Banana firm sues European Union

Chiquita says Latin American producers are favoured

American fruit exporter, Chiquita, is suing the European Commission over loss of revenue from importing bananas into Europe.

This latest move by the US distributor of fresh fruit and vegetables escalates a bitter trans-Atlantic trade dispute between the European Union, the US and its banana exporters.

Chiquita is arguing that European restrictions on importing bananas into the European Union have cost it millions of dollars.

It is claiming damages from the EU for its failure to reform its banana import regime to comply with the 1997 World Trade Organisation rulings.

The company is seeking 564m euros ($520m; £357m) in damages and is reserving the right to claim future damages based on the alleged illegality of the regime.

"The lawsuit we have initiated today is part of our continuing effort to bring about reform to the illegal banana regime," said Steve Warshaw, president and chief operating officer of Chiquita Brands International.

WTO ruling

The World Trade Organisation (WTO) has ruled that the EU import regime for bananas favours Britain's and France's former colonies over Latin American producers.

At the end of last year the European Union adopted a new banana import system in an attempt to end the long-running trade dispute.

But it is still waiting for the US to lift sanctions.

From the outset, Chiquita was critical of the revised import system.

The European Commission proposed a transitional tariff quota system, which operates on a 'first come, first served' basis.

Import licences would be granted to operators who could bring their bananas into the European market first.

This scheme would be phased out by 2006, to be replaced by a tariff-only system.