WORLD TRADE  
ORGANIZATION  WT/L/616 
1 August 2005 
 (05-3440) 
  
  
 
    
EUROPEAN COMMUNITIES – THE ACP-EC PARTNERSHIP AGREEMENT – 
RECOURSE TO ARBITRATIO N PURSUANT TO THE  
DECISION OF 14 NOVEMBER 20011 
 
 
  
AWARD OF THE ARBITRATOR 
                                                      
 1 For previous documents with respect to this arbitration, see WT/L/607 and addenda 1-12. 
 WT/L/616 
Page 2  
 
Table of Contents 
  
I. BACKGROUND..................................................................................................................... ................3  
II. THE EC BANA NA REGIME ........................................................................................................... ....5 
III. THE MANDATE OF TH E ARBITRATOR ........................................................................................6  
A. INTRODUCTION AND ARGUMENTS OF THE PARTIES ....................................................................................6  
B. ANALYSIS ............................................................................................................................... ....................7  
IV. CLAIM UNDER PARAGRAPH 1 OF THE DOHA WAIVER .......................................................11  
A. ARGUMENTS OF THE PARTIES ...................................................................................................................11  
B. ANALYSIS ............................................................................................................................... ..................11  
V. ASSESSMENT OF THE EUROPEAN COMMUNITIES' ENVISAGED REBINDING ..............13  
A. THE ENVISAGED REBINDING .....................................................................................................................13  
B. APPROPRIATENESS OF THE PRICE GAP METHODOLOGY .............................................................................15  
C. REFERENCE PERIOD ............................................................................................................................... ..20 
D. PRICE DATA ............................................................................................................................... ...............21  
VI. CONCLUDING REMARKS ............................................................................................................. ..24 
VII. DETERMINA TION .................................................................................................................. ...........24  
ATTACHMENT 1 ................................................................................................................... ...........................25  
ATTACHMENT 2 ................................................................................................................... ...........................29  
 
   WT/L/616 
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I. BACKGROUND 
1. The present arbitration was initiated pursuant to  the procedures set out in the Annex to the 
waiver decision with respect to Article I of the General Agreement on Tariffs and Trade 1994 
("GATT 1994") contained in the document "European Communities – The ACP-EC Partnership 
Agreement, Decision of 14 November 2001" (the "Doha Waiver", attached).2  This was one of two 
waivers adopted at the Doha Ministerial Conference, inter alia , to facilitate implementation by the 
European Communities of two understandings (between the European Communities and the 
United States, and the European Communities and Ecuador3, respectively) relating to the resolution of 
the WTO  EC – Bananas III  dispute.   
2. As part of those understandings, the European  Communities undertook to reform its banana 
regime so as to replace its then existing WTO-in consistent measures based on several tariff rate 
quotas with a "Tariff Only regime for imports of bananas".  The tariff-only regime is to be implemented by 1 January 2006, with interim ta riff quota arrangements until that date.  The EC - 
Bananas III  dispute was initiated by Ecuador, Guatemal a, Honduras, Mexico and the United States in 
1996 and addressed the then EC banana regime.  In the context of those proceedings, Ecuador and the 
United States were authorized by the Dispute Se ttlement Body (the "DSB") to suspend certain 
concessions and, in the case of Ecuador, other WTO obligations towards the European Communities.  
In the context of seeking to resolve outstanding implementation issues, Ecuador and the United States 
negotiated understandings with the Eu ropean Communities that included, inter alia,  suspension 
(United States) or termination (Ecuador) of the right to suspend concessions or other obligations vis-
à-vis  the European Communities, adjustment of the tariff quota levels and the introduction of a tariff-
only regime for imports of bananas as from 1 Ja nuary 2006 as well as the lifting of these countries' 
reservation with respect to the banana waiver. 
3. On 15 July 2004, the European Communiti es announced, in a communication to WTO 
Members, that it intended to modify, in accordan ce with Article XXVIII, paragraph 5 of GATT 1994, 
its concessions with respect to tariff item CN 08030 019 (bananas) included in the EC Schedule CXL
4. 
4. In a communication dated 31 January 2005, th e European Communities notified the Members 
of the WTO that it intended "to replace its con cessions on item CN 08030019 (bananas) included in 
Schedule CXL of the European Communities annexed to the General Agreement with a bound duty of 
230€/t."  It also indicated that the communicati on constituted "the announcement under the terms of 
the Annex to the Decision of the WTO Minister ial Conference of 14 November 2001 concerning the 
ACP-EC Partnership Agreement (WT/MIN(01)/15)".5 
5. At the invitation of the Parties to the Cotonou Agreement6 and in accordance with the 
procedures of the Annex to the Doha Waiver, cons ultations were held on 22 February 2005 with 
WTO Members exporting bananas to the European  Communities on an MFN basis, in order to 
"provide in particular an opportunity to answer  any question which interested parties may have 
concerning the methodology used for the rebinding of the EC tariff on bananas."7 
                                                      
 2WT/MIN(01)/15, Attachment  1 to this Award.  
3WT/DS27/58 and WT/DS27/60.  
4G/SECRET/22. 
5G/SECRET/22/Add.1. 
6The official title of the Agreement is the "ACP-EC Partnership Agreement".  It was signed in Cotonou 
on 23 June 2000.  The parties to the Cotonou Agreem ent are the EC, on the one hand, and certain African, 
Caribbean and Pacific ("ACP") countries, on the other. 
7WT/L/602. WT/L/616 
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6. On 30 March 2005, Colombia, Costa Rica, Ecuador, Guatemala, Honduras and Panama, 
followed by the Bolivarian Republic of Venezu ela and Nicaragua on 31 March 2005 and Brazil
8 in a 
communication dated 1 April 2005, notified the WTO that they were requesting arbitration pursuant 
to the procedures in the Annex to the Doha Waiver.9  According to the Annex, "the arbitrator shall be 
appointed within ten days following the request ... failing which the arbitrator shall be appointed by 
the Director-General of the WTO, following consulta tions with the parties, within 30 days of the 
arbitration request."  
7. On 12 April, the parties notified the Directo r-General that no agreement had been reached 
between the parties within the stipulated ten days w ith respect to the appointm ent of the arbitrator.  
After consultations with the parties on 15 and 18  April 2005, the Director-General appointed the 
Arbitrator on 2 May 2005 as follows: 
 John Weekes, Chairman  John Lockhart  Yasuhei Taniguchi. 
8. The Annex to the Doha Waiver provides, inter alia,  that the "mandate of the arbitrator shall 
be to determine, within 90 days of his appointme nt, whether the envisaged rebinding of the EC tariff 
on bananas would result in at least maintaining tota l market access for MFN banana suppliers, taking 
into account the above-mentioned EC commitments."
10 
9. At the request of certain African, Caribbean a nd Pacific ("ACP") banana exporting countries, 
the Arbitrator, after consultations with the parti es, invited Saint Lucia, Cameroon, Côte d'Ivoire, 
Dominica, Dominican Republic, Ghana, Grenada, Ja maica, Kenya, Madagascar , Suriname, Tanzania, 
Belize and Saint Vincent and the Grenadines (the "relevant ACP Members") to participate, in a 
limited manner, in this arbitration. 
10. The Arbitrator explained its decision in a letter to the parties and the relevant ACP Members.  
It noted in particular that there was no rule pr ecluding participation by such Members and that the 
Arbitrator enjoyed the discretion to organize the c onduct of the proceedings.  The Arbitrator further 
noted that such participation shoul d have no adverse effect either on  the timetable for the proceedings, 
or on the timeframe for the conclusion of the Arb itration, as foreseen in the Annex to the Doha 
Waiver.  Accordingly, the relevant ACP Members were invited to make a written communication to 
the Arbitrator, in the form of one collective su bmission.  The relevant ACP Members were also 
invited to attend the meeting with the parties and were given the opportunity to make a single brief 
statement at that meeting and to answer questions by the Arbitrator.  Furthermore, the relevant ACP 
Members were given access to the submissions made by the parties prior to the hearing with the 
Arbitrator.   
11. In the course of the proceedings, the Arbitrator requested11 and received information from the 
Food and Agriculture Organization of the United Nati ons (the "FAO") with respect to certain price 
data collected by that organization.12 
                                                      
