The EU and the USA have finally reached an agreement to settle the long running and costly dispute over banana imports into the EU. Since 1993 and the formation of the common market in Europe, US officials have criticised the EU for giving preferential treatment to imports of the fruit from former colonies in the Caribbean and Africa. It seemed the debate had reached an impasse however when the US imposed punitive sanction on unrelated EU exports worth nearly US$200m.


Now however, Washington has agreed to lift the sanctions on 1 July, and in exchange the EU will increased the allocated quotas for Latin American producers and US exporters, including the likes of Dole Food and Chiquita Brands International, which had both lobbied hard for settlement.


Chiquita, whose chairman Carl H. Lindner contributes large sums to both political parties, had urged the government to respond aggressively to EU, and is suing the authority for US$525m in damages caused by import restrictions. Steven G Warshaw, president and COO of the company that has flirted with bankruptcy since the dispute began, stressed that compensation will still be sought, but conceded that the deal was good news: “This (new) regime being WTO-compatible provides a known format for moving in the coming years and does improve our position.”


The chance to regain market share in Europe is an important one for the exporters, however it is still unknown whether all will welcome the new import system proposed by the EU. This involves granting import licenses based on the volumes of banana shipments to the EU by various producers between 1994 and 1996. Previous plans detailed a system that would have calculated import quotas according to the quantities companies are able to deliver into EU ports today. It is thought that Dole, who is also currently suing the EU, favoured the latter approach.


 Officials are pleased with the breaking of the deadlock however, and a joint statement came last night from the US Trade Representative Robert Zoellick and EU Trade Commissioner Pascal Lamy, which commented that the agreement “demonstrates the commitment of the Bush administration and the European Commission to work together closely and effectively on trade issues.”
 
Once the new regime is approved by the EU’s national governments, the US will lift US$191m of sanction and help the EU get a World Trade Organisation waiver and continue to support African and Caribbean producers by retaining a quota for them. The EU has also secured a transition period lasting until 2006, during which quotas will be gradually modified before they are lifted. 


A warning, however came with the new-found compromise, with a US official commenting: “Should this increased access not come into force by January 2002, we reserve our right to re-impose retaliation.”