Page last updated at 15:49 GMT, Tuesday, 15 December 2009

Banana wars: the fruits of world trade

By Nigel Cassidy
Europe business reporter, BBC News, Brussels

Bananas
The banana trade dispute was one of the sticking points in the Doha talks

Bananas are one of the world's favourite fruits, a staple of almost everyone's supermarket shopping. Europeans munched their way through 5.4 million tonnes of them in 2008.

Yet the way bananas are grown by often poor workers in hot places and sold to richer consumers in colder countries tells us a lot about the nature of world trade today.

The eventual "initialling" in Geneva of a stand-alone banana trade agreement between the European Union and Latin American countries not only ends what the EU itself acknowledges was "the longest trade dispute in history", it also breaks one of the many stalemates in the stalled Doha round of world trade talks.

The first shots were fired in the banana wars decades before Latin America and the African, Caribbean and Pacific (ACP) trade negotiators set out their respective stalls at the current World Trade Organisation in Geneva.

The banana was a symbol of better times to come

Frozen out

Since 1975, each Caribbean country has been given a generous import quota for bananas.

The idea was to enable the economies of former European colonies or dependencies to grow independently without recourse to overseas aid.

Tariff-free entry to the EU was extended to a string of ACP countries. Meanwhile, banana producers on Spain's Canary Islands and in the French overseas departments of Martinique and Guadeloupe also enjoyed tariff-free status.

ACP SUPPLIERS TO EU
Cameroon: 279,530 tonnes
Dominican Republic: 170,396 tonnes
Belize: 82,146 tonnes
Ivory Coast: 216,583 tonnes
Other: Jamaica, Ghana, Surinam, Windward Islands
Source: EU

But the effect of the agreement was to freeze out competitors from Latin America, or at least make their EU imports more expensive.

So called "dollar" bananas are generally cheaper to start with because they are grown on larger mechanised plantations run by giant US corporations such as Chiquita, Dole and Del Monte.

Eurobananas

Not everyone in the EU was happy with the Brussels banana regime; Germany for one.

For a start, the country had lost all its colonies after World War I, so had no favoured supplier to champion.

In the 1990s, German Chancellor Helmut Kohl pledged to try and get the EU import regulations liberalised.

His election campaign played on the simple fact that Germans seemed to prefer the larger bright yellow dollar bananas from Latin America.

EU SUPPLIERS FACING LOWER TARIFFS
Ecuador: 1,328,033 tonnes
Colombia: 1,278,133 tonnes
Costa Rica: 893,395 tonnes
Panama: 294,588 tonnes
Other: Brazil Honduras Guatemala Mexico Nicaragua Peru Venezuela
Source: EU

Some turned up their noses at the smaller, paler "eurobananas".

Bananas have mattered to Germans ever since hunger overtook war-torn Germany, the fruit symbolised luxury.

When the Berlin wall crumbled, jubilant East Germans were seen sporting car stickers featuring two bananas forming the letter D for Deutschland. The banana was a symbol of better times to come.

Soaring prices

Certainly one of the dire predictions about the likely impact of the EU's banana policies bore fruit.

Prices soared 63% in 1994 and demand fell by a quarter.

For some the banana became the symbol of the EU's hypocritical refusal to act on its own free-trade rhetoric. Yet now the EU is starting to phase out its tariff "banana split", there will be be others who complain that desperately poor family farmers will be disadvantaged at the expense of wealthy American-owned agribusinesses.

Meanwhile, the banana will doubtless continue to feature in jokes about its curvature, or its uncanny ability to trip up their canniest trade negotiator.

But, as banana specialist and writer Peter Chapman once wrote, nobody laughs at the banana in its areas of origin: "It is too serious a business, on which jobs and lives depend."



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SEE ALSO
Europe strikes 'banana wars' deal
15 Dec 09 |  Business
Q&A: The banana wars
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WTO backs US in banana trade war
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EU seeks key deal on fruit trade
17 Jul 08 |  Europe
Ecuador challenges EU banana duty
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