The U.S.-European Union Banana Dispute

Publication Date: December 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

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Abstract:

The United States and the European Union (EU) reached an agreement in April 2001 that resolved a long-standing dispute over the EU's rules for importing bananas. Objections to the agreement by other banana exporting countries, such as Ecuador and Caribbean banana exporters, have been withdrawn. The U.S.-EU banana agreement provides for a transition to a tariff-only system of imports in 2006. In the meantime, the EU will establish quotas and a licensing system based on historical trade shares that should increase the prospects for Latin American banana imports in the EU market, especially bananas marketed by U.S. firms like Chiquita Brands International. In November 2001, the WTO granted waivers of WTO rules allowing the EU to continue preferential treatment for banana exports of developing countries that are former EU member country colonies. These waivers paved the way for full implementation of the agreement by January 2002. Trade policy officials on both sides of the Atlantic expressed hopes that the banana agreement would contribute to a climate for resolving other thorny trade disputes and for bilateral and multilateral cooperation. Members and committees of the 107th Congress will be monitoring implementation of the agreement and its effects on U.S-EU trade relations.