Ecuador's banana war with Europe

Ecuador won another round of the “banana war” with Europe this week - a trade dispute that has become the longest in the history of the World Trade Organization.

This week the WTO ruled that the EU import duties on bananas violates global trade rules and paved the way to allow Ecuador to impose trade sanctions. The EU is considering an appeal.

Ecuador – the world’s largest exporter of the fruit – claims the trade policies of the EU – the world’s largest market for the fruit – favors Caribbean and African producers at the expense of Latin American producers. Ecuador initiated the case in 1996 along with Guatemala, Honduras, Mexico and the US. Three other countries – Colombia, Nicaragua and Panama – joined later.

Bananas represent the largest fruit industry in the world valued at more than $50 billion annually. They are the fourth largest distributed crop after rice, wheat and corn. European Union countries imported 4.185 million tonnes of bananas in 2006, an increase of 12.3 percent from the year prior. Ecuador is the leading exporter of the crop to the EU.

A report last year by The Guardian newspaper alleged that the trade preferences allowed the three main suppliers of bananas - Dole, Chiquita, and Fresh Del Monte- to create tax havens to avoid paying tax on their profits in Europe as well as the developing countries that produce the crop.

In the case of the latter, the practice is doubly damaging since it drives down costs dramatically – often resulting in severe cutbacks in the industry. Those cutbacks have often led to growers skirting labor laws which has led to a surge in child labor and other abuses, according to the New York Times.