The Tariff‐Only Import Regime for Bananas in the European Union: Impacts on ACP and Non‐ACP Suppliers

Abstract

The European Union is bound by World Trade Organisation agreements to move to a tariff‐only import regime for bananas no later than 1 January 2006. What should change at that date is the trade regime, not the level of protection offered to African, Caribbean and Pacific (ACP) countries. This article provides an assessment of the trade impact of this tariff‐only regime on the basis of simulations carried out with a dynamic partial equilibrium model of the world banana market using 2002–03 as the base year. Simulation results show that the tariff levied on imports from non‐ACP countries should be set at around €250 per tonne in order to maintain in 2008 the EU import structure that prevailed in 2003. A lower tariff would increase EU total imports, to the benefit of non‐ACP countries and to the detriment of the group of ACP countries. Conversely, a higher tariff would decrease EU imports from non‐ACP countries and increase imports from ACP suppliers. Under this assumption, the increase in ACP exports to the EU would mainly benefit the two West African suppliers, Cameroon and Ivory Coast, who are more competitive and have a more price elastic supply than the ACP suppliers of the Caribbean islands.