Tuesday, July 29, 2008

WTO trade talks collapse, banana wars continue

A worker sorts bananas for export on Bananera El Esfuerzo farm in 28 Millas de Siquirres, Costa Rica July 17, 2008. (REUTERS/Juan Carlos Ulate)Geneva (Reuters) - A deal to settle a historic row over trade in bananas between Latin American exporters and the European Union is off after the failure of broader world trade talks on Tuesday, European trade officials said.

The world's top banana exporter, Ecuador, reacted angrily and demanded that the EU stick to the agreement to slash its import tariffs on bananas.

A nine-day bid to find a breakthrough in the so-called Doha round of world trade talks collapsed on Tuesday, and it was not clear when the negotiations could be revived, if at all.

European officials said the failure also killed off a deal reached on Sunday to change the EU's banana imports regime, which gives preferential treatment to African, Caribbean and Pacific (ACP) countries and has hurt Latin American producers like Ecuador and Costa Rica.

"This was always linked to Doha," said Peter Power, a spokesman for EU Trade Commissioner Peter Mandelson. "This was not a stand-alone agreement and was going to be part of Doha package, so there is no banana deal as of now."

But Ecuador's deputy trade minister, Eduardo Egas, insisted that the EU's promise to lower duties on bananas from Latin American countries was not tied to success at the broader trade talks, and he warned that Ecuador would pursue legal action.

"We will analyze additional actions, but our first reaction is to demand that they stick to what was agreed on," Egas told Reuters.

Europe is Ecuador's biggest market for banana exports.

It was not immediately clear what the next steps for the WTO's global trade round would be. It risks possibly years of delay as the United States changes administration and the European Commission comes to the end of its term in 2009.

The now defunct banana deal reached on Sunday was aimed at clearing the way for a breakthrough in the Doha talks. Under its terms, the EU would have cut its tariff of 176 euros (138 pounds) per tonne of bananas to 114 euros by 2016.

It angered rival exporters from former European colonies in the ACP group of countries whose bananas enter the EU with no duties as part of their long-standing trade perks with the bloc.

Banana exports are of vital importance to the developing economies of many ACP and Latin American countries, with the latter claiming about 80 percent of the EU market.

Latin American producers and the United States, acting on behalf of U.S. fruit distributors, have won nearly a dozen legal challenges to the EU's banana import regime.

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