RECOMMENDATION on the draft Council decision on the conclusion of a Geneva Agreement on Trade in Bananas between the European Union and Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela and of an Agreement on Trade in Bananas between the European Union and the United States of America

19.1.2011 - (07782/2010 – C7-0148/2010 – 2010/0057(NLE)) - ***

Committee on International Trade
Rapporteur: Francesca Balzani

Procedure : 2010/0057(NLE)
Document stages in plenary
Document selected :  
A7-0002/2011

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the draft Council decision on the conclusion of a Geneva Agreement on Trade in Bananas between the European Union and Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela and of an Agreement on Trade in Bananas between the European Union and the United States of America

(07782/2010 – C7-0148/2010 – 2010/0057(NLE))

(Consent)

The European Parliament,

–    having regard to the draft Council decision (07782/2010),

–    having regard to the draft Geneva Agreement on Trade in Bananas (07968/2010) and the draft Agreement on trade in bananas between the European Union and the

United States of America (07970/2010),

–    having regard to the request for consent submitted by the Council in accordance with Article 207(4), first subparagraph and Article 218(6), second subparagraph, point (a) of the Treaty on the Functioning of the European Union (C7-0148/2010),

–    having regard to Rules 81 and 90(8) of its Rules of Procedure,

–    having regard to the recommendation of the Committee on International Trade and the opinion of the Committee on Development (A7-0002/2011),

1.   Consents to conclusion of the agreements;

2.   Instructs its President to forward its position to the Council, the Commission, and the governments and parliaments of the Member States and of Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela and the United States of America.

EXPLANATORY STATEMENT

Trade in bananas

Bananas are the world’s fourth most important crop, after rice, wheat and maize, and make a major contribution to food security. However, in most banana producing countries, production is exclusively for the domestic and occasionally regional markets, with only 20% of global production being traded internationally.

Only a limited number of banana producing countries are involved in the international trade in bananas. Control of the banana trade is concentrated in the hands of a limited number of companies, with just five major multinationals controlling more than 80% of all internationally traded bananas.

In recent years, however, the power of the banana multinationals has been eclipsed by the power of the supermarkets in some key EU markets, notably the UK.

In 2008, EU consumers bought more than 5.4 million tonnes of bananas. The EU imported almost 90% of the bananas it consumed (72.5% from Latin America, 17% from African, Caribbean and Pacific (ACP) countries).

Five EU countries supplied the remaining 11%: Cyprus; France (the overseas departments of Guadeloupe and Martinique); Greece; Portugal (Madeira and the mainland); and Spain (the Canary Islands).

Resolution of the banana dispute

On 15 December 2009, the EU, a group of Latin American countries and the United States reached an agreement on the EU’s tariffs on banana imports, bringing to a close one of the most protracted and bitter disputes in the multilateral trading system’s recent history.

EU banana import policies had been the subject of a decade-long row at the WTO, putting the EU against several Latin American banana producers and the US.

Pascal Lamy warmly welcomed the end of “one of the most technically complex, politically sensitive and commercially meaningful legal disputes ever brought to the WTO.”

At issue was the treatment the EU gave to the import of bananas from the ACP countries in preference to bananas from Latin America. In fact, the EU’s banana import regime allowed 775,000 tonnes of the fruit from ACP countries to enter the EU duty-free each year, with a €176/t tariff on bananas from all other exporters (most-favoured nation (MFN) suppliers).

Many Latin American countries, which include some of the world’s biggest banana exporters, long insisted that this import regime illegally discriminated in favour of bananas from ACP countries and violated WTO rules on quantitative restrictions.

The dispute resulted in multiple legal rulings by dispute panels, the Appellate Body and special arbitrators and the EU had to revise its policies.

