Bridges Weekly Trade News Digest • Volume 12 • Number 26 • 16th July 2008
Tropical Products and Preference Erosion: Still No Deal
A long-running three-way fight over the treatment of bananas could prevent a successful conclusion of the Doha round, informed sources say.
Ongoing talks reportedly continued this week between the EU and Latin American exporters on the ‘tropical products’ that are slated for enhanced liberalisation, as well as between the EU and African, Caribbean and Pacific (ACP) countries eager to establish more gradual tariff cuts for products affected by the erosion of preferential access. For a few key products, such as bananas and sugar, the two groups are at loggerheads over the treatment that should be provided.
Indeed, Brussels has long been at odds with Latin American banana exporters because it continues to offer preferential market access to producers in former European colonies, many of which now belong to the ACP group.
The lack of any final outcome to the detailed tariff-line-level discussions prevented Amabassador Crawford Falconer (New Zealand), the chair of the WTO’s negotiating group on agriculture, from including new text on this issue in his revised draft, which was issued last week. However, one delegate warned that the potentially explosive issue “risked blocking” the ministerial deliberations if no agreement was reached beforehand.
In a 16 July press release, the EU indicated its willingness to negotiate on the basis of a compromise proposal on bananas prepared by WTO Director-General Pascal Lamy. “Resolving this long running problem must be part of a final Doha deal,” said EU Trade Commissioner Peter Mandelson in the statement. “That means balancing the needs of two different sets of developing countries, while taking into account the interests of EU banana producers…I hope we can all work for a solution.”
The proposal would involve reducing EU tariffs from 176 euros per tonne to 116 euros per tonne, implemented by 2015 so as to allow ACP producers time to adapt. A 26-euro-per-tonne cut would be made in the first year, a further 9-euro-per-tonne cut in the second year, and a 5-euro cut every subsequent year until 2015. Bananas would not be subject to any cuts in the Doha Round, and parties would agree to a ‘peace clause’ preventing legal disputes.
However, negotiators familiar with the talks indicated that the deal had not found favour either with most exporting countries or with those that currently benefit from trade preferences.
“ACP countries are quite uncomfortable with the proposal” said one delegate familiar with the discussions. “The EC has betrayed us,” the official said, pointing out that many ACP countries had recently agreed to bilateral Economic Partnership Agreements with the EU in order to maintain existing preferential access. Another ACP negotiator described the EU as “an unreliable partner.” ACP officials warned that the deal “wouldn’t sail.”
Latin American negotiators indicated that, while there were different views in the region about whether the text could serve as a basis for negotiations, major exporting countries Costa Rica, Ecuador and Panama had rejected Lamy’s proposal.
ICTSD reporting.