European Standing Committee A
Wednesday 25 March 1998
[Mr. John Maxton in the Chair]
[Relevant document: Council Regulation (EC) No. 2686/94 of 31 October 1994 establishing a
special system of assistance to traditional ACP suppliers of bananas.]
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): I am pleased to
have this opportunity to speak today about a policy on which there has been a rare unity of view
among successive Administrations over many years. That policy is partly due to our colonial history.
The Government accept, as did the previous Administration, that our historic links with the countries
of the Commonwealth Caribbean, which depend on bananas for much of their export revenue, mean
that we have to temper our usual enthusiasm for liberal trading arrangements with our concern for
those small and potentially fragile economies.
In the early 1950s the then Government encouraged the people of the Windward Islands to begin
banana production by assuring them, and other Caribbean suppliers, of priority in our market for all
the fruit that they could grow that was of saleable quality. Over the next 40 years, our national
arrangements for banana imports guaranteed Caribbean growers returns that kept a significant share
of the work force in banana production in the Windwards, in some parts of Jamaica and, more
recently, in Belize.
The EU banana regime, agreed in principle under the previous United Kingdom presidency in
1992, replaced our national arrangements, and those of other European Union member states, with a
harmonised system. As well as bringing those differing arrangements into line with the requirement
for the free movement of bananas within the single market, the regime also attempted to meet three
other, apparently irreconcilable, concerns_the EU's commitments to traditional banana suppliers in
African, Caribbean and Pacific countries under the fourth LomeĀ convention, protection for EU
producers under a common agricultural policy regime and our obligations under the World Trade
Organisation rules. I suspect that our discussions this morning will highlight those apparently
The regime, which has now been in place for nearly five years, has remained controversial both
inside and outside the EU. I will concentrate on the external challenges, because they have provided
the driving force for change. A GATT challenge by five Latin American banana-producing
countries_all of whom are, I believe, technically republics_soon after the regime came into effect
in 1993 was partially resolved when four of them, Costa Rica, Nicaragua, Venezuela and Colombia,
signed a banana framework agreement with the EU during the final settlement of the Uruguay round.
However, the fragile peace that followed the implementation of this agreement in 1995 was disturbed
by a further challenge under the new stricter WTO rules and procedures that were adopted in the
Uruguay round. That complaint, if I could term it thus, came from Guatemala and Mexico_
joined by Honduras and Ecuador, which had recently joined the World Trade Organisation_and the
United States of America, which is not famed for its banana production. We now have to grapple with
the legal issues thrown up by the WTO ruling on this latter challenge as we try to reach agreement on
a revised WTO-consistent arrangement during the UK's current presidency of the EU.
It has been clear to us since the WTO appellate body gave its final ruling on the EU regime last
September that the findings pose severe political and economic difficulties for some of our historical
trading partners in the Caribbean. When my right hon. Friend the Minister for Agriculture, Fisheries
and Food went to St. Lucia in January to talk to Caribbean leaders and hear their concerns, he gave
them assurances of his determination to ensure that their interests were taken fully into account in the
negotiations that are now underway in Brussels. He made it clear that Caribbean growers must be
given the opportunity to prove that they can sustain a viable industry committed to providing a good
quality product to the European consumer at a competitive price.
As firm adherents of the multilateral system, we have also accepted_ever since the latest WTO
challenge began two years ago_that, in the event of an adverse ruling, the EU would have to bring its
banana import arrangements into line with that ruling. The EU committed itself to do that last
October and has been given until 1 Janaury next year to get a revised WTO-compatible system into
place. That gives the UK Government a pivotal role in getting that agreement into place during their
Once we had looked at the complex legal ruling handed down by the WTO appellate body, we
had to make a decision on the broad approach to be taken by the EU in response to the rulings. One
possibility was to take the current arrangements, which are based on tariffs, quotas and licences, and
change the elements that had been criticised by the WTO. Those elements included the main bone of
contention in the dispute, the import licensing system, and in particular the B licences that have
provided an incentive to traders to market Caribbean bananas. They also included the way in which
the EU had shared out its market between supplying countries with quotas for specific countries.
