In a press conference on 23 July 2010 in Yaoundé, Luc Magloire Mbarga Atangana, Cameroon’s Minister of Trade, expressed great disappointment with the amount of financial support allocated to Cameroon and the other two African exporters of bananas, Ghana and Côte d’Ivoire, under the EU’s newly established Banana Accompanying Measures (BAM) programme. The BAM programme was established following the conclusion of the agreement on the fringes of the WTO to resolve the long-running banana dispute. Minister Mbarga Atangana pointed out that although bananas from Cameroon, Ghana and Côte d’Ivoire account for 67.7% of total EU imports of bananas from ACP states, these three countries receive only 27.4% of the €190 million of assistance made available under the BAM programme.

Meanwhile in the EU banana sector, the Spanish government has called on the EC to explore ‘the possibility of additional aids for the banana sector’ in the light of ‘the agreements reached between EU and Latin American countries’. The Spanish minister has furthermore committed the government to ‘[continuously] monitoring … the daily price’ of bananas to ascertain the impact of the tariff changes introduced through these EU trade deals with Latin American banana suppliers.

On 31 May 2010, the Geneva banana agreement entered into force following the signing of the agreement by the parties concerned. The first reduction to €148/tonne is now officially backdated to 15 December 2009. Traders who paid the €174/tonne duty can now reclaim €28/tonne on imports since 15 December 2010. It looks likely that these repayments will exclusively benefit EU importers. Nevertheless press reports suggest that Ecuadorian banana exports to the EU will increase in response to the tariff changes.

The additional tariff reductions included in the agreements with Colombia and Peru and five central American countries are limited to a maximum volume of banana exports, although in some instances these ‘quotas’ are ‘considerably higher than currently traded volumes’.

According to press reports, the provisions of the Colombian and Peruvian free-trade area (FTA) agreements may be applied retroactively in the banana sector. According to a corporate press release, Peru’s third largest banana exporter is focusing on organic, fair-trade banana production. This accounts for 14% of Peruvian exports of bananas, and suggests that the Dominican Republic’s position as the main supplier of organic bananas to the EU market could well be threatened. Getting to grips with productivity and cost-reduction issues would now appear to be an urgent priority in the Dominican Republic’s organic banana sector.

The EC has tabled a communication to the Council on the €190 million Banana Accompanying Measures programme. The communication acknowledges the erosion of the margins of tariff preference faced by ACP exporters, and commits the EU to building on previous banana sector restructuring programmes, which aimed to help beneficiaries produce bananas more competitively or diversify their economies away from banana production. The new programme applies to the ten remaining ACP banana exporters (Cameroon, Côte d’Ivoire, Ghana, Belize, Dominica, Dominican Republic, Jamaica, St Lucia, St Vincent and the Grenadines, and Suriname), including two non-traditional exporters (Ghana and Dominican Republic). A number of previous banana exporters will no longer benefit from the new programme, since they have all but exited the banana export trade (i.e. they export less than 40 tonnes per annum). In addition to the traditional focus on competitiveness and diversification, the new programme will also seek to address broader employment, educational, health and environmental adjustment issues. It is acknowledged that ‘with additional effort some countries may remain competitive in a less protected market, whilst others may have to opt for other solutions’.

Meanwhile, banana prices in the UK are set to break through the £1 a kilo barrier on the back of rising oil prices and the weakness of sterling. Prices at the end of March 2010 were 35% higher than March 2009, when regular discounts were being given to consumers. In Ireland, Fyffes has also warned of impending price increases in the face of unfavourable market conditions, including higher costs (sea freight charges up 8 to 9%) and poor exchange rates.

Through the recently concluded FTA agreements, Peru and Colombia have secured improved access for bananas and other food and agricultural exports to the EU market. Duties on bananas will fall to €75/tonne by 2020 (with similar concessions likely to be extended to central American banana exporters as well). EU banana producers expressed ‘astonishment and concern’ over the deal, arguing they would be disadvantaged by the deal. The EC for its part argues that the increase in funding under the POSEI programme will help ‘limit the impact of the tariff cuts on its domestic producers’.

