The United States has requested the World Trade Organization (WTO) to review the European Union's banana import regime, which it claims is unfairly skewed against US banana suppliers.
In a statement published Friday, US Trade Representative Susan Schwab said the European Union (EU) implements a discriminatory tariff rate quota for banana imports, which means it could be breaching its WTO obligations.
In January 2006, the European Commission implemented a new regulation for the import of bananas into the European Union. This imposed a higher tariff on bananas imported form Latin America, while allowing a duty-free annual import quota of 775,000 tons for bananas from certain African, Caribbean and Pacific countries.
The new banana tariff, which increased to €176 ($239) from €75 ($102) per ton, results in an increase in cost of around €1.84 ($2.50) for each box of bananas imported form Latin America.
According to Schwab, the EU should have brought its banana regime into compliance with its WTO obligations by January 1999, following a 1996 proceeding initiated by Ecuador, Guatemala, Honduras, Mexico and the United States.
That ruling said the EU's banana regime discriminates against bananas originating in Latin American countries and against distributors of such bananas, including several US companies, said the US statement.
Last week's announcement comes after "EU's apparent failure to implement the WTO rulings", said Schwab.
However, the EU said it "strongly objects" to the US claims.
In a statement issued in response to the US call for review, the European Commission (EC) said its current regime is fully compatible with its WTO commitments.
"This is an unfortunate move by the US, which disregards the efforts that the EC continues to make to reach a negotiated solution which takes into account the interests of all the banana exporting countries," it said.
"The same day when the US informally announced its intention to request the establishment of a WTO Panel, an EC delegation was meeting all MFN (most-favored nation) suppliers concerned (with the exception of Ecuador, which is currently in WTO panel proceedings against the EC) in order to explore a potential negotiated solution before the summer break."
The Commission said it "fails to understand the utility of the US move", particularly as the WTO waiver it is attacking is due to expire by the end of this year. As a result, any WTO report would, in any case, become irrelevant, it said.
In addition, the EC said "the US move is even more regrettable taking into consideration that the US is not a producer or exporting country of bananas, so their interest in this case is more than questionable".
European banana import tariffs have indeed been the bane of leading US banana firm Chiquita, which has reported a string of price rises for the fruit after the firm's profits were hit by higher cost. Last year, the company said it expected to incur tariff costs of around $110m.
According to Schwab, "we share the concern of Ecuador and several other Latin American banana exporters regarding the continued existence of a discriminatory tariff rate quota in the EU's current banana regime. We are hopeful that this formal step will facilitate the removal of that discrimination".
Europe says it remains determined to find a negotiated solution to the banana dispute with the MFN suppliers.
"We need to examine the US request in detail before deciding any moves on our side," said the EC.