8 That group of Members is referred to, in this Award, as the "Interested Parties". 
9WT/L/607/Add.1-9, respectively. 
10Fourth indent of the Annex to the Doha Waiver. 
11This request was contained in a letter dated 1 July 2 005 from the Secretary to the Arbitrator, copied to 
the parties and the relevant ACP Members. 
12The FAO responded by facsimile on 5 July 2005.  The FAO's response was distributed to the parties.    WT/L/616 
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12. The Arbitrator met with the parties and releva nt ACP Members on 28, 29 and 30 June 2005.  
The Arbitrator decided that its Award should be distributed to the parties at 12 noon on 
1 August 2005, and notified to the General Council as well as circulated to the Members of the WTO 
by 5 p.m. on that date.   
II. THE EC BANANA REGIME 
13. Schedule CXL of the EC-15 records commitmen ts by the European Communities detailing a 
2.2 million metric ton tariff quota with a bound in-q uota tariff of €75 per metric ton and a final bound 
out-of-quota tariff of €680 per metric ton.  The cu rrent EC banana import sy stem is based on three 
tariff quotas:  A, B and C.   
14. Since the introduction of the common organization of the EC banana market in 1993, the EC 
import regime for bananas has changed several times.   From 1 January 1995 to 30 June 2001, specific 
country shares were allocated to some Latin Amer ican exporters and to n on-traditional ACP banana 
suppliers, totalling 2.553 million me tric tons (of which 2.2 million metric tons was bound (tariff quota 
A) and the rest was autonomous, unbound, quantiti es (tariff quota B)).  Traditional ACP suppliers 
enjoyed a duty-free tariff quota of 857,700 metric tons (tariff quota C). 
15. On 1 July 2001, country specific allocations w ithin the 2.553 million metric tons tariff quotas 
A/B were abolished.  These tariff quotas were now also available to both traditional and non-traditional ACP suppliers.  As a result of the EC – Bananas III  understandings with Ecuador and the 
United States, respectively, the European Communities increased, from 1 January 2002, the unbound, 
autonomous, tariff quota B to 453,000 metric tons a nd reduced the C tariff quota to 750,000 metric 
tons.  Preferential suppliers continued to have exclusive access to tariff quota C.   
16. On 1 May 2004, following the accession of ten Ce ntral and Eastern European countries to the 
European Communities, the European Communitie s enlarged the autonomous tariff quota adding 
300,000 metric tons for the period 1 May 2004-31 D ecember 2004.  For the year 2005, the additional 
quantity was fixed at 460,000 metric tons, increasing the total MFN tariff quotas to 3.113 million metric tons, of which 2.2 million me tric tons are bound (tariff quota A). 
17. Tariff quotas A and B are open to all suppliers, at  a tariff of €75 per metric ton for suppliers 
other than preferential suppliers, and at a zero dut y level for preferential suppliers.  The out-of-quota 
rate for non-preferential suppliers is €680 per metric ton and for pref erential suppliers €380 per metric 
ton.   
18. In summary, the existing EC banana import system consists of tariff quotas totalling 
3.113 million metric tons open to all suppliers, and a tariff quota of 750,000 metric tons at zero duty 
open exclusively to preferential suppliers.  MFN supp liers are subject to a bound in-quota tariff of €75 
per metric ton, whereas all in-quota banana impor ts from preferential suppliers enter the European 
Communities at zero duty.  In 2004, the EC-25 im ported a total of 3.87 million metric tons of 
bananas.
13  More detailed data on EC imports of bananas is contained in Attachment 2. 
                                                      
13Excluding all intra-EC trade. Th e enlargement of the EC took place on 1 May 2004.  Thus the figure 
includes imports into the ten new Member States when they were not yet part of the common market on 
bananas.   Source of the data: Eurostat (information extracted or downloaded on 20 July 2005).  WT/L/616 
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III. THE MANDATE OF THE ARBITRATOR 
A. I
NTRODUCTION AND ARGUMENTS OF THE PARTIES  
19. The mandate of the Arbitrator is set out as fo llows in the Annex to the Doha Waiver:   
... to determine, ... whether the envisaged rebinding of the EC tariff 
on bananas would result in at least maintaining total market access 
for MFN banana suppliers, taking in to account [all EC WTO market-
access commitments relating to bananas].14 
20. The terms of the mandate thus require the Arb itrator to consider whether or not a certain 
outcome "would result" from a certain action.  The te xt of the mandate may be  broken down into three 
elements.  The first is the "envisaged rebinding of the EC tariff on bananas".  This language describes 
the action at the centre of the required analysis.  The second element comprises a benchmark against 
which the envisaged rebinding of the EC tariff on bana nas is to be assessed.  Thus, this element of the 
mandate requires the Arbitrator to determine whethe r the envisaged rebinding "would result in at least 
maintaining total market access for MFN banana supp liers".  The third, and final, element is a 
direction to the Arbitrator to take into account  all EC WTO market-access commitments relating to 
bananas whilst performing the analysis under its mandate.   
21. There is no disagreement as to the meaning and scope of the first element of the mandate.  
The parties agree that the "envisaged rebinding of the EC tariff on bananas" is reflected in the EC 
proposal to record a new commitment in its WTO schedule under tariff heading CN 08030019 at €230 per metric ton.
15   
22. The parties differ, however, over the interpretati on of the second and third textual elements of 
the mandate.  With respect to the second element, the Interested Parties generally argue that the 
concept of "at least maintaining" denotes that—a t a minimum—the European Communities must keep 
in existence and must not allow diminution of th e relevant market access of MFN suppliers through 
the rebinding.16  The European Communities, for its part, su bmits that the Arbitrators are required to 
examine "if the proposed new concession would not increase the level of protection (and conversely 
diminish the market access rights of MFN suppliers ) as compared with the level of protection offered 
by the European Communities' current concession".17  The Interested Parties add that "maintaining" 
                                                      
