Leading Latin American banana producers on Thursday rejected a new import duty that the European Union has suggested for their fruit supplies, pledging to fight long and hard to protect their interests.
The EU has fired the opening salvo in what will be lengthy negotiations over a revamped import regime to apply from 2006, by declaring its preferred duty of 230 euros a tonne. Worth billions of dollars on world markets and a key revenue-earner for many Latin American states, bananas are the world's second-largest fruit market after citrus and have a long history in the EU as a particularly sensitive area.
After losing a bitter 1990s banana dispute at the World Trade Organisation (WTO), the EU pledged to get rid of its existing system and move to a tariff-only mechanism by 2006. The problem is how high to set the tariff.
Several top Latin American banana producers have strongly criticised the EU's proposed entry duty. Led by the world's largest exporter Ecuador, the Latin Americans insist on no increases above the EU's current base tariff of 75 euros.
"That proposal represents an unacceptable threat to the interests of Panama and Latin America in general, and will need to be stopped," said Estif Aparicio, chief of international trade negotiations at Panama's trade and industry ministry.
"Panama...stands ready to take whatever measures are needed to prevent an increased EC banana tariff and ensure strong Panamanian exports to the EC market," he said in a statement.
Aparicio said the EU's "extraordinary increase" in its duty on Latin American bananas would badly erode the region's exports and prices, putting its developing economies at risk.
Ecuador, the victor of the 1990s' banana wars together with the United States, said a 230-euro tariff was much higher than the protection level that Europe needed to maintain the market access that Latin American bananas enjoyed at the moment.
"We think there will be a margin for negotiations and hope we will manage to reach an agreement to the benefit of every interested party," said Mentor Villagomez, Ecuador's ambassador to the EU. "But 230 (euros) shows it is going to be difficult.
"If that is not possible, we reserve our right to use the procedures established...at the WTO," he told Reuters.
Pitted against the Latin Americans are some of Europe's former colonies in the ACP group, who want a duty of 275 euros.
The ACP stance is backed by Europe's only banana producers, France and Spain, and also by African producers - whose fruit is much less competitive than Latin America's so-called dollar bananas.
Africa's main banana suppliers are Ivory Coast and Cameroon.
The EU has also pledged to keep some trade preference for its long-time ACP partners, who fear their more expensive fruit may be crowded out of the lucrative EU market if dollar bananas flood into Europe due to a low import duty.
The main question is the discount to give Europe's former colonies. At present, their bananas enter the EU duty free whereas the Latins must pay the 75-euro base tariff.
"This (EU proposal) definitely goes against the poorest countries like mine, in Latin America," Darcio Castillo, the Honduran ambassador at the WTO, told Reuters on Wednesday.
Honduras is Latin America's fifth-largest banana supplier to the EU by volume, while Panama is the fourth largest.
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