Banana row simmers at WTO 

A long-running row over bananas that threatens to derail talks on a new global trade pact simmered this week with no immediate solution in sight.

The dispute, turning on the terms for European Union imports, pits producers from Latin American countries and the United States against other poor African, Caribbean and Pacific (ACP) countries and the EU.

"I hope we can have contact with some of the banana countries in the next 24 hours and see what prospects there are for working together," a European diplomat told Reuters.

But no formal negotiations were scheduled.

For some producers the row threatens a key economic sector.

They are prepared to block World Trade Organisation (WTO) talks this week seeking a breakthrough in the Doha negotiations for a global trade deal in order to press their demands, just as the banana dispute nearly scuppered Doha's launch in 2001.

"We're ready to walk away if there is nothing on bananas," said a diplomat from Ecuador, the world's top banana exporter.

The EU has lost nearly a dozen trade disputes over bananas. It has now changed its import rules and levies a tariff of 176 euros a tonne except for fruit from ACP countries, mainly former European colonies, which enjoy duty-free access.

Compromise proposed

Latin American growers say this is still discriminatory.

ACP countries point to the growing Latin American share of the European market and say they need more time to adjust.

WTO chief Pascal Lamy proposed a compromise for the EU and the Latin Americans under which the EU tariff would fall to 116 euros over seven years, with an initial cut of 26 euros.

The deal would also deem outstanding disputes settled and protect the EU from further challenges to the regime in future.

The EU, despite misgivings from ACP growers and the French Caribbean and Spanish Canary Islands, accepted the offer.

But the Latin Americans on Friday sought further talks, prompting EU officials to say they could go no further.

"The process is ongoing and (Lamy) is available to help facilitate an agreement in any way that he can," WTO spokesman Keith Rockwell told a news conference.

Failure to settle bananas separately would mean bringing the dispute into the already complex and shaky WTO talks.

Latin American exporters say including bananas in the WTO's negotiations on tropical products would result in much bigger tariff cuts than those accepted by the EU.

But the ACP countries could seek to counter any such move by putting bananas on a list of products they export and which would retain high import tariffs so as not to erode the European trade perks they have historically enjoyed.

The Latin Americans and ACP countries have been negotiating to remove overlaps on their lists, which would allow a farm deal. They are now down to 12 items, including rum and melons.

But agreement will be impossible if both put bananas on their lists because of failure to resolve the dispute.

Colombia, keen to reach a free-trade agreement with the EU, has accepted Lamy's proposal. But Ecuador says it wants a tariff of 109 euros over five years with a downpayment of 35 euros.

Honduras says under normal Doha proposals the tariff would fall to 76 euros over five years and plunge to only 26 euros over four years if included on the tropical products list.

The row is being watched by US fruit distributors like Chiquita Brands International, Del Monte Foods and Dole Food and by Irish distributor Fyffes.