14The parties agree that "the above-mentioned EC co mmitments" specified in the fourth tiret of the 
Annex are "all EC WTO market-access commitments relating to  bananas", as referred to in the second indent of 
the Annex.  First Written Submission of the EC, para. 5; and the respective First Written Submissions of 
Honduras, Nicaragua and Panama, para. 240.  All parties confirmed their acce ptance of the proposition that "the 
above-mentioned EC commitments" means "all EC WTO market-access commitments relating to bananas" in 
response to questions at the oral hearing.    
15In "Article XXVIII:5 Negotiations: Schedul e CXL – European Communities – Addendum", 
G/SECRET/22/Add.1 (1 February 2005), the EC notified: 
that it intends to replace its concessions on item 08030019 (bananas) 
included in Schedule CXL of the European Communities annexed to the 
General Agreement with a bound duty of 230€/t.  
The Interested Parties referred to this announcement in their requests for arbitration: see documents 
referred to supra , footnote 8.  
16First Written Submission of Brazil, paras. 151-15 4;  First Written Submission of Colombia, Costa 
Rica, Ecuador and Guatemala, para. 57-58;  respective First Written Submissions of Honduras, Nicaragua and 
Panama, paras. 233-234.  The Arbitrator notes that, in a letter dated 24 May 2005, the Bolivarian Republic of 
Venezuela associated itself with, and endorsed as its  own, the First Written Submission of Colombia, Costa 
Rica, Ecuador and Guatemala.  Subsequent references to that submission should be read in that light. 
17First Written Submission of the EC, para. 8.   WT/L/616 
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total market access carries with it a temporal, prospe ctive dimension, such that total market access—
appropriately defined—must be preserved in time.18   
23. The parties offer markedly different interpre tations as to the meaning of the phrase "total 
market access for MFN banana suppliers", and th e significance and scope of the EC commitments to 
be taken into account.  The European Communities r eads these two textual elements of the mandate 
together and argues that the level of protection for EC banana producers (or, conversely, the degree of 
liberalization) accorded by the tariff commitm ents scheduled in the EC-15 Schedule CXL alone 
comprises the benchmark against which its e nvisaged rebinding is to be compared.19  Colombia, Costa 
Rica, Ecuador and Guatemala, as well as Brazil, argue  that the concept of "total market access for 
MFN banana suppliers" requires a broader analys is, including, but not limited to, the European 
Communities' scheduled commitments, and which would encompass analysis of all relevant 
conditions affecting competition in the marketplace, including both the level of protection accorded to 
EC producers and the margin of preference enjoye d by preferential suppliers to the EC banana 
market.20  Honduras, Nicaragua and Panama also contend that the position of preferential suppliers is 
relevant to an assessment of whether the envisag ed rebinding "would result in at least maintaining 
total market access for MFN banana suppliers".21  In addition, these parties argue that an analysis of 
"total market access for MFN banana supplie rs" must be "quantity-based, exclusive to MFN  suppliers, 
and encompasses the full amount of MFN volumes now authorized for MFN entry".22  Honduras, 
Nicaragua and Panama submit that the taki ng into account of "all EC WTO market-access 
commitments relating to bananas" must go beyond  consideration of the European Communities' 
scheduled commitments, and must include analysis of commitments owed to MFN suppliers in the 
light of EC enlargement23; under the understandings  concluded between the European Communities 
and the United States and Ecuador respectively in the context of the settlement of the  EC – Bananas 
III dispute; under the negotiating manda te of the Doha Development Agenda (the "DDA"), as well as 
under the Doha Waiver itself.24    
B. ANALYSIS  
24. The starting point for the Arbitrator's analysis is the "envisaged rebinding of the EC tariff on 
bananas".  The parties agree that the envisaged rebinding referred to in the mandate is the EC 
proposal, announced in a communication to WTO Members on 1 February 2005, to rebind its concessions for bananas under tariff headi ng CN 08030019 at €230 per metric ton.
 25   
                                                      
