Chiquita

3.

The EU Trade Policy 

The EU's regulatory regime for imported bananas was enacted in 1993. Under this complex system banana imports were subject to one of two two-tier tariff rate quota systems based on their country of origin. ACP bananas received duty-free entry up to a ceiling of 8577000 metric tons, allocated to each of the banana-producing countries on the basis of their historic exports to the EU. ACP imports in excess of this amount paid 750 ECUs per metric ton. Non-ACP bananas were subject to a duty of ECU 100 per metric ton on imports up to 2 million metric tons, and ECU 850 on imports above that amount. Thirty-three and a half percent of the 2 million tons of non-ACP bananas subject to the lower duty of ECU 100 was reserved for European marketing firms, most of which historically had marketed only ACP bananas.

Implications on Chiquita Sales

Chiquita, post WWII, was Europe’s main banana provider, exporting to Germany as well as to Great Britain and other countries.

The European Union implemented protectionist trade policies and restricted quantity of imports from certain nations. This resulted in significant costs for Chiquita. With a limited ability to export ACP bananas, Chiquita lost a third of its European market share between 1992 and 1995 and its stock fell from $40 in 1991 to $13.36 in 1994.

The EU did eventually agree to reopen its markets to Latin American bananas, but too slowly, and with too many constraints, to be of much help to Chiquita. In 2001, stretched by its legal battles and dwindling market share, Chiquita filed for Chapter 11 protection.

Changes in EU quota system after the case

The European Union and the United States announced an accord in 2001 resolving a long-running banana dispute that has been a source of constant friction between the transatlantic trading partners.EU has agreed to dismantle a first-come, first-served banana import policy that favoured European multinationals and imports from former European colonies in...