Meanwhile on 17 March 2010 the EC formally adopted a proposal for the establishment of its programme of Banana Accompanying Measures (BAM). This is the first stage of the process, with the approval of the EU Council and European Parliament now required. Implementation of the programme should begin in 2011 and run through 2013. Ten countries will benefit from the programme: Belize, Cameroon, Côte d’Ivoire, Dominica, Dominican Republic, Ghana, Jamaica, St Lucia, St Vincent & the Grenadines, and Suriname. Measures supported under the programme will involve variously:

• support to investments in competitiveness improvements;
• support to economic diversification policies;
• support to broader social, economic and environmental adjustments.

Particular measures to be supported will be determined jointly by the beneficiary government and the EC. Country allocations will be based on three criteria:

• the volume of the banana trade with the EU;
• the importance of bananas exports to the EU to the country’s economy;
• the level of development of the country (such as its HDI rating);

Following the launch of the World Banana Forum, five multi-stakeholder groups have been established covering:

• labour rights and other workplace issues;
• distribution of value;
• sustainable production systems and environmental impacts;
• reducing agro-chemical use;
• certification issues.

In the coming years discussions will take place electronically to generate ideas, conduct research and produce measurable results with periodic face-to-face meetings.

With price wars breaking out between Britain’s leading supermarkets, banana prices are being cut dramatically. The Daily Telegraph website notes that ‘prices of bananas are being cut from 98p to 77p per kilo’, a reduction of some 22.5%. This comes on the back of price developments in the UK, which, according to analysis from Banana Link, ‘stripped more than half the total value out of the banana chain’ in 2009. While retailers claim that cheap bananas are ‘not at the expense of producers and intermediaries, as the cuts have come out of retail margins’, the question arises: will this continue to remain the case following the conclusion of the WTO deal? Fears are rising that once contracts come up for renewal, intensified price competition between supermarkets and the reduction on duties on Latin American bananas will ‘plunge banana growers into a race to the bottom’.

Analysis from Banana Link suggests that currently ‘prices paid to suppliers of UK supermarkets are one-third lower than seven years ago’. Banana Link highlights the rise of the ‘buying power of the supermarket chains’, which is eclipsing the former power of the big banana companies. While in the past EU and national authorities have used competition investigations to rein in the market power of the big banana companies, ‘competition law has not yet evolved to contemplate abuses of buying power at the top of the supply chain’.

In this context, it should be noted that the EC confirmed that in December 2009 it had ‘sent a Statement of Objections under anti-trust rules to a number of companies active in the import and marketing of bananas, concerning their alleged participation in a cartel’. According to press reports, the unidentified companies were in southern Europe, and this followed on from ‘surprise inspections’ carried out by the EC in November 2007. According to the reports, this follows actions last year which resulted in the EC ‘[fining] banana importers Dole and Del Monte for running a cartel’, while Chiquita ‘escaped fines because it blew the whistle on the illegal price fixing in northern European nations’.

In a press release issued on 17 December, Dole Food Company confirmed that the Statement of Objections issued by the EC did not affect any of its subsidiaries, and that it had maintained good cooperation with the EC in the process leading up to the issuing of the Statement of Objections.

Banana Link is arguing for a rethinking of price formation in the banana supply chain and looks to the work of the ‘fair trade’ movement for the basis on which this might occur. This would involve using calculations of ‘sustainable costs’ as the basis for price formation in the banana sector. This is seen as essential, since the current retailer ‘price wars’, over-supply situation and pending implementation of the banana deal are all likely to put pressure on the ‘fair trade’ model of price formation, even giving rise to a ‘race to the bottom’ among ‘fair trade’ suppliers as supermarkets chase cheaper ‘fair trade’ bananas. The significance of this issue is illustrated by the fact that, despite wider trends, the ‘fair trade’ minimum price for bananas has risen 21% since 2006 (with additional price premiums for organic bananas).

Banana Link is looking to the new World Banana Forum as a vehicle to promote broader use of ‘sustainable cost’ pricing as the basis for price formation in the banana sector. Against this background the ‘fair trade’ labelling and certification agency, FLO, plans to organise round tables in 2010 designed to promote the idea of ‘sustainable cost’ pricing. It is argued, however, that moves towards such a basis for price formation will require a review of the current retailer practices which it says are ‘stripping value out of the whole chain from the top down’.

