Posts Tagged ‘EU Latin American trade talks’

Banana Trade War At An End?

Monday, November 23rd, 2009

By: Ainsley Brown

Could the longest running trade dispute in World Trade Organization (WTO) history be coming to an end?

If newspaper reports are to be believed, and I have no reason to doubt them, then the 16 year old trade war could be very close to ending.  At the center of this row is the Banana – yes the banana.b2

The European Union (EU) according to a settlement seen by the Financial Times has proposed a deal that would see duties cut on bananas (and other tropical fruit) entering the EU from Latin America. The deal, if accepted, would not only end this long protracted trade dispute but would clear the way for the EU to finalize trade deals with several Latin American countries. Moreover, a settlement would provide a much needed shot in the arm to the stalled Doha Round of Trade talks by settling the tariffs on certain tropical agricultural goods – agricultural goods have been a major sticking point in the talks.

I think, before I go any further that I must make a confession at this point. And here it is, this trade dispute the so called the banana wars is the reason behind my choice of law as a career. No kidding. I am one of those lucky few people blessed to know at the precise moment what they wanted to be and why. For me it was just so simple, so clear – a lawyer.

I was a 16 year old high school student with a love for politics and history when I came across a newspaper story addressing the banana wars. I was immediately intrigued because not only had I followed the transition of the General Agreement on Tariffs and Trade (GATT) in to the WTO, I knew that the outcome this dispute could have very serious consequences for my native Jamaica – I had recently at the time moved to Canada.  Needless to say I watched very closely only to see the WTO rule against the EU. I was in shock, the ruling must have been wrong, there must have been bias, it just wasn’t fair.

Incensed with a feeling of injustice I simply had to know more. Unfortunately, the more I dug up the less I understood, so what did I do; I dug a little deeper and you guessed it I only got more confused. But I was hooked and refused to give up; I just had to figure this out.  It wasn’t that I lacked intelligence, and yes I was reading materials far above my intellect at the time but it was more than that. It was as if what I was reading was written in some sort of magical mystical code – inter alia; prima facie; countervailing measures; most favoured nation; national treatment.

What the hell? My thought was who wrote this? And the answer came back: A Lawyer. The magician-high priest –holder of the code that conjured up this spell that had at the same time my mind swirling and transfixed was a lawyer. What majesty, such elegance, my god what power – I have to be one. For me it was just that clear.

Now based on the limited understand that I could gather the dispute seemed to be a proxy war, one fought between the EU and the US with causalities being African, Caribbean and Pacific (ACP) and Latin American nations. However I am getting ahead of myself.

The trade dispute which is officially for the most part between the EU and several Latin American countries is about the EU policy to grant preferential access to the ACP countries, namely those that were former British and French colonies, for their bananas. The policy objective of the EU was – well at least one of them – was development of the ACP countries through trade.

The EU preferential policy, not necessarily the policy objective, and this is an important distinction,    drew the ire of both the Latin American counties and the US. But why the US? It is easy to see why the Latin American counties could be upset; they are after all not getting the same access as their competitors to the second largest banana market in the world. But why the US? They after all don’t grow bananas – or do they?

bThe answer my friends lie in US corporate interests. That is Chiquita, Dole and Del Monte; they either grow or purchase bananas from Latin America were better economies of scale (e.g. cheaper labour and larger cultivation) make their product generally cheaper than that coming from an ACP country.

Now being 16 years old and not yet verse in the magical mystical code of the law, specifically trade law, I read this as an attack on the EU’s policy objective. I after all had very little understanding of the policy itself. It also exposes something that only come to light after studying trade law and in particular the WTO; I presumed that within the system there was built in a degree of equity – things would not only be just they had to be fair. Man was I ever wrong.

As I have become better verse in trade law I no long hold to the idea that it was an attack on the EU’s policy objective. No, it was wholly an attack on the policy which I agree violated WTO rules. According to WTO trade law there was no other way it could have ruled. However, I have not abandoned my contention that while the ruling was just it was not equitable. This is one of the major flaws of the WTO, I believe, it often fails to take into account the objects rather simply looking at the blunt effect on trade.

This new deal, if accepted, is one that will not make ACP countries very happy but it is one that none the less has to happen. It in fact from the reports as a degree of fairness built in it, while tariffs will come down from 176 Euros to 114 Euros per tonne this will take place over a period of seven years, however, on signing there would be an initial reduction to 140 Euros per tonne. The EU will also pledge funds in order to assists ACP farmer adjust to the new market realities.

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