Communication from the Commission to the Council and the European Parliament - Banana Accompanying Measures: Supporting the Sustainable Adjustment of the Main ACP Banana-Exporting Countries to New Trade Realities
Date: 2010-03-17
Institutions: European Commission
Subjects: ACP countries, CCT duties, import, most favoured nation, tariff preference, tariff reduction, trade agreement (EU), tropical fruit

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EUROPEAN COMMISSION  

Brussels, 17.3.2010 
COM(2010)101 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT 

Banana Accompanying Measures: Supporting the Sustainable Adjustment of the Main 
ACP Banana-Exporting Countries to New Trade Realities 

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Bananas1  are  crucial  to  the  livelihoods  of  millions  of  people  and  a  major  source  of  export 
revenue  for  many  developing  countries.2  For  some  of  these  states,  banana  production  for 
export to the European Union (EU) is an important economic activity, with multiplier effects 
in the rest of the economy. 

African,  Caribbean  and  Pacific  (ACP)  banana-exporting  countries  have  traditionally  had 
preferential access to the EU market. The preferences enjoyed by ACP  countries have been 
challenged  by  other  members  of  the  World  Trade  Organisation  (WTO)  and  the  WTO's 
Appellate  Body  has  repeatedly  ruled  against  the  European  Union's  Common  Market 
Organisation (CMO). Most recently, in December 2008, the Body established that the EU was 
obliged to rebind its banana tariff rate.  

In December 2009, the EU initialled an agreement on bananas with Latin American banana-
exporting  countries  laying  down  a  schedule  for  the  reduction  of  the  EU's  Most  Favoured 
Nation (MFN) tariff on bananas. MFN tariffs will be reduced from the current €176 per tonne 
to €114 over a period of seven to nine years.  

ACP banana-exporting countries will continue to have duty-free, quota-free (DFQF) access to 
the  EU  market.  However,  due  to  changing  trade  arrangements,  notably  MFN  liberalisation 
within the WTO, the reduction of the preferential margin for ACP banana-exporting countries 
will be faster than initially anticipated. This is a challenge that will need to be appropriately 
addressed.  

The  European  Commission  is  committed  to  helping  ACP  countries  adapt  to  the  effects  of 
changes  in  the  EU's  import  regime.  The  integration  of  all  developing  countries  into  the 
multilateral trading system and the global economy is a key EU development objective. The 
European  Commission  therefore  proposes  to  support  the  main  ACP  banana-exporting 
countries  to  address  the  challenges  they  will  face  by  establishing  Banana  Accompanying 
Measures  (BAM).  The  measures  would  last  for  a  proposed  maximum  of  four  years  (2010-
2013)  and  have  a  budget  of  €190  million.  The  Comm ission will examine,  together with the 
budgetary  authority,  the  possibility  of  topping  up  this  amount  by  €10  million  if  the 
corresponding credits become available in the annual budget procedures. 

1. 

BACKGROUND 

1.1. 

EU Trade regime 

ACP  banana-exporting  countries  have  traditionally  enjoyed  preferential  access  to  the  EU 
market.  This  situation  has  been  challenged  by  other  countries  in  the  General  Agreement  on 
Tariffs and Trade (GATT) and through the WTO's Dispute Settlement Mechanism since the 
creation of the bananas CMO in 1993.  

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2 

In  this  Communication,  'bananas'  refers  to  internationally-traded  bananas  under  WTO  reference  code 
CN  08030019.  Different  varieties  of  banana,  including  plantains,  form  a  staple  commodity,  often 
contributing significantly  to  household  food  security.  The  dessert  banana  commonly  consumed  in  the 
European market, the Cavendish variety, is the most widely traded fruit internationally. 
In 2004, the Communication 'Agricultural Commodity Chains, Dependence and Poverty – A Proposal 
for  an  EU  Action  Plan'  (COM(2004)89  of  February  2004)  laid  the  foundation  for  the  EU's  renewed 
engagement  in  agricultural  commodities  in  developing  countries  and  set  out  the  strategic  orientations 
for cooperation. 

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Following several WTO disputes and subsequent reforms of its banana trade regime, the EC 
introduced  a  tariff-only  regime  on  1  January  2006  with  an  applied  duty  of  €176  per  tonne, 
combined with a duty-free tariff quota of 775,000 tonnes for ACP-origin bananas. However, 
this situation was not deemed satisfactory by MFN countries, and the WTO's Appellate Body 
ruled against the EC's CMO, most recently in December 2008.  

Thus, international trade negotiations and outstanding litigation at the WTO required the EU 
to  rebind  its  MFN  tariff  below  the  current  level  of  €176  per  tonne  of  imported  bananas.  In 
December 2009, following long and complex negotiations, the EU initialled an agreement on 
bananas  with  Latin  American  banana-exporting  countries,  laying  down  a  schedule  for  the 
reduction of the EU's MFN tariff on bananas.  

