Delay expected in finalising banana deal

Reports claim that a deal will now not be struck until after World Trade Organisation talks in Switzerland next week

It now appears unlikely that a deal will be struck to end the long-running banana trade dispute between Europe and Latin American exporting countries before World Trade Organisation talks begin in Geneva, Switzerland, on 30 November.

An agreement over tariffs is still though to be close, however, and is expected to be reached after the WTO ministerial talks, a source told the Associated Free Press (AFP).

"We're still very close to a deal," the source told AFP. "All parameters are in place (but) we are still finalising the elements and it isn't easy. We thought that it might be done before Geneva, but that will be difficult."

The new deal is set to resemble the one which was laid out in July 2008, with the EU agreeing to reduce its banana import tariff from the current €176 per tonne to €148 per tonne immediately, and lowering it to €114 per tonne incrementally over the subsequent seven years.

However, the sticking point of the agreement is thought to be a dispute between the EU and African-Caribbean-Pacific (ACP) producers, over compensation for the elimination of ACP banana exporters' competitive advantage once Latin American tariffs are reduced, AFP said.

An EU aid package for ACP countries aimed at "improving competitiveness, economic diversification and mitigating the social consequences of adjustment" is expected to be implemented between 2010 and 2013. Some €190m in additional aid has reportedly been earmarked by the European authorities to support them via Banana Accompanying Measures (BAMs).  

However, ACP countries are said to have called for smaller cut in Latin American tariffs, with producers holding out for up to €250m in compensation.