The EU's initial response to the WTO finding that its banana import regime

The EU's initial response to the WTO finding that its banana import regime did discriminate against the Latin Americans was slow and grudging.On the other hand, the US response to the latest WTO delay is equally unhelpful It plays to the gallery of domestic politics Both sides need their heads banging together. Without question, the prosperity of the post-war years has been fostered by the increasing liberalisation of trade. The US government has repeatedly demonstrated its commitment to free trade principles as the best and fairest engine of world growth, despite the occasional tactical setback for sordid political reasons.The Europeans, too, bang the same drum, though admittedly not quite so enthusiastically. The EU, like the US, has an obligation to abide strictly by the rules of the World Trade Organisation it was so influential in creating. The politics of the pork barrel is threatening the livelihood of Caribbean and West African banana growers, to whom Europe has an obligation dating from colonial days. As always, however, it is not quite as simple as that The Americans have a point, for all the Chiquita influence. THE BANANA wars now raging between Europe and the US make it very tempting to wheel out the old high horse and climb aboard. How dare the perfidious Americans put the innocent Scottish woollen industry and Britain's makers of scented candles out of business in an apparently ridiculous and petty dispute over whose bananas Europeans ought to buy? It just so happens that the Latin American banana importer the Clinton Administration has chosen to throw its weight behind, Chiquita, is controlled by a company that has made hundreds of millions of dollars worth of political donations to both Democrats and Republicans.

"There are 12.5 million passengers a year using Eurotunnel and even if duty-free goes there will still be a significant business left."Duty-paid prices are the Calais terminal are still about 35 per cent cheaper than high street prices in the UK, he said, giving British travellers an incentive to shop on their way home.At the Folkestone terminal, which is much smaller, BAA plans to invest pounds 7m-pounds 8m on improving the facilities and then seek planning permission to expand the site in order to open more outlets.. There are fears that this could slump by two-thirds if duty-free is scrapped, putting pressure on Eurotunnel to raise prices on its car shuttle.But BAA's retail director, Brian Colley, said it was confident of stemming the loss of sales. Last year its retail income reached about pounds 170m, the vast bulk of which came from duty-free. British Airways is a shareholder in ICRR."We are looking at the economics of all the options and co-operating with the Department of Transport, because the independent review will look at wider economic benefits and we welcome that because it enables someone to judge from the point of view of the broader benefits of the service," said Mr Taylor.Eurostar also said passenger numbers rose 6 per cent last year to 6.3 million, while its share of the business traveller market rose by 2.8 per cent on the Paris service and 4.2 per cent on the Brussels service, where investment had cut 30 minutes off the journey time.Eurotunnel is Europe's second-biggest duty-free retailer after Heathrow airport. The Government last year launched an independent inquiry into the viability of these services after the Select Committee criticised an ICRR report that said regional services would be unprofitable while favouring new services from Heathrow Airport.

We won't get 29 per cent this year but we still expect improvements although not at the same level. I don't think that because we have knocked pounds 40m off losses we will carry on doing that."The profit forecast includes the benefit of the opening of the first stage of the upgraded Channel Tunnel rail link, which will wipe 15 minutes off the journey time from London to Paris when it is completed in 2003.Mr Taylor refused to be drawn into the argument over the failure to provide promised regional services north of London. He said revenues across the whole business, including the French and Belgian arms, had risen 29 per cent to pounds 350m. Eurostar (UK) had cut costs by 10 per cent through a recruitment freeze and axeing all peripheral research projects.He said the company was on target to break even by 2005, the date given to the Commons Select Transport Committee last year by Inter-Capital and Regional Rail (ICRR), the consortium that has the franchise to operate the service until 2010.But he said: "Let's not kid ourselves. Sir John Egan, the BAA chairman, outlined an ambitious plan to generate at least pounds 100m in sales by next year, even if duty-free is abolished across Europe in July.BAA intends to start selling a wider range of products, including fashion accessories, compact discs and photographic equipment, while plans for the Calais terminal include outlets specialising in fine wines and "connoisseur cognacs"Eurostar (UK), which is now controlled by British Airways and National Express, said it was on target to break even in 2005, a decade after its launch, as it published figures showing it had cut its operating loss to pounds 95m in 1998 from pounds 135m the previous year.Hamish Taylor, its managing director, said he had abandoned passenger number targets and was concentrating on raising revenue and yield. An aggressive drive to attract business travellers and a radical cost- cutting programme helped increase revenues by 29 per cent at Eurostar (UK), the British arm of the high-speed train service to Paris and Brussels. Meanwhile Eurotunnel announced that the retail facilities at its Folkestone and Calais terminals are being taken over by the airports operator BAA in a 15-year deal. THE CHANNEL Tunnel received a double boost yesterday after Eurostar reported a big increase in passenger revenues and Eurotunnel unveiled plans to combat the threatened loss of duty-free sales this summer.