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Peeling Away Trade Protections for Bananas

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Peeling Away Trade Protections for Bananas

Simple in appearance, pleasantly sweet, nutritious, and nearly universal in appeal, that Cavendish bunch of bananas on your counter comes off as pretty unassuming. In reality, it has been through jungle wars and trade wars and now sits on the precipice of extinction. More than half of the bananas traded globally are the Cavendish variety. But with two diseases threatening the world’s largest Cavendish plantations, growing to love more varieties could help save trade in bananas.

Still an Important Cash Crop

Grown in more than 150 countries, bananas are the eighth most important food crop in the world – fourth most important in developing countries. Bananas are among the most traded fruit in the world, generating revenues of more than $8 billion a year for the top banana exporters including Ecuador, the Philippines, Costa Rica, Colombia and Guatemala. However, most are produced for local or national consumption.

For example, the Food and Agriculture Organization estimates that between 70 and 80 percent of bananas in Africa are produced by smallholder farmers. Around 114 million tons are produced globally beyond what isn’t too small to be counted, yet only 19 million tons were shipped globally. That said, for the top five exporters, bananas are a major contributor to the total value of their agricultural exports. India and China are among the biggest producers but their output mainly serves the large domestic markets.

global bananas trade

Peeling Away Trade Protections

The Banana Wars, centered on the European Union’s (EU) banana trade regime, spanned 20 years as the longest running series of disputes in the multilateral trading system to date (although the Boeing-Airbus dispute may be on track to take that title). As one of the most significant episodes in trade law, the Banana Wars are deserving of more attention, but here are some abridged highlights.

Europe’s banana regime began as an umbrella for complex arrangements at the individual EU Member State level that were designed to offer exclusive or preferential access to former colonies in Africa, Caribbean and the Pacific (ACP), and at the same time shield EU producers from competition.

Under the EU’s original regime, ACP countries received a zero-tariff rate while imports from other countries were taxed at 20 percent. However, each Member State was allowed to “derogate” and maintain special protective provisions for imports from their overseas departments. For example, France set aside two-thirds of its market for Guadeloupe and Martinique and the remaining third for the ACP Franc Zone states of Cameroon and Cote d’Ivoire. The Spanish market was reserved for shipments from the Canary Islands. Greece banned imports to protect its own production in Crete. Only Germany opened to free trade.

The Single European Act of 1986 mandated an integrated EU market by January 1993, which required that Member States consolidate their programs into a common regime for bananas. As devised, this version still enabled members to discriminate among imports by source, offering better terms to their overseas departments and to imports from ACP countries. Colombia, Costa Rica, Guatemala, Nicaragua and Venezuela (supported by the United States) challenged the regime as inconsistent with the EU’s obligations under the GATT.

The EU’s ability to offer tariff preferences was upheld because it had a waiver in the GATT for its general tariff preference program; but the GATT Panel found the EU’s discrimination through tariff quotas to be inconsistent with its obligations. However, prior to the WTO, a GATT member could simply veto the outcome of a panel decision, enabling the EU effectively to ignore the GATT Panel ruling.
EU banana imports

Second Banana

The EU revised its banana regime in 1993 to include new special distribution licenses under a general quota. Licenses were divvied up among primary importers and importers performing secondary activities such as customs clearance, warehousing and storage; licenses were dependent on historical performance, subject to country allocations, market share and other criteria. After yet another challenge by the five Latin American countries, a GATT Panel found in 1994 that the EU’s licensing system was excessively restrictive and not covered by its waiver.

After 1995, with the WTO’s enforceable dispute settlement system in place and additional obligations to avoid discrimination in trade in services, the EU recognized it would face more challenges to its regime. The large multinational producers involved in shipping, warehousing, ripening, marketing and distribution had an even stronger case to make. The EU negotiated with all of the disgruntled Latin American producers but Guatemala to head off the legal challenge. Having offered additional or expanded quotas, they temporarily pleased some countries but further worsened the discriminatory effect for those countries not a part of the negotiation.

