RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/329
30 October 2001
(01-5334)
Council for Trade in Goods Original:  English/
French
EXAMINATION OF THE REQUESTS FOR A WTO WAIVER –
NEW ACP-EC PARTNERSHIP AGREEMENT
Replies of the EC and the ACP states to the questions submitted by Australia, Canada, Colombia,
Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay and Thailand
The following communication, dated 26 October 2001, has been received from the Permanent
Missions of the EC Commission and Gabo n on behalf of the EC and ACP states.
_______________
The European Community (EC) and the African, Caribbean and Pacific (ACP) States, parties
to the Partnership Agreement signed at Cot onou (the Partnership Agreement), welcome this
opportunity to respond to the questions and comments of eleven Members in relation to the request
for a GATT Article I waiver that they submitted on 29 February 2000, and to the request for a GATT
Article XIII waiver that the EC submitted on 22 June 2001.
Many questions submitted by Members tend to overlap with each other or to cover the same
subject.
In order to reply to them in a comprehensive and structured way, the EC and the ACP States
have therefore decided to adopt the following methodology: first, an introduction to the basic features
of the Partnership Agreement and of the preferenti al tariff treatment granted under that Agreement
will be provided, followed by a description of the trade regime applicable to bananas, as most
questions from Members appear to concern that particular product. Second, detailed replies to thequestions submitted by Members will be provided, by grouping them whenever they concern the same
issue.
1. Introduction
1.1. General features of the Partnership Agreement
The Partnership Agreement, signed in Cotonou on 23 June 2000, builds on the acquis of 25
years of co-operation under the successive Lomé Conventions but brings profound reform of the key
aspects of the ACP-EC partnership. It defines a perspective that combines politics, trade and
development in order “to promote and expedite the economic, cultural and social development of theACP States, with a view to contributing to peace and security and to promoting a stable and
democratic political environment” (Art. 1(1)). The partnership is centred on the objective of reducing
and eventually eradicating poverty, consistent with the objectives of sustainable development and the
gradual integration of ACP countries into the world economy and into the world trading system.G/C/W/329
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The primary objective of economic and trade co-operation between the parties is to foster “the
smooth and gradual integration of the ACP States in to the world economy, with due regard to their
political choices and development priorities, thereby promoting their sustainable development and
contributing to poverty eradication in the ACP countries” (Art. 34(1)).
The ultimate objective of the economic and trade co-operation is to enable the ACP States to
play a full part in international trade. The co-operation is therefore  directed at enabling the ACP
States to manage the challenges of globalisation and to adapt progressively to the new conditions of
international trade (Art. 34(2)).
To achieve this objective, the ACP and the EC have agreed to base economic and trade co-
operation on a comprehensive approach, aiming at enhancing the production, supply and tradingcapacity of the ACP countries as well as their capacity to attract investment.
They therefore agreed to completely overhaul past ACP-EC co-operation and to conclude
new WTO-compatible trading arrangements, progressively removing barriers to trade between them
and enhancing co-operation in all areas relevant to trade. To this end, Economic PartnershipAgreements (EPAs) will be negotiated. Negotiati ons will take place during a preparatory period,
starting with the entry into force of the Partnership Agreement and ending on 31 December 2007.
In order to facilitate the transition to the new trading arrangements, the non-reciprocal trade
preferences applied under the Fourth Lomé Convention will be maintained during the preparatoryperiod, under the conditions defined in Annex V of the Partnership Agreement. The preferential
treatment established by the Fourth Lomé Convention had been covered after appropriate review by a
GATT Article I waiver under a decision of the Contracting Parties of 9 December 1994 ( Document
L/7604 of 19 December 1994 ), confirmed on 14 October 1996 ( Document WT/L/186 of
18 October 1996 ).
Therefore, the preferential tariff treatment laid out in the Partnership Agreement applies to all
products without discrimination.  The request for a GATT Article I waiver relates to that across-
the-board tariff preference until 31 December 2007, in other words the same tariff preferences
as the GATT Article I waiver for the Fourth Lomé Convention.
1.2. Implementation of preferences for bananas
Since the creation of the EC common market organisation for bananas in 1993, bananas
originating in the ACP have benefited from a tariff preference both within and outside the tariff rate
quotas. This is due to the EC’s obligation under the then Fourth Lomé Convention continued by the
Partnership Agreement.