Meanwhile, press reports in January noted complaints from Suriname’s banana-exporting company that for the second year running they were being offered ‘unreasonably low prices’ by their Dutch importer. This is despite improvements in the food safety and quality of bananas supplied following a five-year restructuring programme designed to lay the basis for full privatisation of the local banana sector. As a consequence a new Dutch importer is being sought.

With price wars breaking out between Britain’s leading supermarkets, banana prices are being cut dramatically. The Daily Telegraph website notes that ‘prices of bananas are being cut from 98p to 77p per kilo’, a reduction of some 22.5%. This comes on the back of price developments in the UK, which, according to analysis from Banana Link, ‘stripped more than half the total value out of the banana chain’ in 2009. While retailers claim that cheap bananas are ‘not at the expense of producers and intermediaries, as the cuts have come out of retail margins’, the question arises: will this continue to remain the case following the conclusion of the WTO deal? Fears are rising that once contracts come up for renewal, intensified price competition between supermarkets and the reduction on duties on Latin American bananas will ‘plunge banana growers into a race to the bottom’.

Analysis from Banana Link suggests that currently ‘prices paid to suppliers of UK supermarkets are one-third lower than seven years ago’. Banana Link highlights the rise of the ‘buying power of the supermarket chains’, which is eclipsing the former power of the big banana companies. While in the past EU and national authorities have used competition investigations to rein in the market power of the big banana companies, ‘competition law has not yet evolved to contemplate abuses of buying power at the top of the supply chain’.

In this context, it should be noted that the EC confirmed that in December 2009 it had ‘sent a Statement of Objections under anti-trust rules to a number of companies active in the import and marketing of bananas, concerning their alleged participation in a cartel’. According to press reports, the unidentified companies were in southern Europe, and this followed on from ‘surprise inspections’ carried out by the EC in November 2007. According to the reports, this follows actions last year which resulted in the EC ‘[fining] banana importers Dole and Del Monte for running a cartel’, while Chiquita ‘escaped fines because it blew the whistle on the illegal price fixing in northern European nations’.

In a press release issued on 17 December, Dole Food Company confirmed that the Statement of Objections issued by the EC did not affect any of its subsidiaries, and that it had maintained good cooperation with the EC in the process leading up to the issuing of the Statement of Objections.

Banana Link is arguing for a rethinking of price formation in the banana supply chain and looks to the work of the ‘fair trade’ movement for the basis on which this might occur. This would involve using calculations of ‘sustainable costs’ as the basis for price formation in the banana sector. This is seen as essential, since the current retailer ‘price wars’, over-supply situation and pending implementation of the banana deal are all likely to put pressure on the ‘fair trade’ model of price formation, even giving rise to a ‘race to the bottom’ among ‘fair trade’ suppliers as supermarkets chase cheaper ‘fair trade’ bananas. The significance of this issue is illustrated by the fact that, despite wider trends, the ‘fair trade’ minimum price for bananas has risen 21% since 2006 (with additional price premiums for organic bananas).

Banana Link is looking to the new World Banana Forum as a vehicle to promote broader use of ‘sustainable cost’ pricing as the basis for price formation in the banana sector. Against this background the ‘fair trade’ labelling and certification agency, FLO, plans to organise round tables in 2010 designed to promote the idea of ‘sustainable cost’ pricing. It is argued, however, that moves towards such a basis for price formation will require a review of the current retailer practices which it says are ‘stripping value out of the whole chain from the top down’.

Meanwhile, press reports in January noted complaints from Suriname’s banana-exporting company that for the second year running they were being offered ‘unreasonably low prices’ by their Dutch importer. This is despite improvements in the food safety and quality of bananas supplied following a five-year restructuring programme designed to lay the basis for full privatisation of the local banana sector. As a consequence a new Dutch importer is being sought.

December saw the launch of the World Banana Forum, which aims at ‘sharing information, ideas and best practices among stakeholders of the banana sector’ on issues such as ‘sustainable production systems, environmental impact, workplace issues and value distribution along the marketing chain’. The forum brings together ‘banana trade associations, private companies (major banana marketing companies and retailers), civil society and small farmers’ organisations and government representatives’. Progress reports on the deliberations of the forum will appear on the Banana Link website.