A third complaint against the EU’s banana regime was reviewed in the WTO in 1996, this time with the United States as the lead plaintiff in response to complaints from Chiquita and the Hawaiian Banana Association. A WTO decision in 1997 again concluded that, although the EU’s discriminatory tariffs were covered under its historical waiver, its tariff quota allocations and convoluted import licensing administration violated its WTO obligations. The EU’s next version of its banana regime did little to remedy the discriminatory elements, which led to the imposition of tariffs by the United States and Ecuador in response to the EU’s failure to comply with the WTO ruling. By 2001, the EU made another attempt to transition its system, but not until 2006 would the EU decide to phase in a tariff-only system, dispensing with quotas.

Banana Splits

At the end of 2009, after negotiations with non-ACP producers, the EU agreed to reduce the tariff rate it applies to all WTO members. Tariffs would come down from 176 euros per ton to 114 euros per ton by January 2017 (stipulating it could revert to higher rates if exporting countries exceed a “trigger” amount of imports). It wouldn’t be until 2012, that the EU and 10 Latin American countries finalized signed an agreement in the WTO to codify the revised EU banana tariff schedule (“The Geneva Banana Agreement”), officially closing the longstanding legal disputes.

As a prologue, the EU signed trade agreements with Andean and Central American countries in 2013 and Ecuador in 2017. Ecuador has seen a large bump in global export volume as its agreement with the EU is implemented. By next year, the tariff on bananas from Ecuador to the EU will go down to 75 euros per ton with no quota on the amount eligible for this rate. As the EU continues to edge toward “freer” trade in bananas, the ACP producers will face considerable adjustment.

2009 Geneva Banana Agreement

Going Bananas

Having survived the banana trade wars, the popular Cavendish banana faces a new challenge, one that could actually wipe them out.

“Panama disease TR4” has ravaged thousands of acres of Cavendish plantations throughout Southeast Asia and Australia and is spreading to Africa and the Middle East. It can lie dormant in soil for decades and has proven resistant to fungicides and fumigants. It is only a matter of time before TR4 takes hold in Latin America, which supplies nearly the entire U.S. market. Banana plantations in the Caribbean are threatened by another disease called Black Sigatoka, which has been reducing banana yields by 40 percent every year in affected areas.

Before Cavendish was top banana, a banana called the Gros Michel (Big Mike) dominated the banana trade in the early 1900s until the fungus TR1 took it to the brink of extinction in the mid-1950s. At that time, the Cavendish variety from China was discovered to be resistant to TR1 so it replaced Mike. But bananas don’t have seeds. They breed asexually so they cannot recombine their genes to ward off threats. In other words, the Cavendish is ripe for attack because it cannot evolve – every generation is a clone of the previous.

Try Hanging with a New Bunch

If scientists don’t make a breakthrough, TR4 and TR1 could spell the end for the beloved Cavendish. With over 1,000 different varieties of bananas growing around the world, why not get to know some others that might grow more popular through trade – here are a few to get you started.

For your next dessert, try using Niño, Manzano (“apple bananas”) that have a hint of apple and strawberry flavor, or Goldfinger, a newer variety from Honduras. Intriguingly, there’s also Blue Java, named for its blue skin, which has a creamy, ice cream-like texture and purportedly offers a subtle vanilla flavor.

Cooking bananas include the Macho plantain and other fun-sounding varieties like the Burro which has squared sides and a lemon flavor when ripe, and the Rhino Horn from Africa, which can grow up to two feet long. If consumers demand it, perhaps global trade in bananas will finally branch out.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

 

pomegranates

Pomegranates Are Symbolic Even for Trade

613 Seeds

It’s the Jewish New Year, a time for introspection and atonement and of course every Jewish holiday has its food customs. Celebrants dip apples in honey to symbolize hopes for a sweet year ahead. Pomegranates also figure in celebrations at this time of year. Its many seeds are associated with the 613 commandments in the Torah. Before eating the pomegranate seeds, Jews traditionally say, “May we be as full of mitzvot (commandments) as the pomegranate is full of seeds.”

The pomegranate is one of the seven species of Israel listed in the Torah, along with grapes, figs and dates. They’ve been cultivated throughout the Middle East for thousands of years and remain a staple in the cuisine. Outside the United States, consumers can enjoy dozens of varieties, from those with sweeter pink seeds to yellow-green Golden Globes. The only kind I’ve ever seen in my grocery store are the ruby red Wonderful variety, which make up 90 to 95 percent of the U.S. market.

