In 2013, the EU signed a treaty with a number of Central American countries. This was done in order to regulate the banana market. Nicaraguan exports have fallen under this agreement since 1 August 2013. According to the arrangement, the EU can begin an emergency procedure if necessary. This can be done if a certain limit is exceeded. Hereby, preferential customs regulations of the country concerned can be suspended. This year, on 10 April, the exports from Nicaragua to the EU exceeded the established threshold of 14.000 tonnes.
The EU has decided not to suspend the preferential customs duty. The stability of the European banana market was one of the factors taken into consideration when this decision was made. Bananas from Central American countries represent only 1,2% of the European banana imports to which the treaty applies. Nicaragua's share of the total European imports of bananas is 1%.
This county's position is in contrast with the shares of the other countries included in this accord. The supply from the three largest banana exporters has not nearly reached the threshold - Colombia (17,8%), Ecuador (23,4%), and Costa Rica (22,2). This means the 'unused' volume within the stabilising mechanism is about 4,8 million tonnes. This is much less than Nicaragua's total imports to date (14.787 tonnes).
The EU also did not see any effect on the market price. Despite the larger volumes from Nicaragua, banana prices in Europe remain high. In March 2018, bananas recorded a price of EUR1.094 per ton. This was regardless of origin. That is 11% higher than the price in the same month a year earlier. The average wholesale price for European bananas is at EUR1.006 per ton. This is comparable to the price in March 2017 (EUR996/ton).
Based on this analysis, the EU stated that there was no reason to suspend Nicaragua's lower import costs. Last year, this country exceeded the threshold in May. Imports from Nicaragua totalled 50.000 tonnes for the whole of 2017.