Commodities: Germans fail to repeal EC banana tariffs

GERMANY tasted the bitter fruit of failure this week when the European Court in Luxembourg rejected Bonn's claims that the European Community's proposed restrictions on banana imports were illegal.

The new import regime, which took effect on Thursday, establishes a 2 million tonne quota on Latin American banana imports. The measures were deemed necessary once the barrier-free single market took effect on 1 January, to protect producers in EC growing areas, such as the Canary Islands, and former colonies from cheaper competition. This comes from huge Latin American-based, but US-owned, multinationals.

For so-called dollar banana imports of up to two million tonnes, the EC will impose a tariff of pounds 80 a tonne, but beyond that limit the duty jumps to pounds 680 a tonne.

Bonn, backed by Belgium, had unsuccessfully argued that the regime was protectionist and would drive prices higher. It demanded an injunction against the new quotas that was refused because, the court said, Germany had not demonstrated that the new regime would cause 'irreparable harm'.

The court also threw out a case by German, Italian and Dutch importers to have the EC legislation annulled.

The EC Commission, which drafted the new rules, said the new regime 'fully respects to the greatest extent possible the diverging interests of community producers and consumers, and has been designed in such a way as to ensure the Community market is adequately supplied and that the supplies come from traditional sources'.

But the war is not yet over. A Gatt panel has already said the new regime violates existing trade rules and five Latin American producers have demanded a formal ruling against tariff restrictions.

Within Europe the political ramifications of the decision have further strained Franco- German relations, with Bonn blaming Paris for sacrificing free trade principles in order to defend, unfairly, the interests of its former colonies and overseas territories.

Germany eats more bananas than any other nation in the industrial world. When east Berliners flooded across the Berlin Wall in 1989 their first purchase was a banana and the fruit quickly took on a powerful status as the symbol of united Germany.

Eastern Germans now munch 26kg of the fruit a year - more than twice the community average. The campaign against the EC has galvanised a nation into putting stickers in cars and windows exhorting everyone to 'eat German bananas'.

For the banana trade, the decision is a fillip to the two principal EC importers, Geest and Fyffes, and may rekindle bid interest. Dole Food, the main US dollar-banana distributor, made an abortive approach to Fyffes earlier in the year. Geest shares rose last week on rumours of bid speculation.

The future for the European banana market looks bright. Between 1988 and 1991 baEnana imports into the EC rose by 49 per cent from 1.6 million tonnes to 2.4 million tonnes, against increases of only 5 and 6 pTHER write errorer cent in the US and Japan.

Over that period dollar bananas increased their EC market share from less than 50 per cent to 67 per cent, a rise the EC Commission has suggested has as much to do with anticipating the new import regime as it has with increased consumption.

The EC commissioner responsible for agriculture, Rene Steichen, noted last week that the upturn in imports coincided with the start of the commission's reworking of the banana regime. The same 'speculative phenomenon' can be noted in a 29 per cent fall in the German purchase price of Latin American bananas over the same period, the commissioner said.

Before the new import regime took effect, Germany had already secured a special protocol guaranteeing the right to import dollar bananas at a zero-tariff, while everyone else paid 20 per cent. Thus the pounds 80-a tonne duty now imposed merely brings German prices into line with their EC counterparts.

The commission has issued figures showing that fears of a price rise are unfounded, based on the fact that in the Benelux countries, where dollar banana imports are subject to the 20 per cent import duty, the shelf price is no dearer than in Germany. It also points out that the new regime includes a clause that would make it possible to modify the two million tonnes at pounds 80 a tonne ceiling if it was found to be curbing consumption.