Ending the banana wars: Who wins and who loses?

The EU is the world's biggest importer of bananas. As it produces only about a tenth of the bananas needed to satisfy Europeans' voracious appetite for the world's most important fruit, banana exporters from Africa and Caribbean and their competitors from Latin America fight hard for shares on the EU market. MEPs recently approved plans to make it easier for big multinationals to sell Latin American bananas in the EU, but warned that livelihoods of small farms from ACP might be threatened.

Picture of bananas for sale at the wholesale fruit market in Lima on March 19, 2010.©BELGA_
Picture of bananas for sale at the wholesale fruit market in Lima on March 19, 2010.©BELGA_

On 17 January Parliament's international trade committee (INTA) supported the deal on trade in bananas (rapporteur Francesca Balzani, S&D) reached in December 2009 between the EU and the US, Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela.


Under the deal the EU will gradually cut its import tariffs on bananas from Latin America in eight stages, from €176 a tonne at the outset to €114 in 2017. In return, the other side will drop the actions it brought against the EU before the WTO for infringing the rules of international trade


End of 15 year banana war?


If the full Parliament consents to the deal, this will mark the end of the 15-year long banana war.


In 1993, the EU established an import regime that - mainly for development-oriented reasons, to ensure that relatively small ACP banana farmers can continue to earn their living - allowed ACP bananas (from Africa, Caribbean and Pacific Countries) to enter the EU market largely duty-free.


On the other hand, the regime slapped tariffs on bananas from Latin America which are mainly produced by a handful of big US multinationals (Dole, Chiquita).


This preferential treatment allowed relatively inefficient ACP producers to compete with the US industrial machine; nevertheless, the WTO repeatedly found the preferences in breach of international trade rules, even authorizing the US to retaliate and slap tariffs on some EU products (from Scottish cashmere to French cheese).


The EU has thus agreed to lower the tariffs on Latin American bananas which will probably mean lower prices for European consumers as competition will intensify between ACP and Latin American (US) producers.


US multinationals will enjoy better access to the EU


In addition US multinationals will enjoy better access to the EU market, more earnings whilst ACP and European banana producers will probably see their market share shrink and income decline.


Fears abound that this will jeopardize ACP development goals. In an attempt to offset there fears ACP countries are to receive up to € 200 million to help them adjust to stiffer competition; help to European producers should also be beefed up - there should be more money. MEPs also call for labour standards to be respected. 


Members of both the GUE/NGL and Greens/EFA groups voted against granting Parliament's consent. In their view, the deal would jeopardise the basic rights of small producers by strengthening the monopoly position of big U.S. multinationals controlling the banana market in Latin American countries. The agreement was approved with 18 votes in favour and 5 against. 



Further information

Bananas

  • important for food security: a major staple along with rice, wheat and maize
  • a good source of vitamins A, B6 and C; rich in fibre, fat-free
  • India and Brazil the world's biggest producers; around a third of all bananas
  • EU the biggest importer, Latin America were biggest exporter bananas in 2008

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