Overview

Since the 1950s, the UK and France have given preference to bananas imported from former colonies. In 1993, the formation of the Single European Market meant the harmonization of trade relations across member countries and, under the Lomé Convention, the European Union (EU) gave guaranteed access to the banana market to certain African, Caribbean and Pacific (ACP) countries.

This preferential treatment of ACP bananas has been challenged by Latin American exporting countries and by the US government (in support of American based exporters of bananas grown in Latin America), most strongly on the grounds that it clashes with the EU's obligation to liberalize trade under its commitment to the General Agreement on Tariffs and Trade (GATT). In May 1997, the World Trade Organization (WTO) condemned the EU's banana trade restrictions and, in April 1999, the WTO authorized economic sanctions by the US against EU products.

On 19 December 2001, the EU agreed to modify its banana import regime in 
return for the lifting of US sanctions. The new import regime increases access exporters of Latin American bananas have to the EU market. The new regime includes a commitment to move from a quota-based to a tariff-based system by 1 January 2006 at the latest.

Task

Your consulting group has been hired by the Dominica Banana Marketing Corporation (DBMC). DBMC is concerned about the impact of the December 2001 banana trade agreement between the United States and the EU. As a  representative of all banana producers in the Commonwealth of Dominica, DBMC has contracted with you to explain the agreement and to guide DBMC on the best advice to give to Dominica's banana growers.

After landing the DBMC contract, your consulting group and DBMC officials agreed that the following set of questions should frame your final report to them.

General trade relations:

.....• The European Union (EU): What is it? Who is in it? What does it require of its members when it comes to trade relations? How are policies set and disputes resolved?

.....• World Trade Organization (WTO): What is it? Who is in it? What does it require of its members when it comes to trade relations? How are policies set and disputes resolved?

.....• The General Agreement on Tariffs and Trade (GATT): What is it? Who has signed up to it? What does it require of countries who sign up to the agreement? How is GATT enforced? By whom? 

General banana market:

.....• What does the market for bananas look like? Who are the buyers and who are the sellers?

.....• Who are the political players? Why has the banana market been so contentious?

.....• How does the EC's new banana import regime change the world market for bananas? What further change will take place in 2006?

The Dominican Situation:

.....• What impact will the changes to the world banana market have on Dominica's banana growers? Who will benefit and who will be harmed by the change?

.....• What particular problems do banana growers in Dominica face?

Recommendations to DBMC:

.....• What is the best way for banana growers in Dominica to prepare to respond to these changes? Might the answer vary for different growers?

.....• What help might the DBMC request from other players in the banana market?

Links:
.....• CIA Factbook on Dominica
.....• The official site of Dominica
.....• Dominica Banana Marketing Corporation
.....• The World Trade Organization
.....• UK site on sustainable development in banana producing countries
.....American Society of International Law articles on: 
..........• “The US-EU Banana Dispute”
..........• “The US-EU Agreement to Resolve the Banana Dispute”
.....• Europa: The EU Online, December 2001, WTO Dispute Settlement on Bananas
.....• banana growers, importers, and exporters
.....• Banana Link

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