The background to the launch of the World Banana Forum can be found in GEM’s summary report of the multi-stakeholder round table on bananas held in Paris in March 2009, which includes a discussion document on the establishment of a multi-stakeholder forum for sustainable banana production and trade. A number of issues are highlighted in this report, including:

• the possible emergence of major banana producers as significant banana exporters (notably India);
• the high biological challenge facing Cavendish banana production, the most common variety of internationally traded bananas;
• the capacity to reduce production costs demonstrated by formerly high-cost Caribbean banana producers (notably Jamaica and Suriname, which moved from being the most expensive to the least expensive ACP producers, although at reduced volumes);
• the scope for diversification through product differentiation in a context where ‘organic’ and ‘fair trade’ bananas for example now account for 30% of total UK banana consumption and 60% of Swiss banana consumption;
• the importance of cooperation throughout the supply chain in developing differentiated marketing of bananas;
• the dominant role in marketing played by two multinational companies and the strong influence of the policies of large retailers on the functioning of banana markets, hence the large inequalities of market power within the banana supply chain and the scope for a greater role for competition policy in regulating relations within the banana supply chain;
• the increasing role of private standards in regulating access to the market.

Estimated banana exports/sales certified to selected sustainable agriculture standards

Meanwhile, according to FAO the volume of global banana exports has held up relatively well under the impact of the global economic downturn, with EU consumption down only 4%, US consumption down only 3.5% and consumption in other developed economies down 3.2%. This has been counterbalanced by a continued growth in banana consumption in developing countries (+2%), and largely driven by an increase in Chinese demand. If the global recession bottoms out at the end of 2009, global demand for bananas is projected to increase 7.8% (compared to a 2% increase for all tropical fruit). Launching its analysis, FAO has called for the establishment of ‘a global map of banana and plantain diseases’ to combat serious disease outbreaks, which it estimates could cause $4 billion of economic damage by 2010 if left unchecked. To date limited resources have held back efforts to combat these diseases.

While earlier press reports suggested that a final resolution of the banana dispute could be held back by US and ACP concerns or linked to deals on other commodities (sugar, rum, tobacco), this has not proved to be the case, with a final deal being initialled on 15 December 2009. Parties who initialled the deal included the USA.

The deal will cut tariffs from €176/tonne to €114/t by 2017, with an immediate reduction to €148/t once the agreement has been signed by the parties, probably in around four months’ time. In exchange, Latin American banana exporters will drop all actions against the EU in the WTO and will not seek further tariff reductions on bananas in the Doha Round. Parallel to this, the EU has agreed on the approach to be adopted in dealing with ‘tropical products’ and ‘preference erosion’. In a side agreement, the EU has agreed to make available some €200 million in new funding under the ‘Banana Assistance Measures’ programme.

ICTSD reports that a deal is likely to reduce ACP banana exports by 14%, while Latin American banana exports would grow around 17%. While overall imports of bananas into the EU have increased from 545,000 tonnes in 1992 to 927,000 tonnes in 2007, the share of traditional Caribbean suppliers has slumped dramatically. In 2008, Latin American suppliers accounted for 72.5% of the 5.4 million tonnes of banana sold on the EU market, with the ACP accounting for 17% and EU producers 10.5%. The conclusion of the banana deal is expected to facilitate EU FTA negotiations with Colombia, Peru and Ecuador, which are being accorded a high priority by the Spanish presidency of the EU.

In terms of the price effects of a deal, press reports note that banana prices on the UK market have already been falling. Indeed a report in the UK industry paper, the Grocer, notes that while fruit-and-vegetable prices have fallen 9.9% in the year to November 2009, banana prices in the UK have seen a 36% fall. Other media analysis however suggests that this is largely being driven by the pricing policies of supermarket chains in the UK, which use low-priced bananas to bring consumers through the door, hence the periodic outbreak of ‘banana wars’ among UK supermarkets.

In response to the deal, some African banana exporters are reported to be looking to develop national and regional markets for bananas.

