. /. RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/W/238 
26 March 2004 
 (04-1395) 
Council for Trade in Services Original:   Spanish 
   
COMMUNICATION FROM THE REPUBLIC OF ECUADOR 
European Union Regulation (EC) No. 414/2004
 
 
  The following communication, dated 25 March 2004, is being circulated at the request of the delegation of the Republic of Ecuador to the Me mbers of the Council for Trade in Services. 
 
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1. The delegation of Ecuador wishes to refer to Commission Regulation (EC) No. 414/2004 of 
5 March 2004 adopting specific measures with a view  to adapting the arrangements for administering 
tariff quotas on banana imports as a result of th e accession of new Member States on 1 May 2004.   
2. Ecuador considers that this Regulation in corporates changes which could alter the 
commitments undertaken by the EC within the fra mework of the General Agreement on Trade in 
Services (GATS) and the Understanding on Banan as signed with Ecuador (document WT/DS27/58). 
It has therefore seen fit to communicate the fo llowing concerns and questions to the European 
Commission with regard to the issues set forth hereu nder. A prompt reply would be much appreciated.  
3. Commission Regulation (EC) No. 414/2004 of  5 March 2004 amends the conditions for 
qualifying as a "traditional operator" and the defini tion of "primary imports" (Articles 3 and 6.2) 
established in Commission Regulation (EC) No . 896/2001, as amended by Commission Regulation 
(EC) No. 1439/2003. In addition to the require ments set out in Commission Regulation (EC) 
No. 896/2001 (that the operator has, on its ow n account, purchased bananas from the producers and 
dispatched and sold them within the Commun ity), Commission Regulation (EC) No. 414/2004 also 
incorporates the concept of the sale having to be cond ucted with a view to the release of the bananas 
for free circulation in the new Member States. At the same time, it requires that proof of the bananas being sold with a view to their release for free circul ation in the new Member States, that is to say, of 
primary imports and consequently of traditional oper ator status, be provided solely by means of 
original import declarations or other appropriate  Customs documents or certified copies thereof. 
Requiring the submission of original or certified copies of import declarations could lead to the 
establishment of a documentation purchase and sale mechanism, since only operators which have 
already imported bananas (i.e., existing operators of the 10 new Member States) would possess such 
documents, not operators of the EU-15. This requi rement will substantially increase the marketing 
costs of Ecuadorian traditional ope rators established in the EU- 15 and raise the overall level of 
barriers to trade in services.  
4. Ecuador would therefore greatly appreciate an e xplanation by the EC of the legal consistency 
of these changes, which are to be applied to the acced ing countries as a result of the enlargement, with 
Article V:4 of the GATS, which establishes that  any economic integration agreement "shall be 
designed to facilitate trade between the parties to  the agreement and shall not in respect of any 
Member outside the agreement raise the overall level of barriers to trade in services [...] compared to 
the level applicable prior to such an agreement"?  S/C/W/238 
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5. Does the EC not consider that this gives rise to an inconsistency with Article V:4 of the 
GATS? 
6. Some of the acceding countries have maintained  a generally restriction-free regime with 
regard to specific commitments on the wholesale distribution services set out in their Schedules 
(Central Product Classification, CPC 622) and which al so applies to the banana case. If, as a result of 
the EC enlargement and of the adoption by acceding countries of the acquis communautaire  - which 
includes the Community banana regulations, inter alia , Commission Regulation (EC) No. 896/2001 
and in particular Commission Regulation (EC) No. 4 14/2004, which raises the overall level of barriers 
to trade in services, thereby involving the wit hdrawal or modification of "a specific commitment 
inconsistently with the terms and conditions set out in its Schedule" - why did the EC fail to provide 
at least 90 days advance notice of these modifications  or withdrawals, pursuant to Article V:5 of the 
GATS?  
7. Would the EC be willing to apply the procedur e set forth in paragraphs 2, 3 and 4 of 
Article XXI of the GATS, as provided for in such cases by Article V:5 of the GATS? If so, how and when does it intend to deal with  compensatory adjustments?  
8. Furthermore, Article 8 of Annex I of the Understanding on Bananas between the EC and 
Ecuador (document WT/DS27/58) establishes that "The  licensing regime will be administered in good 
faith and on a non-discriminatory basis". Given th at the aforementioned EC Regulation presupposes 
major changes to the definitions of "traditional ope rator" and "primary import" established in Annex I 
of the Understanding on Bananas, th is Delegation is concerned that, in  practical terms, such changes 
could prevent operators of the new Member States fro m being able to register as traditional operators, 
thereby entailing the nullification or impairment of the benefits accruing directly or indirectly to 
Ecuadorian exports to the markets of the new Me mber States under the GATS and the Understanding 
on Bananas.   
9. Ecuador reserves the right to explore these concerns in greater depth. 
 
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