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Bananas

Until the nineteenth century and the invention of the steamship bananas were not commonplace in Britain and were a luxury enjoyed only by the very few who could afford such a rare fruit. Since then things have changed and bananas, grown throughout the tropical and subtropical regions of the world, have become one of the world's most traded commodities.

The international market for bananas has meant they have become an important part of the economies of many countries. Most bananas, consumed within the European Union (EU), come from Latin American countries, a small amount are produced internally in EU territory and the rest come from African, Caribbean and Pacific producers, known collectively as the ACP countries.

Unlike the Latin American producers, ACP countries have been part of a historical agreement with the EU, first signed in 1974, called the Lome convention, which guaranteed that ACP countries could sell a certain amount of bananas to Europe.

The special treatment granted to the ACP countries under the Lome convention and its successor, the Cotonou agreement, have been difficult to reconcile with World Trade Organisation trade rules that obligate all countries to treat their trading partners equally.

The long running disagreement over the legitimacy of the ACP banana agreements, which resulted in costly retaliatory trade barriers between the EU and the United States (US), who supported the Latin American countries in their opposition to the special treatment granted to the ACP, is referred to as the 'banana wars'.

In order to avoid a return to the 'banana wars' it has been agreed that the agreements between the EU and the ACP will be reformed by the 1st January 2006. The outcome of this reform process and the extent to which ACP countries continue to have preferential access to the EU banana market is critical to the future of the banana industry in the ACP countries.

The high costs of production in the ACP countries, relative to the Latin American producers, means that many ACP banana industries have relied on the preferential arrangements with the EU.

After past reforms of its banana regime the European Commission established a Special Framework of Assistance (SFA) to help ACP countries cope with the transition that their economies will go through as the market for bananas becomes more competitive. The UK is working with the ACP countries and the EU Commission to try and make this assistance as effective and useful as possible.

Last updated: 4 October 2005

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