Accord Settles EU-U.S. Banana Dispute

The U.S. and European Union settled their standoff over bananas, closing the books on an eight-year dispute that culminated in 1999 with U.S. penalties on $191 million in European products.

The U.S.-EU deal, announced Wednesday, will result in the lifting July 1 of 100% tariffs on Danish hams, French handbags, Italian bed linen and a handful of other goods.

World Trade Organization panels had twice ruled that the EU's banana-import system violates global trade rules by unfairly favoring Caribbean and African bananas and European distributors over Latin American fruit distributed by U.S. companies Chiquita and Dole.

The 15-nation EU resisted changing the rules to suit the United States, Ecuador and Panama because it was eager to protect its fruit companies and to keep a pledge to its territories and former colonies in Africa and the Caribbean to give preference to their bananas.

Cincinnati-based Chiquita lobbied hard for the Clinton administration and Congress to take up the banana case. The fruit marketer has blamed the EU's banana-import system for financial troubles that have pushed it to the brink of bankruptcy and resulted in its decision to halt payments to its debt holders until it can restructure its debt.

Wednesday, Chiquita gave the U.S.-EU agreement a qualified endorsement. The company said it was "pleased" but only expects "partial recovery" of lost sales in Europe.

The U.S.-EU deal calls for the elimination after five years of the EU's use of quotas to favor its former colonies and territories, such as Spain's Canary Island producers and growers in French-held Martinique. During the transition, Chiquita and Dola will get distribution licenses based on their 1994-1996 sales in the EU.

During and after the transition, certain preferences will still go to bananas from former colonies, such as Cameroon and Ivory Coast in Africa and St. Lucia, Jamaica and Grenada in the Caribbean.

Bananas are a major source of income for several poor Caribbean and African countries, which generally can't grow the fruit as cheaply and efficiently as Latin American countries because of soil, terrain and other conditions.

The banana issue also contributed to acrimonious trade relations between the United States and EU, the world's two largest traders.

The two are still battling over tax breaks for U.S. exporters, Europe's ban on beef treated with growth hormones, Airbus subsidies and other issues.






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