UPDATE 1-EU ends banana war with Latin America-diplomats

Mon Dec 14, 2009 12:30pm EST

Related Topics

* Deal reached to end to WTO's longest-running dispute

* Duties to fall to $114 a tonne by 2016, initial cut to $148

* Poorer ACP growers to get around 200 million euros

(adds details and background)

By Darren Ennis

BRUSSELS, Dec 14 (Reuters) - The European Union reached agreement on Monday to put an end to a decades-long trade dispute with Latin American and other smaller producers over tariffs on banana imports, diplomats said.

"Everybody is finally on board and an initialling of the deal is scheduled for Tuesday," one diplomat with direct knowledge of the negotiations told Reuters.

The deal resolves the world's longest-running trade dispute, which involves banana exporters in Latin America and other regions challenging the EU's preferential treatment of producers in the Africa, Caribbean and Pacific region.

The agreement means the European Union will steadily cut tariffs on bananas supplied from Latin America and other smaller producers such as Thailand and the Philippines.

Under the deal, the duties on bananas would fall to $114 a tonne by 2016 or a few years later from $176, with an initial cut to $148.

In return, Latin American banana producing countries are expected to drop challenges to the European Union, the world's largest trade zone, at the World Trade Organisation.

Poorer ACP growers in mostly former European colonies will get around 200 million euros ($293.3 million) in compensation for the negative effects the pact may have on the preferential treatment given to them by Brussels, diplomats said.

The deal is likely to reduce prices for consumers, increase competition in the banana market and strengthen the hand of low-cost Latin American exporters.

Although the United States does not export bananas, it is a party to the agreement because several big distributors and processors such as Chiquita (CQB.N), Dole DOLE.N and Del Monte DLM.N are U.S. corporations and are likely to benefit from the deal. Irish company Fyffes (FFY.I), a major European distributor, will also gain from the new agreement.

(Reporting by Darren Ennis; Editing by David Brunnstrom)

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