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The Banana War (IMPACTS ON THE ACP COUNTRIES (Half of the population of…
The Banana War
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IMPACTS ON THE EU
The US imposed a retaliatory of 100% import duties on European porducts, encompassing everthing from Scottish cashmere to French cheese
This threatened EU exports, worth about $520 million a year
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(After the Geneva Agreement) The EU has also agreed a compensation package with the ACP countries who will lose out as a result of the deal. They will receive 200m euros over four years.
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OVERVIEW
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It is estimated that 2.5 billion tonnes of bananas are consumed every year in Europe, making Europe an extremely profitable market
WTO INVOLVEMENT
SUCCESS: The US filed a complaint against the EU with the WTO and in 1997, won. WTO successfully recognized the unfairness and the ruling created pressure for EU to alter its rules
FAILURE: "The Geneva Agreement on trade on bananas", brokered without the WTO. The agreement was one of the very few tension relievers in the war, yet WTO had no participation in this.
EU gradually reduce the tariffs it charges Latin American banana importers from 176 euros per tonne to 114 euros per tonne over a seven-year period (2009-2016)
INVOLVED PARTIES
THE CARIBBEAN AND EU
Europe hopes that this trade relationship would enable the economies of such developing countries to grow independently, without depending overseas aid
Producers in the Caribbean are protected from competition from Latin America, whose bananas are grown on large-scale, mechanised planations run by giant US-based corporations
71 African, Caribbean and Pacific (ACP) countries were subjected to the Lome Convention, an agreement created in the 1970s which commits the European Union to promoting trade with its former colonies
Although ACP were granted independence in the 50s and 60s, yet they still had access to European markets for their agricultural products and were provided aid to help the transition into independence
EU has tried to move on from a post-colonial relationship to what it calls a "economic partnership" with some of the world's poorest countries
USA AND EU
The US complained that the trading relationship between the EU and former colonies in the Caribbean broke free trade rules
The US filed a complaint against the EU with the WTO and in 1997, won. The EU was forced to alter its rules
After the WTO ruling, the US contined to argue that free trade in bananas has not been restored
In 1996, Ecuador, Guatemala, Honduras and Mexico, together with the US, formally complained to the World Trade Organization (WTO) about the tariffs.
The US is concnerned about its own economy and wants to prevent European protectionism from troubling its trading balance, as the US trade deficit as at a nine-year high (account deficit in 199 was $300 billion).