Irish fresh produce distributor Fyffes has attacked an EU decision to impose a EUR176 (US$208) a tonne tariff on imported bananas.

At a meeting in Brussels on Friday last, the Permanent Representatives of the Member States endorsed a Commission proposal to introduce a tariff of EUR176 per tonne on imports of third-country bananas from the start of next year, the company said.

Fyffes regrets this decision, believing it is not in the best interests of the industry. Assuming that this revision of the regime is formally ratified at a Council of Ministers meeting this week, the higher level of tariff will impose an additional EUR315m duty burden on the European banana trade each year and will increase Fyffes’ duty costs by approximately EUR40m per annum. The new regulations will also remove the current quota restrictions on imports from certain Latin American producing countries. The market impact of this change, particularly as regards selling prices, will take some time to assess.

The EU’s original proposals for a tariff-only regime were dismissed by a panel of WTO arbitrators on two occasions this year. The latest plan has been rejected by the majority of stakeholders in the global banana trade. It will cause banana importers to seek higher selling prices from customers with a significant potential knock-on effect for consumers. It will materially raise the cost of income compensation for EU banana farmers. In addition it will result in the demise of the banana industries in several Caribbean ACP countries. It will also place enormous pressure on Latin American banana producers who will ultimately have to bear a major part of the cost of the additional duty.

The EU will require certain waivers from WTO rules in order to legally apply the proposed new system and is uncertain how the Latin American producing countries will respond in this regard. This has the potential to derail the WTO trade talks in Hong Kong in December and to renew hostilities between the US and EU over bananas. Fyffes continues to advocate a negotiated settlement between the parties.