EC Bananarama 1992

The disparate banana import policies currently operating in member states of the European Community (EC) are inconsistent with the Community's objective of full economic integration in 1992. Under separate national legislation, widely varying banana prices apply across different member states, varying duties and import quotas apply to the external (world) market, and internal trade is virtually excluded. The inconsistencies are obvious and politically they are highly transparent. Community imports make up about a third of world trade and more than 40 percent of the trade occurs under preferential trade agreements. The special arrangements confer sizable subsidies on some African and Caribbean banana producers and disadvantage other exporting countries -- mainly other Latin American producers. Adoption of a'common'banana regime in the Community in 1992 could potentially alter the pattern of world trade, the world price for bananas, and the welfare of exporting and consuming countries. The purpose of this study is to assess the main economic effects of existing policies and of various policy alternatives. A detailed review of recent trends in the banana market and of existing national policies is provided. A comparative-static model of the EC and world banana markets is used to illustrate the broad trade, welfare and price implications of current and alternative policies, and a simulation model estimates the impact of a range of policies for the Community after 1992.