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 Chiquita. Show all posts
Showing posts with label Chiquita. Show all posts
Saturday, April 12, 2008
Tuesday, November 13, 2007
Banana sector gets slippery
Judgment day arriving as industry awaits Kroes’ moves
Investigations take time and when it comes to investigating in environs full of banana peels, the going gets slippery, slowing down proceedings further. There was, however no slip last week on the part of Jonathan Todd, commission spokesman for competition commissioner Neelie Kroes as he told journalists, “Anti-trust inquiry is ongoing.”
Todd was replying to a question about the latest status of a “cartel probe” launched two years ago into a suspected cartel of banana wholesalers. In 2005, Kroes team had raided the offices of Europe’s largest fruit distributors after Chiquita, the world’s biggest producer of bananas blew the whistle on an alleged cartel in the European banana markets.
At the time, Fyffes of Ireland, Dole and Del Monte of the US had admitted that they had been among the targets of the raids while the European commission had confirmed the “unannounced inspections” at the premises of several producers and distributors of bananas and pineapples in Germany, Belgium, the United Kingdom and Ireland.
“The Commission has reason to believe that the companies concerned may have violated Article 81 of the EC Treaty, which prohibits price fixing and market sharing practices,” the commission statement had said clarifying that raids did not mean that the targeted companies are guilty adding that a full-scale inquiry would be carried out.
The investigation was launched at the instance of Chiquita, based in Cincinnati in the US when it had it had informed the EU competition authorities after the management became aware that several of its employees had been sharing price information with rival companies for “many years.”
Commenting on the inquiry, reliable sources in the European commission and European banana industry sector told New Europe that the regulators are targeting the five biggest banana companies – Chiquita, Del Monte and Dole of the United States, plus Noboa of Ecuador and Fyffes of Ireland for an illegal cartel activity.
The sources also confirmed recent media reports that at the end of two years the European commission has more concrete information and formal charges may be initiated before the end of the current year.
Although Commissioner Kroes has broken many records during her tenure for imposing fines on cartels, the market observers feel that the fines, if imposed may stay within the precedent cases of about 10 percent of annual sales. Moreover, it may take months before the case comes to an end as the accused firms would have several months time period to defend themselves.
One market pundit alleged that the timing is coinciding with the ongoing transatlantic banana war which got reignited last year when Ecuador was joined by the US, Columbia and Panama to open another tug-of-war a decade later.
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.”
Last year, while 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 and on November 23, 2006 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 97 percent of all banana output is aimed for the European market. 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 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.
Written for New Europe, the European Weekly on June 16, 2007 - Issue : 734
Investigations take time and when it comes to investigating in environs full of banana peels, the going gets slippery, slowing down proceedings further. There was, however no slip last week on the part of Jonathan Todd, commission spokesman for competition commissioner Neelie Kroes as he told journalists, “Anti-trust inquiry is ongoing.”
Todd was replying to a question about the latest status of a “cartel probe” launched two years ago into a suspected cartel of banana wholesalers. In 2005, Kroes team had raided the offices of Europe’s largest fruit distributors after Chiquita, the world’s biggest producer of bananas blew the whistle on an alleged cartel in the European banana markets.
At the time, Fyffes of Ireland, Dole and Del Monte of the US had admitted that they had been among the targets of the raids while the European commission had confirmed the “unannounced inspections” at the premises of several producers and distributors of bananas and pineapples in Germany, Belgium, the United Kingdom and Ireland.
“The Commission has reason to believe that the companies concerned may have violated Article 81 of the EC Treaty, which prohibits price fixing and market sharing practices,” the commission statement had said clarifying that raids did not mean that the targeted companies are guilty adding that a full-scale inquiry would be carried out.
The investigation was launched at the instance of Chiquita, based in Cincinnati in the US when it had it had informed the EU competition authorities after the management became aware that several of its employees had been sharing price information with rival companies for “many years.”
Commenting on the inquiry, reliable sources in the European commission and European banana industry sector told New Europe that the regulators are targeting the five biggest banana companies – Chiquita, Del Monte and Dole of the United States, plus Noboa of Ecuador and Fyffes of Ireland for an illegal cartel activity.
The sources also confirmed recent media reports that at the end of two years the European commission has more concrete information and formal charges may be initiated before the end of the current year.
Although Commissioner Kroes has broken many records during her tenure for imposing fines on cartels, the market observers feel that the fines, if imposed may stay within the precedent cases of about 10 percent of annual sales. Moreover, it may take months before the case comes to an end as the accused firms would have several months time period to defend themselves.
One market pundit alleged that the timing is coinciding with the ongoing transatlantic banana war which got reignited last year when Ecuador was joined by the US, Columbia and Panama to open another tug-of-war a decade later.
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.”
Last year, while 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 and on November 23, 2006 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 97 percent of all banana output is aimed for the European market. 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 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.
Written for New Europe, the European Weekly on June 16, 2007 - Issue : 734
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