WTO Talks Collapse: Do Bananas Have A Future?

WTO Talks Collapse: Was There Ever a Future for Bananas?

World Trade Organization (WTO) negotiations collapsed today, July 29 after nine days of intense negotiations. Trade ministers from approximately 35 countries struggled to salvage the stalled seven-year old Doha round.

Optimistic signs and compromises surfaced as a result of last weekend's supposed breakthrough, but these were soon followed by stubborn accusations from a number of combative nations, including the United States, China, and India. Constructing a 153-country consensus now seems even more cumbersome and talks will not resume for at least two years.

During this past week in Geneva, country officials worked particularly long hours in an attempt to come up with the necessary concessions, as well as extending their stay in Switzerland in hopes of returning home "successfully." Such a dream was, unfortunately, not to be realized.

This latest round of trade talks was launched in the Qatar capital in November 2001, but has long been stalemated over issues of farm subsidies called for by the U.S., Japan and the EU, as well as tariffs on industrial goods imposed by the developing economies of Latin America and Asia. Proposed changes included EU and U.S. farm subsidy reductions of up to 80 percent. The compromise was that developing countries would open their markets to imports of manufactured goods, removing so-called "import shields."

In the deal last weekend, Latin American banana producers and EU officials appeared to begin the process of putting to rest a quarter-century banana "war." Many Latin American banana exporters had contended for years that the EU routinely gave preferential treatment to their former colonies in Africa, the Caribbean and the Pacific (ACP), and had kept import tariffs artificially high on the fruit that originates on mainland Latin America.

The complaint was originally filed by the U.S. because three of the largest banana producers in Latin America are U.S. multinational corporations. COHA repeatedly has argued in the past that U.S. banana companies, and not Latin American economies, are likely to benefit from the removal of the tariffs (see "Banana Wars Continue - Chiquita Once Again Tries to Work Its Omnipotent Will, Now Under New Management: Likely Big Losers Will Be CARICOM's Windward Islands").

In addition to this contention, many view the present Doha round as an inappropriate forum for banana talk to occur in the first place, as any new arrangement could anger some of the ACP nations and thus would endanger the future of the round. Nonetheless, it is important for the banana conflict to be resolved so that Latin America, as well as U.S. corporations and English-speaking Caribbean exporters (who in most cases depend upon such exports for their economic survival), can see the benefits from the sale of their largest cash crop.

Throughout the negotiations, it can be said that the U.S. was less than sensitive to the importance of a favorable outcome to such islands as Dominica, Grenada, and St. Lucia- a matter of sheer survival.

One of the main issues of contention amongst developing countries was the possible existence of Special Safeguard Mechanisms (SSM). This provision would enable countries like China and India to raise agricultural tariffs to protect their farmers in case of a surge in imports.

Latin American countries rejected the SSM proposal, saying that it would be damaging to their export interests. Venezuelan Industry and Trade Minister William Antonio Contreras said that "we are not here to block an agreement, but to defend our interests and to fulfill the command of the round that is the one of developing."

The dispute over the existence of these mechanisms, designed to help only certain nations, largely contributed to the collapse of the talks.

It now should be clearer than ever as to why WTO talks have been at a stand still for so many years. It is not an enigma why it has been so difficult to achieve consensus with a myriad of players in the field with a lot to gain, but even more to lose.

Lucrative deals for some nations can be devastating to others: WTO negotiations certainly have not proven to be a win-win game.

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This analysis was prepared by COHA Research Associates Revaz Ardesher and Jessica Wayne

July 29th, 2008

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being "one of the nation's most respected bodies of scholars and policy makers." For more information, please see web page at www.coha.org

ENDS

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