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Wednesday, 7 March, 2001, 21:52 GMT
EU-US banana war spirals
Lorries loaded with bananas in Colombia
The EU-US trade war affects banana growers in the developing world.
The United States will retaliate with trade sanctions if the European Union implements its new rules on banana imports, trade representative Robert Zoellick said on Wednesday.

A banana trade dispute between the US and the EU is one of the biggest bones of contention between Washington and Brussels.

Mr Zoellick told a committee that he was prepared to impose sanctions worth $191m to defend American interests in the banana trade dispute.

The US already has $308m worth of sanctions in place, almost two thirds of which are related to the banana dispute.

The threatened sanctions would rotate to a new set of European exports every six months and could include all sorts of goods, ranging from gourmet foods to handbags to bed linen.

Risky strategy

Its a risky game to play for Mr Zoellick, and he knows it.

The EU has previously said that if the US decides to raise the stakes with more sanctions, the backlash will be painful.

The EU would then implement billions of dollars worth of sanctions on US imports in a dispute over US export tax breaks.

Mr Zoellick urged the EU to delay its planned implementation of the new banana regulations and called for more negotiations.

First-come, first-served

The World Trade Organisation (WTO) ruled last year that the EU's system unfairly favoured growers in EU territories and the Caribbean over Latin American producers, which are marketed by US multinationals Chiquita Brands International and Dole Foods.

The EU then decided to adopt the now disputed new banana import system in an attempt to end its long-running trade dispute with the US.

Under the new EU rules, import rights will be granted as ships arrive at port, in what has been described as a "first come, first served" system.

In 2006, the EU wants that system to be replaced by a system of tariffs that EU agriculture ministers argue will comply with WTO rules.

Divided

"This proposal is the best available solution to a problem which has lasted too long," EU Farm Commissioner Franz Fischler said at the time.

US companies were divided on the merits of a "first-come, first-served" system, which Washington had already dismissed as unacceptable.

But Ecuador, the world's largest banana exporter, signalled it would accept the new EU system.

The EU said the aim was to eliminate the distinction between traditional banana exporters and those who started more recently, like some Latin American countries.

The UK is opposed to the new EU rule and calls for the continued protection for banana growers in Africa, the Caribbean and the Pacific states, many of which are former British colonies.

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See also:

25 Jan 01 | Business
Banana firm sues European Union
20 Dec 00 | Business
EU moves to end banana war
06 Dec 00 | Business
Banana fraud forces plant closures
09 Oct 00 | Business
EU ponders banana trade war proposal
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