“Everybody is finally on board and an initialling of the
deal is scheduled for Tuesday,” one diplomat with direct
knowledge of the negotiations told Reuters.

The deal resolves the world’s longest-running trade dispute,
which involves banana exporters in Latin America and other
regions challenging the EU’s preferential treatment of producers
in the Africa, Caribbean and Pacific region.

The agreement means the European Union will steadily cut
tariffs on bananas supplied from Latin America and other smaller
producers such as Thailand and the Philippines.

Under the deal, the duties on bananas would fall to $114 a
tonne by 2016 or a few years later from $176, with an initial
cut to $148.

In return, Latin American banana producing countries are
expected to drop challenges to the European Union, the world’s
largest trade zone, at the World Trade Organisation.

Poorer ACP growers in mostly former European colonies will
get around 200 million euros ($293.3 million) in compensation
for the negative effects the pact may have on the preferential
treatment given to them by Brussels, diplomats said.

The deal is likely to reduce prices for consumers, increase
competition in the banana market and strengthen the hand of
low-cost Latin American exporters.

Although the United States does not export bananas, it is a
party to the agreement because several big distributors and
processors such as Chiquita <CQB.N>, Dole <DOLE.N> and Del Monte
<DLM.N> are U.S. corporations and are likely to benefit from the
deal. Irish company Fyffes <FFY.I>, a major European
distributor, will also gain from the new agreement.

(Reporting by Darren Ennis; Editing by David Brunnstrom)

Reykjavik had hoped to get approval from EU leaders at a
summit on Thursday to formally launch accession talks with the
27-nation bloc, but a delay in appointing a new European
Commission — the executive that steers EU enlargement policy –
has stalled the process, the diplomats said.

The new Commission was due to take office on Nov. 1 but was
delayed until EU leaders appointed a new EU president and high
representative for foreign affairs as part of the Lisbon reform
treaty, which came into force on Dec. 1. The new 27-member EU
executive is expected to take office on Feb. 1.

“There are three obstacles. The first is that we have to
wait for a new European Commission since the current executive
cannot take any legally-binding decisions,” one diplomat with
knowledge of the talks told Reuters.

“The second problem is that due to the delays in the
Commission, its first draft opinion will not be published until
Dec. 14, and the third reason is that Germany has not sorted out
its constitution in relation to the EU’s Lisbon reform treaty.”

EU Leaders can only make their decision on whether to start
formal negotiations with Iceland once the European Commission
has made its recommendation.

“The Commission report will be in place for the next EU
summit in March and the talks should be launched then, based on
what the Commission has indicated so far,” another diplomat
said.

Iceland launched its bid to join the bloc earlier this year
after the collapse of the country’s banking system left the
economy in tatters, forcing it to accept billions of dollars in
aid from the International Monetary Fund and other lenders as
its currency, the krona, virtually stopped trading overnight.

The resolutely independent Nordic nation had resisted
joining the EU over concerns about access to its rich fishing
grounds — a mainstay for the island’s brittle economy.

Diplomats in Brussels expect the country to join the EU more
quickly than other candidate countries, possibly in two years,
since Iceland is already part of the EU’s single market and its
borderless Schengen area.

On Monday, Iceland’s economy minister was quoted as saying
his country could be in the European Union in two years and a
member of the 16-nation euro zone perhaps by 2014. [nGEE5B607K]

The European Union and Latin America had hoped to wrap up a
deal on Friday to end the 16-year-old “banana wars”. An
agreement would also need the endorsement of African, Caribbean
and Pacific (ACP) countries and the United States.
[ID:nGEE5B11Z6]

“The deal is all but done. But we still need a few more days
to clear up some small technical issues in the legal drafting,”
a European diplomat told Reuters.

Latin American diplomats agreed that a deal was days away
and that there were no major issues left unresolved.

The pact aims to cut the tariffs paid on bananas from Latin
America and shield the European Union from further legal action
at the World Trade Organisation, which has condemned the EU’s
import regime.

Under the deal, the duties on bananas would fall to $114 a
tonne by 2016 or a few years later from $176, with an initial
cut to $148.