ICTSD reports intensified negotiations to conclude a banana deal, with a deal expected before the 30 November WTO Ministerial meeting. The deal, nominally entitled the ‘Geneva Agreement on Trade in Bananas’ is expected to resemble the July 2008 arrangement. This would see the duty paid by Latin American suppliers fall progressively from the current €176/tonne to €114/t after seven years. The new agreement would ‘mandate that bananas receive “stand-alone” treatment and be excluded from the Tropical Products list – a list of products that will receive the “fullest liberalisation”, settle all pending disputes with Latin American exporters, and provide a “credit clause” to mark the lowered MFN tariff as the EU’s final market access commitment in the Doha Round’. In addition, if no deal is reached in the multilateral trade talks by 2013, the process of tariff reductions will be temporarily halted after two years. Reports of a pending deal have seen the share value of Fyffes plc increase by 8%. In contrast it is feared that the deal will result in a 12% decline in banana prices and a decline of 14% in ACP banana exports to the EU. This, it is feared, could be ‘devastating’ for the economies of the Windward Islands. Against this background ‘Britain’s shoppers are being urged to keep faith with fair trade Caribbean banana growers’.

According to ICTSD the EU will provide ‘a substantial amount of aid through “Banana Accompanying Measures”’ reported to consist of €190 million ‘beyond the support offered through the European Development Fund’.

At the ACP Ministerial meeting on 19 November a resolution was adopted which:

• reaffirmed ‘the serious social, economic and political dislocation that could result from the destruction of the banana industry in ACP countries’;
• reiterated the ACP view that bananas should have ‘a separate tariff treatment in the DDA modalities on agriculture’ and should not be subject to treatment as a ‘Tropical Product’, and that the EU and ACP should ‘jointly agree on the modalities for addressing preference erosion products/tropical products in the agriculture negotiations’;
• stressed that the banana deal should be implemented as an integral part of the Doha Round package;
• argued that the current EU offer to MFN suppliers exceeded what was necessary to ‘fulfil the EC’s obligations under Article XXVIII of the GATT and for complying with the WTO Appellate Body’s ruling’;
• called for the ‘implementation of tariff cuts in instalments spread over at least 10 years’, a three-year moratorium following the first reduction in the tariff, the allocation of €250 million to the ‘Banana Accompanying Measures’ programme, with a review of the situation of ACP banana suppliers in 2013 to determine whether additional resources are required.

The ICTSD reports ‘“progress” in moving towards agreement on bananas’ and says that ‘reports indicate that the tentative deal that was struck in July 2008 could eventually be the basis of the accord’. A critical issue under discussion, however, is ‘when the new agreement would become legally binding on the EU’. Specifically the deal would need ‘to establish how the WTO’s Doha Round would provide faster liberalisation for “tropical products”, and slower and gentler liberalisation for products that have traditionally benefited from trade preferences’. ACP countries meanwhile are emphasising that ‘the agreement would also need to resolve outstanding questions regarding the amount of adjustment aid that the EU would provide to them’. However a note of caution on the imminence of a solution has been sounded, with the suggestion that ‘Brussels is asking the Latin American countries to give up too much’, and the Costa Rican trade minister Marco Vinicio Ruiz publicly stating, ‘I don’t feel close to an agreement’.

Press reports note that the Dominican Republic agriculture ministry and the Export and Investment Center have reported a record crop of ‘organic’ bananas, which have become, ‘next to coffee and cacao, the flagship of the non-traditional product exports’. The reports highlight the growth of banana exports from the Dominican Republic, stating that [all] banana exports to the UK market in the first half of 2008 increased some 15.4% in value terms and 14.5% in volume terms. Bananas from the Dominican Republic were also exported to other EU member states, including Belgium, Holland, Germany, France, Sweden and Italy.

Meanwhile press reports indicate that Mozambique is on the verge of exporting 700 tonnes of bananas to Europe in 2009, based on the development of new production techniques which allow the production of a more homogenous crop.

The ICTSD reports unconfirmed reports that an EU-Latin American banana deal is close, although opposition from the ACP group, linked to the adjustment package to be extended by the EU, is reported to be holding up final agreement. The emerging deal is reported to be broadly based on the July 2008 agreement, with any deal ‘expected to include clauses referring back to the Doha negotiations … to ensure that the EU is not obliged to undertake further liberalisation at a later stage’. If the EU does not resolve this issue before the summer on the basis of the July 2008 agreement, Ecuadorian producers have called on their government to impose sanctions on imports from the EU.

