Free Trade Agreement Bananas

Among the five other banana-exporting countries with additional free trade agreements (see table), Guatemala and Peru recorded the largest percentage increase in exports to EU-28 countries (plus 312.5% and 178.1%). Peru also recorded the largest increase in absolute terms (up 91,891 tonnes). According to press reports, exports of organic bananas to target markets such as France, Italy and Germany have increased by 20%. If the United States does not export bananas directly to Europe, why are they so angry? Whether a Democrat or a Republican, U.S. governments have long been committed to an ideological commitment to free trade. But the „banana wars“ are more grumpy than this clear principle. What is the World Trade Organization (WTO)? The WTO is the only international body to deal with trade rules between countries and promote free trade. Based in Geneva, it replaced the General Agreement on Trade and Customs (GATT) in 1994. It has the power to legislate on conflicts and coordinate new rounds of negotiations aimed at removing trade barriers around the world.

Only seven percent of European bananas come from the Caribbean, the US multinationals that control the Latin American banana harvest hold three-quarters of the EU market and the US itself does not export bananas to Europe. The U.S. government is concerned about its economy. The U.S. trade deficit is at a nine-year high. Its current account deficit could reach $300 billion in 1999, surpassing the 1986-197 record. The Government believes that it cannot afford to allow any European protectionism, however petty, to disadvantage its turbulent trade balance. Changes in banana exports to EU-28 countries (tonnes) – The „banana wars“ are the culmination of a six-year trade dispute between the US and the EU.

The United States has criticised the fact that EU regulations granting special access to European markets to banana producers from former Caribbean colonies are contrary to free trade rules. Where does Kashmir come into play? Following the WTO ruling, the US government continued to argue that free trade with bananas had not been restored, while the EU maintains that it has changed its rules. The United States has implemented a 100% retaliatory programme of import tariffs on European products, which ranges from Scottish Kashmir to French cheese. Why does it matter? Some argue that the dispute threatens the entire future of free trade. „Free trade“ has always been a delicate state negotiated between nations. It was often an exercise in trade concessions – a nation opens that market in exchange for another opening of that market. Between 2010 and 2013, total imports of bananas from the dollar area increased by 6.4% (from 3,541,760 tonnes to 3,767,328 tonnes). The effect of this agreement has had the effect of protecting Caribbean banana producers from competition from Latin America, whose bananas are cheaper because they are grown on large mechanized plantations operated by huge American groups. Under the free trade agreements signed with the EU since 2010, tariffs have been reduced faster than under the Geneva Banana Trade Agreement (GATB).

Tariffs collected under the agreements are now 14.5% lower than tariffs collected in 2010 and EUR 8 per tonne lower than those of the GATB, while the quota for reduced-rate imports has increased by 15% since 2010 (see Agritrade Article „Association Agreement between Central America and the Andean Pact“ August 12, 2012).