Caribbean banana producers will lose their preferential market in Europe starting next year following the agreement by the European Union to cut tariffs on banana imports from Latin America. The initialling of the agreement in Brussels ended the world’s longest-running trade dispute and placed the lives of hundreds of banana growers in the Caribbean in jeopardy.

The European Union said it would propose giving African, Caribbean and Pacific (ACP) countries an extra 200 million euros, or US$293 million, in aid to add to the 450 million euros they have received since 1994 to help them to adapt. Banana producers in Latin America will be subject to lower EU import tariffs as a result of the deal. This should make them more competitive with producers in Africa and the Caribbean, who pay no tariff. The price of bananas could fall by 12 per cent as a result. The formal agreement will be signed in six to nine month.

Duty on imported bananas will be cut from 176 euros (£158; US$256) per tonne to an initial 148 euros (£133; US$215). Further cuts will be made on an annual basis over the next seven years to 114 euros per tonne. The deal was being “initialled” in Geneva yesterday afternoon by the various trade representatives. “I am delighted that we have finally found a way to solve the bananas dispute with a compromise that works for all sides,” said European Commission president José Manuel Barroso. “This is an important boost for the multilateral system.” The agreement potentially brings to an end the banana wars trade dispute which began 16 years ago with the establishment of European tariffs on banana imports.

But the origins of the discrepancy go back far further to European colonialism. In 1975 former Caribbean countries were given a generous import quota. The BBC’s Europe business reporter Nigel Cassidy says the idea was to enable the economies of former European colonies or dependencies to grow independently without recourse to overseas aid. However, Latin American banana producers, together with the United States, have long complained that the system is unfair. This view has been supported by the World Trade Organisation (WTO), which has declared the banana tariffs illegal. Although not a banana producer itself, the US is home to some of the biggest banana producers operating in Latin America, including Del Monte and Dole.

Compensation package
The move is likely to disadvantage the banana industries in Africa, the Caribbean and the Pacific (known as the ACP countries), who do not pay tariffs on imports to the EU. Many of them have economies heavily reliant on banana production, and rely on the EU tariffs to secure them access to the European market. Errol Emmanuel, acting manager of Dominica Banana Growers Ltd, told the BBC World Service the agreement would hit poor farmers in the Windward Islands hardest: “These small farms are family owned.

You have husband and wife and maybe one or two helpers…they don’t have the resources to compete with the Doles and the Del Montes, who own vast tracts of land.” A compensation package for Dominica and the other ACP countries, worth 200 million euros, is included in the deal. The European banana market is the largest in the world, with 5.5 million tonnes of the fruit imported last year.