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Cameroonian Trade Minister assesses the current EU-ACP banana issues

Video guest: Josephine Mwangi

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Thursday, 12 August 2010

Cameroonian Trade Minister assesses the current EU-ACP banana issues

To offset the consequences of the loss of the preferential arrangements for ACP banana-producing countries decided in Geneva in December 2009, the European Union is considering support measures in favour of ten countries. On Friday, 23 July, three of the ten countries met in Yaoundé to claim the lion’s share of the proposed funds. Does this represent a split from the seven other countries or is it a question of denouncing the European Union’s preconceptions?
It is important to recall that the European banana market is supplied by three main groups of suppliers, namely the countries of South and Central America (3,555,000 tonnes in 2009), the ACP countries (957,000 tonnes in 2009) and European Union Member States (608,000 tonnes in 2009). However, only South and Central American suppliers pay customs duties (176 euros per tonne) when their products enter the European market, as the ACP and EU countries are exempt from such duties. It is precisely this difference in treatment, at least as regards the ACP countries, which dollar zone suppliers have contested for twenty years before the World Trade Organisation’s dispute settlement body, based on article 1 of the GATT, better known in technical jargon as the most favoured nation (MFN) clause. This long-running dispute resulted, on 15 December 2009, in the Geneva Agreement on Trade in Bananas, whereby the European Union agreed to reduce the customs duties levied on dollar zone bananas from 176 euros per tonne to 114 euros per tonne by 2017, thereby eroding the preferential treatment guaranteed to ACP bananas and threatening their survival. This explains the countervailing measures which our countries managed to extract, after tough negotiations, from the European Union, for an initial amount of 190 million euros for the period 2010/2013, in favour of ten eligible ACP countries (for Africa: Cameroon, Ivory Coast and Ghana and for the Caribbean: Belize, Dominican Republic, Dominica, Jamaica, Saint-Vincent, Saint Lucia and Surinam). The fact is that the three African countries alone represent, based on the statistics for the period 1999–2008, 67.7% of ACP banana imports into the European Union. Therefore, it is not a question for us of claiming the lion’s share of the funds, to use your expression, or of dissociating ourselves from the other ACP countries concerned. We simply want our importance in this trade to be taken fully into account when the funds are allocated. We do not want a repetition of what we perceived as a form of injustice in the implementation of the 1998/2008 programme when, despite a market share of 67.7% of total ACP imports, the African countries received only 27.4 of the technical and financial assistance budget allocated by the European Union. It is therefore a question of equity.

Before the Geneva Agreement reducing the rate of customs duties on banana dollars from 176 euros to 114 euros by 2017, the exports of the ACP countries represented more than 90% of exportations. Is there not a risk, with this reduction, that ACP bananas will disappear from the European market?
With a volume of 957,000 tonnes in 2009, ACP imports represented not 90%, but 18.69% of bananas sold on the European market. Nevertheless, it is obvious that the erosion of the preferential arrangements is bound to reduce the competiveness of ACP bananas, unless the additional support measures requested by us in order to continue the restructuring and competitive upgrading of the African banana sector are implemented promptly. As regards African bananas, we can meet the challenge of competitiveness and thus ensure our survival. That is in any event the goal of the Cameroonian public authorities. Moreover, that ambition is also shared by the economic operators in our country’s banana sector. Cameroon’s bananas still have a bright future ahead.

Cameroon, 270,000 tonnes in 2009, has opted to export 400,000 tonnes to the European Union whereas the Ivory Coast, another banana producer, has opted for the West and Sahel sub-regions market. Is the West the best bet? Moreover, what are the prospects regarding local processing?
The policy of the public authorities in Cameroon as regards basic goods, in particular agricultural products, is well known: it involves not only diversifying outlets, but is also intended to create local added value for our products and stimulate domestic consumption. It is in any event clear, for the government and economic operators in the sector, that although the European market has been our main outlet to date, the future lies in the development of the regional and sub-regional market and in conquering important niche markets such as the Maghreb countries, the Middle and Near East, as well as Southern Africa, even Turkey. We have the necessary products for that in terms of not only intrinsic quality but also taste. Our challenge is to minimise our production costs in order to increase our competitiveness.

And as regards production, when it comes to bananas Cameroon is to a large extent in French hands. Are your efforts to boost the sector justified, when these structures are accused of underpaying their employees and not being in order with the tax authorities?
I imagine that you are referring to our production partners. If that is the case, I will say that our country, like all other banana-exporting countries throughout the world, relies on multifaceted, diversified partnerships which enable it to benefit not only from the contribution of banana production technologies that have proved their worth in benchmark countries, but also from know-how and efficient export distribution networks. In my opinion, this is part of the integration of our economy into the now inescapable globalisation process. The time when economies operated in isolation is now well and truly in the past. For the rest, Cameroon is a country where the rule of law prevails and investors operating in our country must comply strictly with the country’s tax and social security laws.

The European Union was reported to have used bananas as a means of exerting pressure on Cameroon and the Ivory Coast to convince them to sign Economic Partnership Agreements (EPA). After the Geneva Agreement, should we talk of a fool’s bargain?
Unless I am mistaken, the Economic Partnership Agreements (EPA) are regional and not bilateral agreements. In the case of the Central African sub-region, this agreement is still being negotiated. Moreover, except for those choosing to live in isolation, tariff dismantling is now part of the rules and constraints of multilateral trade. On what grounds should such and such a product be exempted from them? In any event, as regards bananas, the dismantling is partial and is being implemented in stages.
Your MAB demands were 500 million, but in the end you obtained only 190 million. Do you think that the demands of the Yaoundé Declaration will be applied by the European Union? If not, what do you intend to do?
I must point out that at the time of the mini-ministerial meeting of July 2008, in Geneva, there was no question of the European Union granting even a single euro in support of ACP bananas, otherwise it would have run the risk of being attacked and criticised once again by the dollar zone countries. However, after intense negotiations led by Cameroon in its role as ministerial spokesperson for the ACP group, we fought for and succeeded in obtaining an initial budget of 190 million euros, which covers the period 2010/2013, as well as a review clause for the post-2013 period, during which additional amounts may be allocated to us, according to needs. With such a result, I think I accomplished creditably my mandate as chief negotiator on behalf of the ACP group. Finally, as regards the Yaoundé Declaration, it is necessary to analyse it as a statement of position of African banana-producing countries, with a view to the forthcoming negotiations with our European Union partner.

Source: La Nouvelle Expréssion