European Union adopts new ‘tariff-only’ import regime for bananas from 1 January 2006

On 29^th November2005, the European Union agreed a new import tariff of 176 euros per tonne to apply from 1 January 2006 to bananas imported from countries enjoying Most Favoured Nation status. The new import regime will also include a duty-free annual import quota of 775,000 tonnes for African, Caribbean and Pacific (ACP) bananas, also to apply from 1 January 2006.

History

Preferences for bananas from African, Caribbean and Pacific (ACP) countries have existed in the EC since the UK joined in 1973. A common organisation of the market was introduced in 1992, as part of the completion of the Single Market. The resulting quota system was then the subject of repeated World Trade Organisation (WTO) challenges in the 1990s – the so-called ‘Banana Wars’.

The system was found to be incompatible with WTO rules and the dispute was resolved in 2001 through Understandings with Ecuador and the United States.  The Understandings commit the EC to eliminating quotas and establishing a tariff-only regime no later than 1 January 2006. 

The Commission originally proposed a single tariff of €230/tonne. However, following a request from a number of Latin American banana producing countries, a WTO arbitrator found in August 2005 that the proposed tariff would not result in at least maintaining total market access for suppliers under the Most Favoured Nations (MFN) clause.

On 12 September, the EU presented a revised proposal in the light of the arbitrator’s award, for an import duty of € 187/tonne for MFN suppliers and a tariff quota of 775,000 tons at zero duty for bananas originating in ACP countries. Again, the arbitrator found that the proposal did not rectify the matter. With the arbitration procedure now over, the EU had to set the rate that would apply as from 1.1.2006.

Economic Partnership Agreements (EPAs)

Preferential arrangements under WTO-compatible EPAs between the EU and ACP are to come into force by 1 January 2008. Formal negotiations of the new trading arrangements started in September 2002.

Everything But Arms (EBA)

The EBA regime was adopted in February 2001, granting duty-free access to imports of all products from least developed countries without any quantitative restrictions, except to arms and munitions. It provided for full liberalisation of imports of bananas from the 48 identified LDCs by 1 January 2006, by reducing the full community tariff by 20% every year.

UK Priorities

The UK recognises the importance of the banana trade to many ACP countries. The consequences of preference erosion are potentially grave, and the UK is committed to working with affected countries to ensure their needs are adequately addressed.

Contact:

DTI Response Unit
Tel: 020 7215 5000
Email: dti.enquiries@dti.gsi.gov.uk