Poorer ACP growers in mostly former European colonies will
get around 200 million euros ($300 million) in compensation for
the negative effects the pact may have on the preferential
treatment given to them by Brussels, diplomats said.

Caribbean countries say their economies will be devastated
by a deal they see as inevitable. Banana exports are the
mainstay of their economies and adjusting to the loss of markets
is already hurting producers and communities on the islands.

Although the United States does not export bananas, it is a
party to the agreement because several big distributors and
processors such as Chiquita <CQB.N>, Dole <DOLE.N> and Del Monte
<DLM.N> are U.S. corporations. Another big distributor is the
Irish company Fyffes <FFY.I>.

“We are waiting for the United States to come on board, and
then it can be initialled,” said another European diplomat.

Asked when that could be expected, the diplomat said: “It
takes what it takes.” But the EU and Latin Americans had now
agreed on the deal, the diplomat said.

The deal — removing an obstacle to an eventual agreement in
the WTO’s long-running Doha Round — is linked to a broader pact
in trade in tropical products, such as rum, tobacco, sugar,
arrowroot and cut flowers.

Concessions by Latin American banana exporters such as
Colombia and Ecuador, plus an aid package from Brussels, will
have persuaded the ACP countries to sign up to the deal, which
erodes their competitive edge in the lucrative European market.

Caribbean ministers said it remained to be seen how the aid
would be divided among ACP members with diverging interests.

For a related factbox, click on [ID:nGEE5B30Y2]
(Additional reporting by Jonathan Lynn in Geneva; editing by
David Stamp)
((brussels.newsroom@thomsonreuters.com; +32 2 287 6830))
($1=.6634 euro)

The deal to end the 16 year-old “banana wars” — which also
includes African Caribbean and Pacific states (ACP) and the
United States — will cut the tariff paid on bananas from Latin
America and shield the European Union from further legal action
at the WTO, which has condemned its import regime.

“Everybody is on board. The last obstacles have been cleared
and closure is expected in the next 24 hours allowing for an
initialling of the deal on Friday,” a diplomat told Reuters.

The essential element was that the tariff on bananas would
fall to $114 a tonne by 2016 from $176, with an initial cut to
$148.

Poorer ACP growers in mostly former European colonies will
get around 200 billion euros ($301.4 billion) in compensation as
part of the pact, diplomats said.

EU Agriculture Commissioner Fischer Boel said earlier on
Wednesday agreement had been reached between the two main
parties — Latin American producers and less efficient ACP
growers which have preferential access to EU markets.

Although the United States does not export bananas, it is a
party to the agreement because several big distributors and
processors such as Chiquita <CQB.N>, Dole <DOLE.N> and Del Monte
<DLM.N> are U.S. corporations. Another big distributor is the
Irish company Fyffes <FFY.I>.

“There are some minor housekeeping points to be finalised
with the U.S., but this should happen in the next 24 hours,” one
diplomat said.

PEACE CLAUSE

Ministers from Caribbean countries, who say their economies
will be devastated by an agreement they recognise as inevitable,
said they had not seen details of the deal and raised concerns
about its possible economic effects.

Banana exports are the mainstay of many Caribbean economies
and adjusting to the loss of markets is already hurting
producers and communities on the tiny islands.

“The ACP are now on board. We have reached a breakthrough,”
another diplomat involved in the negotiations said.

Diplomats said a compromise, or so-called “peace clause”,
had been reached over an EU demand that the 27-nation bloc
should be exempt from further legal challenges as soon as the
deal is signed rather than when the tariff changes have been
registered at the WTO.

Formal registration, known as certification, could take
months or years if other WTO members challenge the new tariffs.

But under the peace clause, Latin American exporters have
agreed not to launch any new disputes during the certification
process if Brussels was implementing the deal as agreed, the
diplomats said.

The deal — removing an obstacle to an eventual agreement in
the WTO’s long-running Doha Round — is linked to a broader pact
in trade in tropical products, such as rum, tobacco, sugar,
arrowroot and cut flowers.

