Developing countries seek to end WTO banana split

By Jonathan Lynn

GENEVA, July 23 (Reuters) - Two groups of developing countries are in talks to resolve a dispute over bananas that threatens to derail efforts to reach a new global trade pact, ministers and diplomats said on Wednesday.

The row over European Union import rules for bananas pits growers in Latin America against mainly former European colonies in the African, Caribbean and Pacific (ACP) countries, especially the West Indies.

"The negotiations are continuing. We hope we can come to a reasonable conclusion," said Ronald Robinson, minister of state in Jamaica's foreign affairs and foreign trade ministry.

"We are talking to the Latins since yesterday. There are encouraging signs," he told Reuters.

Ecuador, the world's top banana exporter, and the United States, on behalf of U.S. corporations distributing Latin American fruit, have mounted several successful challenges at the World Trade Organisation (WTO) against the EU rules.

They say EU import rules giving preferential treatment to the ACP producers are discriminatory, even after reforms by Brussels cutting the banana tariff for most countries to 176 euros ($277) a tonne, while leaving a big duty-free quota for the ACP countries.

PEACE CLAUSE

WTO Director-General Pascal Lamy has brokered a compromise which would see the tariff fall again to $116 over 7 years, with a "peace clause" barring further challenges to EU rules.

The European Union has accepted that compromise and called on the Latin Americans to do the same, though they have said they want better terms.

"The ACPs are having talks with the Latinos but we have no talks for the time being -- we are sitting calm," the EU's WTO ambassador Eckart Guth told Reuters.

For both groups of developing countries, bananas are a crucial sector for both exports and employment.

Robinson said jobs and government revenues were at stake, and the implementation period of any tariff changes would be important as Jamaica made efforts to restructure the industry.

Failure to resolve the banana dispute could see the issue become a major item on to the agenda of ministers meeting this week at the WTO to seek an outline deal in the Doha round.

The negotiating text for agriculture, the key to the whole deal to open up world trade, contains two conflicting proposals.