In view of the contractual obligations towards the ACP countries and the need to guarantee
them proper conditions of competition, imports of bananas originating in those countries benefit from
a tariff preference of € 300 per tonne.
The Fourth Lomé Convention and the Partnership Agreement do not regulate the structure of
the EC banana trade regime, but simply oblige the EC to provide the required tariff preference within
whatever system the EC decides to use.
The current EC banana trade regime is based on the use of three tariff rate quotas for a
transitional period ending on 31 December 2005, after which a regime without tariff rate quotas
should in principle apply, after completion of the appropriate GATT Article XXVIII procedures.G/C/W/329
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Under the terms of Understandings reached with the United States on 11 April 2001 and with
Ecuador on 30 April 2001 (notified as document WT/DS27/58), the three tariff rate quotas will be
managed as follows between 1 January 2002 and 31 December 2005 (“Phase 2” of the
Understandings):
1. A bound 2.200.000 tonnes “A” tariff rate quota open to imports of all origin, subject
to a bound tariff of € 75/tonne for non-preferential suppliers (and a zero duty for ACP
bananas by virtue of the tariff preference),
2. an autonomous 453.000 tonnes1 “B” tariff rate quota open to imports of all origin,
subject to a tariff of € 75/tonne for non-preferential suppliers (and a zero duty for
ACP bananas by virtue of the tariff preference), and
3. an autonomous 750.000 tonnes “C” tariff rate quota open to ACP imports only2, with
a zero duty.
The tariff rate applicable outside the tariff rate quotas is €680/tonnes on an MFN basis, with a
tariff preference of €300/tonnes for ACP bananas.
The reservation of that “C” quota for ACP bananas as from 1 January 2002 requires a waiver
under GATT Article XIII:1 and :2, and the EC has requested such a waiver for the duration of the
TRQ-based regime. The request for an Article XIII waiver is therefore not based on a provision of thePartnership Agreement, but on the Understandings reached with the US and Ecuador to solve the
long-standing Bananas  dispute.
2. Replies to questions
2.1. Questions relating to the Cotonou Agreement
(a) Questions on the effectiveness of trade preferences ( joint reply to questions 1 from Australia,
1 from Nicaragua and 6 from Thailand )
It should first be noted that trade preferences are an integral part of the world trading system,
as they are a tool to ensure that developing count ries secure a share in the growth in international
trade commensurate with the needs of their economic development. Furthermore, the maintenance of
non-reciprocal trade preferences under the Partnership Agreement is not an end in itself. The non-reciprocal trade preferences are only granted on a transitional basis, until the end of the preparatory
period, to allow time for the negotiation of new WTO-compatible trading arrangements.
Past ACP-EC trade co-operation has not brought the results expected since the ACP’s share
of total EC imports decreased from 6.7 per cent in 1976 to 2.8 per cent in 1999 and their share inworld exports decreased from 3.4 per cent in 1976 to 1.1 per cent in 1999.  This demonstrates that
tariff preferences alone are not an automatic engine for trade.
They offer opportunities, but their effect is limited if the preferred countries are not in a
position to seize them, especially because of capacity constraints.  Therefore, to give full value totrade preferences as a means to foster the integration of developing countries into the world economy,
other factors need to be considered in addition: supply and competitive constraints, enhanced
                                                     
1 The level of this tariff rate quota is currently equal to 353.000 tonnes.
2 Between 1 July 2001 and 31 December 2001 (« Phase 1 » of the Understandings), the level of the
« C » quota is 850.000 tonnes, it is open to imports from all origins, subject to a tariff of €300/tonne for non-
preferential suppliers (and a zero duty for ACP bananas by virtue of the tariff preference).G/C/W/329
Page 4
cooperation in trade-linked areas, technology transfer s, access to information and to world networks,
investment promotion strategies and private sector development.
As indicated above, EPAs will lead to the creation of largely integrated economic areas
between the ACP and the EC. This economic integr ation, governed by a stable, predictable and
transparent framework, will lead to an increase in  trade flows in the region, with the Community and
with the rest of the world, thereby promoting the smooth and gradual integration of ACP states into
the world economy.
