The Secretariat of the African, Caribbean and Pacific Group of States

Geneva, 7 November 2007

The ACP countries are surprised and disappointed that the US has made a frontal attack against the Cotonou preference for bananas. The US, one of the world’s trading powers, and which hardly produces any bananas, in fact tries to eliminate from the international trading system countries which collectively account for a mere 1.1 % of world trade. The Cotonou preference which allows the duty free importation of 775,000 tons of ACP bananas into the EC is of fundamental importance for the economic and social survival of the ACP banana exporting countries. In fact, without this preference, the ACP countries would find it impossible to continue participating in international trade. Thanks to the regular banana shipments, the ACP countries have access to regular shipping lines allowing them to export and import also many other products. In case the US succeeds in eliminating the Cotonou preference, such shipping lines would disappear. The elimination of banana exports would therefore have a domino effect on many other trade related activities in the ACP countries.

It can therefore not be sufficiently stressed that the US action threatens the livelihood of millions of poor people. It is unacceptable that the most powerful nation in the world attempts to eliminate a measure essential for the development of the ACP countries, knowing that it has itself neither meaningful banana production nor trade. To make this still more outrageous, the US brought the case without holding prior consultations. By so doing, they deprived the ACP third parties of the opportunity to highlight the importance of the development dimension of this affair, before the decision to establish a panel was taken. This sidelines the rule of the dispute settlement system that requires that this dimension be taken into account. There could not be a more eloquent demonstration of the priority that the US is giving to commercial considerations over the legitimate concerns of vulnerable developing countries.

On the substance, the US claim is based on purely formalistic arguments and ignores what has actually happened on the market since the introduction of the EC’s new banana regime. The EC had undertaken that its new regime would maintain market access for MFN bananas. The official statistics vividly illustrate that the new regime has done far more than simply maintain total market access for MFN bananas. Imports of bananas from MFN countries have rapidly increased thanks to the entry into force of the new EC banana import regime. Annual imports of MFN bananas have increased by more than 300,000 tons during 2006. This already impressive rate of increase has even further accelerated during the first eight months of this year.

This rapid increase of the imports of the MFN bananas into the EC is the result of the abolition of the previously existing licensing system. Most licences were controlled by a few large multinational companies. This licence system generated huge profits in the form of quota rents for these companies. The market data demonstrate that the apparent increase in the EC import duty has actually been less than the profits previously obtained by these operators. How could one otherwise explain that the introduction of an allegedly higher import duty has resulted in increased import volumes while wholesale prices on the EC market remained stable and the prices paid to local banana producers increased?

In conclusion, the US claims are not only completely unfounded, they are also an unfair attack on the ACP countries’ vital interests. This is all the more unacceptable since the US had entered into an agreement with the EC in which it promised to support the Cotonou preference in return for an increase in the volume of import licences controlled by US multinational operators. This increase was paid for by the ACP countries which saw their preferential quota reduced correspondingly. The US has already reaped the benefits from the agreement. The US should now be obliged to respect its commitments and to support what remains of the ACP preference.