Last week, the WTO’s Dispute Settlement Body issued its decision on whether or not the EC had complied with the previous ruling in the long running banana dispute. In brief, the EC allows 775,000 tonnes of bananas to be imported from the African, Caribbean and Pacific (ACP) countries duty-free each year, while imports from other countries have to pay a (fairly substantial) tariff. The US has challenged this, leading to a seemingly endless dispute.
The ruling is that the EC’s preferences are inconsistent with WTO rules on non-discrimination. The Dispute Panel appeared to accept the EC’s contention that the preferences did not reduce the value of US banana exports in any way, but nevertheless the US has faced diminished ‘competitive opportunities’ due to the EC banana rules. That is, the handful of banana growers in the US were unfairly affected by not having full access to the EC market.
In reality it is not bananas grown in Florida and Puerto Rico that motivated the US to challenge the EC preferences. Rather it is the very many more bananas grown by US corporations in Ecuador, Columbia, the Philippines, Costa Rica and other countries that it is concerned about. Over 50% of total banana exports are controlled by just two companies, both of which are American, grown mostly in those four countries. That these countries already account for around 60% of EU banana imports doesn’t seem to matter.
The US’s ‘competitive opportunities’ that the WTO is steadfastly protecting come at the expense of some of the poorest countries in the world. Estimates made by the FAO have suggested that if the EU abandons the quota, as they have been instructed to do by the WTO, and replaces it with a tariff of €75 per tonne with ACP countries given duty-free access, exports from Caribbean ACP countries will decline by 30% by 2010. For (more…)