RESTRICTED
WORLD TRADE WT/DSB/COM/4
31March 1998
ORGANIZATION(98-1278)
Original: English
EUROPEAN COMMUNITIES -REGIME FOR THE IMPORTATION
SALE AND DISTRIBUTION OFBANANAS
Joint Statement byEcuador, Guatemala,
Honduras, Mexico, Panama andtheUnited States
Thefollowing jointstatement, made available attheDSBmeeting on13February 1998, is
circulated toMembers attherequest ofthedelegations ofEcuador, Guatemala, Honduras, Mexico,
Panama andtheUnited States.
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TheGovernments ofEcuador, Guatemala, Honduras, Mexico, Panama andtheUnited States
havereviewed carefully theEuropean Commission 'sproposal torevise itsbanana regime. Weconclude
thattheCommission 'sproposal would notbring theEuropean Community 'sregime intocompliance
withtheWTO Agreement. Thefollowing comments concerning theproposal areapreliminary, non-
exhaustive summary ofourprincipal concerns.
Separate quotas
TheCommission 'sproposal isclearly incompatible withWTO rulesbecause itcreates aquota
forACPcountries of857,700 tonnes separate fromthe2.2million tonne tariff-rate quota (TRQ) that
would apply tobananas fromLatin America. TheCommission hasdefended itsproposal foraseparate
ACP quota byarguing thattheWTO Reports donotspecifically conclude thattheexistence oftwo
quotas isinconsistent withArticle XIIIofGATT 1994andthatWTO-consistency isassured ifitapplies
thesame "criteria" within eachquota.
TheCommission'sattempteddefensemissesthepoint:astheAppellateBodystated,ArticleXIII
applies totheentire EC'smarket forbanana imports, "irrespective ofwhether andhow" theEC
"categorizes orsubdivides these imports." (ABReport, para. 190.) Moreover, thepanel heldthat,
"The EChasonlyoneregime forbanana imports forpurposes...of Article XIII." (Panel Report,
para. 7.82). Although theWTO reviewed adifferent structure, thatof12individual ACP country
allocations --andnotthecurrent proposal forasingle allocation of857,700 tonnes --thisprinciple
applies regardless.
Accordingly,allECimportsofbananasaresubjecttoArticleXIII,whichsetsforththedefinitive
non-discrimination rulesfortheallocation ofshares ofarestricted market. Under Article XIII:1, all
WTO Members 'imports totheECmustbe"similarly restricted." Article XIII:2 specifies thatifa
marketis"allocated"into"shares,"suchsharesmustapproximatetradethatwouldprevail"intheabsence
ofrestrictions."WT/DSB/COM/4
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Whether theCommission labels itsassignment of857,700 tonnes toACPcountries a"separate
regime" oraseparate "quota," itnonetheless constitutes a"share" ofan"allocated" market subject
toArticle XIII. TheWTO Reports leave nodoubt onthisscore, andtheEChasnotrefuted thepoint.
Inthiscontext,ourGovernmentsconsidertheproposedsubdivisionoftheEC'smarkettoviolate
Article XIIIanddiscriminate against Latin American suppliers inthefollowing respects:
1. Thecreation ofthese separate quotas arbitrarily assigns different countries todifferent quotas
onthebasisofcountry oforigin. Theseparate quota approach thereby subjects Latin American
bananastorestrictionsthatarenot"similar"andcreateslessfavourableconditionsofcompetition
compared tothose forcountries assigned totheACP quota.
2. Therespective shares oftheEC'smarket reflected bythetwoquotas donotreflect trade in
theabsence ofrestrictions andareobviously based ondiscriminatory criteria. Even compared
toperiods before theimplementation ofRegulation 404,inwhich EC'srestrictions onLatin
America artificially reduced Latin American shipments, theEC'sproposal would provide ACP
bananas, attheexpense ofLatin American bananas, amarket share 40percentgreater than
thatrepresented byACP historical exports.
3. Although theproposal would reserve theACPquota exclusively forACPcountries, itwould
notprovide thesame conditions forLatin American bananas. Thequotas applicable toLatin
America (both the2.2million quota andthehigh-duty quota of353,000 tonnes) would beopen
toimports ofACPcountries thatwould compete withLatin American bananas, atpreferential
ratesofduty. Moreover, while theACPquota allows forconsiderable growth ofimports from
ACPcountries, thediscrimination inherent inthetwoquotas allows nosuchgrowth forLatin
American countries.
TheAppellate Body determined thatanyviolations ofArticle XIIIarenotcovered bytheWTO
waiver forLomé Convention requirements. Accordingly, should theECdecide topursue anyTRQ
approach, itmustbegin withaTRQ applicable toallimports andallocate onthebasisofArticle XIII
rules.
Increased protection for353,000 tonnes
TheCommission 'sproposal would subject theamount of353,000 tonnes, which theEC
previously hadadded tothethird-country quota of2.2million tonnes following theaccession ofAustria,
Finland andSweden in1995, toa300ecupertonne tariff --compared tothe75ecutariff currently
being applied toLatin American bananas onthisamount. While wehavedoubts about theWTO-
compatibility ofthisaspect oftheEC'sproposal, ourGovernments alsoaredisturbed bythisproposed
significant increase inprotection coming from aWTO Member 80percentofwhose banana market
issupplied bydeveloping countries.
Licensing
TheCommission 'sproposal barely addresses thelicensing system ithasproposed toreplace
thecurrent WTO-inconsistent regime, andweareconcerned bytheabsence ofclearparameters. We
hopethattheproposal canbemodified toensure consistency withtheEC'sWTO obligations.
TheCommission haspromised to"scrap" thecurrent rulesproviding licenses toCategory B
operators andripeners, butsimply eliminating theseformal categories doesnotensure compliance with
theWTO. If,forexample, newEClicensing rulesentitled acompany tolicenses onthebasis(explicit
orinfact)thatitreceived andusedCategory Borripener licenses during thelifeofthecurrent regime,WT/DSB/COM/4
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thiswould onlyperpetuate theunacceptable GATT andGATS discrimination resulting fromCategory B
andripener license allocations.
Time period
Wealsoareconcerned thattheECisproposing thatthenewdiscriminatory regime remain
inplace until2005, when itwillbe"reviewed." Such aperiod extends wellpasttheduration ofthe
WTO waiver fortheLomé Convention.
Conclusion
TheCommission 'sapproach isinconsistent withitsWTO obligations andwould increase
protectionism. AWTO-inconsistent proposal willonlyprolong thislong-standing dispute. Weurge
theCommission tomodify itsproposal inorder tobring itsbanana regime intocompliance withthe
WTO obligations oftheECanditsmember States by1January 1999 inaccordance withthe
recommendations andrulings oftheWTO panel andAppellate Body.
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