18First Written Submission of Brazil, para. 154; First Written Submission of Colombia, Costa Rica, 
Ecuador and Guatemala, para. 57; Honduras, Nicaragua and Panama first submission, para. 234.  At the oral 
hearing, the EC indicated that the rebinding of the EC tariff would lead to a new WTO concession for the EC in respect of bananas and that concession would be maintained in time, in the sense that it would be a bound 
commitment.  See also First Written Submission of the EC, para. 8.   
19Rebuttal Submission of the EC, paras. 28-57.  The EC confirmed its submission that the scheduled 
commitments are the exclusive benchmar k against which the proposed tariff is to be assessed in response to 
questions at the oral hearing.   
20First Written Submission of Colombia, Costa Rica,  Ecuador and Guatemala, para. 53; and First 
Written Submission of Brazil, para. 160. 
21Honduras, Nicaragua and Panama acco rdingly factor the capacity of certain ACP banana suppliers to 
increase exports into their analysis of the envisaged rebinding: see, for example, respective First Written 
Submissions of Honduras, Nicaragua and Panama, paras. 266 ff.  
22Respective First Written Submissions of Honduras, Nicaragua and Panama, para. 235.  (Emphasis 
original.) 
23Following the enlargement of the EC from 12 to 15 and then to 25 member States, the overall 
quantities of bananas benefiting from the in-quota tariff rate of  €75 per metric ton have been expanded through "autonomous" tariff quotas not record ed in the EC's tariff schedule.  Supra , paras. 13-18. 
24Respective First Written Submissions of Hondur as, Nicaragua and Panama, paras. 243-244.  
25G/SECRET/22/Add.1.  WT/L/616 
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25. The Arbitrator's task is to determine whether this envisaged rebinding "would result in at least 
maintaining total market access for MFN banana suppliers ".  In doing so, the Arbitrator must take into 
account "all EC WTO market-access commitments relating to bananas".    
26. The phrase "would result in at least mainta ining" centres on the word "maintaining".  
"Maintaining" is synonymous with "preserving" or  "causing to continue" and carries with it the 
connotation of guarding from  loss or deterioration.
26  The "maintaining" of a state of affairs denotes a 
temporal, prospective element in the sense that the stat e of affairs must continue.  Accordingly, in the 
context of the Annex, "maintaining" indicates that the "total market access for MFN banana suppliers" 
enjoyed before the envisaged rebinding must continue following that rebinding.   
27. The word "maintaining" is qualified in several ways by the terms that precede it in the phrase 
"would result in at least maintaining".  "Would" is a conditional form of "will".  In the current context, 
the use of "would" with the verb "maintain"  denotes both a prospective analysis as well as 
conditionality: the specified result will follow, if the condition (here, the rebinding of the EC banana 
tariff) comes to pass.  "Result" d escribes a relationship of cause and effect.  "At least" underscores the 
concept of guarding from loss that  is inherent in the word "mai ntaining".  The expression "at least 
maintaining" requires that "total market  access for MFN banana suppliers" is the minimum  level that 
must be maintained.  Read together, therefore, the words in the expression "would result in at least 
maintaining" denote that the effect of the envisaged rebinding, if it is put in place, will, at a minimum, 
be the continuation or preservation of "total mark et access for MFN banana suppliers".  The phrase 
"would result in at least maintaining" describes the relationship that is required between the 
"envisaged rebinding" and the benchmark of "total  market access for MFN banana suppliers".   
28. The phrase "total market access for MFN banana  suppliers" centres on the expression "market 
access".  The ordinary meaning of the term "access"  suggests that it relates to "a way or means to 
approach or entrance".27  The ordinary meaning of the term "m arket", in turn, may be defined as "a 
locus of competition for sales of a particular commodity".28  Read together, the meanings of the terms 
"market" and "access" indicate that "market access"  deals with the conditions under which suppliers 
may enter a product (or service) into an area of economic activity, so as to compete for sales with 
other suppliers.  In other words, market access relate s to the conditions of entry of the product into the 
market.  In the context of the current proceeding, th e relevant "market" is the market of the European 
Communities for bananas.  Insofar as bananas of di fferent origins are in competition on the market29, 
outcomes within the EC market for bananas will be a function, inter alia , of the conditions within 
which different suppliers are allowed to co mpete for sales of bananas.       
29. This general definition of "market access" is consistent with the use of the term in the context 
of the Marrakech Agreement Establishing the World Trade Organization  (the " WTO Agreement "), 
where "market access" (or "market-access") in respect  of trade in goods relates to the conditions 
imposed upon foreign goods by an importing Member  on entry into that Member's market.  Such 
measures imposed at the time of entry impact on the competitiveness of foreign suppliers in the 
market of the Member concerned.  In the WTO context, the expression "market access" is generally 
used in describing tariff concessions, as well as othe r commitments, such as tariff quota commitments, 
used in relation to the importation of goods by WTO Members.  Indeed, the final element of the 
                                                      
26Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, A. Stevenson (eds) (Oxford University 
Press, 2002), Vol. 1, p. 1674. 
27Ibid., p. 13. 
28Panel Report, US – Upland Cotton , para. 7.1429.  This definition, which arose in the context of a 
discussion of "world market share" in Article 6.3(d) of the  Agreement on Subsidies and Countervailing 
Measures (the " SCM Agreement "), was not addressed by the Appellate Body.     
29The panel in EC – Bananas III  concluded that "bananas are 'like' products, for purposes of Articles I, 
III, X, and XIII of GATT 1994, irrespective of whether they originate in the EC, in ACP countries, in BFA 
countries or in other third countries".  (Panel Report, EC – Bananas III , para 7.63)  This finding of the panel was 
not appealed.      WT/L/616 
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mandate—which refers to "all EC WTO market-access commitments relating to bananas"—uses just such a construction.  A similar constr uction is used in Article 4.1 of the Agreement on Agriculture , 
which defines a category of "[m]arket access concessi ons contained in Schedules".  These "relate to 
bindings and reductions of tariffs, and other mark et access commitments as sp ecified therein".  By 
referring to bindings in Schedules, Article 4.1 of the Agreement on Agriculture  evokes Article II of 
GATT 1994, the provision that provides for the schedu ling of tariff concessions and that requires the 
commerce of WTO Members to be accorded "treatment  no less favourable than that provided for in 
the appropriate part of the appropriate Schedule".  The Arbitrator notes, at this point, that the 
"envisaged rebinding of the EC tariff on banan as"—the proposal to be measured against the 
benchmark of "total market access for MFN bana na suppliers"—is an envisaged tariff binding 
governed by Article II of GATT 1994.  As such, Article II may provide contextual assistance for 
defining correctly the benchmark level.      
30. The essence of a commitment under Article II of  GATT 1994 is an undertaking not to apply a 
tariff above the level specified in the Schedule of th e Member concerned.  The exercise is therefore 
fundamentally about guaranteeing certain conditio ns of entry into the EC market through an 
undertaking not to apply protective instruments or a level of protection above a bound level.  For this 
reason, it has been stated that tariff bindings  under Article II of GATT 1994 represent, generally, 
"commitments on conditions of competition for trade, not on volumes of trade".
30  Market access 
commitments  undertaken in the context of Article II of GATT 1994 have often been described as 
giving rise to market access opportunities for the Members benefiting from the concessions.31  These 
opportunities  afforded by the granting of tariff concessions relate to certain lega l conditions governing 
the ability of exporters to enter and compete on th e market of another Member.  Indeed, as far as 
market access opportunities provided through tariff c oncessions are concerned, all that is guaranteed 
for an exporting Member is an opportunity to ente r the market of an importing Member under secure 
and predictable conditions (but not a guarantee to  export certain volumes to that market).   
31. In the context of this proceeding, the "envisag ed rebinding" referred to in the mandate is a 
proposed tariff binding  to be undertaken by the European Communities under Article II of GATT 
1994.  The benchmark against which it is to be asse ssed is not the specific concept of tariff bindings, 
but the more general concept of " market access " for the MFN suppliers.  Although tariff bindings 
under Article II of GATT 1994 are an aspect of "mar ket access", the general concept of "market 
access" may involve other aspects of the conditions u nder which suppliers enter a market to compete 
for sales.  Moreover, the question to be resolved in  this proceeding does not deal with the expression 
"market access" in isolation.  Nor indeed does it deal with "market access commitments", other than 
to require that such commitments be taken into acco unt.  Instead, the term "market access" is qualified 
in the context of the Annex by two further e xpressions:  the mandate requires analysis of " total market 
access for MFN banana suppliers ". 
                                                      
