FreshPlaza: EU bananas: the failure of consensus politics

FreshPlaza

EU bananas: the failure of consensus politics

By requesting WTO arbitration on its second proposal, the EU has demonstrated that it is in no mood for messing around. The decision also represents the failure of consensus politics, ironically the rock on which the WTO is built. In this case the circle, represented by an appropriate import value on banana tariffs, could not (cannot) be squared. In order for one set of producers to ‘gain’, another set must ‘lose out’. The EU was not prepared to wait for the Dollar bloc to seek arbitration so it has taken the unusual step of asking an impartial umpire to deliver a judgement of Solomon for the good of all concerned. The EU has no appetite for delay or prolonged negotiation, neither for an extension of the current corrupt regime that causes it a disproportionate number of administrative and legal headaches. It wants a clear-cut system that preserves the existing market balance via means of a single tariff for the Most Favoured Nations, in accordance with its 2001 agreement with the WTO. It reportedly has several theoretical econometric models that generate identical conclusions on the level of tariff set to ensure this happens, adequately justifying its stance to the WTO and EU Council of Ministers should a blocking majority or minority emerge during the ratification process. It is confident that it has reached a successful and appropriate conclusion within the guidelines set down in 2001 and that, no matter how iniquitous the impact, it will have delivered on the promises made at the time. Most importantly it is impatient for a result before the Ministerial Round in Hong Kong: in the final analysis it has abided by the letter of the law because it has been unable, it would argue, for reasons beyond its control to abide by the spirit of the law. The Dollar bloc meanwhile is disorganised, divided in its demands and likely to stay so in the short, medium and long term. If and/or when the WTO rules in favour of the EU proposal at the second arbitration, the countries that make up bloc will have no-one to blame but themselves. However there is an alternative that is starting to gain currency: the countries could unite politically under a UPEB (Unión de Productores y Exportadores de Banano) banana cartel and persuade the EU and WTO that under the banner it would be able to manage banana supply to global markets in a similar way in which OPEC manages global oil supply. In which case there would be no need for a tariff to create a market that guarantees equal access for all. In exchange it should reasonably be able to demand a two or three-year transition period during which time the system could be tried and tested. Once proved to be sufficient, UPEB can again reasonably demand that the tariff level should be set at no more than €75 per MT and preferably less.