Banana battle defeat which could sink island economies

America has flexed its muscle at the World Trade Organisation to get a ruling against import tariffs on bananas which protects the economies of former European colonies.

The decision, confirmed by US and EU officials on Friday, is an important development in a trade dispute that has seen Latin American countries and the US again take on the EU.

"The United States prevailed in its challenge," the Office of the US Trade Representative said in an e-mailed statement.

"We hope that the [EU] will finally ensure that it puts in place a bananas import regime that is WTO consistent."

The US had argued that EU import duties of 176 euros ($255) a tonne imposed on banana imports from Latin America harmed exports from major producer nations like Ecuador, Honduras, Panama and Nicaragua.
Although the US does not export bananas to the EU itself, three of the largest producers with plantations in Latin America are US-based multinationals: Chiquita Brands International, Del Monte and Dole.

In contrast, developing countries in Africa, the Caribbean and the Pacific, which include many former European colonies, can export bananas under a quota system that permits 775,000 tonnes of duty-free imports per year.

Latin America accounts for four-fifths of EU banana imports. The verdict will be closely followed by Chiquita, whose shares climbed 9.2 per cent in one day last year on early reports that the EU would lose a similar case brought by Ecuador.

The tariff costs Chiquita $1 per share annually, according to Barry Sine, an analyst with financial consultancy Oppenheimer & Co. Chiquita shares rose 2.2 per cent to $17 in pre-market trading in New York on Friday.

The WTO has consistently ruled against the EU's method of setting different tariffs for banana imports.
While the EU has altered some of the import rules in recent years, none of the changes has stood up to challenges at the WTO.

Michael Mann, spokesman for Marian Fisher Boel, the EU Farm Commissioner, confirmed the EU had lost the case. But he also criticised the WTO panel for taking a "purely formalistic approach that found against something that does not exist anymore" - a reference to new rules for European banana imports that came into effect this year.

The EU can still appeal the ruling.