WTO backs US in banana trade war

Business Materials 9 February 2008 02:59 (UTC +04:00)

( BBC ) - A European Union import duty on bananas has again been declared illegal by the World Trade Organization (WTO).

The WTO backed the US in its challenge to a higher EU tariff of 176 euros ($254.9; ?131) a metric tonne on bananas from Latin America.

It is the latest in a heated battle over the EU's preferential trade deals for its ex-colonies in Central America.

The EU said the ruling was "irrelevant" amid negotiations on major changes to its entire import quota regime.

"The United States prevailed in its challenge," a US trade official confirmed.

He added that it was "the tenth proceeding" against the EU, the "longest running in WTO history".

The EU's defeat follows closely behind a similar claim by Ecuador, the world's biggest banana exporter, last November, which it also won.

Latin American producers currently make up about 60% of the EU market, with African and Caribbean producers taking a further 20%.

EU-grown bananas - mainly from Spanish and French islands - make up the final 20%.

The US is not an EU exporter of bananas but three large US-based multinationals, including Chiquita, have plantations in the region.

A spokesman for EU Farm Commissioner Marian Fisher Boel criticised the WTO panel for taking a "purely formalistic approach that found against something that doesn't exist anymore".

EU officials have been working furiously to hammer out new trade deals with about 80 countries in Africa, the Caribbean and the Pacific (ACP) to end special trade relationships that have been in place since the 1950s.

These allowed a range of products, including banana crops from ACP states enter the EU with no duty to pay, while Latin America exports were charged.

But under a WTO imposed deadline of 31 December last year, these special arrangements break international trade rules.

Those countries harmed by the deal would have the right to impose retaliatory tariffs against the EU.