The agreement consists of three basic components:

-    an agreed schedule of tariff reductions for most-favoured nation (MFN) banana exporters;

-    agreement on how to deal with "tropical products" and products subject to "preference erosion" in the wider WTO negotiations;

-    a financial package, amounting to €190 million, of assistance to ACP banana exporters, to be known as the Banana Accompanying Measures (BAM) programme.

The disputes on bananas have destabilised the climate for production and trade in the countries concerned. The deal will make the global market in bananas more predictable and stable, and thereby encourage investment and growth, and increased attention to wider production condition issues in the banana supply chains.

Tariff reductions

Under the terms of the deal, the EU will gradually cut its tariffs on Latin American banana exports from the current level of €176/t to €114/t by 2017, when it will reach its final level of €114/t.

A first cut of €28/t, which was applied retroactively as of 15 December 2009, the date of initialling of the Agreement, reduced the tariff to €148/t. The tariff will then fall again at the start of each year for seven years in annual instalments (€143, €136, €132, €127, €122, €117, €114), starting on 1 January, 2011.

Should there be no agreement in the Doha Round negotiations, then the EU will freeze its cuts for up to two years. This means that should there be no agreement once the EU cuts its tariffs to €132 per tonne, it will make no further cuts for up to two years, until the end of 2015 at the latest, then from 2016 at the latest, the EU will continue cutting its tariff each year, as agreed until the tariff reaches €114/t on 1 January 2019 at the latest.

The agreement lays to rest decades of conflict, with a clause stating that Latin American banana exporters will drop all actions against the EU in the WTO: "once the WTO certifies the EU’s new tariff schedule, Latin American banana-supplying countries will drop all their disputes on bananas with the EU at the WTO, and any claims they made against the EU after new member countries joined the Union, or when the EU changed its banana tariff in 2006" and will not seek further tariff reductions on bananas in the Doha Round.

Bananas from ACP countries will continue to enjoy duty-free and quota-free access to the EU's market under separate trade and development agreements, but are likely to lose market share to more efficient Latin American producers as the EU tariff slides lower.

"Tropical" and "Preference Erosion" products

In parallel, the EU, ACP and Latin American countries agreed on an approach on the so-called "tropical" and "preference erosion" products in the on-going DDA negotiations. "Tropical products" will be subject to deeper tariff cuts, while tariff cuts for "preference erosion" products of interest to ACP countries will be conducted over a relatively longer period.

The agreement is the EU's final commitment on the tariffs it will apply to banana imports following the Doha Round negotiations.

Banana support programme for the ACP

Since 1994, the EU has provided more than €450m to ACP banana-exporting countries to help them adapt to changes, to produce bananas more competitively or to diversify their economies into other areas.

In addition to regular EU aid, the main ACP banana-exporting countries will receive up to €190 million from the EU budget to help them adjust to the new tariff. The Commission will examine, together with the budgetary authority, the possibility of topping up this amount by €10 million if the corresponding credits become available in the annual budget procedures. The aid will be aimed at improving competitiveness, economic diversification and mitigating the social consequences of adjustment.

The Banana Accompanying Measures programme will apply to ten ACP banana exporters (Belize, Cameroon, Côte d’Ivoire, Dominica, Dominican Republic, Ghana, Jamaica, St Lucia, St Vincent & the Grenadines, and Suriname), including two non-traditional exporters (Ghana and Dominican Republic).

In addition to the traditional focus on competitiveness and diversification, the programme will also seek to address broader employment, educational, health and environmental adjustment issues.

Implementation of the programme should begin in 2011 and run through 2013. Measures supported under the programme will involve: support to investments in competitiveness improvements; support to economic diversification policies; support to broader social, economic and environmental adjustments.

The measures to be supported will be determined jointly by the beneficiary government and the Commission. Country allocations will be based on three criteria:

- the volume of the banana trade with the EU;

- the importance of bananas exports to the EU to the country’s economy;

- the level of development of the country (such as its HDI rating).

The allocation amounts to an average of €5 million per beneficiary country per annum.

