EU proposes substantial increase in banana tariff
EU proposes substantial increase in banana tariff
At a Jan. 31 World Trade Organization meeting in Brussels, the European Union formally proposed a banana import tariff adjustment that would raise the levy to 230 euro ($300) per ton as of Jan. 1, 2006.
EU leaders said that this will balance the demands of large-scale growers in Latin America and interests of traditional suppliers in Africa and the Caribbean.
According to an Associated Press report, Caribbean producers had hoped that the EU would set a 275 euro ($358) per ton tariff, while Latin American exporters had pushed for 75 euros ($98) per ton. The eventual figure will have to be agreed in arbitration at the WTO.
Michael Mitchell, director of corporate communications for Chiquita Brands International in Cincinnati, said, "Our position has been consistent for some time. We believe that a tariff rate of 75 euro or less will meet the WTO standard for at least maintaining total market access for Latin American bananas."
Mr. Mitchell said that an Australian banana economist derived the 75-euro level supported by Chiquita. "Anything over 75 will diminish Latin American access," he emphasized. "So we believe 230 euro is much too high. It is, as you can see, a tripling of the tariff on Latin American bananas."
Juan David Alarcon, CEO of the Turbana Corp., told The Produce News that "every Latin American country was surprised with the European Union?s attitude in making a public statement before the WTO of a tariff that we all know will restrict our exports to that market and only benefit European producers and ACP countries."
Mr. Alarcon added, "On January 26, the presidents of Colombia, Ecuador, Costa Rica, Panama, Nicaragua, El Salvador and Guatemala met in Quito, Ecuador. At this summit, all of the presidents agreed on the need to find a mutually convenient solution between Latin Americans and the European Union. During the negotiations, the agreement was to maintain the current system in place and if no agreement was reached, then the issue would be brought before the WTO.
?Our countries are united, and we will exercise our rights before the WTO," Mr. Alarcon continued. "We will start negotiating with the EU. Nevertheless, we will probably end up in arbitration."
Mr. Alarcon added, "The most important issue is that all of our countries are united because banana production has a very high impact in our economies and creates employment. Both of these factors assure stability. When this industry suffers, our hard-earned stability is lost, and the outcome could be catastrophic."
Mr. Mitchell confirmed to The Produce News Feb. 1 that "on Monday [Jan. 31] the EU formally proposed a change in the banana import tariff from 75 to 230 euros. We have known informally since October what they would propose when the trade minister made the announcement, so the fact of the amount is not a surprise in any way. The significance of their formal notification to the WTO begins the timetable for negotiations and potential arbitration over the next several months."
Mr. Mitchell said that Latin America?s banana-supplying countries "will begin negotiations with the EU, and if a negotiated settlement can?t be reached, this will go into an arbitration process before the WTO. Most believe it will go to arbitration. It's unlikely there will be a negotiated solution."
Mr. Mitchell added, "It is too early to say what impact? the EU tariff increase proposal will have on the banana trade. We won?t know for several months what the solution is. It will be something that will unfold over the remainder of this year."
If negotiations are unsuccessful, an arbitrator will be appointed to decide if a 230-euro tariff "meets the WTO standard of total market access for Latin America," Mr. Mitchell said. "If the arbitrator says it doesn?t, then there may be more negotiations and arbitration if the EU comes back with another rate."
Tim Debus, executive director of the International Banana Association in Washington, DC, said that IBA is "focused on the banana business in North America. That is our focus of activities and the scope of our work. Therefore, our association does not take a position on issues in the European market."
Mr. Debus added, however, "The European and North American markets are interconnected in banana supply. What takes place in the European market may have an impact down the road on banana supply to North America, but that is all speculation. What ultimately will happen, I don?t know.
?Our organization is not involved in any way in positioning or lobbying the European import regime," Mr. Debus continued. "We?re watching it. These are very big issues. For the global banana industry, this major issue will have an impact across the board for growers, shippers, importers and marketers."