This  agreement  settles  all  pending  disputes  at  the  WTO  and  establishes  that  the  MFN  tariff 
will fall from the current €176 per tonne to €114 
over a period of seven to nine years. ACP 
countries will continue to enjoy duty-free, quota-free access to the EU market, offered as part 
of Economic Partnership Agreements (EPAs) between ACP regions and the EU since January 
2008.  

The change in the EU's tariff regime implies a reduction of the ACP preference margin. To 
assist  ACP  banana-supplying  countries  in  their  adjustment  processes,  the  European 
Commission proposes to establish country-specific accompanying measures for the main ACP 
banana-exporting countries. The measures will build on the adaptation processes set in motion 
with the Special System of Assistance (SSA) and the Special Framework of Assistance (SFA) 
for traditional ACP suppliers of bananas (see section 1.3 below). 

1.2. 

ACP banana trade with the EU 

In  the  decade  since  1999,  ten  main  ACP  banana-exporting  countries  have  emerged,  each 
supplying on average more than 10,000 tonnes of bananas annually to the EU (Annex 1). In 
Africa, the countries are: Cameroon, Côte d'Ivoire and Ghana. In the Caribbean, the countries 
are:  Belize,  Dominica,  Dominican  Republic,  Jamaica,  St.  Lucia,  St.  Vincent  and  the 
Grenadines,  and  Suriname.  Graphs  1  and  2  show  EC  imports  from  these  countries  between 
1999 and 2008.  

Over the past ten years, twenty other ACP countries have supplied bananas to the EU at some 
point.  However,  volumes  have  been  marginal,  with  an  annual  average  below  40  tonnes  per 
country. 

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Graph 1: EU imports from main African banana-supplying countries, 1999-2008 

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300.000

250.000

200.000

150.000

100.000

50.000

0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Year

Cameroon

Ghana

Côte d'Ivoire

Source: Comext, Eurostat, 2009 

Graph 2: EU imports from main Caribbean banana-supplying countries, 1999-2008 

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n
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T

300.000

250.000

200.000

150.000

100.000

50.000

0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Year

Dominica

Jamaica

Saint Vincent and the Grenadines

Belize

Dominican Republic

Saint Lucia

Suriname

Source: Comext, Eurostat, 2009 

1.3. 

Past support programmes  

In the past, the EU extended support to ACP banana sectors by funding: 

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•  the Special System of Assistance (SSA)3 from 1994 to 1999, and  

•  the Special Framework of Assistance (SFA)4 from 1999 to 2008.  

Both programmes supported the adaptation of traditional ACP banana-exporting countries5 to 
changes  in  the  EC's  banana  market  regime  and  to  likely  changes  in  tariff  schedules. 
Specifically, they helped beneficiary countries to: 

•  produce bananas more competitively; and/or  

•  diversify their economies into other sectors to reduce their dependence on bananas.  

The  results  were  generally  positive,  although  certain  challenges  remain,  particularly  in 
countries  where  diversification  was  a  priority6.  Four  countries  -  Cape  Verde,  Grenada, 
Madagascar and Somalia - gradually reduced and finally ended their exports to the EU. Two 
non-traditional ACP banana-supplying countries - the Dominican Republic and Ghana - have 
drawn  on  their  preferential  access  to  the  EU  market  to  establish  themselves  as  banana-
exporting countries in recent years, and so did not benefit from the SSA or the SFA. 

2. 

THE NEW BANANA ACCOMPANYING MEASURES 

2.1. 

Objectives, beneficiaries and intervention areas  

Through the Banana Accompanying Measures (BAM), the European Commission proposes to 
support adjustment to the new MFN tariffs of the ten ACP countries that have supplied more 
than 10,000 tonnes of bananas to the EU on average over the last ten years: Belize, Cameroon, 
Côte  d'Ivoire,  Dominica,  Dominican  Republic,  Ghana,  Jamaica,  Saint  Lucia,  Saint  Vincent 
and the Grenadines, and Suriname.  

The  BAM  will  help  to  fulfil  the  goals  of  EU  cooperation  with  ACP  countries:  reducing 
poverty, fostering sustainable growth and ensuring the countries' smooth integration into the 
world economy. The measures will support the adjustment process in ACP banana-exporting 
countries taking into consideration the countries' own policies and adaptation strategies. They 
will focus primarily on three goals: 

(a) 

(b) 

Boosting the sector's competitiveness. Supporting banana exporters to become 
more  competitive  in  countries  where  producers  stand  a  good  chance  of 
adapting to developments in international trade in the long term.  

Promoting economic diversification. Helping areas which currently depend on 
banana  exports  to  generate  income  in  other  ways  can  help  reduce  their 
vulnerability, whether this new income complements or replaces income from 
banana exports. 

