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EU amends banana tariff

By staff reporter , 12-Sep-2005

The EU today submitted a new lower tariff of €187 per tonne for bananaimports, after its previous proposals on opening up the bloc's market wererejected by the World Trade Organisation (WTO).

Last month the WTO rejected the EU's proposed tariff level of €230 pertonne for banana imports after Latin American countries complained that itwas too high. The current tariff is €75 pertonnef.

Companies like Chiquita, which gets most of its bananas from LatinAmerica fear that the change to higher tariff regime would hurt its EUbusiness.

The new tariff of €187 is due to come into force 1 January 2006 if theWTO accepts the level as fair to Latin American producers.

The tariff system is meant to replace the current quota system, underwhich licenses are required to import bananas into the EU within the quota.Each year, a fixed quantity of licenses isallocated to each eligible operator, including Chiquita.

The new tariff system would not apply to bananas imported from developingcountries in Africa, the Caribbean and the Pacific under a specialconcession to help their importers compete.

Under the terms of the 2000 Cotonou agreement, banana producers in theAfrican, Caribbean and Pacific (ACP) group countries benefit from preferred,tariff-free access to the EU, leaving LatinAmerican countries without favourable access.

ACP bananas would be exempt from the tariff for up to 775,000tonnes. The EU originally proposed a €230 per tonne tariff in October2004.

Mariann Boel, EU commissioner for agriculture and rural development,said: "It was always our intention that the level of protection would notchange under our new import regime. We havecalculated the proposed tariff in a neutral and transparent manner.Following the WTO arbitration award on 1 August 2005, we have revised ourproposal and we now look forward to consultingconstructively with our Latin American trading partners."

The EU agreed with Ecuador and the US in 2001 to move from a compleximport system based on a combination of tariffs and quotas for ACP bananasto a regime solely based on a tariff by 1 January2006.

In accordance with these understandings, the EU proposed in January 2005an import duty of 230 €/tonne to replace the existing bound duty of 680€/tonne with a quota of 2,200,000 tonnes subjectto an in-quota rate of 75 €/tonne.

The EU proposal was based on a calculation aimed at maintaining totalmarket access for suppliers benefiting from most favoured nation (MFN)treatment.

The WTO arbitrators, while acknowledging the EU's use of the price gapmethodology for the calculation of a tariff equivalent, criticised thetariff as too high and discriminatory.

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