The Banana War

The Banana War (1993-2009)
By: Jason Marentette
Davenport University

Banana Wars Agenda
1. The Banana Wars
2. Banana Production and Latin America export (2009)
3. Banana Import (2009)
4. The Three strands of European Commissioning policies
5. The EU created New Banana Regime
6. EU duty charge on bananas
7. United States Involved
8. World Trade Organization (WTO)
9. The European Union responded
10. EU Discrimination claim by non-ACP
11. Ecuador and the US confronts the European Policy
12. EU Strands redesign for compatibility to the WTO
13. The Doha Development Round (2009)
14. References

The Banana Wars
A trade dispute about Bananas that was one of the most technically complex,
politically sensitive and commercially meaningful legal disputes that has produced
one of the longest trade discussions in modern history.
Countries Involved
 European Union (EU)
 Latin America
 United States
 Caribbean
 Africa
 Pacific States
Sources:(End of „banana wars‟ brings hope for Doha, 2009)

Banana Production and Latin America export (2009)
Bananas are a highly important industry for many of the developing countries, In 2009,
world production of bananas reached an estimated 97.3 million metric tonnes.
Top global production by country (2009)
1. India 28%
2. Philippines 9.3%
3. China 9.2%,
4. Ecuador 7.8%,
5. and Brazil 7%
Key point
Latin America export 83.2% of their bananas Production

Banana Import (2009)
Imports of bananas are very concentrated in the United States, European Union and
Japan which accounts for 56% of the worlds total Banana Imports
Europe imports
• 70% of bananas from Latin America
• 17% of bananas Caribbean‟s and the Pacific States
Sources: (Banana Market, 2012) &(Q&A: The banana wars, 2009)

The Three strands of European Commissioning policies
Africa, the Caribbean‟s and the pacific (ACP) are former European colonies
Three ways to examine the European colonies:
1. International trade rules
2. Internal trade policy
3. European development and aid policy
Policy were created to ease the transfer of power from the 1950s and give access
to European markets
Sources: (The EU Banana Regime, 2010, pp. 5-6)

The EU created New Banana Regime (1993)
-Common Market Organization for Bananas
One single European Market
Common Market Organization for Bananas (CMOB) is a single system policy to
benefit domestic producers and consumers of bananas within the EU boarders.
Key point - Banana Import were allows tariff free banana imports from European
colonies.
Source: (The Banana War at the GATT/WTO, 2008)

EU duty charge on bananas
ACP Countries - APC Bananas have duty-free up to 857 thousand tonnes and
subjected to €750 per metric tonne above that amount
Non-ACP Countries - are subjected to €100 per metric tonne on imports of up to two
million metric tonnes and €850 on imports above that amount
Source: (The Banana War at the GATT/WTO, 2008)
Key point - Banana tariffs are unfair and breach free trade rules

United States Involved
- Argument and Action
The largest banana producers in Latin America are operated by US companies and
therefore involving the United States
Top banana company (Global)
1. Dole 19% USA
2. Chiquita 17% USA
3. Del Monte 17% USA
Argument - The barriers from free trade with ACP were costing US
markets estimated $520 million losses per year which was a
loss for US firms resulting from EU Banana import Policy.
Action - US to increase 100% the import tariff on European luxury
Sources: (Q&A: The banana wars, 2009), (Banana Market, 2012) & (Historical Overview of the European Union Banana Import Policy, 2006, p. 121)

World Trade Organization (WTO)
- Latin America and United States Complained (1996)
World Trade Organization (WTO) was established in 1995 for the use of global
international organizations dealing with rules between nations.
(World Trade Organization, 2014)
In 1996, Latin America together with the United States formally complained to the
World Trade Organization (WTO) about the EU tariffs.

The European Union responded
- New tariffication scheme (The Last Option)
The EU responded by establishing a “new tariffication” which tried to get around WTO
problems with a quota system based on preference “first come, first served”.
Tariffication is a process by which quotas, licensing schemes, and other non-tariff
barriers to trade are converted to tariffs. This was considered compatible with WTO
rules.
Sources: (Schaffer, 2009, p. 304) & (Historical Overview of the European Union Banana Import Policy, 2006)
The Problem
• The system preferentially awards import licenses to companies
that historically have exported ACP bananas which are, of
course, European companies.
• Disadvantage between traditional and newcomer operators