In a related development the EU is reported to be close to a trade deal with Costa Rica, although Costa Rican negotiators are said to be reluctant to accept the current offer on bananas since ‘a similar reduction had already been offered to the WTO’.

Meanwhile the Spanish, French and Portuguese governments are reported to be uneasy about any banana deal which could threaten domestic banana production in these countries. Ministers have committed themselves to working together to ensure the EU banana sector gets ‘the support it needs’.

The government of Ecuador has rejected EU calls for it to drop its WTO banana suit, while a settlement is negotiated. The Ecuadorian government has called on the EU to ‘stick to the tariff deal negotiated in July 2008’ on the fringes of the WTO ministerial meeting. Under this deal ‘the EU would have to cut its banana import tariff of US$227.5 per tonne to €114 by 2016, with an initial cut to €148’.

This comes against the background of EU proposals tabled at the end of February 2009 to ‘lower the current tariff of €176 per tonne to €114 per tonne by 2019 … after an initial decline [the tariff] would be frozen at €136 per tonne from 2011 to 2014. Gradual reductions would then resume until 2019’.

ACP countries have responded critically to the EC proposals, estimating that the deal would cost ACP suppliers €350 million in lost revenues between 2009 and 2016. The EC in response has offered to establish a new banana-sector assistance programme with an allocation of €100 million for the 2010-13 period. ACP governments have however rejected this offer as inadequate, arguing that it ‘doesn’t even scratch the surface of the needs of our banana growers’.

On March 12th the EC proposed to reduce the current MFN duties on bananas from €176/t to €136/t by 2011, and to €114/t by 2019. The ACP however has argued that given the expansion in ‘dollar banana’ exports in recent years, these tariff reductions are ‘neither necessary nor justified’. Representatives of Cameroon’s banana exporters have argued that the EC proposal ‘doesn’t give us enough time to adjust’ and that as a consequence ‘for certain countries it would mean saying goodbye to bananas’.

The proposed EC banana sector adjustment package of €100 million for the 2010-13 period is also felt to be ‘clearly insufficient’ by ACP representatives. The ACP has called for restructuring support to be ‘commensurate to the problems created’. The ACP argues that ‘without the additional resources promised by the EC, the longstanding ACP-EU development partnership is thrown into question. The EU, it is argued, is ‘yielding to pressure for trade liberalisation regardless of the consequences for the development objectives set out in the Cotonou Agreement’.

According to press reports the ACP counter-proposal is to lower the tariff to €150/t and to maintain it at this level while accompanying measures to restructure ACP banana sectors are implemented. This is based on an earlier study which suggested that any tariff below €150 would make it very difficult for ACP countries.

ACP government criticism of the EC proposals has been echoed by private sector bodies in Cameroon and Côte d’Ivoire, with the call being made for any restructuring support to be properly endowed.

Meanwhile press reports indicate that the Cameroon Development Corporation is to increase its banana production by 60% by the end of the year.

There is growing anger amongst Latin American banana suppliers at the EC’s new banana offer. Governments of ten ‘dollar banana’ producing countries have now rejected the EU proposal, demanding a return to the July 2008 agreement. They are even ‘threatening to impose retaliatory measures’. Guatemala’s ambassador to the WTO argued ‘we will not accept the introduction of new elements and renegotiations to arrive at something that is completely different and disadvantageous compared to the balanced agreement concluded on July 27th 2008’. The EC continues to argue that the July 2008 agreement does not apply since it was concluded on the assumption that the Doha Round would be completed; since the Doha Round is stalled the ‘old agreement does not apply’.

Meanwhile at the closure of the FTA negotiations between Colombia, Peru, Ecuador and the EU on February 13th 2009 Colombia’s chief negotiator announced ‘we have received an important offer from the European union regarding bananas’, but he declined to elaborate on the nature of this offer. He did however admit that given the consensus achieved during the first round of FTA negotiations it is possible that ‘the FTA could be ready during the next semester’.

Meanwhile strikes in Guadeloupe and Martinique have disrupted banana supplies to the French market and this, alongside flood damage in Costa Rica and supply problems in Ecuador is leading to an increase in banana prices.

