, 2007 for New Europe, the European Weekly - Issue : 737
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