Socio-economic Impacts of the WTO Ruling on EU's Banana Trade Regime in the Caribbean
Claire Godfrey, Oxfam GB
"We are told that the world has changed, that because of the WTO there must be a free market in bananas. But the market should not be so free that it can destroy people's lives."
Winston Graham, banana farmer, Windward Islands.
"If our banana industry collapses, it will mean poverty for many thousands of people. I've been a banana farmer all my life. I have nine children. How am I to earn enough money to feed my children without bananas?"
Claudius Jan-Marie, banana farmer, Roseau Valley, St. Lucia.
Introduction
The banana is one of the Caribbean region's most important commodities. The Caribbean's traditional preferential access to European markets safeguards the livelihoods of thousands of families in the Caribbean, and sustains many of the region's economies. The European market is particularly important to the small island economies of the Windward Islands, where income from banana exports to Europe contributes almost half of the economies' total export earnings.
However, the Caribbean banana industry is under threat. The European Union is revising its banana import regime to respond to the decision of the World Trade Organisation (WTO) that the regime contravenes free-trade rules by unfairly discriminating against some of the companies importing and marketing Latin American "dollar" bananas. European Commission proposals for a WTO-compatible EU banana import regime will lead to a significant reduction in the Caribbean banana states' traditional share of the European banana market. Oxfam has worked with small-holder banana farmers in the Windward Islands for many years, supporting their efforts to achieve increased efficiency, as well as pursuing diversification initiatives. Oxfam is concerned that a squeeze on their share of the European banana market will unnecessarily condemn thousands of people to poverty and hardship. This would be a backward step in realising the OECD/DAC1 goals for poverty reduction by 2015. It could even threaten the future political and economic stability of the islands.
In 1993, the EU banana regime's import and licensing system was considered the only option to solve a double dilemma: that of harmonising internally different bilateral banana trade agreements and, externally, of finding a balance between trade liberalisation as agreed through the General Agreement on Tariffs and Trade (GATT), and the preferential trade agreements entered into with the ACP countries under the Lomé Convention. However, the new regime was promptly challenged at the GATT by five Latin American exporting countries. Later, in September 1995, the US Trade Representative filed a complaint with the WTO against the import regime, and threatened to impose trade sanctions on EU exports unless the European banana market was liberalised.

