EU Loses WTO Case Brought by Latin American Banana Growers

Among the odder wars in human history one can find such silly-named fights as The Soccer War (El Salvador vs. Honduras), the War of Jenkin’s Ear (England vs. Spain) and the Wars of the Roses (York vs. Lancaster, repeatedly). However, a recent WTO ruling has spared mankind the ignominy of having to write a history of the Banana Wars. Instead, this august world body has found an EU tariff against Latin American banana’s unjust, and it has instructed the Europeans to negotiate a fair deal. Much bloodshed has been avoided – and breakfast in Europe just got cheaper.

At the heart of this struggle is the tariff treatment of bananas brought into Europe from Latin America compared to the treatment of those imported from the African, Caribbean and Pacific (ACP) group. The ACP group has the good fortune to be former French and British colonies, and when those two empires went out of business, the ex-colonies got special trade status for their banana crops – they enter the EU duty-free. Currently, the Latin American growers, former colonies of Spain, pay 75 euros per ton for the first 2.7 million tons of exports, rising after that to 680 euros per ton.

Despite this differing treatment, the Latin nations account for 60% of the bananas sold in EU markets, and 20% come from the ACP group. The other 20% is EU-grown (mostly French and Spanish islands that didn’t depart with the loss of empire – Ireland, Germany and Poland contribute surprisingly few bananas to the EU market). However, the tariff preference for the ACP growers irked the Latins, who complained throughout the 1990s (rows that actually were called Banana Wars, despite the lack of combat-related deaths -- rather like the Cod War between Iceland and the UK in the 1970s). The result was a WTO mandate for the EU to change its rules by January 1, 2006.

And so the EU announced a flat tariff of 230 euros per ton for the Latins and no tariff at all for the ACP. This was the rule the WTO shot down. The EU has ten days to negotiate a settlement. “We will start consultations with interested parties without delay," EU Trade Commissioner Peter Mandelson said. "I hope that everyone will cooperate in finding a mutually acceptable solution within the strict deadline set by the WTO."

In the spirit of global good will, and bananas in every bowl of corn flakes, the Kensington Review offers this humble compromise. No more tariffs on bananas brought into the EU, and slight boost in aid to the ACP nations for the next couple of years to help them reallocate labor and land if they can’t compete with the ex-Spanish colonies. And best they do it quickly, before someone starts shooting.


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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