(b) Questions on GSP ( joint reply to questions 1, 2, 10 and 13 from Paraguay and 1 from
Thailand )
As noted above, the non-reciprocal tariff preferences are only maintained on a temporary
basis so as to facilitate the transition to the new trading arrangements.  These new trading
arrangements will be fully consistent with the provisions of the WTO.
The new GSP scheme will be notified to WTO members when it is adopted.
(c) Questions on the specialisation in few commodities (reply to question 2 from Australia )
Exports from the ACP to the EC are currently concentrated in a few products. The first 5
products exported in 2000 account nearly for 50% of the total. They are petroleum oils (27.6 per cent
of total exports), diamonds (9.6 per cent), cocoa beans (4 per cent), coffee (3.2 per cent) and cane
sugar (2.9 per cent). The fact that the first four products are free of duty on MFN basis clearly
demonstrates that the lack of diversification and over-specialisation is not due to the trade preferences
but rather to the limited supply capacity of many  ACP.  Nevertheless, some ACP countries whose
exports were very concentrated in a few products 25 years ago, have succeeded in diversifying their
exports, taking advantage of the trade preferences.
(d) Questions on the impact of the transitional non-reciprocal trade preferences on non-ACP
developing countries  ( joint reply to questions 3 from Australia, 1, 2, 3, 4, 5, 8,  9 and 12 from
Paraguay and 2 from Thailand )
Despite their high level of trade preferences, the ACP countries have been unable to maintain
market share compared to other developing countries.
Between 1976 and 1995, the ACP countries’ share of the EC’s developing-country imports
dropped from 15 per cent to 11 per cent, while Asia’s share soared from around 12 per cent to around
53 per cent and the Mediterranean countries’ share increased by 5 points (to 18.3 per cent in 1995), anincrease matched by Latin America (16.5 per cent in 1995).  These figures show clearly that trade
preferences given in the context of the previous Lomé Conventions have not had a negative trade
impact on non-ACP developing countries.
(e) Questions on the procedure for amending the preferential regimes ( joint reply to questions 5
from Costa Rica, 3 from Nicaragua, 11 and I .4 from Honduras, I.5 and I.6 from Panama,
11 from Paraguay )
As laid out in Article 1 of Annex V to the Partnership Agreement, the EC is required to
provide preferential access to all products originating in the ACP.  With regard to most of the
products referred to in Article 1(a) of this Annex, the type of preferential access granted has beendefined in Declaration XXII attached to the Partnership Agreement.  Any potential request of the ACP
countries to define the preferential access for any of the remaining products will be examined inG/C/W/329
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accordance with the provisions of Article 1 (a) of Annex V.  The EC will duly notify Members should
any additional specification of preferences intervene.
Declaration XXVII to the Partnership Agreement provides for the possibility to amend the
access arrangements as defined in Declaration XXII.  Such an amendment is only possible “in thelight of the economic development requirements of the French overseas departments” and would
therefore, normally lead to a weakening of the arra ngements for specific products with regard to the
French overseas departments.  The EC would not ify Members should any such modification occur.
In accordance with the provisions of Article 36 (3) of the Partnership Agreement and Annex
V to this Agreement, the Protocols will be maintained during the preparatory period and reviewed “in
the context of the new trading arrangements, in pa rticular as regards their compatibility with WTO
rules, with a view to safeguarding th e benefits derived therefrom”(Art. 36(4)).
In the case of enlargement of the EC to new Member States, the Partnership Agreement and
its preferences should be regarded as part of the acquis  and so any new Member State would be
obliged to respect these engagements.  In the case that new ACP accede to the Partnership Agreement,they would be bound by the rights and obligations contained therein.  This means that tariff
preferences applicable to all ACP countries would extend to any such new members as well as the
waiver.
(f) Question relating to Article 9 of Annex V on safeguards ( reply to question 13 from Honduras )
The safeguard provisions laid down in Articles 8-11 of Annex V to the Partnership
Agreement are equivalent to the corresponding provisions in the Fourth Lomé Convention. The
procedures laid out in the implementing Regulation will be based on general agricultural safeguards
and will be consistent with WTO rules.
(g) Question relating to Article 23(g) on fair trade ( reply to question 1 from Honduras )
The promotion of fair trade products as referred to in Article 23(g) is a part of the
development strategies of ACP-EC co-operation.  The Partnership Agreement does not provide for
any trade policy measures in relation to fair trade.
