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Last Updated: Thursday, 27 January, 2005, 11:47 GMT
Latams reject EU's banana tariff
Summit of Latin American banana-producing countries.
Latin American countries have rejected the European offer.
Latin American banana producers have rejected EU plans to charge a 230 euro ($300; 159.6) tariff for each tonne of bananas exported to the EU.

Under the European Union (EU) proposal, Latin American countries will no longer be limited by quotas but will pay higher duties from January 2006.

Currently, Latin American countries' exports are limited but the duty per tonne is never more than 75 euros.

Latin American banana producers fear the new rule will increase poverty.

ACP benefit

The new EU tariff will benefit banana exporters from former African, Caribbean and Pacific (ACP) colonies, whose comparatively smaller producers struggle to compete with much-larger Latin producers.

Under the new regime, ACP producers will continue to export bananas duty free. These producers would like to see even higher tariffs on the cheaper Latin American bananas.

In the 1990s, the European Union lost a World Trade Organisation (WTO) dispute against the US and Ecuador.

The decision forced it to change its complex tariff system, perceived as favouring the former ACP colonies.

On Wednesday, Presidents and high officials from Ecuador, Colombia, Costa Rica, Guatemala, Honduras, Panama and Nicaragua, signed a declaration rejecting the European proposal during a summit in the Ecuadorian capital, Quito.

They argued that this latest EU proposal contradicts the spirit of the earlier WTO ruling. Some even suggested that the WTO should intervene.

"To ruin the Latin American market would sink millions of people into misery and desperation," said Costa Rican president Abel Pacheco.

Extending the system

Ecuador's Minister of Commerce Ivonne Baki has said the EU should extend its current system until the issue is settled.

"We are asking that the tariff rate be set at zero or a maximum of 75 euros per tonne," she added.

The European Commission has however dismissed this idea and say the new proposal is in line with the earlier WTO agreement.

"We have a time frame and a set of principles we have to follow, agreed under the WTO waivers and in agreement with Ecuador and the United States... We have an international obligation to set a single tariff system by January 2006," said Michael Mann, European Commission agriculture spokesman.

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