WTO Ruling Favors Latin America – Again

THE World Trade Organization(WTO) has ruled for the second time infavor of Latin America in the so-called“banana war” over proposed EuropeanUnion tariffs, finding that the most recentproposal of 187 euros ($225) per metricton of bananas imported from LatinAmerica would not grant Latin Americanproducers the same access they now enjoyunder most favored nation status.Currently, Latin American bananas arecharged 75 euros ($92) per metric ton.“I cannot hide that I feel very, very satisfiedwith this ruling,” Costa Rican TradeMinister Manuel González said at a pressconference Oct. 27 announcing the news.This ruling follows an identical decisionAug. 1 in another WTO arbitration onthe Union’s original proposal of 230 euros($283). The Union proposed the hike aspart of its efforts to make a transition fromits current trade system, which is a combinationof quotas and tariffs and expiresDec. 31, to a tariff-only system. UnderWTO rules, the change cannot be made ifit would affect Latin American producers’market access.LEADERS from banana-producingnations in Latin America have rejected theproposal, saying it would wreak havoc ontheir economies and cause serious socialproblems, and have held a series of summitsto hash out a common strategy fordefending their exports (TT, July 15),which led to taking the issue before theWTO.“What happens now? That is a questionmark,” González said. “I believe thisgives the Latin American countries additionalmuscle, a much more solid platformon which to enter negotiations withthe European Union on what will be theregimen they finally apply.”The ruling is binding under WTOrules; however, the Union could alwaysimpose the 187-euro tariff unilaterally, “orthey could say, ‘187 no, but 186 yes,’”González pointed out. In that case, CostaRica and the other Latin American countrieswould have the option of turning to aWTO panel, a more definitive process butone that would take two to three years andcost Costa Rica a substantial price, theTrade Minister added.A second consequence the Unionwould face if it went ahead with the tariffhike would be that the WTO could revokethe current trade privileges granted tobanana-producing countries referred to asACP (African, Caribbean and Pacific)nations, which include former Europeancolonies. ACP colonies are exemptedunder WTO trade rules from paying tariffson 750,000 tons of bananas exported to theUnion.The Union originally said the tariffhike was designed to favor ACP nations,which would maintain preferentialaccess while Latin American bananasfaced increased tariffs. According toGonzález, a WTO decision to revoke theACP privileges “would put the EuropeanUnion in a difficult position with a groupof countries it has traditionally tried tobenefit.”González said last month that theunderlying reason for the new tariff is E.U.protectionism (TT, Oct. 21).“Spain produces bananas in theCanary Islands and France producesbananas in its colonies of Martinique andGuadalupe,” he told The Tico Times. “Tomask this protectionism, they use as anexcuse the preference for the ACP countries,which are also very poor, but notnecessarily more or less poor than weare.”González said it is still unknown exactlyhow the Union will proceed, andwhether it will consult with Latin America.If an agreement is not reached, he saidCosta Rica will use “any means available”to fight the tariffs, including taking theissue before the WTO Doha Round talksset to take place in Hong Kong inDecember.