(h) Question relating to Article 29 on regional economic integration ( reply to question 2 from
Honduras )
Article 29 forms part of the development strategies of ACP-EC co-operation.  The concrete
implementation of these strategies will depend on the specific needs of the countries concerned and
will be demand driven. They can therefore not be defined at this point in time.
(i) Questions relating to Articles 36 and 37 on EPAs ( joint reply to questions 3, 4, 5 and 6 from
Honduras, I.7 from Panama, 6, 7, 11 and 13 from Paraguay )
Article 36 expresses the ACP-EC combined objective to achieve the progressive integration
of ACP countries into the world economy and to allow them to participate more fully in the WTO.  In
addition, the Partnership Agreement provides that “economic and trade co-operation shall build on
regional integration initiatives of ACP States, bearing in mind that regional integration is a keyinstrument for the integration of ACP countries into  the world economy.”  Article 37.5 states that the
decision concerning the geographic configuration of the EPAs will be taken by the ACP group, taking
into account the regional integration process within the ACP.G/C/W/329
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As stated notably in Article 37, one important aspect is the establishment of economic
partnership agreements (EPAs) between the EC  and ACP sub-regions, progressively abolishing
substantially all barriers to trade between the parties.  These EPAs will be established following the
relevant provisions of the WTO, making use of the flexibility available, in particular with regard to
the duration of the transitional period, the final product coverage and the degree of asymmetry.
(j) Questions relating to Article 41 on services ( joint reply to questions 7 from Honduras, I.8(a)
and (b) from Panama )
The EC will, in the mandated GATS negotiations, provide sympathetic considerations to the
ACP States' priorities, in particular with regard to services sectors of their interest.  Negotiated
specific commitments will not be established outside the MFN system, but will be part of the final
schedule of Members at the end of the negotiations.
Concerning Article 41(4), negotiations on reciprocal liberalisation in accordance with the
provisions of GATS, in particular GATS Article V,  have not yet started and are foreseen at a later
date.  It is therefore impossible to anticipate the duration and result for such negotiations.
The EC, in line with the objectives set out in Article IV of the GATS, sees the negotiation of
specific commitments, in particular in sectors such as the ones mentioned in Article 41(5), as an
important way to strengthen ACP countries' domestic services capacity, enhancing overall
competitiveness and thereby increasing their partic ipation in international trade in both goods and
services.  The same objectives, that is strengthening supply capacity, and enhancing competitivenessand participation in international trade, will be promoted by liberalisation, as part of the establishment
of economic partnership agreements in line with the provisions of the GATS.
(k) Questions relating to Article 42 on maritime transport ( joint reply to questions 8 from
Honduras and I.8(c) from Panama )
Article 42(3) of the Partnership Agreement states that the parties shall grant national
treatment to the each other in relation to access to  ports, the use of infrastructure and auxiliary
maritime services of those ports, as well as related fees and charges.
Article II of GATS (the MFN- principle) is currently suspended if a WTO Member has not
taken specific commitments in these areas.  Also, the requirement to grant national treatment applies
only when a Member has specific commitments.  The EC has no such commitments for the relevantsub-sectors, and is of the view that a waiver is not required for the provisions in Article 42.
This Article enters into force at the same time as the Partnership Agreement.Currently, national treatment is the practice in the EC, and service providers from third
countries should continue to be treated on a non-discriminatory basis.
(l) Question relating to Article 45 on competition policy ( reply to question 9 from Honduras )
Article 45 refers to the introduction of effective and sound competition policies and rules.
Paragraph 2 defines in more detail the character and objectives of this competition policy.  Theregional component is certainly important in the EC context, competition being a Community
competence, implemented by the European Commi ssion.  Also, ACP regional integration schemes
might wish in the future to define and implement competition rules on a regional basis.  The origin of
undertakings referred to in Paragraph 2 should not be relevant for introduction and implementation of
competition rules, which are, as it is mentioned in Paragraph 1, of crucial importance for improvingG/C/W/329
Page 7
and securing an investment friendly climate, a sustainable industrialisation process and transparency
in access to markets.
(m) Question relating to Article 52 ( reply to question I. 9 from Panama )
The right reference is to Article 31 of annex IV.