EU Discrimination claim by non-ACP
The changes proposed were fit only for the EU interest and the playing field was
unequal
The EU defended favoritism of ACP as a foreign aid policy tool, explaining that
having a leveled import tariff is “agricultural genocide”.
The Main Issue - This ended with a single tariff for all banana imports, but it was
also agreed by the WTO that a waiver be applied to the ACP
countries to honor long-term commitments to the region.
The new agreement from EU helped Latin Americans with better
profit margins and tariff, but the system did not favor equal
playing fields for both the ACP and non-ACP.
Source: (Fair trade Bananas: A global assessment of impact, 2010)

Ecuador and the US confronts the European Policy
- with the WTO (1999-2000)
Historical Moment
In 1999, Ecuador – the first time that a developing country authorized to execute
economic sanction on a developed block.
Economic sanction is a domestic penalty applied by one country on another
country.
Source: (Historical Overview of the European Union Banana Import Policy, 2006, p. 121)
In 2000, WTO declared the European banana import system illegal

EU Strands redesign for compatibility to the WTO
CMOB, Treaty of Rome which is the official Treaty establishing the European
Economic Community (TEEC) had to be changed.
TEEC - effective in 1958 to propose a reduction progress to customs duties and the
establishing of a customs union. This also indicated the free movement of goods acts
for European countries and colonies.
Source: (The Treaty of Rome, 1957, p. 7)

The Doha Development Round (2009)
-Conclusion
Sources: (Banana war ends after 20 years, 2012), (The Doha Round, 2014) & (The EU Banana Regime, 2010)
Terms of settlement (2009)
• An agreement to formally conclude eight separate WTO cases
• EU agreement was to gradually reduce the tariffs on Latin American Bananas from
$224 per tonnes to 145$ within seven years starting in 2010
• US and Banana-producing countries from Latin America will drop related litigation
against the EU
• EU to trim the tariff advantage it had granted to the ACP
• A compensation plan to support the ACP countries that had lost out as a result of the
agreement. Over four years (2010-2013) a total budget of €190 Million to helped them
restructure.

References (Part 1)
The Treaty of Rome. (1957, March 25). Retrieved 02 2014, from European Commision:
http://ec.europa.eu/economy_finance/emu_history/documents/treaties/rometreaty2.pdf
The Banana War at the GATT/WTO. (2008). Retrieved 02 2014, from Cuts International:
http://www.cuts-citee.org/pdf/TLB08-01.pdf
End of ‘banana wars’ brings hope for Doha. (2009, December 15). Retrieved 02 2014, from
Financial Times: http://www.ft.com/cms/s/0/51722784-e9b2-11de-
9f1f00144feab49a.html#axzz2tO6q2O8t
Q&A: The banana wars. (2009, December 15). Retrieved 02 2014, from BBC:
http://news.bbc.co.uk/2/hi/business/8390099.stm

References (Part 2)
Fairtrade Bananas: A global assessment of impact. (2010, 04). Retrieved 02 2014, from Fairtrade :
http://www.fairtrade.org.uk/includes/documents/cm_docs/2011/F/Fairtrade%20in%20the
%20Banana%20Sector_IDS%20Final%20Report%20December%202011.pdf
The EU Banana Regime. (2010, November). Retrieved 02 2014, from acp-eu-trade:
http://www.acp-eu-
trade.org/library/files/Cali,%20Roderick%20&%20Page_EN_14102010_Parliement_The
%20EU%20banana%20regime%20%20.pdf
Banana Market. (2012, February). Retrieved 02 2014, from University of Florida:
http://edis.ifas.ufl.edu/fe901

References (Part 3)
Banana war ends after 20 years. (2012, November 12). Retrieved 02 2014, from bbc:
http://www.bbc.co.uk/news/business-20263308
The Doha Round. (2014, 02). Retrieved 02 2014, from Would Trade organization:
http://www.wto.org/english/tratop_e/dda_e/dda_e.htm
World Trade Organization. (2014, 02). Retrieved 02 2014, from What is the WTO?:
http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm
Adriana Chacón-Cascante. (2006). Historical Overview of the European Union Banana Import
Policy. Retrieved 02 2014, from Ministerio de agriculura y de Ganaderia:
http://www.mag.go.cr/rev_agr/v30n02_111.pdf
(2009). Tariffication. In Schaffer, International Business Law and Its Environment (p. 304).
Manson, OH USA: South-Western.

The Banana War

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