The tariff-only regime for bananas in the European Union: Settingthe tariff at right level is impossible mission

Herve Guyomard (), Chantal Le Mouël, Fabrice Levert and . International Association of Agricultural Economists
Additional contact information
Herve Guyomard: Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique
. International Association of Agricultural Economists: IAAE - International Association of Agricultural Economists

Post-Print from HAL

Abstract: On 29 November 2005, the European Union (EU) unilaterally introduced a tariff of €176 per tonne to apply from 1 January 2006 to bananas imported from countries enjoying the Most Favoured Nation (MFN) status. The new EU trade policy includes a duty-free annual import quota of 775,000 tonnes for bananas originating from African, Caribbean and Pacific (ACP) states. This regime replaces the very complex and highly contested tariff-rate quota policy in place in the EU between 1993 and 2005. However, the banana international trade war very likely has not come to an end. Several Latin American countries have announced their intention to challenge the new EU trade policy by initiating a new WTO complaint. In this paper, we first propose an analysis of the two WTO arbitration awards that ruled against the initial EU tariff proposals. We show that the arbitrators' awards are incomplete notably because they do not explain why CIF (Cost, Insurance and Freight) import unit values in the EU-15 from MFN suppliers are much higher than FOB (Free on Board) export unit values in corresponding MFN countries adjusted by all relevant costs that should theoretically be added to transform FOB into CIF prices. One plausible explanation to this apparent paradox is that reported CIF prices include at least part of quota rents generated by the tariff-rate quota policy. On this basis, we analyse the impacts of different MFN tariff levels on EU banana imports under contrasting hypotheses regarding, first whether the price gap between CIF and FOB unit values does include at least part of quota rents, second whether banana exports to the EU from Western African ACP countries were constrained under the previous regime where a specific import quota were reserved to ACP countries. We also analyse the consequences of an "augmented" tariff-only import regime including a MFN tariff and a duty-free import quota for ACP bananas.

Keywords: TARIFF RATE QUOTAS; TARIFF; BANANAS; EUROPEAN UNION; WORLD TRADE ORGANIZATION; MOST FAVOURED NATIONS; AFRICAN COUNTRIES; CARRIBEAN COUNTRIES; PACIFIC COUNTRIES; custom duties; international trade; banana; afrique; Caraïbes; océan pacifique; quota; droit de douane; commerce international; banane; fruit; union européenne (search for similar items in EconPapers)
Date: 2006-08-12
Note: View the original document on HAL open archive server: https://hal.science/hal-01594038v1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in 26. conférence de l'Association internationale des économistes agricoles, Aug 2006, Queensland, Australia. 17 p

Downloads: (external link)
https://hal.science/hal-01594038v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01594038

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().