By: Debra Percival
ACP says EU must not give way on bananas
Banana packing station, St. Lucia, funded by the EU. ACP states want a new ‘Special Assistance’ programme to counter tariff cuts
Ahead of the General Council meeting of the World Trade Organisation (WTO) scheduled in Geneva, 18-19 December, African, Caribbean and Pacific (ACP) states are warning of that any reduction of tariffs on bananas entering the EU market from other third countries, “… must not be lower than those enshrined in the draft Geneva Agreement on bananas.”
The Ministerial meeting will look at openings for breathing new life into the Doha Development Round of world trade talks which collapsed in July 2008.
Before those talks wrapped up, a draft compromise was reached, says Gerhard Otmay Hiwat, Suriname’s Ambassador to the EU and current chair of the ACP working group on bananas. This foresees a reduction from the current Most Favoured Nation (MFN) for third nations of €176 metric tonnes to €150 metric tonnes which, say ACP states, should “be maintained for some period before arriving at a landing zone of €116 in 2019.”
African and Caribbean banana producers who are party to the EU’s Cotonou agreement with the EU (2008-2019), have been export quota-free and duty-free to the EU under any one of the new respective European Partnership Agreements (EPA) since 1 January 2008. Many ACP countries have high production costs, making competition with large-scale South American producers extremely difficult.
Ambassador Hiwat told a meeting of ACP Ambassadors with EU Trade Commissioner, Baronness Catherine Ashton on 4 December, “…any reduction in the current MFN rate (down-payment) entails a reduction in the ACP preferential margin and resultancy of the potential viability of ACP banana exports.”
The Ambassador said that a new free trade agreement between Central American nations and the EU in the pipeline foresees deeper cuts than those in the Geneva compromise. “The ACP preferential margin on bananas will be further eroded when the EU-Central America FTA comes into effect given that is more favourable than envisaged in the Geneva Agreement,” he told Baroness Ashton who is chief negotiator for the EU in WTO talks.
Any change to the MFN tariff undermines the value of the new EPA agreements, said Ambassador Hiwat. “One of the primary motivations for ACP countries completing EPA negotiations was to preserve their access to the EU market,” he said.
He called for an EU financial package for ACP banana producers to offset tariff reductions foreseen in the Geneva compromise.This, he said, should be similar to “…that conferred to EU domestic banana producers that are immune from the deleterious impact of increased competition in the EU market.” EU domestic banana producers include Martinique, Guadeloupe and the Canary Islands.
ACP states are seeking a redesigned version of the existing, ‘Special Framework of Assistance for bananas’ which expires in 2009 to both up competitiveness of production in ACP banana producer countries and to, “support the adjustment of the ACP banana exporting countries where objectively the industry will be unable to survive the marked reduction in the value of EU preferences.” Another ACP stipulation is that monies under such a new five-year funding programme for all 14 ACP banana exporters should be disbursed on 1 January of each year of the programme. The EC is bound to provide such funding under the WTO draft Para 141 (July 2008) of AGRI modalities on mitigating the impact of preference erosion in developing countries, said the Ambassador.
He said that in already agreeing a compromise on bananas in July 2008, the ACP had demonstrated a capacity to compromise with its “longstanding trade and development partner.” And now it was up to the EU to reciprocate with a “firm expression of understanding and support,” he said.
