Scoop has an Ethical Paywall
License needed for work use Register



Cablegate: Winning the Battle but Losing the War - Bananas

This record is a partial extract of the original cable. The full text of the original cable is not available.





E.O. 12958: N/A
SUBJECT: Winning the Battle but Losing the War - Bananas

Sensitive but Unclassified. Not for Internet Distribution.

1. (SBU) Summary. In November 2002, the Government of
Turkey agreed to remove a number of non-tariff barriers on
banana imports in response to a WTO case initiated by the
Government of Ecuador. Although the barriers were
eliminated, the GOT raised import tariffs by 29% from an
already high 120%. Problems with Turkey's import regime
have also discouraged companies from investing in Turkey.
However, Turkey's eventual membership in the European Union
may revive interest in investment in the food sector. End

The Banana Wars

2. (SBU) On December 12, AgCounselor met with a banana
importer to discuss resolution/withdrawal of a WTO case
initiated by the Government of Ecuador against Turkey. Since
November 1999, companies had complained that the GOT has
restricted imports of bananas using a number of non-tariff
barriers. Among the barriers used by Turkey were delays in
issuing certificates of control up to 45 days; issuing
licenses only for small uneconomical amounts (10,000 boxes
or 50 tons, in the case of bananas); and lastly, limiting
the time required for completing pesticide applications
which proved difficult for many importers.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Let's go to Geneva

3. (SBU) In response to exporter complaints, Ecuador wanted
the WTO to address these issues. Over the past two years,
Ecuador and Turkey had consulted on the issue. According to
one importer, the Ministry of Foreign Trade realized that
they would lose the case and might be subject to sanctions.
As a result, in November 2002, the GOT agreed to eliminate
all the barriers. However, as a concession to the Ministry
of Agriculture, the GOT raised tariffs on banana imports
from 120 percent to 149 percent which is Turkey's bound

Why We Have No Bananas

4. (SBU) The banana case illustrates the extent of the
GOT's desire to protect local industry. Turkish banana
production meets only about 15 percent of total demand.
Given climate and soil conditions, Turkish producers cannot
significantly increase production to any great extent.
According to one importer, Turkey is now producing bananas
in green houses, which given energy costs is extremely
uneconomical. In fact, the high tariffs penalize the
Turkish consumer who must pay more a great deal more for
bananas. Turkish producers generally increase their own
prices to those of the imported bananas and reap the
profits. Tariffs on other fruits (apples and pears) are
about 60 - 65 % and are applied seasonally. It is
difficult, as far as importers are concerned, to see why a
country needs 149 or even 120 percent tax to protect its
industry. The tariff is even more costly since the season
for bananas is only 3 months while the tariff remains in
place for the entire year.

Effect still undetermined

5. (SBU) In 2001, banana imports decreased by 30 percent,
although this decline was attributed more to the economic
downturn rather than the tariffs. The import problems have
discouraged companies from investing in any facilities in
Turkey. Now, however given the possibility of Turkish EU
membership on the rise, companies may again explore the
possibility of investing in this market.

Will the new government be better?
6. (SBU) There is a general feeling among traders that the
situation may improve with the new government. In November
2002 after the withdrawal of the non-tariff barriers,
certificates of control were issued in a week and for
unlimited quantities. Pesticide requirements also have
become somewhat more flexible. Under the previous
government, the MHP party viewed all imports as a threat to
Turkish agriculture. Although the jury is still out, people
are hopeful that the situation will change for the better.

--------------------------------------------- -----------
Comment: Agriculture - Problems but Hope for the Future?
--------------------------------------------- -----------

7. (SBU) In general, the worst problems in U.S.-Turkish
bilateral trade are in the agriculture sector. For the most
part, non-tariff barriers are more prevalent in agriculture
products versus industrial products. The banana affair is
good example of Turkey's approach to trade. The threat of
WTO action compelled the GOT to resolve the trade dispute.
Of course, in the case of bananas, it took the GOT 2 years
to reach that point. At the same time, the GOT will often
go to great lengths to protect its domestic agriculture
often at the expense of the Turkish consumer who spends
close to 50% of his/her income on food. Trade problems seem
to have discouraged foreign companies from investing in
Turkey fearing similar problems with Turkey's application of
investment rules. It's a good sign that, at least
initially, companies believe that the new government will
create a more positive atmosphere for trade and investment.
In addition, potential EU membership may encourage companies
to invest here in the hope of basing food production and
processing facilities in Turkey to supply EU countries with
food products.


© Scoop Media

Advertisement - scroll to continue reading
World Headlines

UN News: Aid Access Is Key Priority

Among the key issues facing diplomats is securing the release of a reported 199 Israeli hostages, seized during the Hamas raid. “History is watching,” says Emergency Relief Coordinator Martin Griffiths. “This war was started by taking those hostages. Of course, there's a history between Palestinian people and the Israeli people, and I'm not denying any of that. But that act alone lit a fire, which can only be put out with the release of those hostages.” More

Save The Children: Four Earthquakes In a Week Leave Thousands Homeless

Families in western Afghanistan are reeling after a fourth earthquake hit Herat Province, crumbling buildings and forcing people to flee once again, with thousands now living in tents exposed to fierce winds and dust storms. The latest 6.3 magnitude earthquake hit 30 km outside of Herat on Sunday, shattering communities still reeling from strong and shallow aftershocks. More

UN News: Nowhere To Go In Gaza

UN Spokesperson Stéphane Dujarric said some 1.1M people would be expected to leave northern Gaza and that such a movement would be “impossible” without devastating humanitarian consequences and appeals for the order to be rescinded. The WHO joined the call for Israel to rescind the relocation order, which amounted to a “death sentence” for many. More

Access Now: Telecom Blackout In Gaza An Attack On Human Rights

By October 10, reports indicated that fixed-line internet, mobile data, SMS, telephone, and TV networks are all seriously compromised. With significant and increasing damage to the electrical grid, orders by the Israeli Ministry of Energy to stop supplying electricity and the last remaining power station now out of fuel, many are no longer able to charge devices that are essential to communicate and access information. More


Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.