African states seek 500 mln euros in EU banana deal

Africa's top banana export countries sought on Friday 500 million euros ($694 million) in compensation from the European Union as part of a deal to end the world's longest-running trade dispute.

Talks drag on at the World Trade Organisation in Geneva between the EU and Latin America's leading banana suppliers aimed at reducing import tariffs and end the "banana wars" that have dragged on since the 1990s.

As part of the pact, Brussels must find a package of financial aid for rival banana-producing African, Caribbean and Pacific (ACP) countries to compensate them for possible losses to their industry and ease any socio-economic hardships that the liberalisation would mean for some of its former colonies. But ACP producers -- which have for years enjoyed duty-free access to the lucrative European market -- told EU ministers at talks on Friday in Brussels that the 27-nation bloc's latest offer, estimated to be around 100 million euros, is not enough.

"An update on the ACP's support needs ... indicates that an envelope of close to 500 million euros would be required to avoid social turmoil and political instability in the ACP countries concerned," a statement prepared by the ACP delegation for the ministerial meeting said.

The European Commission -- which oversees trade policy for the EU -- has proposed gradually lowering taxes on banana imports from Latin American countries to 114 euros per tonne by 2016 from 176 euros now.

But ACP producers such as Cameroon and Ivory Coast, want smaller tariff cuts over a longer period, the declaration obtained by Reuters showed.

SWAMPED

They say Europe will become even more swamped by cheaper fruit from Latin America, which already supplies some 80 percent of EU banana imports, to the detriment of former colonies of Britain, France and Portugal.

"ACP countries will immediately suffer drastic losses which would also have to be compensated for immediately," they argued.

European Commission officials say they hope to conclude a deal with all parties soon.

"We have noted that the EU has indicated that discussions are almost at an end with the MFN suppliers (Latin American countries) and the U.S., with who it intends to sign a final deal by the end of June 2009," the ACP statement said.

Ecuador, the world's largest exporter of bananas, has led pressure from Latin America for the EU to stick to the tariff deal negotiated in July 2008 on the sidelines of a Geneva meeting seeking a breakthrough in the Doha round of wider World Trade Organisation (WTO) talks.

Three of the world's biggest distributors, Chiquita Brands International, Del Monte Foods and Dole Co., have Latin American plantations.

When the WTO talks collapsed in July 2008, the EU walked away, saying the banana deal had to be part of a general Doha agreement.

But, having won a string of WTO cases on the issue against Brussels, the Latin Americans insist that bananas should be included in a separate pact.

ACP countries have argued that any agreement on bananas should form part of a wider Doha deal -- an arrangement that would give them added leverage in the discussion because they could threaten to block Doha.

Source: forexpros.com

Publication date: 6/2/2009