The Tico Times Online Daily Page

European Union Escalates
Banana Tariff Showdown
By Katherine Stanley With EFE Reports
Tico Times Staff
kstanley@ticotimes.net

The European Commission notified the World Trade Organization (WTO) yesterday of its intention to raise tariffs on banana imports from Latin America from 75 euros ($98) to 280 euros ($300) per ton, effective in 2006.

The notification demonstrates the commission’s unwillingness to negotiate directly with the leaders of Latin American banana-producing countries, despite those leaders’ hopes, expressed at last week’s summit in Ecuador (TT, Jan. 31) that the European Union would consent to a lower tariff.

The Presidents of Costa Rica, Panama, Guatemala, Nicaragua, Colombia and Ecuador, and the Vice-President of Honduras, Vicente Williams, signed the Quito Declaration at the end of the conference on Jan. 26. In the declaration, the leaders rejected the proposed E.U. tariff hike, saying the change would have disastrous effects on Latin American economies.

The next day, European Commission trade spokesman Claude Veron-Reville said the commission would submit the new tariff scheme to the WTO, rather than negotiate directly with Latin American leaders.

Costa Rican Trade Minister Manuel González on Friday implied the European Union is intimidated by Latin American producers’ firm stance.

“Latin America has acted like a single country, a single family,” he said. “The European Union is worried about the union that (our countries) represent.”

He also criticized European leaders for reacting before having received the treaty formally, and for failing to explain the reasons behind the proposed change.

“They haven’t explained it to us – or at least, they haven’t wanted to give us the information,” González said.

González maintains the tariffs are discriminatory, since banana-producing countries in Africa, the Caribbean and the Pacific would continue to send their bananas to Europe tariff-free under the proposed regime (TT, Nov. 26, 2004).

Veron-Reville said E.U. leaders are not interested in direct negotiations.

“These types of proceedings have their place in Geneva, as established in the agreements we have made with (the Latin American) countries,” he said.

According to González, official notification to the WTO begins a 60-day “consulting period,” during which either party can request formal arbitration of the dispute.

Mentor Villagómez, Ecuador’s ambassador to Brussels, has said Ecuador would immediately request arbitration if the commission goes ahead with the notification.

Latin American leaders say the tariff hike would cause unemployment and increase poverty for the hundreds of thousands of workers whose jobs depend on the banana industry.

In Costa Rica, according to González, bananas constitute 10% of total exports for a total of $500 million in revenue per year, and the industry generates 100,000 direct and indirect jobs.

See next Friday’s print edition of The Tico Times for the full story.