The European Commission has been struggling to come up with a banana import system that complies with global trade rules after the World Trade Organisation (WTO) last year ruled against its current system.

The WTO sided with Latin American countries and the United States, which argued that current European Union rules favoured EU territories and former European colonies in the Caribbean over Latin American exporters and US marketing companies such as Chiquita Brands International Inc and Dole Food Co Inc.

EU Farm Commissioner Franz Fischler said he hoped the Commission's new proposals would "breathe new life into the process".

The EU is under pressure to solve the dispute because the United States has imposed $191 million of sanctions on European Union goods in retaliation for the banana spat and Ecuador, the world's leading banana exporter, has also been authorised by the World Trading Organisation to slap $201.6 million of sanctions on European Union goods.

EU Trade Commissioner Pascal Lamy denied that the new proposals were in any way connected to US plans to rotate products hit by its sanctions in the near future.

Last November, the Commission proposed that the EU move to a tariff-only banana import system by January 1, 2006, after a transitional period involving a complex tariff rate quota system.

But, despite intense discussions with the United States and other trading partners, the EU has not been able to come up with a way to divide up the quota that satisfies all concerned.

Under the new proposals, the EuropeanCommission will still push for a transitional system of tariff quotas, but they would be allotted on a "first come, first served" basis. A tariff-only system would take effect in 2006, as proposed before.

First come, first served
Under a "first come, first served" system, licences to import bananas would be awarded - within certain quotas - to operators who were in a position to bring their bananas into the European market first.

However, the Commission said that if no agreement could be reached on the "first come, first served" basis by mid-October, it planned to start negotiations on a tariff-only system.

France has strongly opposed a tariff-only system, saying it would jeopardise producing regions such as the French West Indian island of Guadeloupe.The Commission will detail its proposals to European Union foreign ministers at a meeting on July 10 when it will seek authorisation from European Union governments for its strategy.

Lamy said the Commission would consult the United States and other interested parties on its new proposals. EU officials have said the Commission could not broker an agreement on the lines it originally proposed because of disagreement between the United States and banana exporters on how to divide up EU import quotas.

Lamy said the United States had insisted import licences should be distributed based on shipment levels before the EU created a single banana market in 1993.

But Ecuador, whose exports were relatively small before 1993, insisted on a post-1993 reference period, he said.

"We hope that at the end of the day, the pressure which the two main American operators are making on the US administration will turn into ... rational behaviour," Lamy said.

Glenys Kinnock, a British Labour member of the European Parliament, branded a tariff-only solution unacceptable and accused the Commission of doing a deal with Washington.

"The Commission proposal would devastate the lives of Caribbean islanders who depend on a system which offers fair access to Europe's markets," she said in a statement.

-- (Reuters)