Ancient and Modern Purveyor of Good Fortune

Pomegranates are drought tolerant so they can grow in tropical to warm climates, but they do best in regions with cool winters and hot, dry summers. They thrive throughout Latin America, southern Europe, Asia, Africa and Fresno, California. Due to this heartiness, there’s almost always a season for pomegranates somewhere in the world and – thanks to trade – we can enjoy them nearly all year-round. Recently, the U.S. Department of Agriculture approved imports of Peruvian-grown pomegranates, which U.S. retailers say won’t compete directly with California production because they’ll be harvested and shipped as California’s season ends.

Known to be a good source of antioxidants and vitamin C, pomegranates are more popular than ever, finding their way into juices, fruit strips and other processed foods. Higher demand has been especially great for exporters from developing countries. Pomegranate exports are even playing a role in moving farmers in Afghanistan from opium poppy or coca farms to growing legal as well as profitable crops.

Where efforts to shift into other crops have failed, the pomegranate holds promise. Afghan varietals are prized for being especially delicious, creating demand for Afghan farmers to supply pomegranates to buyers around the world. Last year, Afghan farmers exported nearly 23,000 tons of pomegranates, up 35 percent over the previous year. Non-profit organizations have provided startup seeds and planted hundreds of thousands of pomegranate saplings in Afghan fields. If successful, Afghan producers could also move into finished products like fruit bars. More than a symbol, pomegranates are a tangible vehicle for renewal in Afghanistan.

Global Seed Trade

Sowing Trade Seeds

Although pomegranates no longer seem “exotic” to us, Americans are increasingly open to trying new varieties of fruits and vegetables in pursuit of innovative flavors, in response to health trends, and out of affinity for local growers who often produce heirloom and other varieties we can’t find in the grocery store. To enjoy a variety of foods – and importantly, to sustain basic crop production – growers must have access to a variety of high-quality seeds.

Founded in 1883, the American Seed Trade Association (ASTA) represents over 700 companies involved in seed production, plant breeding and related industries in North America. According to ASTA, a seed can cross up to six borders between the breeder to the farmer who plants it in the field. The United States exported $1.8 billion in seeds in 2017, $610 million of which went to Canada and Mexico.

The global seed market was an estimated $66.9 billion in 2018 and expected to reach $98.1 billion by 2024. According to the International Seed Federation, the Eastern European countries of Czech Republic, Slovakia, Hungary, and Poland are the largest exporters of seeds for field crops after France and the United States.
Food supply and seed trade

Good Genes

Despite a robust seed trade, the Food and Agriculture Organization worries about the steady loss of biodiversity for food and agriculture. Through a network of more than 1,750 gene banks, the Global Crop Diversity Trust supports a global seed conversation system to ensure a diversity of genetic resources from the ancient, traditional and heirloom varieties to the raw genetic material needed to breed nutrition-packed, high yield, weather- and pest-resistant modern crops.

Seeds can be made available from the gene banks to help farmers recover from natural disasters. After Hurricane Maria devasted 80 percent of Puerto Rico’s crop value, farmers turned to the Tropical Agriculture Research Station run by the U.S. Department of Agriculture for seeds and tree grafts to replenish their farms.

One of the largest seed collections resides in the Svalbard Global Seed Vault, nestled inside a mountain on an island halfway between mainland Norway and the North Pole. It houses over 983,500 seeds with room to conserve 4.5 million varieties.
Svalbard
Seed conservation is about more than saving for a rainy day. Food production around the world depends on the availability and international trade in seeds. According to the Global Crop Diversity Trust, many countries strongly depend on crops whose genetic diversity originates from foreign regions, both in their food supply and in their production systems.

So while we should all be thankful that gene banks preserve our food heritage, it’s the free movement of seeds in trade that helps protect today’s food production and supply. Now, if we can only get the stores to carry those Golden Globe pomegranates.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

honey

HONEY BEES POLLINATE TRADE OPPORTUNITIES

Harvesting season in the Central Valley

Stretched across some 500 miles throughout California’s Central Valley, almond hulls are splitting open, signaling the beginning of harvesting season.