30GATT Panel Report, EC – Oilseeds , para. 150. 
31This notion has been referred to in particular in the context of defining the legitimate expectations 
arising from tariff bindings, in the context of analyses of non-violation claims.  The panel on Japan – Film  thus 
found that: 
The second required element which must be considered to establish a case 
of non-violation nullification or impair ment under Article XXIII:1(b) is the 
existence of a benefit accruing to a WTO Member under the relevant 
agreement (in this case, GA TT 1994). In all but one of the past GATT cases 
dealing with Article XXIII:1(b) claims, the claimed benefit has been that of legitimate expectations of im proved market-access opportunities  arising out 
of relevant tariff concessions.  
(Panel Report, Japan – Film , para. 8.285) WT/L/616 
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32. The phrase "for MFN banana suppliers" indicat es that the benchmark against which the 
European Communities' envisaged rebinding is to be measured is to be determined from the 
perspective of the opportunities afforded to MFN supp liers by the existing conditions of entry to the 
EC market. 
33. The ordinary meaning of the adjective "total" is "[o]f or pertaining to the whole of 
something".
32  It denotes completeness or all-inclusiveness and may also indicate an aggregate 
measurement.  The use of the expression " total market access" further clarifies that what is to be taken 
into account is the entirety  of the opportunity actually afforded  to MFN suppliers by the existing 
conditions of entry to the EC market.   
34. In the light of the above, it is difficult to accept the submission of the European Communities 
that an assessment of "total market access for MF N banana suppliers" in th e context of the Annex 
must be limited exclusively  to the market access commitmen ts recorded in the European 
Communities' Schedule CXL.  Such commitments ma y well be an important factor affecting the 
opportunity afforded by the conditions of entry fo r MFN banana suppliers, and the mandate clearly 
requires that such commitments - which are certa inly included in the phrase "all EC WTO market-
access commitments relating to bananas" - be taken into account during the analysis.  Nevertheless, it 
is clear that the scheduled commitments of th e European Communities relating to bananas do not 
exhaust the full scope of "total market access for MF N banana suppliers" currently enjoyed.  As noted 
above, the European Communities grants MFN suppliers  a greater opportunity to enter the EC banana 
market than is recorded in its Schedule CXL,  through additional "autonomous" tariff quota amounts.33  
They form part of the opportunities enjoyed by the MFN banana suppliers on the EC market and thus 
part of the "total market access for MFN suppliers" that is to be maintained, or preserved, under the 
new tariff. 
35. The third and final element of the mandate requires that "all EC WTO market-access 
commitments relating to bananas" be "tak[en] into account".  This requires that such commitments be 
considered in the Arbitrator's analysis.  The expression "taking into account" does not, however, in 
itself require that such factors be the only factors to be considered.    
36. The parties have expressed differing views as to what is encompassed in the expression "all 
EC WTO market-access commitments relating to ba nanas".  The parties agree that "all EC WTO 
market-access commitments relati ng to bananas" includes the European Communities' scheduled 
commitments.34  Honduras, Nicaragua and Panama argue how ever that other commitments are also 
captured by this phrase, notably commitments arisin g out of EC expansion (i ncluding under Article 
XXIV:6 of GATT 1994), the negotiating mandate of the DDA, under the EC – Bananas III  
understandings with the United States and Ecuador, and under the Doha Waiver itself.  The Arbitrator 
finds that "all EC WTO market-access commitmen ts relating to bananas" includes commitments 
incurred as a result of EC enlargement under Articles XXIV:6 and XXVIII of GATT 1994.  The Arbitrator also accepts that the European Communities has commitments under the negotiating 
mandate of the DDA.  However, these commitments  consist of a political undertaking to achieve 
market access improvements, including for bananas.   As such, the Arbitrator finds that these 
commitments are not of a character that would allow them to be factored into  the analysis under the 
mandate.  As regards the unders tandings concluded between the European Communities and the 
United States and the European Communities and Ec uador, as well as the Doha Waiver itself, these 
clearly comprise important background to the arbitration and the Arbitrator has taken them into 
account as well.   
                                                     
 
32Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, A. Stevenson (eds) (Oxford University 
Press, 2002), Vol. 2, p. 3305.  
33Supra , paras. 13-18. 
34First Written Submission of the EC, para. 8; respective First Written Submission of Honduras, 
Nicaragua and Panama, Table 11.    WT/L/616 
 Page 11 
 
 
37. In summary, the mandate requires a determinati on as to whether the proposed new EC tariff 
for bananas would preserve, at a minimum, the eff ective opportunities to enter the EC banana market 
afforded to MFN suppliers by the existing conditions of  entry.  The analysis must factor in, not only 
bound commitments, but all other aspects of the import regime, as applied .  The Arbitrator notes that, 
because it relates to certain opportunities to enter the market, "total market access for MFN banana 
suppliers" is not a guarantee of any particular level or volume of trade or price.  Rather, it relates to 
the opportunity for MFN suppliers to enter and compete on the EC banana market.   
IV. CLAIM UNDER PARAGRAPH 1 OF THE DOHA WAIVER 
A. ARGUMENTS OF THE PARTIES  
38. Honduras, Nicaragua and Panama argue that the sc ope of the arbitration is not limited to the 
consideration of whether the envisaged rebinding of the European Communities' tariff on bananas 
would result in at least maintaining total market access for MFN banana suppliers, and instead submit 
that the Arbitrator may also review the EC pr oposal under the terms of Pa ragraph 1 of the Doha 
Waiver.35  Honduras, Nicaragua and Panama thus call for the Arbitrator to examine whether the 
proposed EC rebinding is "necessary" within the terms of Paragraph 1, or "required" pursuant to the 
relevant provisions of the Cotonou Agreement.  They  submit that an interpretation that did not lead to 
an examination of Paragraph 1 would render m eaningless the term "additional" in Paragraph 3 bis of 
the Doha Waiver, because "additional" denotes that th e provisions are "extra" rules that apply on top 
of the general provisions.  They argue that such an interpretation is also  consistent with the 
negotiating history and would avoid an absurd result whereby interested parties, in addition to having 
recourse to arbitration under the Annex to the Doha  Waiver, would have to follow ordinary dispute 
settlement rules in order to bring a claim under Paragraph 1.   
39. The European Communities submits that such an examination is outside the specific terms of 
the mandate of the Arbitrator, which refers only to the determination of whether the envisaged 
rebinding "would result in at least maintaining tota l market access for MFN banana suppliers".  The 
European Communities submits that, were the Arbitrat or to address this issue, it would deny it (and 
the ACP countries) important due process rights.36     
B. ANALYSIS  
40. As noted above, the mandate of the Arbitrator in this proceeding is defined in the fourth tiret 
of the Annex to the Doha Waiver as follows:   
... to determine, ... whether the envisaged rebinding of the EC tariff 
on bananas would result in at least maintaining total market access 
for MFN banana suppliers, taki ng into account [certain] EC 
commitments. 
41. Paragraph 1 of the Doha Waiver provides as follows:   
Subject to the terms and conditions set out hereunder, Article I, 
paragraph 1 of the General Agre ement shall be waived, until 31 
December 2007, to the extent necessary to permit the European 
Communities to provide preferential tariff  treatment for products 
originating in ACP States as required by Article 36.3, Annex 5 and its Protocols of the ACP-EC Part nership Agreement, without being 
                                                     
