Brussels, June 21 - EU negotiators are talking unofficially with the world's top banana exporter Ecuador on how to cut Europe's import duty for the fruit, hoping to avoid the effects of a global trade lawsuit, officials said on Thursday.
In March, the World Trade Organisation (WTO) launched an investigation into a complaint by Ecuador that the EU's single import tariff for bananas is too high and breaks trade rules.
The WTO panel of three trade judges was named last week and is expected to reach a preliminary verdict in October.
It already looks like a possible re-run of the bitter 1990s conflicts over bananas, which the European Union lost at the hands of the United States and Ecuador. The deal that ended the dispute was for the EU to replace its complex system of banana quotas and duties with a single entry tariff, in force since January 2006.
Officially, discussions on the banana tariff between Ecuador and the European Commission -- which negotiates foreign trade on behalf of the EU's 27 governments -- are suspended, due to the WTO case. But unofficially, they are continuing, officials say. Despite the trade challenge, the Commission remains open to negotiating a solution on a tariff that would satisfy Ecuador and other Latin American exporters, some of which have also filed WTO complaints against the EU over the banana tariff.
Colombia is said to have proposed a formula for tariff reduction but no details are as yet available.
"It's still possible that Ecuador will withdraw its panel request if we find common ground," one EU official told Reuters.
Industry insiders say the Commission has offered to reduce the current tariff level of 176 euros ($235.50) per tonne gradually.
"There are different scenarios being played around with," one industry source said. "I'd expect the EU's usual slow phase-in approach."
CLAUSE
The Commission wants to resolve the tariff row within a wider WTO agreement for the Doha round of trade talks, where the EU has offered to cut farm import tariffs across the board -- but depending on what its main trading partners sign up to.
Its aim would be to bind the banana duty at a high level so it would then fall, as part of a wider Doha tariff-cutting deal, to a rate more acceptable to countries like Ecuador.
The crucial difference is between the applied and bound tariff rates. The bound rate, the one used as a baseline in international trade agreements, is the maximum tariff legally allowed, while the applied rate is the duty actually imposed.
For bananas, unusually, the EU has two rates.
"Regardless of what the Commission says about Ecuador, they've been talking very closely ... partly as a tie-up with Doha," the industry source said. "And if there's a deal on Doha, they will put in a banana clause.
"Having got a political deal, they would then artificially hike the bound tariff rate so that the progressive application of Doha to it might arrive at something like 120 euros," he said.
Bananas are a sensitive issue for the EU, which gives preferential access to bananas from producer countries in the African, Caribbean and Pacific (ACP) group -- mainly ex-colonies of Britain, France and Portugal.
ACP bananas enter the EU's lucrative markets free of duty, inside an annual quota of 775,000 tonnes, but anything shipped above that attracts the standard 176-euro duty.
Before the new regime entered into force, Latin American exporters paid 75 euros per tonne, under quota, to get their fruit into Europe. Anything over that faced a duty of 680 euros.
ACP countries are unhappy about the prospect of the EU lowering its banana entry tariff, fearing that cheaper Latin American fruit may swamp lucrative EU markets.