Concessions by Latin American banana exporters such as
Colombia and Ecuador, plus an aid package from Brussels, will
have persuaded the ACP countries to sign up to a deal that
erodes their competitive edge in the lucrative European market.

Caribbean ministers said it remained to be seen how the aid
would be divided up among ACP members with diverging interests.
(Editing by Myra MacDonald)
((jonathan.lynn@reuters.com; +41 22 733 3831; Reuters
Messaging: jonathan.lynn.reuters.com@reuters.net ))
($1=.6635 Euro)

Rehn takes over from Spaniard Joaquin Almunia, who will
become competition commissioner in the 27-country bloc’s
executive. France’s Michel Barnier was named internal market
commissioner with responsibility for financial services.

The formation of the European Commission is the latest stage
in the EU’s efforts to maintain influence on the world stage
after the economic crisis.

The 27-person team, which represents almost 500 million
people, is likely to take office early next year, and will serve
for five years but needs the European Parliament’s approval.

“In five years’ time, I want this Commission to have been
instrumental in leading Europe out of the economic crisis
towards a competitive economy that provides sustainable growth,”
Barroso told a news conference.

The nomination of the Commission, a powerful regulatory
body, follows the naming of a president and a new foreign policy
chief and ratification of a treaty intended to make EU
decision-making smoother.

Almunia, a 61-year-old Socialist, has won a reputation for
independence and fiscal prudence as economic and monetary
affairs commissioner. Rehn, 47, has overseen the accession of
Romania and Bulgaria as EU enlargement commissioner.

“Both men are (among) Commission President Barroso’s top
lieutenants and they are seen as safe pairs of hands,” an EU
diplomat said.

“In making these appointments, Barroso keeps tight control
on two top jobs and keeps Paris, Berlin and London’s hands off
them.”

Europe’s economy has started to recover after the global
crisis. The EU faces a decision on when to stop emergency
financial measures that were used to prop up the economy, and
needs to tackle soaring budget deficits.

As competition commissioner, taking over from Neelie Kroes
of the Netherlands, Almunia will be asked to enforce strict
rules on state aid, prevent protectionism and uphold the EU’s
single market.

Other appointments included:

– Catherine Ashton: Foreign Affairs High Representative

– Dacian Ciolos (Romania): Agriculture

– John Dalli (Malta): Health and Consumer Policy

– Karel De Gucht (Belgium): Trade

– Stefan Fuele (Czech Republic): Enlargement

– Connie Hedegaard (Denmark): Climate Action

– Maire Geoghegan-Quinn (Ireland): Research and Innovation

– Janusz Lewandowski (Poland): Budget/Financial Programming

– Guenther Oettinger (Germany): Energy

– Janez Potocnik (Slovenia): Environment

– Neelie Kroes (Netherlands): Digital Agenda.

((For more on the EU, please double click on [EU/LOOK])}

(Editing by Dale Hudson)
((Brussels Newsroom, Tel:+32-2 287 6830; Fax:+32-2 230 7710;
brussels.newsroom@reuters.com))

They also chose Baroness Catherine Ashton, a Briton little known even in her own country, as EU foreign affairs chief under a deal that kept out more established figures such as Tony Blair, and raised questions about how the bloc plans to lift its profile.

The appointments are intended to bolster the EU’s standing and help it to match the rise of emerging powers such as China following the global economic crisis, but neither Ashton nor Van Rompuy is a familiar figure outside Europe.

“I believe my experience will speak for itself. Am I an ego on legs? No I’m not. Do I want to be seen to be out there saying everything all the time? No I don’t. Judge me on what I do and I think you’ll pleased with the outcome,” Ashton told reporters.

Von Rompuy promised to move “step by step” to help Europe out of “exceptionally difficult times, a period of anxiety, uncertainty and lack of confidence.”

Van Rompuy, 62, and Ashton, 53, are compromise candidates who plan to use quiet diplomacy and consensus. At least initially they will not have the weight in foreign capitals that a better-known figure such as Blair, a former British prime minister, would have had.

Agreement on the positions took weeks, undermining efforts to present the bloc as a united force, partly because Britain had demanded Blair should be president.

