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Ecuadorian bananas will lose tariff preferences in EU above 80% threshold

Staff Writer | February 7, 2017
The European Union (EU) decided to implement a protectionist policy to its banana industry.
Ecuadorian bananas
Banana   The European Union decided:
The greatest beneficiary would be Spain, which produces 60% of Europe's total production.

The MEPs approved a mechanism to protect the fruit grown in Europe, which will allow suspending the Ecuadorian banana tariff preferences when imports of this product exceed a certain annual threshold.

In addition, the endorsed standards include an early warning system that will be triggered when imports of fruit from Ecuador reach 80% of that threshold.

To this end, the European Community executive shall communicate this situation to the European Parliament and the Council, just as they did with a similar mechanism adopted in the case of Colombia and Peru.

The measure, passed by a majority in the European parliament, puts a brake on the insidious doubts generated in the Community's influential lobbies on the negative effects that the trade agreement with Ecuador, which entered into force on January 1, would have on the sector.

The Canary MEP, Gabriel Mato, said that the safeguard clause and the stabilization mechanism of Community production is not intended to halt sales of Ecuadorian bananas, but he acknowledged that "it is necessary to ensure that such imports be done with full guarantees so that they don't endanger the work of European producers."

However, the safeguard clause will affect the initial expectations of the Ecuadorian sector.

In principle, the safeguard will serve to suspend the tariff preference in the trade agreement signed last December, provided that there is an important increase in banana imports to Europe that could cause the slightest damage to Community producers, especially of the Canary Islands.

Regarding the other protectionist tool applied in this case, the mechanism of production stabilization, the European Commission shall be required, from now on, to establish an early warning system to promptly inform the Parliament and the European Council when the volume of imports of bananas from Ecuador, Colombia and Peru, surpass 80% of the threshold that the European sector considers dangerous.

Eduardo Ledesma, executive director of the Association of Banana Exporters of Ecuador (AEBE), said that this year's threshold for Ecuador was of 100 million boxes exported to the European market, a volume that they wouldn't achieve. "In 2016 we exported 60 million boxes to Europe and I think that we will only increase exports this year by about 5%," he said.

Ledesma said that if Ecuador or another country exceeded the quota established by the European Union (EU), they wouldl have to cancel the tariff on excess fruit, which in the case of Ecuador would be 122 euro ($ 131.7), i.e. US 63 to 64 cents per box of bananas that surpasses the quota.

"In essence (the standards set by the European parliament) will not affect us. It is only a warning that we will have to pay a fee if we exceed the threshold," said the head of AEBE.

He also sated that the measure was implemented to protect the EU against the fruit that comes from other countries, such as Colombia, Guatemala and Peru, which have exceeded the threshold in different years and haven't been charged for the surplus.

In a statement, the Foreign Trade Ministry stated that the terms negotiated by Ecuador in the Protocol of Accession to the EU trade agreement, regarding bananas, were fully observed in the amendments adopted yesterday by the European Parliament when regulating and establishing a safeguard and stabilization mechanism for bananas.

He also indicated that the "amendments shall follow the legal proceedings before other bodies of the European Union before they are published in the Official Journal and enter into force, and that the goal was to improve communication between EU entities for the application of the safeguard mechanism and stabilization of bananas."

Ecuador is the largest banana exporter in the world, with a market share of 26% of the fruit consumed in Europe.

Until 2015, the country paid 132 euro per metric ton of bananas, with the agreement they will only cancel 97 euro per metric ton.