(n) Question relating to Annex V on approximation of law ( reply to question 12 from Honduras )
All WTO members will be informed in accordance with the relevant provisions of the WTO
and, where applicable, with the relevant provisions of the existing bilateral agreements.
2.2. Replies to questions dealing specifically with the tariff preference granted to ACP bananas
(a) Questions relating to the relevant provisions of the Partnership Agreement ( joint reply to the
question from Canada, to questions 1 from Colombia, 3 from Ecuador, 1, 2 and 3 from
Guatemala, I.1, I.2, I.3, I.4 and I.9 from Honduras, 2, 4 and 5 from Nicaragua, I.1, I.2, I.4,
II.1(a) and II.3 from Panama )
The tariff preference granted by the EC to ACP bananas is required by Article 36.3 of the
Partnership Agreement, as well as Annex V of the Partnership Agreement.  It is implemented by
Council Regulation (EEC) No 404/93, as modified by Council Regulation (EC) No 216/2001.
As indicated above, the Partnership Agreement therefore continues the non-reciprocal trade
preferences applied under the 4th Lomé Convention until 31 December 2007.
Protocol 5 to Annex V confirms the obligation of  the EC to take measures aimed at ensuring
the continued viability of the banana export indust ries of the ACP banana suppliers and the continued
outlet for their bananas on the Community market.  Tariff preferences are an example of such
measures.
(b) Questions relating to trade statistics ( joint reply to questions 1 from Ecuador and I.6(d) from
Honduras )
The Annex to this note includes statistics on banana imports from the ACP during the last 6
years.
The EC and the ACP do not have at this stage statistics on the origin of the imports having
taken place within the “C” quota since 1 July 2001,  i.e. since its opening to bananas of all origins.
The EC and the ACP would like to recall that in any event, the “C” quota should be reserved for ACP
imports as from 1 January 2002, under the terms of the Understandings reached with the United States
and Ecuador.
(c) Questions relating to the duration of the preferential treatment ( joint reply to questions 1, 2
and 8 from Costa Rica, 4 from Ecuador, 8 and 9( b) from Guatemala and I.11 from Honduras )
The Partnership Agreement requires the EC to maintain the tariff preference to ACP products,
including bananas, until the end of the preparatory period, i.e. 31 December 2007.
Termination or dismantling of the preference before 2008 would therefore be in violation of
the Partnership Agreement, and it would reduce the access of ACP products to the EC market.G/C/W/329
Page 8
(d) Questions relating to the level of the preference for ACP bananas ( joint reply to questions 5, 6
and 9(a) from Guatemala, 6 from Ni caragua, I.12 and I.13 from Honduras )
In view of the EC’s contractual obligations towards the ACP countries and the need to
guarantee them proper conditions of competition, imports of bananas originating in those countries
benefit from a tariff preference of € 300 per tonne.  The level of the preference is without prejudice tothe exact structure of the EC banana trade regime.
(e) Questions relating to the current and future leve ls of the tariff rate quotas (transitional TRQ
regime ending normally on 31 December 2005) ( joint reply to questions 2 and 4 from
Colombia, 9, 10, 11, 15 and 18 from Costa Ri ca, 4 and 12 from Guatemala, I.10 from
Honduras, 9 from Nicaragua, II.4 from Panama )
The level of the “A” quota, i.e. 2.200.000 tonnes, has been set in the Schedules of the EC.
The levels of the “B” quota (453.000 tonnes between 1 January 2002 and 31 December 2005)
and of the C quota (750.000 tonnes between 1 January 2002 and 31 December 2005) have been set in
the Understandings reached with the United States and Ecuador to solve the Bananas  dispute.  These
Understandings represent a delicate compromise  between the interests of the various Members
concerned.
The reservation of the “C” quota for ACP banana s as from 1 January 2002 is to be viewed in
the context of the substantial reduction of the level of that tariff rate quota in favour of the “B” quota
as from 1 January 2002.
Several Members have also inquired about the impact that a possible enlargement of the EC
before the end of the transitional TRQ regime would have on the levels of the tariff rate quotas
applied in the transitional phase ending on 31 December 2005.  The EC confirms that it will fully
comply with the procedures established for that purpose under Article XXIV of the GATT 1994.