Plans are in train for a major expansion of African banana production, primarily for domestic and regional markets, as concerns over basic food security have grown. While action at the local level is seen as critical, governments are seen as having an important role in both setting an appropriate policy framework and addressing capital and infrastructure constraints on the development of local banana production and trade. A number of major multinationals in the banana sector are reported as having an interest in expanding banana production in Africa. Currently just five companies control more than 90% of all internationally traded bananas.

Chiquita has reportedly concluded partnership agreements to invest in export-oriented banana production in Mozambique and Angola, with Mozambican exports to the EU market expected from October 2009. This is seen as responding to the duty-free, quota-free access into the EU which these countries enjoy market as LDCs.

In January, Costa Rica joined Ecuador’s WTO challenge to ‘the EU’s refusal to lower tariffs on banana imports’. Costa Rica’s Foreign Trade Minister Marco Vinicio Ruiz said at the time that Latin American producers felt ‘tricked’ by the EU’s failure to implement the agreement concluded on the fringes of the WTO ministerial meeting in July 2008. Initially optimism had been expressed about the prospect of an agreement by the end of the February 2009, but following the tabling of a new EC proposal that defers the implementation of a tariff of €114/tonne tariff to 2019, rather than 2016 as stated in the July 2008 agreement, Latin American banana suppliers have expressed criticism of this backsliding by the EU on the agreement concluded in July 2008.

Meanwhile UK charities fear the banana price war on the UK high street could result in a deterioration of labour conditions on banana plantations. This is a suggestion which representatives of the retail chain Asda have rejected.

A discussion paper has been posted by the Institute for International Integration Studies reviewing the impact of the termination of the ACP commodity protocols and their replacement by various (I)EPA provisions. After reviewing the erosion of ACP banana preferences since 1990 and the weakening of EU policy commitments the paper notes that the importance of banana-sector preferences nevertheless remained significant enough to ensure that all traditional banana exporters initialled and then signed either a comprehensive (Caribbean) or interim EPA (Côte d’Ivoire and Cameroon). In the latter case this was even done at the expense of regional solidarity. The paper notes the apparent positive economic and legal benefits of the incorporation of banana-sector preferences into the (I)EPAs, although it is acknowledged that the value of the duty-free, quota-free access made available under the (I)EPAs ‘will depend on the extent of continued protection against low-cost dollar bananas’. It notes that ‘Caribbean exporters in particular fear that further erosion of the EU preference margin would undermine the profitability of their industry’. Factors impacting on the value of ACP banana-sector preferences include ‘the unresolved disagreement over the appropriate level of the EU tariff on MFN bananas; the treatment of bananas in the WTO Doha Round negotiations; and the impact of a potential FTA agreement between the EU and Central America’.

In terms of the legal protection, the paper questions whether ‘dollar banana’ exporters will simply accept the WTO legal protection which the EC claims the (I)EPAs bestow on ACP banana-sector preferences. Should ‘dollar banana’ suppliers successfully challenge such banana preferences then this ‘would have significant reverberations for the world trading system’. It further notes that ‘securing the legal certainty of the banana preferences would be a pyrrhic victory if those preferences suffer continued erosion’.

The paper concludes that the duty-free, quota-free access granted under the (I)EPAs needs to be seen in the context of the preference erosion which has occurred and is likely to occur, with benefits primarily accruing to the lower-cost ACP suppliers which can further enhance their competitiveness (Côte d’Ivoire, Cameroon, Dominican Republic and possibly Belize).

According to press reports Jamaica’s agriculture minister Dr Christopher Tufton has stopped short of pronouncing a formal withdrawal from banana exports while indicating the slim possibility of resuming exports given the withdrawal of the major exporter from export sales to the EU. The future framework for banana policy is believed to focus on supplying an expanding domestic market, particularly in the food-processing and snacks industry.

In a related development Costa Rica has announced its intention of establishing carbon-neutral banana production by 2012. One aim of this policy is to ‘differentiate its fruit on this basis and use its sustainability credentials as a marketing tool on international markets’.

ACP governments have indicated to Trade Commissioner Ashton that they will boycott the Doha Round if their demands are not met with regard to the treatment of bananas and sugar.