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Saturday, June 05, 2004

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Colombia to EU: Higher Banana Tariffs = More Drugs
Thu Jun 3, 2004 01:43 PM ET

By Jeremy Smith
BRUSSELS (Reuters) - Colombian drug production could rise at the expense of banana-growing if the European Union hikes its import tariffs for the fruit in a major policy change expected before 2006, the country's EU envoy said on Thursday.

The European Commission, which negotiates foreign trade for the 25-nation bloc, hopes to start talks soon with trade partners on the way the EU imports bananas. It plans a single tariff by 2006, replacing the current quota and duty system.

At the moment, the basic tariff is 75 euros ($91.70) a ton. Latin American nations, growing bananas from Mexico down through Central America and into Colombia and the world's top exporter Ecuador, fear it might reach as high as 300 euros.

"We hope to have a common position among all Latin American countries. We'll go for less than 75 euros," said Nicolas Echavarria, Colombia's ambassador to the EU, based in Brussels.

"But for Colombia, there is another limit. There is an acceptance from the EU that there is co-responsibility for the drug problem. If we cannot maintain production of bananas and other crops, our production of drugs is going to increase."

Colombia is the world's top producer of cocaine, processed from coca, and also a major supplier of heroin and marijuana.

Latin American banana growers, competing with Caribbean island and African states for coveted EU access, say any tariff rise over 75 euros will cost them market share.

African producers, whose bananas are less competitive than those grown in Latin America, want a future tariff of about 220 euros. Africa's main growers are Ivory Coast and Cameroon.

Any loss in market access would entitle the Latin Americans to compensation from the EU. That right was enshrined in a World Trade Organization (WTO) ruling in favor of the United States and Ecuador that put an end to the bitter 1990s "banana wars."

A tariff hike, they say, would also cause sweeping job losses as banana production withers -- while other crops, possibly coca and marijuana, are planted on the unused land.

"This will be a very big decision for Latin America. The implications are large for us. We have to defend our jobs and production," Echavarria told reporters.

Bananas are a sensitive issue for the EU, which must square any major policy change with the WTO. Brussels has long given preferential access to bananas from former European colonies in African, Caribbean and the Pacific, so-called ACP countries.

The EU's current system is comprised of three separate quotas totaling about 3.2 million tonnes. ACP nations have a duty-free quota for 750,000 tonnes, while Latin American suppliers face a tariff of 75 euros on the remaining quotas. ($1=.8178 Euro)

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