Scaled Back Commission Banana Proposal To Have Crippling Effect On Caribbean

SCALED BACK COMMISSION BANANA PROPOSAL TO HAVE CRIPPLING EFFECT ON CARIBBEAN
CHRIST CHURCH, BARBADOS – Caribbean banana exporting countries have expressed deep disappointment at yesterday’s announcement by the European Commission of a revised banana tariff proposal of €187 per tonne on third country or most favored nation (MFN) banana imports under a Tariff Only system, to come into effect as of January 1, 2006.
Dominica’s Minister of Foreign Affairs, Trade and Labour Hon. Charles Savarin reacted to yesterday’s proposal with dismay. Citing a dramatic decline in Dominica’s current banana exports to the European market by some 75% from export levels in the late 1980s, Minister Savarin noted the revised tariff proposal would only serve to exacerbate the countries’ fiscal and economic difficulties, making economic recovery that much harder. “Compared to other Caribbean banana producing countries, Dominica has historically been the most dependent on banana exports. The significant decline in those exports in recent years has had a devastating effect on Dominica’s economy,” he said. The Minister underscored that “while the EC €230 per tonne proposal made public some months ago posed a difficulty for the Dominican banana industry, the €187 proposal seriously threatens the survival of the industry.”
The revised tariff proposal places the Region’s banana industry in a precarious and vulnerable position. Industry groups across the Region are sounding the alarm over the proposal’s “crippling effects” on the Region’s banana industry, should it be implemented.
While the proposed revised EC tariff is subject to a process of consultation with MFN suppliers, the level of the tariff has evoked surprise in the Region, in that it is a significant reduction from the initially proposed figure of €230 per tonne. The Caribbean had already indicated that at that level, the competitiveness of its banana industry would be severely challenged.
Caribbean banana exporting countries previously indicated that a tariff of €275 per tonne for MFN suppliers was necessary in order for farmers to remain competitive. These countries were dealt yet another blow last month, when World Trade Organization (WTO) Arbitrators handed down a ruling against the EC-proposed tariff of €230 per tonne, that states it would not maintain total market access for MFN banana suppliers.
Further to the findings of the WTO Arbitrator’s ruling of August 1, the EC maintains the revised proposal is fully in conformity with the ruling of the WTO Arbitrators, in that the proposed MFN tariff is designed to maintain total market access for MFN suppliers.
European Commission representatives are to meet with envoys of the MFN suppliers later this week, having met separately with the Africa Caribbean Pacific (ACP) Banana Working Group in Brussels yesterday.
Notwithstanding the fluid process of consultation that the tariff proposal is now subject to, there have been calls from the Region that the EC not allow it to be eroded further. Despite their deep disappointment over the tariff proposal, industry groups have urged that the EC be steadfast in defending the tariff level.
Reacting to yesterday’s tariff proposal, Coordinator of the Windward Island Farmers Association Mr. Renwick Rose said “this proposed tariff sends yet another negative signal to Caribbean banana farmers, because the lower the tariff the more worried they become about their banana investment. There is a very real possibility that with a tariff set too low, they could end up being competed out of the market, with severe implications for their livelihoods.”
Forming part of the new EC proposal to resolve the dispute with the Latin American producers is an increased ACP tariff quota, from 750,000 to 775,000 tonnes at zero duty. This is a modest increase, considering the number of new European Union Member states.
The Director General of the Caribbean Regional Negotiating Machinery (RNM), Ambassador Dr. Richard Bernal, has urged the ACP and Latin American banana producing countries to intensify their joint search for a fair and lasting solution, because whatever arrangement is introduced it must guarantee remunerative prices and adequate market access for all.
Some Latin American industry and trade union groups are increasingly voicing the view that reducing the tariff too much would have a negative effect both on the MFN and the ACP banana suppliers. The ultimate effect is increased competition, so much so that this could lead to oversupply, ultimately driving down prices, they contend. “There is growing consensus amongst some that it might be the best way forward in the interim to keep in place the status quo as regards the banana regime, while we look for mutually beneficial long-term solutions,” Mr. Rose concluded.