EU heals banana split in time to rescue Gatt deal

MARRAKESH (Agencies) - Trade ministers from the European Union reached a compromise on a protracted row about bananas, clearing the way for 120 nations to adopt the world's biggest free-trade accord.

The two main protagonists in the banana conflict, France and Germany, agreed to a compromise proposal worked out by the European Trade Commissioner, Sir Leon Brittan, removing the last hurdle to concluding the Uruguay Round of the General Agreement on Tariff and Trade (Gatt).

The EU agreed to take note of the 'political and legal reservations' expressed by Germany, Belgium, The Netherlands and Denmark on the banana question, but that 'notwithstanding' those reservations, the commission would submit a 'global package' which would settle the details in the EU within the framework of all Uruguay Round agreements.

The EU's surreal split over bananas had jeopardised its approval of a deal that would open European and US markets to competitive bidding for government procurement contracts. France had threatened not to approve the Gatt deal, which opens up the prospect of dollars 200bn (pounds 136bn) of public-sector contracts in the United States and Europe, unless Germany dropped its opposition to EU quotas on banana imports.

France feared that banana imports to the EU from its colonies and territories in the Caribbean would be crushed by competition from Latin American countries producing larger and cheaper 'dollar' bananas. At present, higher-cost producers in the former European colonies in Africa, the Caribbean and the Pacific, are protected under an EU quota system which limits tariff-free imports of Latin American bananas to 2.2m tons a year.

Germany, which munches its way through more bananas than any other European country, claims that the system keeps EU prices too high and threatens banana-related jobs in German harbours and fruit-import companies. The Germans held back from signing the Gatt accord in case it upheld the EU's existing banana regime and weakened Bonn's legal challenge in the European Court. The German Economics Minister, Gunter Rexrodt, said yesterday that despite the face-saving compromise, the row had not been completely solved and Germany would press on with its plan to take the issue to the European Court. 'We will continue on our path,' he said.

On other free-trade matters, the eagerly awaited meeting between the US Trade Representative, Mickey Kantor, and the Japanese Foreign Minister, Tsutomo Hata, helped cool their boiling trade dispute. Mr Hata pledged to continue the reforms begun by Morihiro Hosokawa to open up Japan's consumer markets. Mr Hosokawa's recent resignation as prime minister has plunged Tokyo into uncertainty. Mr Hata is widely tipped to succeed him, but he came to the meeting with little authority to revive talks on bringing down Japan's dollars 60bn trade surplus with the US.