 
35Respective First Written Submissions of Hondur as, Nicaragua and Panama, paras. 168 ff. 
36Rebuttal Submission of the EC, paras. 71-85. WT/L/616 
Page 12  
 
required to extend the same preferentia l treatment to like products of 
any other member. (footnote omitted) 
42. It is clear, on a plain reading of the fourth tir et of the Annex to the Doha Waiver, that the 
Arbitrator's mandate does not explicitly require the Arbitrator to assess  whether the European 
Communities' envisaged rebinding is consistent with  the conditions set forth in Paragraph 1 of the 
Doha Waiver.  Honduras, Nicaragua and Panama ar gue, however, that the Arbitrator may consider 
substantive claims that the European Communities' envisaged rebinding does not comply with the conditions of the Doha Waiver, and request the Arbitr ator to review the consistency of the European 
Communities' proposed rebinding against the term s of Paragraph 1.  Th e European Communities 
contests this submission, submitting that the Arbitrator 's "terms of reference" (or "jurisdiction") are 
limited to the terms of the mandate.
37 
43. In seeking to show that an examination under Pa ragraph 1 of the Doha Waiver is within the 
jurisdiction of the Arbitrator in this proceeding, notwithstanding the lack of any express authority for 
such jurisdiction within the terms of the Anne x to the Doha Waiver, Honduras, Nicaragua and 
Panama rely, in particular, upon the wording of Pa ragraph 3bis of the Doha Waiver, which provides 
that:  
With respect to bananas, the additional provisions in the Annex shall 
apply.    
44. Honduras, Nicaragua and Panama s ubmit that the use of the term "additional" means that both 
the general requirements of the Waiver, and the "additional" provisions of the Annex, apply in respect 
of bananas.  Thus, in the submission of Honduras,  Nicaragua and Panama, claims under the general 
provisions of the Waiver may be brought before the Arbitrator.   
45. The Arbitrator agrees with Hondur as, Nicaragua and Panama that both the "additional" Annex 
provisions as well as the general provisions of the D oha Waiver apply to bananas.  Compliance with 
the Doha Waiver in respect of bananas does not turn solely upon fulfilment of th e standard of "at least 
maintaining total market access for MFN banana supplie rs" reflected in the fourth tiret of the Annex.  
Instead, it is clear that, in respect of bananas, as well as all other products covered by the Waiver, the 
European Communities must comply with all of th e conditions of the Waiver, including those in 
Paragraph 1.     
46. However, the jurisdiction of the Arbitrator is  governed by the terms of the Annex.  That 
mandate is limited, specifically, to determining whether the "envisaged rebinding would result in at 
least maintaining total market access for MFN banana suppliers".  The Arbitrator is not free to expand 
its mandate.  It must find its jurisdiction in the in strument establishing its authority.  There is no 
indication that the Arbitrator may determine other matters, such as the consistency of the European 
Communities' envisaged rebinding with Paragraph 1 of  the Doha Waiver (which, by its nature would 
also include consideration of the terms of the Co tonou Agreement to determine what is "required" 
under that Agreement38).  The Arbitrator finds, therefore, that this claim by Honduras, Panama and 
Nicaragua is beyond its jurisdiction. 
47. This interpretation does not render th e word "additional" in Paragraph 3 bis meaningless.  
Pursuant to the "additional" procedure, the task of the Arbitrator is to review the envisaged rebinding 
of the EC tariff on bananas against the benchmark laid out in the mandate.  This procedure is 
"additional" in the sense that it provides for a sui generis  process, with its own benchmark, that would 
not otherwise have existed, were it not for the add itional procedures of the Annex.  Again, it must be 
emphasized that this does not mean that the general provisions of the Doha Waiver do not apply or do 
                                                      
37Responses to questions at  the oral hearing.  
38See Appellate Body Report, EC – Bananas III , para. 167.   WT/L/616 
 Page 13 
 
 
not have legal effect; it means, rather, that the Arbitr ator is not authorized or  required to determine the 
issue.  The compliance of the European Communities with the conditions of the Doha Waiver may be 
the subject of review in the context of dispute settlement, a point expressly confirmed by Paragraph 6 
of the Waiver, which states that:  
This Waiver shall not preclude the right of affected members to have 
recourse to Articles XXII and XXIII of the General Agreement. 
Such procedures safeguard, within an overall bala nce of rights and obligations agreed by WTO 
Members, not only the rights of a complaining Member  to bring disputes in respect of matters covered 
by the Doha Waiver, but also the due process rights of other WTO Members.   
V. ASSESSMENT OF THE EUROPEAN COMM UNITIES' ENVISAGED REBINDING 
48. As observed above, the Arbitrator is requi red to determine whether the European 
Communities' envisaged rebinding for bananas would result, at a minimum, in the preservation of the 
effective opportunities to enter the EC banana mark et afforded to MFN suppliers by the existing 
conditions of entry prior to the rebinding.  In  this assessment, the sch eduled market access 
commitments undertaken by the European Comm unities are to be taken into account, but the 
appropriate benchmark is the tota lity of the opportunities afforded by the existing conditions of entry 
encountered by MFN suppliers.   
49. In this light, the Arbitrator will first outline th e main elements of the European Communities' 
envisaged rebinding.  Whether that envisaged re binding meets the requirement described in the 
mandate for this arbitration will then be analyzed, in light of the arguments of the parties.     
A. THE ENVISAGED REBINDING  
50. As noted above, the European Communities has notified its intention to replace its 
concessions on bananas with a bound duty of €230 per me tric ton.  This rebinding exercise takes place 
in the context of the European Co mmunities' move to a tariff-only regime, as described in the Doha 
Waiver.  The proposed rate is to take effect on 1 January 2006.39   
51. In the course of the proceedings, the European Communities explained that, in arriving at its 
proposed rate, it had employed the price gap meth odology used in the Uruguay Round agriculture 
negotiations.  This methodology has since been incorporated, with minor modifications, into the WTO 
Agreement  as the Attachment to Annex 5 of the Agreement on Agriculture .  The European 
Communities had "sought a methodology which would ensu re that the new tariff would maintain the 
same level of protection as did the existing concessions."40  According to the European Communities, 
the price gap methodology "was devised precisely to measure the level of protection provided by 
different types of instruments affecting market ac cess and to convert it into a tariff equivalent."41  
"The exercise envisaged in the Waiver Annex, na mely the rebinding of the EC tariff on bananas, 
while maintaining total market access for MFN banana suppliers, is analogous to the type of exercise 
for which the price-gap methodology has been used."42  The European Communities also noted that the 
price gap methodology is familiar to all WTO Me mbers who participated in the Uruguay Round 
negotiations, that it was simple, and that it was part of the WTO Agreement on Agriculture .43    
                                                      
