The 2006 Reform of the EU Domestic Policy Regime for Bananas. An Assessment of its Impact on Trade.

The paper provides a quantitative assessment of the possible market implications of the December 2006 reform of the EU domestic policy regime for bananas. It is shown that, depending on implementation choices to be made at the member country level, the impact of the domestic policy reform on trade can be of a larger order of magnitude than that of the controversial 'tariff-only' regime the EU introduced earlier in the same year. The simulations presented in this paper show that, ceteris paribus, if France, Portugal and Spain decide to decouple payments to their banana producers EU imports will increase by 13% and MFN exports to the EU by 16%; if they decide for a 2005 Memorandum-like option, EU imports still increase by 9% and MFN exports to the EU by 11%