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The EU banana regime is assessed

20 May 2004

 The EU Court of Auditors issued a report on 'the sound financial
 management of the Common Market organisation for bananas' in October
 2002. The report examines:

  • the way in which the Commission devised and implemented the
     measures introduced to achieve the CMO's objectives;
  • the way in which these measures have been managed by member
     states;
  • the extent to which the objectives had been achieved.

The Court found that the Commission had been successful in:

  • harmonising the EU banana regime;
  • ensuring free movement of bananas in the EU;
  • maintaining consumer choice.

However the report expressed concern about overpayment of aid under
 the income compensation scheme in the banana sector (total expenditure
€1.2
 billion since 1991). It furthermore found that virtually no premiums
 had been taken up to take land out of banana cultivation. Perhaps
 more significantly it identified weaknesses in the system of licensing
 and verification of imports which had resulted in a major fraud
 and the loss of some €160
 million in uncollected duties. The Court did however note that the
 Commission was taking steps to address this problem.
It further noted how the Commission was scheduled to carry out
 a major evaluation of the banana regime in 2004, and it urged the
 Commission to use this opportunity to carry out an objective assessment
 and fundamental review of current measures, and the future of banana
 production in the EU.

Editorial comment

 In resolving the trans-Atlantic banana dispute the management of
 the licensing system was the key point of contention. Given the
 significance of the licensing issue to the whole banana dispute,
 the discovery of wide-scale fraud places past debates in a somewhat
 different light.