New European resolutions are jeopardising the competitiveness of banana exports and consequently, the domestic industry is being affected because its relative weight on the economies of the countries is still significant.

The affected countries have already begun to take action, which includes an international conference and arbitration proceedings in the framework of the World Trade Organisation. Among the leading banana suppliers in Latin America is Ecuador , exporting 21% of the fruit around the world, followed by Costa Rica , Colombia and Guatemala , which altogether are responsible for 23% of world exports.

The loss in employment was felt during the nineties, when there was an overproduction of bananas around the world, which put several countries into difficulty. The reforms implemented by the European Union could hasten significant losses to the detriment of countries’ economies. In countries like Honduras and Costa Rica , banana plantations employ between 5 and 10% of the population. In Costa Rica alone the industry employs approximately 150,000 persons and in Ecuador , it exceeds 380,000. In some small island states in the Caribbean , banana plantations employ as much as two thirds of the population and can represent up to 50% of the country’s total exports. Curiously, the United States and the major European importers re-export the bananas they import on a massive scale, and thus manage the large supply centres through which multinational firms monitor the development of the market.

Germany is the largest banana importer in Europe , followed by Belgium , Great Britain and Italy . With its open market policy, Germany has maintained low prices at the expense of producers.

Some benefits of geographically redistributing the market have been achieved by the introduction of organic bananas by the Dominican Republic .

The tariff system implemented by the European Union imposes a tax of 230 euros per tonne, and this is the reason for the concern expressed by the producer countries within the region.

In April of this year, the Second International Banana Conference was held in Brussels and was attended by important European social actors and companies like Dole, Chiquita and Del Monte, representing the industry. That meeting was geared toward addressing crucial issues in the areas of both production and consumption.

One of the agreements reached at that conference was that on maintaining the European Union’s system of imports until the social, economic and environmental impact of the measure could be quantified. The current system has brought about a crisis in the market stemming from the increase from 75 to 230 euros per tonne. The effects can be devastating since it could also give rise to a price war.

The situation is, without a doubt, a delicate one. The importer and exporter countries will present different options, but the apparent situation is extremely serious since for the time being at least, it is not clear whether or not the European Union’s position could be made flexible.

It remains to be seen what position could be managed in the World Trade Organisation given that the dispute settlement mechanism is in progress. It would be worthwhile to maintain the status quo since it seems to be the best option for producers, although from all appearances it does not seem to be a possibility.

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Mr. Luis Noriega is the Director of Trade of the Association of Caribbean States. The views expressed are not necessarily the official views of the ACS. Feedback can be sent to mail@acs-aec.org