Martinique banana box

Discussions over a new deal on tariffs for Latin American nations exporting bananas to the European Union are reportedly nearing a conclusion, although barriers still stand in the form of African-Caribbean-Pacific (ACP) countries and the US.

According to the Associated Free Press (AFP), a deal to end the long-running trade dispute should be finalised this week, assuming the EU can agree a suitable level of compensation for ACP banana exporters – although some are still reportedly unhappy with the proposed agreement.

As part of the new deal, an EU aid package for ACP countries aimed at 'improvingcompetitiveness, economic diversification and mitigating the socialconsequences of adjustment' is expected to be implemented between 2010and 2013, with some €190m in additional aid reportedly earmarked bythe European authorities to support them via Banana AccompanyingMeasures (BAMs).

However, ACP countries are said to have called for smaller cut in LatinAmerican tariffs compared with the levels proposed in the deal, while producers have been holding out for up to €250m incompensation.

'We don't like the deal, but we have very little leverage to improve it...we can live with it. That's the overall stance of the ACP,' one unnamed trade official close to the deal told AFP. 'But there are some wild cards within the grouping – Cameroon and the Ivory Coast.'

Additionally, the source said, there was a fear that the US could try and scupper the deal as it would leave them exposed on the issue of cotton.

'We all know that cotton is one of the biggest injustices in trade,' the source said, referring to the issue of subsidies paid by the US and other wealthy nations to cotton producers, which have been blamed for skewing trade against poorer competitors.

Despite these issues, Costa Rican commerce minister Marco Ruiz claimed that a new banana deal could be concluded in the coming days.

'We're very, very close to a deal with the EU. We had a general consensus last week that it would be possible for the technical team to finish the details in the coming week,' he told AFP. 'In terms of the compensation, that's between the EU and the ACP. The agreement negotiated has left some margin for a deal to be reached.'

If it is finalised, 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 thecurrent €176 per tonne to €148 per tonne immediately, and lowering itto €114 per tonne incrementally over the subsequent seven years.