EU and US agree to ease tension over banana dispute

The United States and Europe declared a temporary ceasefire in their trade battles onFriday, hoping new talks in a long-running dispute over bananas will be able to avert another round of costly trade sanctions, Associated Press reports. EU Trade Commissioner Pascal Lamy announced after discussions with new U.S. Trade Representative Robert Zoellick that the European Union hadagreed to take more time negotiating with the United States before putting into effect a new system regulating banana imports. The announcement will give the President Bush the opportunity to attempt to strike a deal that had eluded the previous Clinton administration. Zoellick said he was not certain he would be able to succeed in the banana dispute where the previous administration had failed, but he said it was critical forboth sides to try to resolve issues that have soured relations in recent years. "I hope we can emphasize the elements that unite us rather than divide us,''​ he said at a joint news conference with Lamy. Lamy stressed that if the two sides cannot resolve their differences, the European Union will go ahead and put a new "first-come, first-served" systemgoverning banana imports into effect on July 1. The United States currently has sanctions on $308 million of European products resulting from two cases it has won involving bananas and a European banon American beef grown with hormones. The U.S. has successfully argued that the European Union unfairly gives preferential treatment to banana shipments from former European colonies in theCaribbean and Africa at the expense of banana shipments from U.S. owned plantations in South America. Zoellick told Congress this week if the EU proceeds with its new banana regulations, which the United States claims are also illegal under World TradeOrganization rules, it will begin rotating the list of products covered by American sanctions in an effort to increase pressure on more European countries. In response, the EU has warned that it will proceed to impose punitive tariffs on $4 billion of American goods in retaliation for the tax subsidies received bythousands of American firms including Boeing and Microsoft Congress last fall changed the U.S. law but the EU contendsthe new subsidy provisions are also WTO-illegal. That case will be decided later this year. Lamy and Zoellick did not announce when they would begin talks on the banana issue. The United States wants Europe to issue licenses for future bananaimports, a process that would be advantageous to U.S. firms Chiquita Brands International Inc. and Dole Foods Co. rather thanallocating quotas on a ``first-come, first served'' basis established by the new EU regulations. Source:Associated Press