The breakthrough came when Prime Minister Gordon Brown dropped that demand and backed EU Trade Commissioner Ashton as foreign affairs chief and vice-president of the EU’s executive European Commission instead.

POLITICAL BALANCE

The role of president of the council of EU leaders was created under the Lisbon treaty, which takes effect on December 1 and creates a diplomatic corps to be headed by Ashton. She replaces Spaniard Javier Solana.

The White House said Washington had no stronger partner than Europe in advancing security and prosperity around the world.

“These two new positions, and related changes to take effect on December 1 as a result of the implementation of the Lisbon Treaty, will strengthen the EU and enable it to be an even stronger partner to the United States,” it said.

EU leaders had sought a political balance to satisfy member states and the European Parliament, whose approval is needed for Ashton. This was achieved by appointing a center-right president and a center-left high representative for foreign affairs.

Van Rompuy, who will not need the assembly’s approval, won plaudits for holding together Belgium’s fragile coalition government after becoming prime minister less than a year ago.

Ashton, a former member of the House of Lords, Britain’s upper house of parliament, has little foreign affairs experience. But she has made a good impression as trade commissioner.

“I’m one of those people that believe that characters can grow into jobs,” German Chancellor Angela Merkel said.

Blair had long been the front-runner but many other states wanted a candidate more likely to lead by consensus, and Germany and France joined forces to block his candidacy.

They remain powerful forces in the EU although they have none of the top jobs which also include a Portuguese, Jose Manuel Barroso, as European Commission President.

Barroso will now complete the line-up of the Commission under him and Ashton. Deals are sure to have been made on some of the jobs during the consultations on the top jobs led by Sweden, which holds the EU presidency for the rest of this year.

EU diplomats said it was now all but certain that former French Foreign Minister Michel Barnier would be commissioner for the EU’s internal market, one of the most powerful and most sought-after positions in Barroso’s team.

Failure to agree on the top jobs would have highlighted divisions in a bloc representing nearly 500 million people, and undermined the goal of boosting the EU’s image abroad.

In backing Ashton, the leaders also answered calls by many EU officials for a woman to have one of the Union’s top posts.

(Writing by Timothy Heritage; editing by Andrew Roche)

Such a deal is a vote for low-key consensus builders over big-name personalities and means that while European decision-making may become more streamlined, the EU will still struggle to punch its weight in international diplomacy.

Van Rompuy, virtually unknown on the world stage, is regarded as a sharp and efficient operator in his home country. He has been prime minister for only a year, but in that time has won high praise for bringing Belgium’s long-divided Flemish and French-speaking communities closer together.

In backing him for president of the EU Council, a move largely driven by France and Germany, EU leaders are asking Van Rompuy, a 62-year-old consummate politician fond of writing Haiku poems, to serve as a business-like chairman of the union.

“It’s not a glamour team,” an EU diplomat said.

He can be expected to run a tight, well-organised agenda, and his behind-the-scenes style should help find consensus among the EU’s 27 sometimes fractious states. But when it comes to representing the EU abroad, he may battle to be noticed.

The choice of Ashton to serve as high representative for foreign affairs is also a nod towards understated efficiency rather than the influence of a high-profile, big-name diplomat.

Ashton, who has spent the past year serving as the EU’s trade commissioner, has relatively little experience in foreign affairs. But she picked up her trade brief quickly and has earned a reputation as being an astute negotiator.

“It is not a bad choice,” said Hugo Brady, an analyst at the Centre for European Reform think tank, referring to the pairing.

“Ashton does not have very strong foreign policy credentials, but she is a very capable person. It is good that the post goes to Britain. It will give the EU’s foreign policy a more global dimension,” he said.

From the outside, however, particularly from the point of view of Washington, Beijing or New Delhi, the EU’s choices are likely to raise some question marks.

If U.S. President Barack Obama or Chinese President Hu Jintao wants to “speak to Europe,” they will now be expected to call Van Rompuy or Ashton, largely unfamiliar names.

