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EC Bananarama 1992 (English)

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.


  • Author

    Borrell, Brent Maw-Cheng Yang

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  • Document Type

    Policy Research Working Paper

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  • Country

    Europe and Central Asia,

  • Region

    Europe and Central Asia,

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  • Doc Name

    EC Bananarama 1992

  • Keywords

    price elasticity of supply;world price;exporting country;price elasticity of demand;free access to imports;tariff on import;tariff import;deficiency payment;domestic market price;single european market;free trade policy;demand for import;internal trade barrier;preferential market access;international financial statistic;loss of welfare;preferential trade agreement;domestic consumer price;efficient resource allocation;common external tariff;banana import;dollar area;world economy;import demand;direct payment;industrial country;export price;aid payment;free market;tax revenue;alternative policy;simulation model;export supply;government revenue;simulation result;import quota;retail price;banana industry;market requirement;Trade Policies;tariff revenue;external affairs;duty-free access;economic integration;sales tax;world trade;supply curve;domestic price;producer price;preferential status;market clearing;world exports;welfare gains;domestic consumption;price rise;discriminatory tariff;increased export;licensing arrangement;contingent risk;general taxation;policy option;welfare benefit;greater access;efficiency loss;marginal land;international demand;alternative use;supply elasticity;baseline scenario;qualitative analysis;national policy;export revenue;consumption decline;import increase;economic welfare;estimated elasticity;consumer welfare;import restriction;quality improvement;preferential treatment;equilibrium price;franc zone;internal market;trade regime;policy regime;trade arrangement;trade system;domestic production;unrestricted access;export quantity;world market;consumer demand;high transportation;import price;transfer cost;foreign exchange;export earning;export earnings;single market;efficient mechanism;Provide Aid;domestic sources;large subsidy;minimum level;national legislation;special arrangement;producer surplus;windward islands;welfare effect;theoretical model;transportation cost;partial equilibrium;



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Borrell, Brent Maw-Cheng Yang

EC Bananarama 1992 (English). Policy, Research, and External Affairs working papers ; no. WPS 523. International trade Washington, D.C. : World Bank Group.