The Associated Press reported that EU officials said Latin American bananas currently have around 60 percent of the market, while African and Caribbean producers have 20 percent. Bananas grown in the EU " mostly on Spanish and French islands " account for another 20 percent.
EU leaders said that this will balance the demands of large-scale growers in Latin America and interests of traditional suppliers in Africa and the Caribbean.
According to an Associated Press report, Caribbean producers had hoped that the EU would set a 275 euro ($358) per ton tariff, while Latin American exporters had pushed for 75 euros ($98) per ton. The eventual figure will have to be agreed in arbitration at the WTO.
Michael Mitchell, director of corporate communications for Chiquita Brands International in Cincinnati, said, "Our position has been consistent for some time. We believe that a tariff rate of 75 euro or less will meet the WTO standard for at least maintaining total market access for Latin American bananas."
Mr. Mitchell said that an Australian banana economist derived the 75-euro level supported by Chiquita. "Anything over 75 will diminish Latin American access," he emphasized. "So we believe 230 euro is much too high. It is, as you can see, a tripling of the tariff on Latin American bananas."
Juan David Alarcon, CEO of the Turbana Corp., told The Produce News that "every Latin American country was surprised with the European Union?s attitude in making a public statement before the WTO of a tariff that we all know will restrict our exports to that market and only benefit European producers and ACP countries."
Mr. Alarcon added, "On January 26, the presidents of Colombia, Ecuador, Costa Rica, Panama, Nicaragua, El Salvador and Guatemala met in Quito, Ecuador. At this summit, all of the presidents agreed on the need to find a mutually convenient solution between Latin Americans and the European Union. During the negotiations, the agreement was to maintain the current system in place and if no agreement was reached, then the issue would be brought before the WTO.
?Our countries are united, and we will exercise our rights before the WTO," Mr. Alarcon continued. "We will start negotiating with the EU. Nevertheless, we will probably end up in arbitration."
Mr. Alarcon added, "The most important issue is that all of our countries are united because banana production has a very high impact in our economies and creates employment. Both of these factors assure stability. When this industry suffers, our hard-earned stability is lost, and the outcome could be catastrophic."
Mr. Mitchell confirmed to The Produce News Feb. 1 that "on Monday [Jan. 31] the EU formally proposed a change in the banana import tariff from 75 to 230 euros. We have known informally since October what they would propose when the trade minister made the announcement, so the fact of the amount is not a surprise in any way. The significance of their formal notification to the WTO begins the timetable for negotiations and potential arbitration over the next several months."
Mr. Mitchell said that Latin America?s banana-supplying countries "will begin negotiations with the EU, and if a negotiated settlement can?t be reached, this will go into an arbitration process before the WTO. Most believe it will go to arbitration. It's unlikely there will be a negotiated solution."
Mr. Mitchell added, "It is too early to say what impact? the EU tariff increase proposal will have on the banana trade. We won?t know for several months what the solution is. It will be something that will unfold over the remainder of this year."
If negotiations are unsuccessful, an arbitrator will be appointed to decide if a 230-euro tariff "meets the WTO standard of total market access for Latin America," Mr. Mitchell said. "If the arbitrator says it doesn?t, then there may be more negotiations and arbitration if the EU comes back with another rate."
Tim Debus, executive director of the International Banana Association in Washington, DC, said that IBA is "focused on the banana business in North America. That is our focus of activities and the scope of our work. Therefore, our association does not take a position on issues in the European market."
Mr. Debus added, however, "The European and North American markets are interconnected in banana supply. What takes place in the European market may have an impact down the road on banana supply to North America, but that is all speculation. What ultimately will happen, I don?t know.
?Our organization is not involved in any way in positioning or lobbying the European import regime," Mr. Debus continued. "We?re watching it. These are very big issues. For the global banana industry, this major issue will have an impact across the board for growers, shippers, importers and marketers."
The Associated Press reported that EU officials said Latin American bananas currently have around 60 percent of the market, while African and Caribbean producers have 20 percent. Bananas grown in the EU " mostly on Spanish and French islands " account for another 20 percent.
