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End To “Banana Wars” Seen Within Reach

Adeal to end the world’s longest-running trade dispute over import tariffs on bananas is virtually complete, but a final agreement may not be reached until next week, diplomats involved in the talks said Friday.

The European Union and Latin America had hoped to wrap up a deal Friday to end the 16-year-old “banana wars.” An agreement would also need the endorsement of African, Caribbean and Pacific (ACP) countries and the U. S.

“The deal is all but done. But we still need a few more days to clear up some small technical issues in the legal drafting,” a European diplomat told Reuters.

Latin American diplomats agreed that a deal was days away and that there were no major issues left unresolved.

The pact aims to cut the tariffs paid on bananas from Latin America and shield the European Union from further legal action at the World Trade Organization, which has condemned the EU’s import regime.

Under the deal, the duties on bananas would fall to $114 a tonne by 2016 or a few years later from $176, with an initial cut to $148 (all figures US$).

Poorer ACP growers in mostly former European colonies will get around 200 million euros ($300 million) in compensation for the negative effects the pact may have on the preferential treatment given to them by Brussels, diplomats said.

Caribbean countries say their economies will be devastated by a deal they see as inevitable. Banana exports are the mainstay of their economies and adjusting to the loss of markets is already hurting producers and communities on the islands.

Although the United States does not export bananas, it is a party to the agreement because several big distributors and processors such as Chiquita, Dole and Del Monte are U. S. corporations. Another big distributor is the Irish company Fyffes.

“We are waiting for the United States to come on board, and then it can be initialled,” said another European diplomat.

Asked when that could be expected, the diplomat said: “It takes what it takes.” But the EU and Latin Americans had now agreed on the deal, the diplomat said.

The deal – removing an obstacle to an eventual agreement in the WTO’s long-running Doha round – is linked to a broader pact in trade in tropical products, such as rum, tobacco, sugar, arrowroot and cut flowers.

Concessions by Latin American banana exporters such as Colombia and Ecuador, plus an aid package from Brussels, will have persuaded the ACP countries to sign up to the deal, which erodes their competitive edge in the lucrative European market.

Caribbean ministers said it remained to be seen how the aid would be divided among ACP members with diverging interests.

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