Latin American banana exporters accuse E.U. of pro-Africa favoritism

World Trade Organization negotiations to try to achieve a fairer global trading system have always been thorny because of the difficulty of trying to accommodate the often conflicting economic interests of the various trading blocks and nations. While developing nations are often in broad agreement on general issues because of how they feel disadvantaged by their trading relations with the industrialized countries, they sometimes find themselves in conflict with each other.

An example is the charge by Latin American banana exporters, led by Ecuador, the world's leading producer, that the European Union, the largest banana consumer, unfairly favors producers in its former African and Caribbean colonies. Ecuador accuses Europe of imposing illegally high tariffs to protect these producers. Behind the battle is a shift in banana production away from Latin America to African countries such as Cameroon, Ghana and the Ivory Coast. Latin America complains that its banana farmers are prejudiced by the EU tariffs on their bananas that are compounded by increasing competition from African producers who enjoy a zero tariff regime when exporting their banana to the EU.

Ecuadorian negotiators at the W.T.O say the E.U. has not offered any significant concessions as a way out of the impasse. E.U. negotiators are said to have offered money to help Ecuador diversify its economy away from dependence on banana and also considered the idea of setting up an account to raise environmental standards, using some of the windfall Europe has earned from the new tariffs to do so.

"Ecuador believes it is unfair to give tariff preferences to Africa, when African plantations are operating on a smaller scale, and on top of that, with lower wage costs," said a banana trade analyst. In the year since the new tariffs came into place in January 2006, its exports to the E.U. fell 3%. Meanwhile, Ivory Coast, whose ex-colony status secures it duty-free access to Europe up to a 775,000 ton ceiling, saw sales soar 26.6% in the same period. The E.U. charges EUR176 a ton for Latin American banana imports. Ecuador says this duty is too high as it hampers its exports and that it adds four euros to every box of fruit exported to Europe, making its bananas uncompetitive against the zero-tariff African bananas. Ecuador will ask for a formal investigation of the issue when the WTO's dispute settlement body meets on March 8.

The E.U. disputes the claims and says that while Latin America's market share dropped as a whole, the region's overall sales boomed, stimulated by high demand. Despite the new tariffs Latin American producers continue to dominate the market, of which they currently have around 60 percent share, while African and Caribbean producers have 20 percent, EU officials have said. Bananas grown in the EU, mostly on Spanish and French islands, account for another 20 percent.

Meanwhile, critics say large buyers and producers such as Chiquita Brands International, Dole Food Co. and Del Monte Foods Co. are playing both sides of the dispute. They are said to be supporting the Latin American complaints to the W.T.O. in order to prop up their extensive operations in that region, while also setting up large-scale production in West Africa at the expense of the livelihoods of small African and Caribbean banana farmers.