WORLD TRADE
ORGANIZATIONWT/DS27/43
14 January 1999
(99-0150)
Original:  English
EUROPEAN COMMUNITIES – REGIME FOR THE IMPORTATION,
SALE AND DISTRIBUTION OF BANANAS
Recourse by the United States to Article 22.2 of the DSU
The following communication, dated 14 January 1999, from the Permanent Mission of the
United States to the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 22.2
of the DSU.
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Pursuant to Article 22.2 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU) , the United States requests authorization from the Dispute Settlement
Body (DSB) to suspend the application to the European Communities (EC), and member States
thereof, of tariff concessions and related obligations under the  General Agreement on Tariffs and
Trade 1994 (GATT), covering trade in an amount of US$520 million.  This level of suspension is
equivalent to the level of nullification or impairment of benefits accruing to the United States that
results from the EC’s failure to bring its regime for the importation, sale and distribution of bananas
(banana regime) into compliance, by 1 January 1999, with the GATT  and the General Agreement on
Trade in Services (GATS)  or to otherwise comply with the recommendations and rulings of the DSB
in EC - Regime for the Importation, Sale and Distribution of Bananas .
The EC’s Failure to Implement the DSB’s Recommendations and Rulings
On 8 May 1996, the DSB established a panel at the request of Ecuador, Guatemala, Honduras,
Mexico and the United States, to examine the EC banana regime.  Both the panel and the Appellate
Body in this dispute found the EC banana regime in violation of the GATT  and the GATS .  On
25 September 1997, the DSB adopted the report of the panel, as modified by the Appellate Body.  Theresulting DSB recommendations and rulings include, inter alia, the recommendation that the EC bring
the measures found to be inconsistent with the GATT  and the GATS  into conformity with its
obligations under those agreements.  (WT/DS27/A B/R, para. 257; WT/DS27/R, para. 9.2).  A
WTO-appointed arbitrator subsequently determined that the “reasonable period of time” for the EC to
implement the DSB recommendations and rulings would expire by 1 January 1999.
On 20 July 1998, the EC Council of Agriculture Ministers formally approved amendments to
the banana regime and on July 28, those amendments were published in the EC Official Journal  (EC
1637/98; “Regulation 1637").  On 31 October 1998, the European Commission published additional
implementing provisions concerning the administration of import licenses for bananas (EC 2362/98;“Regulation 2362").  Regulations 1637 and 2362 became effective on 1 January 1999.  These
regulations perpetuate discriminatory aspects of the EC banana regime that were identified in the
DSB’s recommendations and rulings as inconsistent with WTO agreements.  Therefore, these
amendments fail to bring the EC’s banana regime  into conformity with the EC’s WTO obligations
within the reasonable period of time, as required by the DSB recommendations and rulings, thusperpetuating the nullification or impairment of benefits accruing to the United States, directly andWT/DS27/43
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indirectly, under the GATT  and the GATS , that was found by the panel and the Appellate Body in this
dispute.  The United States thus is entitled to redress under Article 22 of the DSU.
U.S. Recourse to Article 22.2 of the DSU
Article 22.1 of the DSU provides that “full implementation” of the recommendations and
rulings of the DSB is the preferred conclusion to a dispute.  In the event that implementation is not
achieved within the established “reasonable period of time,” the parties to a dispute may attempt to
negotiate mutually acceptable compensation, if requested by the prevailing party, or the prevailing
party may be authorized by the DSB to suspend concessions and obligations.  Article 22.2 of the DSU
provides that, within 20 days after the “reasonable period” expires, a prevailing party may request
DSB authorization to suspend the application of concessions and obligations to the party that hasfailed to implement the DSB recommendations and rulings.  Article 22.6 requires the DSB to grant
such authorization within 30 days of the expiry of that period, unless there is consensus to reject the
request.  If the party that has failed to implement the DSB recommendations and rulings requests
arbitration on the level of the suspension proposed by the prevailing party, the matter shall be referred
to arbitration under Article 22.6.  The text of the DSU is clear that such rights are to be exercisedwithin the time frames set forth in Article 22.
The EC’s failure to bring its regime for the importation, sale and distribution of bananas into
compliance with the GATT  and the GATS,  or to otherwise comply with the recommendations and
rulings of the DSB in this matter results in a lo ss in U.S. exports of US$520 million, including lost
U.S. exports of goods and services used in the production of Latin American bananas for the
European market and lost profits of U.S. service suppliers on the distribution and sale of Latin
American bananas in the European market.  In accordance with the schedule established in Article
22.2, the United States requests authorization from the DSB, at its meeting on 25 January 1999, to
suspend the application to the EC, and member States thereof, of tariff concessions and relatedobligations under the GATT , covering trade in an amount of US$520 million.
In considering what concessions to suspend, the United States applied the principles and
procedures set forth in Article 22.3 of the DSU, and makes this request pursuant to Article 22.3(a).
As required by Article 22.4 of the DSU, the level of suspension proposed is equivalent on an annual
basis to the nullification or impairment of benefits accruing to the United States, resulting from the
EC’s failure to comply with the DSB’s recommendations and rulings. The United States intends toimplement this suspension of tariff concessions and related obligations under the GATT  by directing
the U.S. Customs Service to impose duties in excess of bound rates on the products listed in the
attachment to this request.WT/DS27/43
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LIST OF PRODUCTS
The imposition of increased duties would apply to products that are both:  (1) classified in the
subheadings of the Harmonized Tariff Schedule of the United States listed below; and (2) the product
of Austria, Belgium, Finland, France, the Federal Republic of Germany, Greece, Ireland, Italy,Luxembourg, Portugal, Spain, Swede n, or the United Kingdom.  The product descriptions that are
provided below are for the convenience of the read er and are not intended to delimit in any way the
scope of the products that would be subject to increased duties.
HTS Number Product Description
02101900 Meat of swine, other than hams, shoulders, bellies (streaky) and cuts thereof, salted, in brine, dried
or smoked
04069057 Pecorino cheese, from sheep's milk, in original loaves, not suitable for grating
19053000 Sweet biscuits; waffles and wafers
33073050 Bath preparations, other than bath salts
34060000 Candles, tapers and the like
39202000 Nonadhesive plates, sheets, film, foil and strip, noncellular, not reinforced or combined with other
materials, of polymers of propylene
42022215 Handbags, with or without shoulder straps or without handle, with outer surface of sheeting o f
plastics
42023210 Articles of a kind normally carried in the poc ket or handbag, with outer surface of reinforced or
laminated plastics
48055000 Uncoated felt paper and paperboard in rolls or sheets
48192000 Folding cartons, boxes and cases of noncorrugated paper or paperboard
49090040 Printed cards (except postcards) bearing personal greetings, messages or announcements, with or
without envelopes or trimmings
49119120 Lithographs on paper or paperboard, not over 0.51 mm in thickness, printed not over 20 years at time
of importation
61101010 Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted, wholly
of cashmere
63022190 Bed linen, not knit or crochet, printed, of cotto n, not containing any embroidery, lace, braid, edging,
trimming, piping or applique work, not napped
85072080 Lead-acid storage batteries other than of a kind used for starting piston engines or as the primary
source of power for electric vehicles
85167100 Electrothermic coffee or tea makers, for domestic purposes
94051080 Chandeliers and other electric ceiling or wall lighting fittings (other than used for public spaces), not
of base metal
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