The U.S. Department of Agriculture is forecasting that California’s almond growers are set to produce a bumper crop this year of about 2.5 billion pounds, about 70 percent of which will be exported around the world.

It’s an industry that drives about one-quarter of California’s farm exports and generates about $21.5 billion in economic output for the region including growing, processing and manufacturing activities.

A productive crop must be nourished

California is blessed with the perfect climate for almond production, but it must import one of its most important ingredients: pollinators for the almond blooms.

Every February, two out of every three commercial bee hives in the United States are transported to California, their bee residents pressed into service of the almond bloom.

In fact, it’s just the start of an annual food pollinating bee tour. Anywhere from 60 to 75 percent of the bee population kept as livestock crisscross the United States foraging on the blooms of crops that will eventually make their way into our grocery stores and into overseas markets.

Pollinated crop acreage

First stop, almond orchards

For most commercial bees, the pollinating season begins with almonds, California’s largest crop. To provide a sense of scale, Scientific American estimates it takes some two million hives – more than 31 billion honeybees – to pollinate the Central Valley’s 90 million almond trees during their two-week bloom. It’s a symbiotic relationship: the bees gather nectar and pollen to feed their colonies, enabling them to triple their population.

Once almonds bloom in January, hives are moved to other spring-blooming orchards such as cherries and plums in California or apples in the Pacific Northwest. Some head to Texas to pollinate squashes, others to citrus fruit orchards in Florida, and others are dispatched to pollinate cranberries in Wisconsin and cherries in Michigan.

In all, these busy bee travelers pollinate over 90 different crops and then sweeten the deal by shifting into delicious honey production by the end of summer, which they will nourish themselves on over winter while we get to consume the rest. Americans consume a staggering 1.6 pounds of honey per person every year. Even though U.S. beekeepers produced 148 million pounds of honey in 2017 and exported 9.9 million pounds, we imported 447.5 million pounds to keep up with demand from consumers and food producers.

Mobile beehive on trucks
Millions of bees are “exported” state to state to pollinate 90 different American crops.

One in every three bites of food

From cucumbers and citrus fruits to watermelon, kiwis, berries, cherries, apples, melons, peaches, figs, tomatoes, pumpkins and almonds, one-third of the U.S. food supply relies on pollination by the hard-working honey bee.

And, of course, since the United States is a major exporter of agricultural crops, we could say that honey bees help pollinate our trade opportunities. That’s true globally for hundreds of billions worth of crop production and internationally traded food that depends on pollinators.

$15 billion in value for 90 crops

Healthy bees, healthy trade in food

When bees get sick, the health of the U.S. agriculture economy and agricultural exports is imperiled.

Although honey bees are not the only pollinators supporting U.S. agriculture, they are the most important, adding more than $15 billion in value to U.S. agricultural crops each year according to the U.S. Pollinator Health Task Force.

Colony collapse disorder over the last few years drew widespread attention, but the decline in North American honey bees is a long-term trend. In 1947, there were about six million colonies but today we are down to about 2.5 million.

Sharp declines were seen following the introduction in 1987 of an external parasitic mite, aptly named Varroa destructor, that feeds on the blood of honey bees. Loss rates over the winter have been averaging around 31 percent since 2006, far exceeding the 15-17 percent that commercial bee keepers say is economically sustainable.

The rise of monoculture agriculture with increased reliance on pesticides and reduced use of cover crops is thought to add stress on bee health. The bees are struggling to maintain a varied and high-quality diet – they need protein from pollen and carbohydrates from the nectar of flowering plants. Without adequate nutrition, they are also more vulnerable to viruses.

1 in 3 bites

Experts have organized into research consortia, working groups and task forces to try to determine what can be done. The factors negatively impacting bee health are multiple, complex, and interacting, requiring a similarly comprehensive approach to combat them, including restoration of habitats, dissemination of best practices in hive management, and investments in research to better understand how to prevent colony loss.

We are all invested in their success, and when you see honey bees buzzing around your garden this summer, think about the humble but essential role their busywork plays in U.S. food production and agricultural exports.

This article is adapted from “Honey Bee Health is Serious Business” by Andrea Durkin for Progressive Economy.

Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.