Another approach, suggested primarily by the United States of America, was to sweep away
quotas and licences, and protect ACP countries through an increased tariff preference. Given the
complexities of the WTO findings, that is undoubtedly appealing.
However, there are drawbacks. Such radical change in response to the first adverse WTO ruling
would set an unwelcome precedent for the EU. Latin Americans, whose agreement would be needed,
would face rises in the tariff barrier on their banana exports. Most importantly, from the UK
standpoint, at last autumn's Commonwealth Heads of Government meeting in Edinburgh, Caribbean
leaders made it clear that their preferred solution was to continue with as much of the present tariff
quota regime as it was possible to salvage.
The commission has therefore, sensibly in our view, set itself the task of making the current
arrangements conform with WTO findings by proposing changes to the import licensing rules and to
the way that the EU market is shared out.
The Government have assessed the proposal which Commissioner Fischler presented to the
Agriculture Council in January against two key criteria. We have assessed whether the proposal goes
as far as it can to protect the interests of Caribbean producers: as I have said, that is a priority for us.
We have also assessed whether the proposal constitutes a defensible response to the WTO findings on
the banana regime.
Our first key test was the protection of Caribbean ACP interests. We and the Caribbean leaders
must accept that the revised arrangements will not be as favourable as those that we have at present. B
licences will go, as will individual export allocations to ACP countries. That is a major anxiety for
some Caribbean producers, especially those in the Windward Islands.
The Commission's analysis of the WTO ruling is that there is no way in which the EU can
continue to offer ACP countries individual guarantees of access to its market, so we have reluctantly
conceded that the unallocated global volume of 857,700 tonnes for duty-free imports from traditional
ACP suppliers is the best that can be achieved.
WTO compatibility was even more difficult to assess than the protection of Caribbean ACP
interests. The WTO complainants, led by the United States of America_
which, as I have said, is not famed for banana production_have lost no time in claiming that the
arrangements proposed by the Commission would not be consistent with WTO rules.
Some EU member states have taken up this claim: as I said, there has been continuing dispute
inside and outside the EU. The Commission, which has responsibility for defending its proposals, has
provided member states with a comprehensive analysis of its response to the WTO findings in
devising revised arrangements.
Although there are still some uncertainties on the WTO aspects, the Government have concluded
that the proposal represents a carefully judged reconciliation of the EU's obligations under the WTO
and its commitments to the ACP countries under the LomeĀ convention. Although the proposal does
not_and probably cannot_meet Caribbean anxieties in every respect, it is, in our view, the best one
they are likely to get in the wake of the WTO ruling. The proposal for a new framework of assistance
for traditional African, Caribbean and Pacific producers, for which my right hon. Friend the Secretary
of State for International Development has responsibility, should help the highest-cost producers
adjust to the changed circumstances and to the tougher competition that they will face in the
European Union market.
I apologise for the length of the statement. The matter is complicated, and the Committee
needs as much background information as possible.
The European Scrutiny Committee has asked that the aid proposal be debated alongside the
proposed revisions to the trade regime, and I shall be glad to take questions from hon. Members about
the Commission package. I am delighted that my hon. Friend the Under-Secretary of State for
International Development is attending his first European Standing Committee_a new experience that
I am sure that he will enjoy. I am sure that he will be able to answer any questions that I cannot deal
The Government have decided to concentrate our efforts on getting revised arrangements, on the
lines of the Commission proposal, agreed by the end of our European Union presidency in June. That
will not be easy, given the persistent disagreements within the European Union about bananas.
However, we are encouraged that no member state_not even one of those that favour freer trading
arrangements_has refused to negotiate on the basis of the Commission's proposal.
We have been pushing ahead as quickly as we can. After initial discussion at the January
Agriculture Council, a technical working group completed a thorough examination of the proposal,
before reporting back to the Special Committee on Agriculture and to the February Council. There
was a further discussion in the Special Committee earlier this week. We expect to keep up the pace so
that we can reach a conclusion before the end of June.
I hope that hon. Members understand why I have spoken for longer than usual, and I am grateful
for your forebearance, Mr. Maxton. It is a complicated issue, in which the decisions of the
Government and of the European Union will affect the livelihoods and the futures of many of our
historical trading partners in the Commonwealth of Caribbean countries.