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July 29, 2008

ACP countries under pressure to reach banana deal at WTO talks

African and Caribbean countries came under pressure on July 27 to reach a deal on bananas and remove a major obstacle to efforts to rescue global trade talks.

The chances of a deal on the core areas of farm and industrial goods in make-or-break talks at the World Trade Organisation (WTO) were delicately poised as rich and poor nations examined proposals for real new export opportunities.

The European Union and Latin American banana producers agreed early on July 27 to cut the EU's import duty to 114 euros ($179) a tonne by 2016 after an initial cut to 148 euros in 2009 from 176 euros now, people familiar with the fruit talks said.

But it must still be approved by former European colonies in Africa, the Caribbean and Pacific (ACP) as well as EU member states such as France and Spain, whose farmers in the Caribbean territories and the Canary Islands also grow bananas.

A banana deal would settle one of the world's oldest trade disputes and is key to any breakthrough in the WTO's Doha round of talks on a new agreement to open up world trade, potentially giving a boost to the global economy.

The WTO talks began on July 22 and are likely to run into the middle of the coming week.

Under Doha's agriculture proposals, tropical produce from Latin America would have faster, steeper tariff cuts than usual.

But ACP exports would see duties come down more slowly so they can retain some preferential access to rich markets.

The two sides have been working to tidy up overlaps of products on the tropical and preferential access lists but agreement would be impossible without a deal on bananas.

The fruit is a key export for many Latin American and ACP countries. Cameroon's banana industry is the biggest employer in the country after the public sector, and government officials say the industry helps prevent unrest in West Africa, which has been wracked by civil conflict in recent years.

Lowering the EU's import tariff further for their competitive Latin American rivals could devastate ACP banana output, they warn. ACP banana exports pay no EU duty.

"Bananas for us are a factor for political stability," said Luc Magloire Atangana Mbarga, trade minister of Cameroon.

Delegates were hoping to reach final agreement on bananas and other tropical products issues before ministers from 35 key WTO players resumed talks on the Doha deal.

The Doha negotiations were launched in November 2001 to boost the world economy and help developing countries grow out of poverty. They were almost written off last week as rich and poor countries remained deadlocked.

But a controversial move by WTO Director-General Pascal Lamy to shut out most of the ministers and get seven key members to tackle the nine most sensitive issues was vindicated on Friday when they produced a grudgingly accepted compromise.

Talks on July 26 on opening up services sectors were hailed by ministers and businessmen as also offering positive signals. The compromise included a proposed new cut in the ceiling for disputed U.S. farm subsidies and revised proposals allowing developing countries to protect their farmers, seeking to balance the needs of poor country importers and exporters. It also sketched out limits on the ability of developing countries to shield entire industrial sectors from opening up.

A trade source said developing countries were growing alarmed at signs that China would seek to protect markets for rice, cotton and sugar and other industrial sectors, shutting off new export opportunities for them.

Reuters

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