EC TO RAISE BANANA IMPORT QUOTAS

JAMES FALLON

The European Commission in Brussels, Belgium, has agreed to raise the quota for bananas imported from four Central and South American countries in 1994 and 1995.

Each of the four banana-growing nations involved in the agreement -- Costa Rica, Colombia, Nicaragua and Venezuela -- will receive a percentage of the new quota based on their historic share of the EC's $2.7 billion banana market.

The EC's previous ceiling on bananas imported from Central and South America was 2 million metric tons per year. Terms of the new agreement with the Central and South American exporters call for a limit of 2.1 million metric tons this year and 2.2 million metric tons in 1995.

Historically, Costa Rica and Colombia have been two of the largest exporters of bananas to Europe, with 23.4% and 21% shares, respectively, of the market. Nicaragua holds a 3% share of the market and Venezuela about 2%.

The new agreement also lowered the tariff charged to 75 European Currency Units ($65.78) from 100 ECUs (87.72). The deal still must be approved by the European Council of Ministers before it can take effect in October.

If approved, the agreement could result in even lower retail banana prices in Europe.

Although retail banana prices have more than doubled in 1994 from a low of 24 pence (16 cents) a pound in the United Kingdom, importers are concerned the higher quotas will cause European prices to tumble to lower levels once again.

The EC, however, was being pressured to make a deal with the four exporting countries. Those countries had complained to the General Agreement on Tariffs and Trade in Geneva that the EC's previous quotas violated the concept of free trade.

As part of the new agreement, the four countries have agreed not to pursue the complaint.

The EC proposed its initial quota system in July 1993 to limit the imports of so-called "dollar" bananas from Central and South America and protect their banana-growing former colonies in the Caribbean and Africa.

That plan stirred a controversy as Germany and the Central and South American growers took the EC to the European Court of Justice and GATT in an attempt to overturn the quotas. Under the quota system, there was a 20% tariff on imports up to 2 million metric tons and a 170% tariff on shipments above that level.

Germany, which is Europe's largest banana market, had received special status under European rules that allowed it to freely import Central American bananas. This status, however, will be discontinued under the new import quota system.

Meanwhile, Guatemala -- which accounts for only 1.5% of the European market -- has said it will not accept the new quotas and will continue with its complaint to GATT. Both actions could end up scrapping the new quota system entirely, since GATT issued a report claiming the earlier quota system was against its rules.