After an epic 16-year battle, the EU has agreed to stop fighting to keep banana prices for its citizens artificially high.
John J. Miller reports for WSJ:
The European Union ended one of the world’s longest-running trade battles Tuesday as it agreed to cut import tariffs on bananas from Latin America grown by U.S. corporations like Dole Food Co., Fresh Del Monte Produce Inc. and Chiquita Brands International Inc. The settlement, which must still be backed by national legislatures, means cheaper bananas for Europeans, more profits for U.S. fruit firms and lower revenues for some former EU colonies. It ends a 16-year-old trade dispute over access to the EU’s $6.7 billion banana market, the world’s largest.
Since 1993, when it set up its tariff-free zone, the EU has offered the best import rates to 12 former colonies, such as Cameroon, Ivory Coast and Belize. The sweet deal upset governments in countries such as Colombia, Costa Rica and Guatemala, where U.S. firms run industrial fruit plantations.
Five Latin Americans countries, backed by the U.S., filed their first formal trade complaint at the World Trade Organization in 1993. As the dispute escalated, other countries joined the battle against the EU tariffs. Since then, the EU has offered tariff cuts several times. Each time, the Latin American nations found them insufficient and filed another WTO complaint. In 1999, the WTO authorized the U.S. to impose $191.4 million of trade sanctions on the EU. The last WTO ruling, again upholding the complaint, was issued in early 2008. Trade ministers tried, and failed, to mint a deal as part of the Doha round of trade talks. Finally, this year, the four groups involved found common ground in a separate deal. Delegates from the EU, U.S., former EU colonies and the Latin American banana powers met in Geneva more than 100 times for a total of 400 hours of talks, WTO officials say.
The deal: The EU will reduce tariffs on bananas from Latin American countries to €114 a ton in 2017 from €176 today, in return for Latin American countries dropping their WTO case. The EU’s former colonies will continue to receive virtually tariff-free access for its banana shipments to the EU, and will get a one-off cash payment of €200 million ($293.1 million).
Ecuador hailed the deal as a victory “for all Latin American nations.” WTO director-general Pascal Lamy welcomed the end of “one of the most technically complex, politically sensitive and commercially meaningful legal disputes ever brought to the WTO.”
This borders on farce. And I’m not quite sure which side of the border it’s on.
The General Agreement on Tariffs and Trade, the predecessor to and umbrella treaty behind WTO, went into effect in 1947. The WTO itself was negotiated in 1987 and has been in place since 1995. The whole point of WTO is the elimination of barriers to the movement of goods between countries, based on the ideals of non-discrimination and reciprocity.
Yet, the EU has spent the last sixteen years — enough time that a child born when the suit was filed could have attained its drivers license or a child starting 1st grade could have finished medical school — fighting to keep the prices of bananas high? Better yet, this wasn’t even done to protect domestic industry but colonies that it shed five decades ago? And, not only could WTO not issue a binding ruling in all that time but the end result is a mere 35 percent reduction in the illegal tariff in eight years — a quarter century after the grievance was first filed? That’s not exactly a model of efficiency.
It strikes me as quite probable, incidentally, that the EU will have spent more money litigating the case and paying off the companies in question than they raised in tariffs. (I emailed Miller to see if he had the figures available but, alas, he did not.) Regardless, the EU taxpayer paid twice for the privilege of paying more for bananas.
James Joyner is managing editor of the Atlantic Council.