39G/SECRET/22/Add.1, 1 February 2005. 
40First Written Submission of the EC, para. 3. 
41Ibid., para. 9. 
42Ibid., para. 11. 
43Ibid. WT/L/616 
Page 14  
 
52. The price gap methodology as employed by the European Communities involves calculating 
the difference between internal and external pric es of bananas during a reference period.  The 
difference between the two (i.e., the "price gap") provides a measure of the level of protection 
afforded to domestic producers on the market.  In  this instance, the European Communities chose 
2000-2002 as the reference period.
44   
53. The external price was obtained using Eurostat data with respect to the volume and c.i.f. value 
of banana imports into the EC-25 from MFN suppliers.45  To calculate the external price, the c.i.f. 
value of banana imports from MFN suppliers was divided by the volume of imports.  The European 
Communities arrived at an external price for the EC-25 of €559 per metric ton, averaged over the 
period 2000-2002.  With the exception of the ques tion of the appropriate reference period, the 
calculation of the external prices based on Eurostat data is not in dispute. 
54. To calculate the internal pri ce, the European Comm unities used price data collected by the 
FAO and made available through a publicly accessible database.  At the time the European Communities carried out the price gap calculation, i.e., in June 2004, the data series was referred to as 
"Bananas (C. America, f.o.b. Hamburg - EC duty paid)".   The description has since been changed to 
"L. America, f.o.t. Benelux/Hamburg – EC duty paid". 
55. The European Communities then applied a series of coefficients to that price data, to adjust 
for:   
• the higher average price of bananas originating in Central America compared to those 
originating in South America; 
• the higher average price of bananas in German y compared to the rest of EC-15;  and 
• the higher average price of bananas in th e EC-15 compared to the ten new members 
of the European Communities. 
56. After making these adjustments, the European Communities arrived at an internal EC-25 price 
of €789 per metric ton.  The gap between the external price of €559 per metric t on and the internal price 
calculated by the European Communities for the 25 member States (€789 per metric ton), amounted to 
€230 per metric ton in the period 2000-2002, proposed by the European Communities as the new tariff.  
57. The Interested Parties have challenged the envisaged rebinding both in respect of the 
methodology and in respect of the price data used to arrive at the envisaged rebinding.  In particular, 
they have argued that: 
(a) the price gap methodology used by the European Communities cannot meet the 
requirements of the mandate.   One importa nt reason is that it fails to take into 
account the impact of the increase in the pr eference margin that would result from the 
rebinding; 
(b) even assuming that the price gap methodology were appropriate in the circumstances, 
the reference period and the price data upon which the European Communities has relied in its calculations are flawed. 
The Arbitrator will now consider these issues. 
                                                     
 
44In respect of the choice of the reference period, see infra , paras. 80-83. 
45Exhibit EC-4.  WT/L/616 
 Page 15 
 
 
B. APPROPRIATENESS OF THE PRICE GAP METHODOLOGY  
58. The Interested Parties have questioned the valid ity of the price gap methodology to calculate 
the level at which the EC tariff on bananas should be rebound.  Most importantly, they have argued 
that the price gap methodology fails to account for the impact of the increase  in preference margin 
that would result from the envisaged rebinding.  The Interested Parties have argued that the proposed 
tariff would significantly increase the margin of pr eference between MFN bananas and preferential 
bananas.46  This widening of the preference margin w ould alter the conditions of competition between 
preferential and MFN banana supplie rs to the latter's disadvantage.47  Honduras, Nicaragua and 
Panama have also questioned the applicability of the price gap methodology to calculate the new tariff for the reason that the EC banana regime has alre ady been subjected to tariffication in the Uruguay 
Round.
48   
59. The European Communities, for its part, submits that the Annex standard requires that the tariff 
proposed by the European Communities must maintain  the level of liberalisation/level of protection 
provided by its current WTO commitments.  Analyz ing the level of liberalisation does not imply, 
according to the European Communities, taking into account any margin of preference granted to 
bananas originating in the ACP.  Accordingly,  the European Communities did not address those 
criticisms in its arguments on the calculations, because they were rendered irrelevant by its 
interpretation of the Annex to the Doha Waiver.49   
60. At the outset, the Arbitrator obser ves that the fact that there w as a tariffication exercise for the 
EC banana regime during the Ur uguay Round does not in itself rule out the use of the price gap 
approach to determine a tariff equivalent to the existing EC banana regime.  The Uruguay Round 
tariffication involved a price gap calculation of a tari ff equivalent to measure the effect of various 
non-tariff measures that existed during the period 19 86-1988.  Since then, the European Communities 
                                                      
46The Interested Parties have argued that the propos ed tariff would increase th e margin of preference 
from the current €75 per metric ton in respect of in-quota imports to €230 per metric ton .  
47Brazil notes that the single tariff to be applied on 1 January 2006 will not apply to imports of all 
origins. The ACP imports will still en joy duty-free access to the EC market.  Brazil states that the issue is 
whether the €230 per metric ton single-tariff will, or w ill not result in hampering the access of the MFN bananas 
to the European market to the benefit of the ACP duty- free suppliers. It argues that the EC's envisaged bound 
duty of €230 per metric ton will distort the market in fa vour of the ACP countries and that the MFN suppliers 
will lose significant market shares.  The Bolivarian Repu blic of Venezuela, Colombia, Costa Rica, Ecuador and 
Guatemala argue that the EC's price ga p methodology fails to address the effects of the envisaged tariff on the 
conditions under which MFN bananas compete with ACP bananas.  The EC considers that compliance with the 
standard that applies under the Annex to the Doha Waiver requires only the maintenance of the conditions under 
which MFN bananas compete with EC bananas.  However, the Bolivarian Republic of Venezuela, Colombia, Costa Rica, Ecuador and Guatemala argue that the phrase  "total market access" requi res not merely maintenance 
of the conditions under which MFN bananas compete with EC bananas, but also maintenance of the conditions 
under which MFN bananas compete with ACP bananas.  They submit
 that increasing the margin of preference 
between ACP bananas and MFN bananas to any level higher than the current €75 per metric ton would 
adversely affect total market access for MFN bananas.  In the view of Honduras, Panama and Nicaragua, the 
price gap method fails to take into account a key factor bearing on a proper analysis of the standard under the Annex to the Doha Waiver, namely the extent to which a subset of the ACP countries-Africa, Belize, and the 
Dominican Republic-will respond to an enlarged tariff preference by increasing their exports to the EC market.  
Honduras, Panama and Nicaragua submit that these countries have soils, to pography, climate, cost structures 
and other resources that closely resemble, and are compe titive with, those in Latin America.  They submit that 
the envisaged tariff of €230 per metric ton will incr ease the existing margin of preference between MFN 
bananas and ACP bananas and create incentives for multinational banana marketing and production companies 
to expand production in Africa.  Since tariff quotas would be removed on ACP bananas, it would enable banana 
suppliers in Africa to gain unlimited, duty-free access to the EC market leading to di splacement of MFN banana 
suppliers. 
48Respective First Written Submissions of Honduras, Nicaragua and Panama, para. 300. 
49Rebuttal Submission of the EC, para. 92. WT/L/616 
Page 16  
 