ACP concerns

Traditional ACP banana exporters have been concerned about the serious social, economic and political dislocation that could result from the banana agreements.

ACP believe that in order to minimise potential losses to ACP banana exporters following the banana deal and other bilateral tariff concessions granted to Latin American banana exporters, a far larger level of financial support to production and trade adjustment measures in ACP banana-exporting countries would be needed.

European banana producers

The support for the EU banana sector is provided through the POSEI (Programme d'options spécifiques à l'éloignement et l'insularité) envelope. As a result of the reform of the EU's Common Market Organisation for bananas in 2006, European banana producers in the outermost regions receive €279 million annually within this envelope.

However, as the reform of POSEI was carried out in 2006, it did not take into account the future reductions of tariffs for imported bananas. It is therefore not clear whether the current POSEI envelope is sufficient to ensure that European banana producers are able to withstand the pressures created by the increasing liberalization of the global trade in bananas. Their competitiveness and their actual existence may therefore be threatened as a result of the WTO Agreements on Trade in Banana.

Bilateral accords

The recent bilateral agreements concluded with Colombia and Peru, and Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) offer a even better preferential treatment to exports from these countries (a duty of €75/t by 2020, in a series of incremental reductions).

This will cause the ACP’s preferential margin to erode even further.

Ecuador - the world’s biggest banana exporter, which is not currently a party to the bilateral accords - is worried. In fact, as Colombia and Costa Rica, Ecuador's main competitors in banana exports, have better tariffs, they could easily take over Ecuador's share of the EU market. Although the country will benefit from the Geneva Agreement cuts, by 2020 every tonne of Ecuadorian bananas exported to Europe will have a €39 tariff disadvantage compared to its most serious regional competitors.

Moreover, within this climate of uncertainty, big multinational companies such as Chiquita and Dole might abandon Ecuador as their supplier.

Conclusions

Your Rapporteur considers that the European Parliament should give its consent on the Agreements if it received firm commitments from the Commission and the Council to ensure that:

-     At the earliest opportunity, an impact assessment on the effects of the agreements on banana‑producing developing countries and the European outmost regions until 2020 will be presented to the European Parliament;

-     An impact assessment of the BAM, 18 months prior to the programme's expiry will be submitted, to Parliament, accompanied, where necessary, by appropriate proposals;

-     Specific initiatives are taken to strengthen the commercial position of banana growers within the various supply chains;

-     There are no attempts to finance the programme for ACP banana-producing countries through redeployment from the budget lines for development cooperation;

-     The resources from the BAM will be allocated across countries according to the expected losses in terms of banana exports and production along with the country's level of development, weighted indicators and the trade in bananas in the EU.

OPINION of the Committee on Development (16.12.2010)

for the Committee on International Trade

on the draft Council Decision on the conclusion of a Geneva Agreement on Trade in Bananas between the European Union and Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela and of an Agreement on Trade in Bananas between the European Union and the United States of America
(07782/2010 – C7‑0148/2010 – 2010/0057(NLE))

Rapporteur: Charles Goerens

SHORT JUSTIFICATION

The arrangements applicable to the producers of bananas imported into the EU, as laid down in Regulation 404/93/EEC, have been contested by several Latin American members of the WTO and by the United States and are the subject of WTO dispute settlement procedures.

The need to eliminate all differences in treatment in line with the WTO rules has resulted in rulings unfavourable to the EU, which for fifteen years has hence been negotiating solutions aimed first at introducing a tariff-only regime and then at reducing the rate of ‘Most Favoured Nation’ (MFN) duty.

Negotiations in the WTO resulted, on 15 December 2009, in an agreement on trade in bananas with Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela and in an agreement on trade in bananas with the United States of America.

These agreements, negotiated by the Commission, provide for the settlement of disputes between the countries concerned within the GATT. Furthermore, they implement the Understandings by imposing a ‘tariff-only regime’ and provide for the settlement of all on-going disputes over the tariffs applicable to bananas imported from Latin America.

