San José, Costa Rica, since 1956

Banana Wars Settled, Trade Agreement Set

With the banana wars settled and the Honduras situation calming down, European Trade Commissioner Benita Ferrero-Waldner expects to have an association agreement signed with Central America as soon as May 18 of this year.

Both conflicts stood as obstacles in efforts to strengthen trade relations between the regions. But Ferrero-Waldner told Costa Rican reporters that, because negotiators agreed on banana tariffs last month and a new Honduran president will be inaugurated next Wednesday, the 27-nation European Union (EU) will sign the agreement at the EU-Latin American and Caribbean Summit in Madrid in May.

“The European Union is firmly committed to completing these negotiations in time to bring an agreement to the summit in May,” said Ferrero-Waldner, who said the negotiation process would require two more rounds of talks in addition to a number of informal meetings. “I am sure that we will have success working together.”

Formal negotiations for a trade agreement began in October 2007, though discussion of a possible trade partnership has been going on for at least a decade. The EU predicated a future partnership on Central America’s ability to reach certain integration benchmarks, such as developing common policies and establishing a customs union.

“Our objective with this agreement goes much farther than economic or commercial interests,” Ferrero-Waldner said. “We would like to expand our relationship in all areas, (including) the challenges to development.”

In setting a May 18 deadline, Ferrero- Waldner indicated that the negotiations would proceed even if one of the countries may not be in agreement with the others. She said, “One country alone will not be able to block this agreement. This I want to make clear.”

In the past, Costa Rica has been a strong advocate for the trade agreement, pushing it forward when regional conflicts have interfered.

Foreign Trade Minister Marco Vinicio Ruiz, urging movement on the agreement at a press conference on Thursday, said these talks provide “a window of opportunity” before leadership changes hands in the EU.

Path Toward Full Trade Agreement In addition to pushing the association agreement forward, Costa Rica played a pivotal role in resolving of the conflict over banana tariffs.

In a congratulatory meeting on Monday, representatives of the banana industry and many who had been involved in the 16-year battle met at the San José Palacio Hotel.

“The (result of) the negotiation allows us to be more competitive and to demonstrate that we produce the best bananas in the world,” said Jorge Sauma, general manager of the National Banana Corporation in Costa Rica (CORBANA).

“What made this process significant was the collaboration between the government and the private sector,” said Anabel González, former World Trade Organization  (WTO) director of agriculture. “The result was very positive and will only strengthen Costa Rica.”

The final agreement allows Latin American and Caribbean countries to compete with the consortium of African, Caribbean and Pacific (ACP) countries, which had long enjoyed the advantage in the banana market in Europe.

Over the next decade, the banana tariff will be reduced from €176 ($248) per ton of bananas to €114 ($160) per ton, and countries such as Costa Rica, Ecuador and Colombia will have better access to markets in Australia, Canada, the United States and Japan, among others.

However, the new tariffs will not be effective until the banana agreement is signed in May or June of this year. According to Ronald Saborío, who represented Costa Rica in the negotiations, the pay will be retroactive from Dec. 18.

Latin America has long been the main supplier of bananas to European markets. In 2007, the region sold 3.5 million tons, compared to 800,000 tons shipped by ACP countries and 700,000 sold by European producers (TT, Dec. 18, 2009).

Costa Rica alone supplies Europe with 16.5 percent of its bananas, which is roughly 50 percent of all the bananas Costa Rica produces.

In Costa Rica, banana production consumes 45,000 hectares of land, employs 40,000 workers and provides 100,000 indirect jobs.

Foreign Trade Minister Ruiz said that, while there are still a few steps to go before the banana agreement is implemented, the soon-to-be-signed association agreement will further benefit the banana industry.

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