BBC News Online: Business

Banana war is over

The EU and the US hammered out a compromise earlier this month to end a bitter transatlantic trade battle over bananas.

Ecuador, which was a party to the eight-year-old dispute, objected to the EU-US deal and had threatened to take the dispute back to the World Trade Organisation (WTO) if the EU did not make some changes.

Ecuador preferred a previous EU proposal for a "first come, first served" system from which it stood to derive greater benefit rather than a quota system.

It's over

"This is a decisive step to put this saga to rest," the Commission and the Ecuadorean government said in a joint statement.

"It is now possible to say that the major parties to the long-running banana dispute have been able to agree on a solution that represents a fair balance between the competing interests," they said.

The understanding with Ecuador was "fully compatible" with the EU-US agreement and only makes slight technical, said the EU.

While the banana row appears to be resolved in principle, the deal must still be endorsed by EU governments, which have disagreed bitterly over bananas in the past.

Banana split

Both Ecuador and the United States have won WTO cases against the EU's banana import policies.

The WTO found the EU had favoured banana imports from existing territories, the Caribbean and former colonies over Latin American producers and US marketing companies such as Dole Foods and Chiquita.

The WTO authorised the US in 1999 to impose $191m of trade sanctions on EU exports but it has agreed to lift them once the reformed EU banana system is in place.

Ecuador also won the right to impose $201.6m of sanctions on the EU but never imposed them.