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March 2009, Bridges
European and Latin American negotiators appear to be nearing a conclusion to the WTO’s longest-running dispute, unofficial sources from both sides say.
In February, the EU reportedly offered to lower its most-favoured-nation banana tariff from -176 per metric tonne to -114 per tonne by 2019. This is three years later than was envisaged in the compromise reached during the WTO ‘mini-ministerial’ in July 2008. When that meeting collapsed, the EU took the deal off the table, insisting it was contingent on a successful conclusion of Doha Round negotiating modalities.
Under the July 2008 agreement, the EU committed to making a -28 tariff cut in 2009, followed by more-or-less equal annual reductions until reaching a final rate of -114 in 2016. The new stand-alone proposal is based on this approach, except that the tariff would be frozen at -136 for three years starting 2 January 2011, after which gradual reductions would resume, ending at a rate of -114/tonne in 2019. Should the Doha talks revive, the EU would revert to its original schedule.
The new deal comes with two caveats: a definitive end to WTO litigation, as well as an understanding that the EU would not be required to do more under an eventual Doha Round agreement.
Latin American countries’ reactions vary depending on how far they have advanced in bilateral free trade negotiations with the EU. For instance, Ecuador, which has only recently joined Andean-EU talks, appears willing to accept the new European proposal. Costa Rica, which hopes to sign a comprehensive Central America-EU deal in January 2010, insists on no backtracking from the July 2008 compromise. According to unconfirmed reports, the EU could lower the tariff to -95 per tonne under a regional trade pact with Central America.
African, Caribbean and Pacific (ACP) banana exporters would be offered more EU financial aid to help them adjust to a more competitive trading environment.
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