US embassy cable - 05QUITO2464

UNCLAS SECTION 01 OF 02 QUITO 002464 
 
SIPDIS 
 
USEU BRUSSELS PASS TO NORVILLE FRANCIS 
USTR PASS TO CHRIS WILSON 
USDA/FAS/OA/TERPSTRA/ROBERTS/HARDYBASS 
USDA/FAS/ITP/SHEIKH/YOUNG/BERTSCH 
USTR/MOWERY/MURPHY 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAGR, ETRD, AORC, PGOV, PREL, EC 
SUBJECT: ECUADOR REQUESTS USG ACTION ON WTO EU BANANA 
DECISION 
 
1. (SBU) Summary:  The GOE and Ecuadorian businessmen are 
urging the USG to press the EU to abide by WTO decisions 
regarding EU banana tariffs and quotas.  During an October 
25 meeting with the Ambassador, GOE Minister of Trade Jorge 
Illingworth requested that the USG urge the EU to abide by 
the 2001 WTO-driven agreement calling for a change in the 
EU's banana import system.  Meanwhile, banana producers met 
with AgAtt and Econoff on October 27 to appeal to the US to 
make a public announcement that the EU should move to a 
tariff only banana import regime and not maintain their 
current mixed tariff-quota regime.  These appeals for US 
support coincide with an October 27 WTO ruling favoring 
Latin American banana exporters. End Summary. 
 
ECUADOR REQUESTS SUPPORT 
------------------------ 
 
2. (SBU) While discussing FTA issues with the Ambassador on 
October 25, Minister of Trade Illingworth urged the USG to 
press the EU to abide by a 2001 WTO ruling that called for 
the preservation of market access into the EU for Latin 
American banana suppliers.  Given the USG's history in the 
case -- the 2001 dispute was initiated by the US on behalf 
of US companies operating on Latin America -- Illingworth 
would like the US to get involved again.  The Ambassador 
assured Illingworth that his request would be passed on to 
the Department. 
 
3. (U) The leaders of five Ecuadorian banana producing 
organizations who met with AgAtt and Econoff on October 27 
were quite specific in what they wanted from the US: a 
public pronouncement that the EU abide by WTO decisions and 
move to a tariff-only regime.  The five banana producers, 
fresh off their own meeting with Illingworth, stressed the 
positive social impact that EU compliance with WTO decisions 
would have in Ecuador. 
 
4. (U) Referring to the October 27 WTO ruling striking down 
an EU proposal to move to a single tariff system set at 187 
Euros per ton for Latin American bananas, the banana 
producers were concerned that a new agreement to replace the 
existing tariff-quota regime would not be reached prior to 
January 1, 2006.  Acknowledging the necessity of maintaining 
some protection for ACP countries, the banana producers 
remarked that they would be willing to accept a tariff of 
125 Euros per ton that would fall to 75 Euros per ton over 
several years.  They also noted that during recent meetings, 
EU representatives in Ecuador had shown no flexibility on 
the level of the tariff.  They are concerned that without a 
new agreement, the EU will just continue with its mixed 
tariff-quota regime until EU waivers for ACP support end in 
2008. 
 
5. (U) While recognizing past US involvement in the case, 
AgAtt emphasized that Latin American countries and the EU 
need to reach a new agreement and that the US was not a 
formal player in this stage of the negotiations.  AgAtt 
underscored the importance of Latin American countries 
having a common position.  The AgAtt also stressed the US 
position that the new agreement needs to comply with the 
2001 WTO decision.  In light of the favorable WTO ruling on 
October 27, she encouraged the banana producers to return to 
EU representatives and to get the GOE to vocalize its 
position publicly.  She also stressed the importance of 
coming to an agreement prior to the next stage of the Doha 
round of talks that will take place in Hong Kong in 
December.  AgAtt also stated that she would communicate 
their concerns and requests to counterparts in Washington, 
DC. 
 
ECUADOR REMAINS DIVIDED INTERNALLY 
---------------------------------- 
 
6. (SBU) Although they at times claimed that the Ecuadorian 
banana sector's 6,000 producers were united in this fight, 
the banana producers meeting with AgAtt and Econoff also 
acknowledged that banana magnate Alvarao Noboa's interests 
are keeping the GOE from taking a public stand on the issue. 
Noboa's banana plantations are tied to Chiquita, while those 
of other banana producers are associated with Dole and Del 
Monte.  Because Chiquita maintains EU concessions for banana 
imports into the EU, it benefits from the status quo. 
Noboa's political power in Ecuador (he is the leader of a 
major political party, the PRIAN) essentially keeps the GOE 
from publicly proclaiming its support for a new tariff-only 
system.  The banana producers told AgAtt and Econoff that 
Noboa is applying pressure on Ecuadorian congressmen to keep 
the GOE divided. 
 
JEWELL