WORLD TRADE
ORGANIZATIONWT/DS27/59
G/C/W/270
2 July 2001
(01-3275)
Original:  English
EUROPEAN COMMUNITIES – REGIME FOR THE IMPORTATION,
SALE AND DISTRIBUTION OF BANANAS
Communication from the United States
The following communication, dated 26 June 2001, from the Permanent Mission of the
United States to the Chairman of the Dispute Settlement Body, is circulated at the request of thatdelegation.
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For the information of all Members, please find attached the text of the Understanding
reached between the European Communities (EC) and the United States on 11 April 2001.
We have received and reviewed the EC's separate  notification of 22 June 2001, to the Dispute
Settlement Body (DSB) of our U nderstanding on bananas.  As we have explained to the EC during
bilateral discussions last week and indicated at meetings of the DSB, the Understanding identifies the
means by which the long-standing dispute over the EC's banana import regime can be resolved, but,
as is obvious from its own text, it does not in itself constitute a mutually agreed solution pursuant to
Article 3.6 of the DSU.  In addition, in view of the steps yet to be taken by all parties, it would also be
premature to take this item off the DSB agenda.
The United States very much looks forward to the prospect of a resolution to this
long-standing dispute, and we will of course continue to be pleased to consult with the Commission
and other interested parties as the EC proceeds with implementing its regulations in accordance with
the Understanding.WT/DS27/59
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Understanding on Bananas
A. The European Commission and the United States have identified the means by which the
long-standing dispute over the EC’s banana import regime can be resolved.
B. In accordance with Article 16(1) of Regulation No. (EC) 404/93 (as amended by Regulation
No. (EC) 216/2001), the European Communities (EC) will introduce a Tariff Only regime for
imports of bananas no later than 1 January 2006.
C. In the interim, the EC will implement an import regime on the basis of historical licensing as
follows :
1. Effective 1 July 2001, the EC will implement an import regime on the basis of
historical licensing as set out in Annex 1.
2. Effective as soon as possible thereafter, subject to Council and European Parliament
approval and to adoption of the Article XIII waiver referred to in paragraph E, the EC
will implement an import regime on the basis of historical licensing as set out in
Annex 2.  The Commission will seek to obtain the implementation of such an import
regime as soon as possible.
D. With respect to the United States' imposition of increased duties applied to certain EC
products as of 19 April 1999 covering trade in an amount of US$191.4 million per year (the
"increased duties"):
1. Upon implementation of the import regime described in paragraph C(1), the
United States will provisionally suspend its imposition of the increased duties.
2. Upon implementation of the import regime described in paragraph C(2), the
United States will terminate its imposition of the increased duties.
3. The United States may reimpose the increased duties if the import regime described
in paragraph C(2) does not enter into force by 1 January 2002.
E. The United States will lift its reserve concerning the waiver of Article I of the GATT 1994
that the EC has requested for preferential access to the EC of goods originating in ACP states
signatory to the Cotonou Agreement; and w ill actively work towards promoting the
acceptance of an EC request for a waiver of Article XIII of the GATT 1994 needed for the
management of quota C under the import regime described in paragraph C(2) until
31 December 2005.
F. The EC and the United States have informed Ecuador and will cooperate in seeking the
agreement of all parties.WT/DS27/59
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Annex I
Phase I
1. A bound tariff-rate quota (TRQ) designated as quota "A" will be set at 2,200,000 tonnes.  An
autonomous TRQ designated as quota "B" will be  set at 353,000 tonnes.  These TRQs will be
managed as one, with the total quota being 2,553,000 tonnes.  There is no expectation of
allocation of shares of either of these TRQs  among country suppliers, and the Commission
will not seek to convene a meeting to that effect of the principal supplying countries except
upon the joint request of all such countries.  The tariff applied to bananas imported in the "A"and "B" quotas shall not exceed 75 euro/tonne.
2. A TRQ designated as quota "C" will be set at 850,000 tonnes.3. Import licenses for 83% of the "A" and "B" TRQs will be distributed to "traditional" operators
based on each qualified "traditional" operator's 1994-96 average annual final reference
volume ("reference volume") for the "A/B" quotas.  Qualified "traditional" operators will be
identified on the basis of the distribution of licenses that occurred under Regulation 404,
Article 19.1(a) and Regulation 1442, Article 3.1(a) for "Category A subfunction (a)".
Importers will not need to produce new evidence.
4. Licenses for TRQ "C" are intended to be distributed broadly in accordance with the principles
to be utilized in managing of licenses for TRQ's "A" and "B" and on the basis of imports of
ACP-origin bananas.  The European Commissi on and the United States will consult again
within 4 weeks with a view to finalizing the licensing principles for TRQ "C".
5. Within each TRQ, licenses may be used to import bananas from any source.  Licenses to
import bananas into TRQ "C" cannot be used to import bananas into TRQs "A" or "B", and
vice versa.
6. A "non-traditional" operator category will be created with respect to 17% of the quantity of
the "A and B" TRQs.  Non-traditional operators cannot become traditional operators insubsequent periods.  Management of non-tr aditional imports will be done by simultaneous
examination.
7. The licensing regime will be administered in good faith and on a non-discriminatory basis.
8. The Commission will provide the United States as soon as possible the verified statistics
confirming the implementation of this phase, taking into account the protection of business
confidential information.WT/DS27/59
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Annex II
Phase II
1. During Phase II, the provisions applying to Phase I will continue, except as provided in this
Annex.
2. In Phase II, TRQ "B" will be 453,000 tonnes (an increase of 100,000 tonnes).  The total for
the "A" and "B" TRQs will be 2,653,000 tonnes.
3. The TRQ "C" will be 750,000 tonnes and will be reserved for bananas of ACP origin.
4. The share of import licenses to "traditional" operators for the "A" and "B" TRQs will be
allocated in accordance with the procedure in Annex I.  Import licenses will be distributed
based on each qualified "traditional" operator's 1994-96 reference volume through31 December 2003.  Thereafter, the share of import licenses to "traditional" operators for the
"A" and "B" TRQs will be allocated based only on usage of licenses issued under Phase II of
this Understanding, through credible documentation.
5. The Commission will provide the United States as soon as possible the verified statistics
confirming the implementation of this phase, taking into account the protection of business
confidential information.
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