Sunday, November 22, 2009

16 Year Banana Wars close to resolution

The Malaysian Insider – Deal nears to end ‘banana wars’

The “banana wars” began in 1993 when Britain began to give preferential treatment to banana producers from former British and French colonies in African, Caribbean, and Pacific regions by imposing tariffs on countries outside of those regions. The dispute is the longest running trade dispute in the world. Honduras, Ecuador, and Costa Rica have all successfully brought trade complaints to the world trade organization over the past sixteen years. American Companies, Chiquita Brands and Dole have also successfully brought trade complaints with the world trade organization over the tariffs.

The current proposal to end the banana wars would phase out the tariff that the EU charges on Latin American bananas over the next seven years. Latin American countries would also agree to drop all litigation in the EU involving the trade dispute. The agreement would provide the countries in Africa, the Caribbean, and Pacific region that currently benefit from the tariff with approximately 190 million Euros in development aid to help them restructure. The agreement further provides that it will not be subject to revision if global Doha round talks succeed. Trade Commissioner, Catherine Ashton, stated that the countries would likely finalize an agreement within the next two weeks. Costa Rican Trade Minister, Marco Vinicio Ruiz, attempted to downplay how far negotiations had progressed, asserting that any agreement would likely take until the end of the year to finalize.

The end of the banana wars potentially signifies a new era of global trade relations. The trade agreement ending the banana wars might spur further negotiations in the currently stalled Doha round of world trade negotiations. The end of the banana wars would likely clear the way for further agreements in dozens of other tropical products and other agricultural products. Disputes over agricultural subsidies between the EU, America and Latin America caused negotiations to break down in 2007 and continue to be a major source of dispute in world trade negotiations. Even if the agreement does not further the agenda of the Doha round, the agreement will likely open the window for the EU and several Latin American countries to pursue multi-country free trade agreements and bilateral trade agreements. Analysts note that an agreement ending the banana wars would likely result in free trade agreements between the EU and Columbia, Peru, and Ecuador.

Will the end of the banana wars lead to more free trade agreements among countries?

Is it surprising that the countries successfully ended the banana wars during 2009, when many countries are enacting protectionist measures?

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