Instead Jose Manuel Barroso, president of the European Commission, the bloc’s executive, is likely to be a more high-profile touchstone for foreign leaders, even if he too is a relatively unknown quantity in many overseas capitals.

To that extent, the choices of Ashton and Van Rompuy seem to go against the original concept of the jobs, as described in the Lisbon reform treaty, which was to increase the bloc’s global clout as well as streamlining decision-making.

But with 27 countries in the union, what is needed before the EU can become a major player in world affairs is a set of common foreign and security policy objectives. To get those, negotiation, debate and compromise are needed first.

Van Rompuy and Ashton, 53, will be instrumental in trying to achieve that, and the EU’s leaders will know they have two skilled and efficient politicians working on the issues.

“(Ashton)’s never been a foreign secretary. However, she has been in the international trade business for quite some time and has quite of lot of experience in multilateral affairs,” said Antonio Missiroli of the European Policy Centre.

In her time as trade commissioner, Ashton has been key in bringing the United States and India together to kickstart the Doha round of world trade talks.

She has also brokered the EU’s largest foreign trade agreement, a 100 billion euro pact with South Korea, and solved two of the EU’s most intractable trade disputes.

With international diplomacy closely tied to trade, and the EU constituting the world’s largest economic trading zone, Ashton appears to be a choice that reflects the EU’s desire to tie its economic strength closely to diplomatic influence.

The pairing also largely leaves egos out of the running. The EU’s 27 heads of state and Barroso will therefore know they still have large chairs at the table when it comes to taking major decisions affecting their interests.

(Additional reporting by Marcin Grajewski and David Brunnstrom, editing by Dale Hudson)

The EU on Monday published the findings of the investigation
it launched a year ago into allegations of human rights
violations and torture in the 25-year war between the Sri Lankan
government and Tamil Tiger rebels.

“The report comes to the conclusion that Sri Lanka is in
breach of its commitments. We will now prepare for a legal
proposal to remove the additional trade preferences which may
enter into force mid-next year,” a spokesman for the EU’s
executive Commission said.

EU sources said the report showed evidence of police
violence, torture and breaches of labour laws, notably the use
of underage children.

“The evidence is very clear that Sri Lanka does not fulfil
the basic human rights conditions of GSP Plus,” one EU source
said, in reference to a system of preferential tariffs –
sometimes as low as zero — for the world’s poorest countries.

Brussels has consistently warned Sri Lanka that it must meet
27 international human rights conventions to retain its
Generalised System of Preference Plus trade scheme. Suspending
the preferential tariffs would hit Sri Lanka’s textile industry
hard and many fear big job cuts as a result.

In 2008, the European Union was Sri Lanka’s largest export
market, accounting for 36 percent of all exports, followed by
the United States with 24 percent. Garments earned the country a
record $3.47 billion from EU markets and were its top source of
foreign exchange, followed by remittances of $3 billion and tea
exports of $1.2 billion.

The Commission will discuss Monday’s report and decide by
the end of November whether to propose to EU member states that
they temporarily suspend Sri Lanka’s GSP Plus status. A decision
would likely take effect around June next year, six months from
a vote by member states, a Commission official said.

Major European importers, notably large British retailers
such as Marks & Spencer <MKS.L>, are concerned about possible
increases in the cost of buying from one of their major
suppliers amid the worst economic downturn in decades.

Colombo came under heavy pressure from Western nations,
including those in Europe with large Tamil populations, because
of civilian deaths in the final phase of the war against the
Tigers, which ended with the separatists’ defeat in May.

The Sri Lankan government has repeatedly accused European
countries with large and vocal Tamil populations of pandering to
pro-Tamil Tiger viewpoints in exchange for electoral support.
Last year, it said it would neither cooperate with the EU
investigation nor allow investigators to visit the island.

Rajiva Wijesinghe, Colombo’s secretary of ministry for human
rights and disaster management, last week criticised a leak of
the report as an attempt to undermine Sri Lanka. “The (trade)
concession is a total process of economics, but the process is
hijacked by politics. There is a political motive,” he said.

(Reporting by Darren Ennis and David Brunnstrom, editing by
Mark Trevelyan)