(f) Questions relating to the applicable MFN duties within the tariff rate quotas (transitional TRQ
regime ending normally on 31 December 2005) ( joint reply to questions 13 from Costa Rica,
5 from Guatemala and 8 from Nicaragua )
The level of the MFN duty applicable to the “A” quota is the bound tariff as set in the
Schedules of the EC. The level applicable to the “B” quota is similar, i.e.  €75/tonne.
The question is not relevant for the “C” quota as from 1 January 2002 : as only ACP bananas
will have access to that tariff rate quota from that date, only the preferential rate will apply and not an
MFN rate.
(g) Questions relating to the application of the preference for ACP bananas within the tariff rate
quotas (transitional TRQ regime ending normally on 31 December 2005) ( joint reply to
questions 14 from Costa Rica, 6 and 10 from Guatemala, I.6(a), (b) and (c), I.7 and I.8 from
Honduras, 6 and 7 from Ni caragua, II.2 from Panama )
Since the creation of the EC common market organization for bananas in 1993, the EC has
granted a tariff preference to ACP bananas both within and outside the tariff quotas, in order toimplement its obligations under the Fourth Lomé Convention.  As indicated above, the Partnership
Agreement has maintained the obligations of that Convention until 31 December 2007 and the EC has
therefore continued to provide preferential treatment to ACP bananas also in the “A” and “B” quotas
(as well as outside the tariff rate quotas).G/C/W/329
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This obligation is in no way contingent upon actual use of the preference by the ACP States.
This preferential treatment is therefore well known by Members.
(h) Questions relating to the move to an EC trade regime without tariff rate quotas ( joint reply to
questions 2 and 3 from Colombia, 3, 4, 6, 7 and 18 from Costa Rica, 13 from Guatemala,
I.12, I.13, I.14 and I.15 from Honduras, 10 from Nicaragua and II.3 from Panama )
Because the “A” tariff rate quota is bound in its Schedules, the EC has to unbind that quota as
well as the out-of-quota bound tariff to introduce a tariff-only trade regime.  To do so, the EC will
fully comply with its obligations and the proc edures under Article XXVIII of the GATT 1994.
The EC and the ACP States consider that this re-binding operation should not increase the
level of protection of the EC market and should therefore be viewed as a tariffication exercise, that
should be neutral in terms of overall market access at the time of the re-binding.
As indicated above, the level of the preference given to ACP bananas under the Partnership
Agreement is without prejudice to the exact structure of the EC trade regime for bananas.  In view ofthe EC’s contractual obligations towards the ACP countries and the need to guarantee them proper
conditions of competition, imports of bananas originating in those countries benefit from a tariff
preference of € 300 per tonne.
As the EC intends to introduce a trade regime without tariff rate quotas by 1 January 2006,
the re-binding procedure under Article XXVIII of GATT 1994 and the modification of the relevant
part of the EC legislation should be completed well before that date.  This means that the Article
XXVIII negotiations should be initiated in due time to respect this calendar.
Obviously, a tariff-only regime means that non-tariff measures will not be part of the EC
trade regime for banana.
(i) Questions relating to the text of the draft GATT Article I decision ( joint reply to questions 3,
6 and 7 from Costa Rica, 7 from G uatemala, I.2 and I.3 from Panama )
The EC and the ACP States wish to point out that  the text of the first paragraph of the draft
waiver decision contained in document G/C/W /187/Add.2 corresponds exactly to the text of the first
paragraph of the waiver decision concerning the Fourth Lomé Convention ( document L/7604 ).
It should be noted that similar language is also used in other decisions granting GATT
Article I waivers, such as the decision of 14 October 1996 on the US Andean Trade Preference Act
(document WT/L/184 of 18 October 1996 ) or the decision of 15 November 1995 on the US Caribbean
Basin Economic Recovery Act ( document WT/L/104 of 24 November 1995 ).
It should also be kept in mind that the terms of the waiver covering the preferential regime
applied under the 4
th Lomé Convention have been interpreted by the Appellate Body.
