EU: Trade Agreement on Banana Imports

Earl of Sandwich Excerpts

Tuesday 7th February 2012 Lords Chamber

[The Earl of Sandwich]

My Lords, once upon a time, only 12 years ago, the UK among 15 European Union states signed the Cotonou agreement with the 78 ACP countries, which was designed to guarantee former colonies access to EU markets for their primary products. I well remember the preamble—I expect that the noble Lord, Lord Foulkes, will remember it from his time—solemnly committing Europe not only to meet its trade obligations but to eradicate poverty and to ensure continued development, including alternative forms of livelihood. Then came globalisation and liberalisation, the free trade winds blew through the WTO, and a series of interim economic partnership agreements were signed with a number of countries towards the end of 2007. A more comprehensive EPA with the Caribbean countries was signed in October 2008 but, as we have heard, it has been watered down since.

Meanwhile, the WTO, led by the US—let us not forget—on behalf of Latin American banana exporters such as Ecuador, has long complained to the EU that the old preferences were still there and discriminating against them. So two years ago, Europe caved in and let them in. But, as the noble Baroness, Lady Benjamin, and others have asked, what has happened to the protection for growers in the smaller, vulnerable states in the Windward Islands, so carefully established for them in the Cotonou treaty? The answer is that the UK, the EU and the whole world have let them down.

While UK sales of bananas have risen dramatically, the increased volume entering from other sources last year has driven down prices in the supermarkets, with a devastating effect on growers. As the noble Baroness, Lady Benjamin, said, the only bright future lies with the producers linked with the Fairtrade movement. I was pleased to see the familiar blue and yellow logo on the bananas in the Bishops’ Bar today. Fairtrade accounts for at least a quarter of UK banana sales. Through the Fairtrade Foundation, which I remember began with the backing of several leading aid agencies a generation ago, and the support of Waitrose and Sainsbury’s, thousands of producers and banana workers in the Caribbean are now getting a living wage. But it is not enough.

Certifying bananas as Fairtrade ensures that banana farmers in Africa and the Caribbean receive a decent price, but this is undermined by supermarkets engaging in banana price wars. A few years ago the price of loose bananas fell below 84 pence a kilo, down to as low as 67 pence a kilo. That was low enough. Last year, Asda cut the price of its loose bananas to 38 pence a kilo, its sixth cut in six weeks and a move that placed acute pressure on rivals to follow suit.

Since 1992, some 20,000 of the 24,000 farmers in Dominica, St Vincent, St Lucia and Grenada have gone out of business altogether, and the future for its remaining farmers looks bleak. I am not sure that the suggestions of the noble Lord, Lord Foulkes, and my noble friend Lord Montgomery will be enough for those growers.

So what are our Government doing at this end to stop the banana price wars that are so harmful, especially to growers least able to cope with squeezed margins in the supply chain? What happened to the decision to appoint a groceries code adjudicator, which they were once so keen about, but which seems to have got stuck in the system? Finally, what happened to the development objectives in the Cotonou agreement? Have they been jettisoned in the name of the WTO and free trade? The agreement states:

“The partnership shall be centred on the objective of reducing and eventually eradicating poverty consistent with the objectives of sustainable development”.

As a consolation prize, I am hoping that the noble Baroness will tell us how many banana-producing ACP countries who are not LDCs benefit from other arrangements, such as the “Everything But Arms” agreement and any titbits left over from the generalised system of preferences and other forms of concessional trade.

I conclude by thanking the noble Baroness, Lady Hooper, for introducing the debate and I dedicate these last few words to the late Lord Walston, a Labour Peer and personal friend who was a farmer in Cambridgeshire and St Lucia and who would most certainly have joined in this debate.