Under the agreements, the rate of duty applicable to bananas imported into the EU is to be gradually reduced from EUR 176 to EUR 114 per tonne in 2017, with the option of a further reduction to EUR 75 per tonne in 2020. This possibility is already the subject of negotiations between the Commission and some Latin American MFN countries, and will doubtless further imperil the very survival of the banana industry in many ACP countries.

From a budgetary viewpoint, it is estimated that these measures will also lead to a reduction in EU own resources, as from 2009, owing to the retrospective effect of the agreements entering into force as of 15 December 2009.

Under the consent procedure, Parliament can only either reject or approve the act being proposed, on the basis of a recommendation from the committee responsible – in this case the Committee on International Trade (INTA), to which the Committee on Development has submitted this opinion.

Your rapporteur firmly believes it is impossible to withhold consent for the two agreements negotiated in Geneva, since these agreements are in line with the GATT rules and any proposal to reject them, even if duly justified in the light of Parliament’s prerogatives and its on-going discussions, would conflict with the ‘pacta servanda sunt’ (‘agreements must be kept’) precept governing international relations.

Your rapporteur adopted the same approach to the issue of banana accompanying measures (BAM), which were also negotiated in Geneva (DCI BAM Regulation) with the aim of enabling the ten banana-producing ACP countries partially to offset the losses occasioned by the agreements in question. It is precisely with regard to this point that one should mention the development dimension, which is of concern to us.

It would seem appropriate, in this connection, to point to the principle set out in the second subparagraph of Article 208 (1) of the Treaty on the Functioning of the European Union, which states that the Union shall take account of the objectives of development cooperation in the policies that it implements which are likely to affect developing countries. The agreements are certain to have an adverse effect on some countries, including banana-producing ACP countries. The banana accompanying measures only run until 2013 and while, in strictly management terms, those countries have to be able efficiently to manage the resources that will be provided under the DCI (BAM) Regulation, in strictly development terms it is clear that the impact of the agreements must continue to be carefully assessed, not just until 2013, but also up to 2020. A study on the impact of the agreements in the period up to 2020 is therefore essential.

*******

The Committee on Development calls on the Committee on International Trade, as the committee responsible, to propose that Parliament give its consent to the agreements in question, subject to the Commission bringing forward, at the earliest opportunity, an impact assessment on the effects of the agreements on banana-producing developing countries, up to and including in 2020.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted

9.11.2010

 

 

 

Result of final vote

+:

–:

0:

17

3

0

Members present for the final vote

Thijs Berman, Corina Creţu, Nirj Deva, Charles Goerens, Catherine Grèze, András Gyürk, Eva Joly, Filip Kaczmarek, Gay Mitchell, Norbert Neuser, Bill Newton Dunn, Maurice Ponga, Birgit Schnieber-Jastram, Michèle Striffler, Alf Svensson, Eleni Theocharous, Ivo Vajgl, Anna Záborská, Iva Zanicchi

Substitute(s) present for the final vote

Judith Sargentini

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted

17.1.2011

 

 

 

Result of final vote

+:

–:

0:

18

5

0

Members present for the final vote

William (The Earl of) Dartmouth, David Campbell Bannerman, Daniel Caspary, Christofer Fjellner, Bernd Lange, Emilio Menéndez del Valle, Vital Moreira, Cristiana Muscardini, Niccolò Rinaldi, Helmut Scholz, Peter Šťastný, Keith Taylor, Iuliu Winkler, Pablo Zalba Bidegain

Substitute(s) present for the final vote

Josefa Andrés Barea, Francesca Balzani, Catherine Bearder, José Bové, Salvatore Iacolino, Syed Kamall, Jarosław Leszek Wałęsa

Substitute(s) under Rule 187(2) present for the final vote

Elie Hoarau, Stéphane Le Foll, Marietje Schaake