WORLD TRADE
ORGANIZATIONWT/DS27/18
31 August 1998
(98-3333)
Original:  English
EUROPEAN COMMUNITIES – REGIME FOR THE IMPORTATION,
SALE AND DISTRIBUTION OF BANANAS
Request for Consultations by Ecuador, Guatemala,
Honduras, Mexico and the United States
The following communication, dated 18 August 1998, from the Permanent Missions of
Ecuador, Guatemala, Honduras, Mexico and the United States to the Permanent Mission of theEuropean Communities, is circulated at their request.
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Given the EC's obligation to comply with the DSB recommendations and rulings in the
banana dispute by 1 January 1999, we regret that we have been unable to convince you that the
interests of the WTO require resolving in a prompt and expeditious manner our current disagreement
over the WTO-consistency of the EC's changes to its banana regime.  And it is with further regret that
we find ourselves writing to you to request unnecessary, hollow procedural steps that will needlesslyconsume the time and resources of all the parties.
As you know, on 25 September 1997 the Dispute Settlement Body ("DSB") adopted its
recommendations and rulings in  European Communities – Regime for the Importation, Sale and
Distribution of Bananas,  including the recommendation that the European Communities (EC) bring
the measures found to be inconsistent with the General Agreement on Tariffs and Trade 1994
("GATT") and the General Agreement on Trade in Services ("GATS") into conformity with its
obligations under those agreements.  On 7 January 1998, by decision of Dr. El-Naggar, the arbitrator
pursuant to Article 21.3 of the Understanding on Rules and Procedures Governing the Settlement of
Disputes ("DSU"), the EC was given the "reasonable period of time" until 1 January 1999 to comply
with the DSB rulings and recommendations.
On 26 June 1998 the EC Council of Agriculture Ministers adopted, with few modifications,
proposed amendments to the EC banana regime that had been approved by the European Commission
on 14 January and took other measures, in particular concerning licensing.  On 28 July 1998,
amendments to Regulation 404 were published in the EC Official Journal  (EC 1637/98).
As we have informed your delegation and the DSB on several occasions, we believe the
central elements of the EC measures are inconsistent with the DSB rulings and recommendations, and
it is clear that you disagree with that view.  Following a discussion of the matter at the DSB meeting
of 23 July 1998, our governments wrote to you on 31 July 1998, requesting a joint meeting with the
Chairman of the Dispute Settlement Body to discuss resort to procedures under Article 21.5 of theDSU.  At that meeting, which took place on 6 Au gust 1998, the EC clarified its view that Article 21.5
requires parties to consult as a prior condition to  the resort to the original panel to resolve the
disagreement over the WTO-consistency of the EC measures taken to implement the DSB rulings and
recommendations.  Our governments disagree with that view.
Article 21.5 provides for a special expedited procedure for the resolution of a disagreement
over the WTO-consistency of measures taken.  Ar ticle 21.5 flows out of the DSB's obligations underWT/DS27/18
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Article 21 to keep under surveillance the implementation of DSB recommendations and rulings.
Thus, our recourse to Article 21.5 is not a "new" dispute, as the EC has claimed.
We do not agree that consultations are necessary before resorting to the original panel under
Article 21.5.  The EC's position taken for purposes of this dispute appears calculated to produce
maximum delay and is unsupportable for the effective functioning of the dispute settlement system.Nonetheless, without prejudice to our rights under Article 21.5 or the fact that Article 21.5 does not
require prior consultations, and in interest of avoiding any further delay, our governments, jointly and
severally, request the EC to engage promptly in consultations concerning this matter.
These consultations would concern the issue of the EC's compliance with the DSB
recommendations and rulings by 1 January 1999, including the following aspects:
- The consistency with GATT Article XIII of the regulation's allocation of its market
among supplying countries, which discriminates against bananas from Latin
American suppliers both in terms of quantities allocated and conditions of access;
- The consistency with GATS Articles II and XVII of the EC decision to distribute
licenses to "actual importers on the basis of the presentation of a utilised import
license and/or, in particular in the case of new Member States, equivalent proofs,
where necessary" using a reference period in which a WTO-inconsistent regime wasin effect;
- The consistency with GATT Article I and the WTO waiver
1 for certain requirements
of the Lomé Convention of (1) the regulation's tariff of zero for unlimited quantities
of bananas from ACP countries within the tariff quota of 2.53 million tonnes, which
goes beyond the duty-free treatment for 90,000 tonnes of "non-traditional" ACP
bananas found by the Appellate Body to be covered by the Lomé waiver; and (2) theregulation's margin of tariff preference in the amount of 200 ECU/tonne for ACP
bananas entered over this tariff quota, which goes beyond the margin of tariff
preference found by the Appellate Body to be covered by the Lomé waiver.
These inconsistencies also nullify and impair benefits accruing to our countries, directly or
indirectly, under the GATT and GATS, and impede the objectives of the GATT.
This request is without prejudice to our right to request review under Article 21.5 procedures
of other aspects of Regulation 1637/98 concerning licensing and quota allocations that are currently in
the form of discretionary authority.
We appreciate the EC's recognition at the 6 August 1998 meeting of the expedited nature of
Article 21.5 proceedings, its statement of willingness to facilitate those proceedings, and its pledge to
respond within 10 days to any request for consultations.  We would like to stress that our request to
consult at this time and our invocation of procedures under Article 21.5 of the DSU is withoutprejudice to our rights under the DSU, including Article 22.
Consistent with the above-mentioned concerns and objectives, we request that you please
advise us promptly of the possible dates during the next week or two on which EC representatives
would be available to engage in consultations on th e measures described above.  Given that the EC is
under an obligation to comply with the DSB recommendations and rulings by 1 January 1999, we
trust you will understand the need for timely action.
                                                     
1 GATT document L/7604 of 19 December 199 4;  WT/L/186 of 18 October 1996.WT/DS27/18
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It is in all parties' interest to resolve the disagreement over the WTO-consistency of the EC's
measures as expeditiously as possible.  Accordingly,  we would also request your assurances that the
EC will cooperate so as to enable recourse to the original panel under Article 21.5 at the next DSB
meeting.
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