The EU Banana Regime: Evolution and Implications of its Recent Changes

14-10-2010

The study first surveys the key issues resulting from the long banana dispute at the WTO. It distinguishes 3 phases in the attempt by the EC to design an EU-wide and WTO-compatible banana import regime: the first (1993-1999) in which the first regime applicable to all EU member countries was introduced and challenged in WTO, and the first modifications made with changes to the methods for delivery of import licenses; the second phase (1999-2005) when the future regime was negotiated and the transition to a ‘tariff only’ regime began; the last phase (2006-to date) with the signing of the EPAs and the ‘Geneva agreement’ of 2009. The second part of the study looks at the possible implications of these recent changes, suggesting that their net effects are expected to be positive for ACP countries, slightly negative for Latin American countries, and indifferent for EU producers, which are unaffected due to the decoupled payment system now used for most production. The recent EU bilateral agreements with some Latin American banana producers further erode the preferential access of ACP producers and of other Latin American exporters to the EU, which are all expected to experience a limited decline in their relative competitiveness in the EU market. The main adjustment costs are likely to be borne by the Caribbean exporters, which will need to receive the majority of the support envisaged by the EU through the bananas accompanying measures to help banana exporters to adapt to the changes in the EU's import regime. These resources should be allocated across countries according to the expected losses in terms of banana exports and production, taking into account the lessons from previous similar schemes, including the SFA, STABEX, the support for sugar producers and the EU Rum Programme.

The study first surveys the key issues resulting from the long banana dispute at the WTO. It distinguishes 3 phases in the attempt by the EC to design an EU-wide and WTO-compatible banana import regime: the first (1993-1999) in which the first regime applicable to all EU member countries was introduced and challenged in WTO, and the first modifications made with changes to the methods for delivery of import licenses; the second phase (1999-2005) when the future regime was negotiated and the transition to a ‘tariff only’ regime began; the last phase (2006-to date) with the signing of the EPAs and the ‘Geneva agreement’ of 2009. The second part of the study looks at the possible implications of these recent changes, suggesting that their net effects are expected to be positive for ACP countries, slightly negative for Latin American countries, and indifferent for EU producers, which are unaffected due to the decoupled payment system now used for most production. The recent EU bilateral agreements with some Latin American banana producers further erode the preferential access of ACP producers and of other Latin American exporters to the EU, which are all expected to experience a limited decline in their relative competitiveness in the EU market. The main adjustment costs are likely to be borne by the Caribbean exporters, which will need to receive the majority of the support envisaged by the EU through the bananas accompanying measures to help banana exporters to adapt to the changes in the EU's import regime. These resources should be allocated across countries according to the expected losses in terms of banana exports and production, taking into account the lessons from previous similar schemes, including the SFA, STABEX, the support for sugar producers and the EU Rum Programme.

Ulkopuolinen laatija

CALÌ Massimiliano (Overseas Development Institute, United Kingdom) ; ABBOTT Roderick (LSE/ECIPE, United Kingdom) and PAGE Sheila (Overseas Development Institute, United Kingdom)