Jamaica, as an ACP banana exporting country, benefited from a preferential market access system to the EU under the Banana Protocol of the Lomé Conventions and the Cotonou Agreement.  The ACP quota of 750,000 tonnes was exported to the EU duty-free.   Other non-ACP banana exporters faced high tariff rates.

The EC’s banana regime was changed as a result of the nearly decade-long (1993 – 2001) dispute in the GATT/WTO brought by Latin American banana producers against the European Communities, citing discriminatory practices. 

Resulting from the decisions of the WTO banana panels and the 2001 WTO Ministerial Conference in Doha, Qatar, the EC was required to move to a tariff-only regime in 2006, thus fully liberalising the EU market for bananas.

In 2004, the EU announced that 1st January 2006 would usher in a new Banana Regime, the provisions of which would include the elimination of the current quota and licensing system, in favour of a more transparent, tariff only regime. 

Within this new system, ACP banana producers would be allowed duty-free access for 775,000 tonnes of bananas into the EU, while bananas from Latin American producers in excess of 2.3 million tonnes would attract a tariff. 

WTO Arbitration Panel Rulings on Bananas. The provisions of the 2001 Understanding reached between the EU and the United States on bananas requires that any new European Commission (EC) tariff re-binding implemented as of 2006 must “result in at least maintaining total market access for MFN banana suppliers”.  The 2001 Understanding also provided for two rounds of arbitration, which would determine whether the newly proposed tariff-only regime met the conditions of the Doha Waiver Agreement.

In August 2005, the WTO Arbitration Panel ruled that the EC´s proposed rebinding on bananas would not conform to the EC´s WTO market access commitments and would therefore have to be revised.

Following the initial ruling, the EC triggered a second arbitration by submitting a revised tariff of 187 euros per tonne and a 775,000 metric tonne tariff-free quota on ACP bananas. The Arbitrator, in issuing a second ruling on October 19, again found that the EC´s proposed rectification would not result in at least maintaining total market access for MFN banana suppliers, taking into account all EC WTO market access commitments relating to bananas.

Recent Developments in the EC Banana Regime   As of 1st March, 2006, the EC has implemented a mixed management of the quota system for ACP banana producers.  The revised system stipulates that 50% of the 775,000-tonne ACP quota will be managed on a first-come-first-served basis, while the remaining 50% will retain the historic licensing system for the rest of the year.  However, as of 2007, the licensing mechanism will be completely removed.

ACP states had originally requested that the EU impose a tariff of no less than 275 euros per tonne on Latin American banana imports in order to allow ACP banana producers to compete with their Latin American counterparts.  With the previous offers of 230 and 187 euros per tonne now ruled unacceptable by the WTO, ACP banana producers stand to see their small 18% share of the EU market for bananas being significantly eroded, with untold consequences for the millions within these countries who depend on bananas for their livelihood as well as the overall economic infrastructure within these States.

Time to Adjust!

The EC has established a ‘Special Framework of Assistance’ to assist ACP banana producers to make adjustments to their economies, in the light of the financial and development shortfalls expected from the changes under the Banana Protocol.

By the end of 2005, the EC had made available approximately €252 Million to the twelve traditional ACP banana-producing countries.  Jamaica was allocated €33.64 Million for the period 1999 to 2005, and €3.49 Million for 2006, for its Banana Support Programme.  The Programme, which is implemented by the Ministry of Agriculture, has two (2) components: banana improvement and rural diversification.