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Council Regulation (EC) No 2686/94 of 31 October 1994 
Council  Regulation  (EC)  No  856/1999  of  22  April  1999  and  Commission  Regulation  (EC)  No 
1609/1999 
Belize,  Cameroon,  Cape  Verde,  Côte  d'Ivoire,  Dominica,  Jamaica,  Madagascar,  Saint  Lucia,  Saint 
Vincent and the Grenadines, Somalia and Suriname. 
See  'Biennial  Report  on  the  Special  Framework  of  Assistance  for  Traditional  ACP  suppliers  of 
Bananas'; COM(2010)xxxx). 

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(c) 

Addressing  the  broader  impact  of  adaptation  on  employment,  education  and 
healthcare, land use and the environment. Tariff reductions are likely to have 
social, environmental and economic effects on ACP countries, in particular if 
the  banana  industry  downsizes.  Adaptation  strategies  could  address  these 
effects, and EU assistance should be able to support them. 

Beneficiary countries' adjustment needs will vary considerably, depending on the importance 
of the banana sector in their economy, their volume of exports to the EU, and their ability to 
adapt.  With  additional  effort,  some  countries  may  remain  competitive  in  a  less  protected 
market, whilst others may have to opt for other solutions. The measures should therefore be 
country-specific  and  integrated  within  each  country's  wider  agriculture  and  development 
strategies.  

2.2. 

Implementing modalities 

Country-specific strategies will help countries adapt to new market conditions and guide the 
delivery  of  EU  assistance,  ensuring  that  the  BAM  are  relevant  and  effective.  Each  country 
should  draw  up  or,  where  it  already  exists,  update  its  specific  banana-sector  National 
Adaptation  Strategy  together  with  its  stakeholders,  in  line  with  its  wider  agricultural, 
environmental  and  employment  policies  and  development  strategies.  The  strategies  should 
incorporate the experience and results of past banana support programmes if applicable, and 
be based on further assessments of prospects under the new trade arrangements.. On the basis 
of  these  National  Adaptation  Strategies,  an  EU  Multi-Annual  Support  Strategy  will  be 
adopted,  which  will  be  coherent  with  the  EU's  Country  Support  Programmes  (CSPs).  The 
strategies  will  be  further  screened  to  decide  whether  Strategic  Environmental  Assessments 
(SEAs) are required. 

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ANNEX 1: EU IMPORTS FROM MAIN AND TRADITIONAL ACP BANANA-SUPPLYING COUNTRIES, IN TONNES, 1999-2008 

Belize 
Cameroon 
Cape Verde 
Côte d'Ivoire 
Dominica 
Dominican Republic 
Ghana 
Grenada 
Jamaica 
Kenya 
Madagascar 
Saint Lucia 
Saint Vincent and the Grenadines 
Suriname 
Tanzania 

Source: Comext, Eurostat, 2009 

0 

0 

0 

0 

0 

0 

2 

10 

10,472 

2005 
74,189 

2007 
62,357 

2006 
73,207 

2003 
73,806 

2001 
51,609 

2002 
38,178 

2000 
68,558 

2004 
80,292 

2008 
1999 
55,650 
82,146 
160,638  204,978  215,455  229,913  293,091  260,056  252,912  252,702  221,821  279,530 
0 
192,522  200,163  216,699  210,788  202,034  208,948  183,752  221,791  189,438  216,583 
17,467 
27,583 
10,281 
12,814 
97,331  109,434  101,337  144,683  176,757  206,362  170,464 
42,217 
45,951 
4,207 
3,201 
2,526 
0 
557 
621 
0 
40 
11,654 
40,600 
51,635 
1 
0 
3 
19 
0 
0 
0 
0 
38,512 
28,243 
49,313 
65,532 
8,975 
15,893 
32,520 
37,910 
65,812 
35,258 
6,548 
39,029 
0 
0 
0 
0 

17,516 
85,886 
3,345 
591 
42,958 
1 
0 
34,727 
30,829 
28,720 
0 

27,713 
59,807 
2,972 
784 
40,941 
10 
0 
72,566 
42,923 
34,234 
0 

1,788 
406 
28,660 
0 
0 
42,872 
23,962 
19,387 
0 

928 
448 
41,775 
1 
0 
32,520 
20,911 
0 
0 

34,134 
0 
18,371 
0 
0 
30,456 
13,792 
58,788 
0 

22,404 
0 
31,863 
0 
0 
36,726 
17,239 
45,119 
0 

12,167 

13,298 

7,291 

0 

Average 1999-2008 
65,999 
237,110 
1 
204,272 
15,660 
119,428 
12,146 
341 
30,850 
4 
0 
43,147 
24,495 
33,290 
0 

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