WRITTEN QUESTION E-3735/02

by Caroline Lucas (Verts/ALE) to the Commission

(19 December 2002)

Subject: Quotas and the survival of the Caribbean banana industry

In June 2002 the ACP Council of Ministers meeting sent a resolution to the European Parliament, Council and Commission which drew attention to the fact that the new banana regime had resulted in prices

plummeting to levels which threaten to displace ACP suppliers, most of whom have no alternative markets and were already creating tremendous social and economic dislocation and eroding the achievements in the fight against poverty.

This problem results from the implementation of phase 2 of the EU-US Agreement which transfers 100 000 tonnes of quota from ACP (quota C) suppliers to dollar (quota B) suppliers, which effectively increased the total volume of bananas entering the market by 100 000 tonnes, enabling EU supermarkets to pursue a highly competitive price policy.

Will the Commission implement a temporary reduction in the B quota (dollar supplies) in order to eliminate excess supplies that are depressing prices, and, if not, what steps does the Commission intent to take in support of ACP suppliers?

Answer given by Mr Fischler on behalf of the Commission

(5 February 2003)

The Commission can inform the Honourable Member that in 2002 the Community banana market displayed a satisfactory quantitative balance that was reflected in smooth price movements. As happens every year, prices began to fall at the beginning of the second half, with a steepening of the downward trend during September and October. But the situation strongly improved with a big price upswing from the end of November. In particular the price of ACP bananas rose by 58 % between week 46 (mid-November) and week 51 (end of December) and at the end of 2002 reached their highest level at that season for five years. The outlook for the coming months is positive and the market should display a satisfactory balance in 2003. It can justly be said that the Community market continues to be a profitable one for banana-producing countries, including the ACP ones.

The Commission can also point out that the agreements concluded with the United States and Ecuador allowed the trade dispute that had lasted for several years to be ended and authorised opening of a tariff quota reserved for ACP bananas. Moreover, in November 2001 the Union succeeded in obtaining derogations at WTO level guaranteeing the ACP banana-producing countries preferential access to the Community market.

Lastly, it must be remembered that the common market organisation for bananas has no price guarantee arrangement. Banana price formation, and sometimes the volatility of that price, is the expression of a market dynamic with which the Commission has no power to interfere. The size of tariff quotas can be adjusted to secure market supply only in cases where a shortfall of bananas from one of the various origins arises. In that event the only power the Commission has is to increase the quantities to be imported under the unbound tariff quota (quota B). The rules in force give it no authority to reduce the size of tariff quotas, nor would lower prices on the Community market be an adequate ground for proposing a tariff quota reduction.