Finally, it is worth recalling that the only draft decision currently submitted to the Members
as part of the documentation for the waiver request submitted on 29 February 2000 by the EC and the
ACP States is the draft contained in document G/C/W/187/Add.2 of 14 April 2000.G/C/W/329
Page 10
(j) Questions relating to the EC request for a GATT Article XIII waiver ( joint reply to question
from Canada and the questions 16 and 17 from Co sta Rica, 9(c) from Guatemala, I.5, I.9,
I.16 and I.17 from Honduras, 5 and 11 fr om Nicaragua, and II.1(b) from Panama )
As a part of the Understandings reached with the United States and Ecuador to solve the
Bananas  dispute, the EC should as from 1 January 2002 reduce the level of the “C” quota to 750.000
tonnes and reserve it for ACP bananas.  The reservation will end on 31 December 2005 at the latest,
when the EC introduces a trade regime without tariff rate quotas.
Such reservation of the “C” quota implies that  the obligations of the EC under Article XIII:1
and XIII:2 of the GATT 1994 are waived for that purpose.
Within the “C” quota so reduced, ACP bananas will be subject to a zero duty, and
non-preferential bananas will not have access to that quota.
The GATT Article XIII waiver is a product-specific waiver concerning only bananas, its
duration is limited to 31 December 2005 and it is designed to allow the EC to implement an
autonomous tariff rate quota under the terms of the Understandings reached with the United Statesand Ecuador.  Contrary to the tariff preference, it does not concern a measure required by the
Partnership Agreement but finds its origin in the Un derstandings of the EC with the United States and
Ecuador.  The request has been submitted by the EC only. For all these reasons, the decision on the
GATT Article I waiver is legally and factually totally distinct from the decision on the GATT
Article XIII waiver.
Because the GATT Article XIII waiver would cover the “C” quota only up to a quantity of
750.000 tonnes, this means that any additional quantity which would not be transferred to the “B”
quota would not benefit from the waiver.
The GATT Article XIII waiver does not contemplate the possibility of a country allocation
within the “C” quota.
(k) Questions relating to the EC trade regime that are not linked as such to the EC-ACP request
for a GATT Article I waiver or the EC request for a GATT Article XIII waiver (joint reply to
questions 9 and 12 from Costa Rica and 11 from Guatemala)
The Appellate Body has ruled that the alloca tion rules of the Banana Framework Agreement
are not consistent with Article XIII:1 of the GA TT, because imports from BFA countries and imports
from other Members are not "similarly restricted".
Therefore, as indicated in Article 18, first paragraph, third indent of Council Regulation
(EEC) No 404/93 as modified by Council Regulati on (EC) No 216/2001, a country allocation within
the “A” and “B” quotas can only be done on the basis of an agreement with all the Members having a
substantial interest  in the supply of bananas.
As far as Article 18, paragraph 7 of Council Regulation (EEC) No 404/93 as modified by
Council Regulation (EC) No 216/2001 is concerned, this provision allows the European Commission,
in exceptional circumstances where the supply of the EC  market is insufficient, to increase the level of
the “B” quota on an MFN basis.  Such an increase of the level of the “B” quota should normally be
decided by the Council, but may in this very sp ecific situation be decided by the Commission to
accelerate the decision-making.G/C/W/329
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2.3. Sugar (joint  reply to questions 5 from Ecuador, 14 and 15 from Honduras, 2, 12, 13 and 14
from Nicaragua, 14 and 15 from Paraguay
The preferential trade regime for sugar, as set out in Protocol 3 to the Partnership Agreement,
has existed since 1975 and provides for the import by  the EC of up to 1 294 700 tonnes (white sugar
value) of ACP sugar annually.
The Sugar Protocol which is implemented wi thin the EC’s Common Market Organisation in
the sugar sector guarantees a minimum sugar purchase price to be negotiated between the EC and the
ACP on a year by year basis. Normally, this price is agreed at the same level as that guaranteed to the
EC’s own producers through the intervention prices for raw and white sugar.
The waiver currently requested for the Partnership agreement covers the same preferential
trade regime for sugar for which the WTO waiver for the former 4th Lomé Convention was granted.
There are no quantitative restrictions on the import of sugar.  However, following the
existence of prior arrangements, tariff quotas have been opened for ACP countries and India since1975 on the basis of preferential agreements.  For other GATT members, there is a quota allocated
predominantly to the two most substantial suppliers,  Brazil and Cuba, with 3.000 tonnes available for
“others”.  In addition, duty free market access is fo reseen for the Least Developed Countries, in the
framework of the EU’s “Everything But Arms” initiative.  During a transitional period lasting until
2009, this access is limited to specific, albeit increasing, quantities.
