February 2001

Banana farmers in the Caribbean, plantation workers in Central America and Fair Trade operators in Europe continue to voice strong objections to the proposed new banana regime adopted by the Agricultural Council of the European Union. In particular there is general agreement that the proposed. "First-come First-served" (FCFS) system for managing the regime will not be to the advantage of small farmers and independent operators.

Most worryingly, the details of this complex system have not yet been made public but it is already clear that it will not benefit small farmers in the Caribbean for the following reasons:

1. Within the former system the quota of 850.000 tons was reserved for traditional ACP countries. Under the new system all ACP countries have the right to import bananas for a zero tariff into the EU. More countries will apply for this quota without any increase of the amount.
2. ACP countries will have a maximum tariff preference of 300 Euro per ton, which can be decreased if the Commission feels that it is necessary. FoT prices for the years 1999 and 2000 show clearly that a tariff of 300 Euros per ton will increase the FoT price of most of the Latin American countries just to the level of Windward Island bananas or even less.
3. The new regime does not allocate quotas to countries or group of countries. All quotas are open for all operators. It is very likely that "dollar" operators, who are not able to import their available volume within the A and B quota will turn to the C quota. This will lead to a reduction of the possible import for ACP countries.
4. The introduction of a reduction coefficient after loading of the bananas will put smaller operators, especially Fairtrade operators, in a disadvantaged position. Multinational operators will have no problem to sell the reduced amount outside the EU.
5. In order to allow some protection for the ACP countries the tariff in a tariff-only system, starting at the latest in 2006, needs to be 400 Euro per ton. The tariff revenue should be reinvested in promoting socially and environmentally sustainable production.

Although the EU-Commission believes that the new proposal is consistent with the WTO rulings it is unlikely that it will bring the long-lasting dispute to an end. The United States already said that it will not accept the proposal, together with most of the Latin American and Caribbean countries.

The EU parliament took the decision to support Fair Trade and organic production. This should be reflected in the design of the EU banana regime. If the regime is to be consistent then it should:

1. Support Fair Trade and organic production and enable to disadvantaged farmers to survive and improve the situation of workers
2. Give smaller, new and independent operators at least an equal chance to compete.

This new proposal is another indicator of the marginalisation of the small farmers and plantation workers interest given their absence from the decision making process. It also bring to the fore the need for greater transparency in the operation of these international trade mechanisms.

Once again we reiterate our joint position taken at the historic International Banana Conference in May 1998 that there needs to be an international agreement along the lines of the Banana Charter adopted then and aimed at a sustainable industry and trade beneficial to all.