2.4. Beef  (reply to question 2 from Nicaragua)
The Partnership Agreement contains special provisions for preferential imports of beef from
certain beef-producing ACP countries.  Those provisio ns are laid down in Protocol 4 which is part of
Annex V.
The Protocol provides country specific quotas totaling 52100 tonnes with a 92 per cent
reduction of the specific amount of duty at import.  Further to that and in accordance with the general
concessions for ACP products the ad-valorem duty is nil.
The waiver currently requested for the Partnership Agreement covers the same preferential
trade regime for beef for which the WTO waiver for the former Fourth Lomé Convention was
granted.
2.5. Canned tuna  (reply to question 4 from Thailand)
This question has already been dealt with in Geneva in a meeting between EU and Thai
delegations earlier this year.  While canned tuna products are normally subject to a 24 per cent tariff
duty, those originating in ACP countries have since the past benefited from a zero tariff, upon request.
The least developing nations, under the GSP rules may also benefit from the zero per cent.  In
addition, Colombia, Venezuela, Ecuador, Peru, Bo livia, Guatemala, Honduras, El Salvador,
Nicaragua, Costa Rica and Panama benefit from the zero tariff under the regime against drugs.  Other
exceptions to the 24 per cent tariff have not been made.G/C/W/329
Page 12ANNEX
European Union Banana Supplies (Origin:  ACP Countries)
CN ex 08030010 (up to 1993) / CN ex 08030019 (from 1994) EUR – 15 from 1989
PROVENANCE 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
ACP countries 544,484 621,910 596,438 680,205 748,126 726,987 763,965 800,075 693,054 654,853 675,987 756,808
Traditional ACP 542,653 617,606 584,519 641,007 683,583 639,742 687,163 733,992 640,413 593,235 631,129 693,953
Côte d'Ivoire* 85,186 95,189 116,407 144,307 161,25 8 149,084 160,269 180,735 166,247 158,243 192,522 200,237
Cameroon*** 56,070 77,628 115,116 110,357 146,901 158, 166 165,289 166,622 157,123 155,000 160,638 205,995
Suriname 29,945 27,705 27,745 29,950 27,984 32, 721 27,984 25,966 29,257 21,218 39,029 34,234
Somalia 59,388 57,785 8,081 181 501 4,634 21,701 25,121 21,608 7,018 0 0
Jamaica 39,219 63,181 70,117 74,826 77,390 76, 294 83,751 89,493 76,978 61,929 51,635 40,941
Saint Lucia 116,284 127,225 99,824 122,066 113,303 91,542 101,492 106,628 70,686 70,461 65,532 72,566
Saint Vincent 67,596 81,535 62,263 71,320 57,608 32,055 47,673 44,173 29,981 38,737 37,910 42,923
Dominica 51,315 52,415 54,154 51,606 52,699 42, 868 33,260 39,138 35,290 27,144 27,583 27,713
Belize * 26,580 24,040 19,617 28,494 38,516 46, 980 41,126 54,109 53,144 53,431 55,650 68,558
Cape Verde 2,734 2,715 3,011 1,876 684 73 60 0 0 0 10 2
Grenada 8,268 8,189 8,186 6,015 6,720 5,325 4,558 2,007 101 54 621 784
M a d a g a s c a r 6 800 1 0 1 9000000 0
Non-traditional ACP 1,832 4,304 11,919 39,199 64,543 87,245 76,803 66,082 52,641 61,619 44,858 62,855
Dominican Republic 855 3,836 9,703 38,512 61,677 86, 074 75,045 61,250 49,031 56,199 42,217 59,735
Ghana 67 62 551 100 218 383 1,589 2,797 3,194 4,233 2,526 2,972
Other 910 406 1,665 587 2,648 788 168 2,036 416 1,186 115 148
Update:  3 July 2001
          * Traditional ACP quantities from 1994 to 1998 were limited to 155,000 tonnes for Côte d'Ivoire and Cameroon and to 4 0,000 tonnes for Belize
(that limitation is not applied in this table).          ** The quantity of 115, 736 tonnes indicated for Cameroon (1998) is being reviewed.  The true figure should be of the  order of 155,000 tonnes.
Source:  Comext for ACP/Austria, Finland and Sweden 1989-1994 from respective national trade statistics.
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