has implemented tariff quotas, increased the volumes subject to in-quota tariff rates and/or made the 
conditions less restrictive, for example, through the removal of country-specific allocations.  The 
current rebinding exercise involves the calculation of a tariff equivalent for bananas that would 
estimate the protective effect of the conditions of entry during the period 2000-2002, adjusted for the EC-25.  Indeed, Colombia, Costa Rica, Ecuador and Gu atemala admit that, in principle, and if applied 
correctly, the difference between the internal and exte rnal prices could be equated to the effects of the 
existing trade restriction, measured by its equivalent tariff.
50  The Interested Parties themselves have 
drawn the Arbitrator's attention to studies from the economic literature which provide, despite its 
practical difficulties, credibility to the use of the price gap method for measuring non-tariff barriers.51  
While the tariff quota commitments constitute, in th e WTO context, a variant of a tariff concession, 
rather than a non-tariff measure per se , the economic effect of the EC tariff quotas for bananas is, in 
an analytical sense, comparable to  a quota regime (non-tariff measure) , as evidenced by the negligible 
volume of banana imports entering the European Communities at the out-of-quota tariff.52  
61. The principal issue in this in stance, however, is whether the result of the EC price gap 
calculation, i.e., the proposed tariff rebinding, meet s the standard of preserving, at a minimum, the 
effective opportunities to enter the EC banana mark et afforded to MFN suppliers by the existing 
conditions of entry.   
62. As a preliminary matter, the Arbitrator notes that the result of the EC price gap calculation 
reflects actual access opportunities during the refere nce period 2000-2002.  Contrary to the European 
Communities' assertion that the exclusive benchmar k for the assessment should be the scheduled 
commitments53, it has, in fact, implicitly taken into acc ount the effective access conditions prevailing 
on the EC-25 banana market during the chosen refere nce period.  As noted above in the analysis of 
the mandate, "total market access for MFN banana s uppliers" requires consideration of the effective 
opportunities to enter the EC banana market afforded  to MFN suppliers by the existing conditions of 
entry.  Accordingly, the analysis must factor in  not only bound commitments, but all other aspects of 
the import regime, as applied .54  It was therefore appropriate for the European Communities to take 
into account the autonomous tariff quotas currently available to MFN suppliers in addition to its 
scheduled commitments in its calculations.  
63. However, the principal question raised by the In terested Parties in respect of the price gap 
methodology used by the European Communities is its  failure-and inability, in the submission of the 
Interested Parties-to take into account the impact of the increase in the preference margin that would 
result from the rebinding.  Accordin g to the European Co mmunities, this is not relevant to the 
                                                      
50First Written Submission of Colombia, Costa Rica, Ecuador and Guatemala, para. 89. 
51For example, "Measuring Nontariff Barriers" by Ro bert E. Baldwin, referred to in the First 
Submission of Brazil, paras. 207 and 208.  Exhibit EC-10, available on-line at 
http://www.nber.org/papers/w2978.pdf;  Measurement of No n-Tariff Barriers by Alan  V. Deardorff and Robert 
M. Stern (University of Mich igan), available on-line at: 
http://www.oecd.org/dataoecd/34/3/1863859.pdf 
52The EC has indicated that:  
"According to the information receive d by the European Commission from 
the EC member States pursuant to Article 22 (4) of Commission Regulation 
896/2001  (4), between 10,000 to 20,000 tonnes of bananas are imported out 
of quota every year.  That represents about 0.3% of the total imports and 
they correspond to marginal imports of residual quantities, consisting for the most part of a few tonnes, in cons ignments. There is no consolidated 
information about their origin."  
(Written answer by the EC to a question by the Arbitrator) 
53EC statement at the oral hearing in response to a question by the Arbitrator. 
54In practice, the EC has actually granted MFN suppliers more market access than the minimum 
recorded in its Schedule.  Supra , paras. 13-18.   WT/L/616 
 Page 17 
 
 
assessment.  This question was exte nsively discussed both in the wr itten submissions of the parties 
and during the oral hearing. 
64. The Interested Parties have stressed that the competitive environment they face in entering the 
EC banana market is affected importantly by the existence of preferential treatment granted to ACP 
suppliers.  These preferences, which would otherwi se be contrary to Article I of GATT 1994, are 
made possible by a waiver of the European Communitie s' obligations under that Article.  This waiver 
was granted by the WTO Members subject to certain  conditions.  In particular, it includes the Annex 
under which this arbitration procedure is foreseen.  This arbitration procedure therefore forms an 
integral part of the agreement reached by WTO Me mbers in granting the waiver.  Indeed, the very 
continuation of the waiver in respect of bananas is also intimately tied to the conclusion of the 
rebinding exercise.   
65. These elements suggest that the rebinding ex ercise and the procedures under the Annex were 
considered in the context of  the preferences that would be granted under the then proposed waiver.  
They also suggest that the standard by which the rebinding is to be assessed in these proceedings was 
developed in consideration of these preferences.  In deed, the essence of the preferences is to exempt 
their beneficiaries from the application of the MFN tariff rate.  There is a direct correlation between 
that MFN rate and the level of the preferences actuall y granted:  the greater the difference between the 
MFN rate and the preferential rate, the greater the margin of the preference.  These elements suggest 
at a minimum that, while the mandate refers specifi cally to MFN suppliers, the context in which this 
arbitration is being carried out bears a close relati onship to the preferences authorized in the same 
legal instrument (the Doha Waiver) in favour of ot her suppliers:  the level of the MFN tariff and the 
margin of preference are, in a sen se, two sides of the same coin. 
66. Bearing in mind that context and turning to th e specific assessment that is required under the 
benchmark in the Annex, it can be recalled that , as determined above, "maintaining total market 
access for MFN banana suppliers" relates to the pres ervation of the effective opportunities afforded to 
MFN suppliers by the existing conditions of entry to the EC banana market.  Different suppliers—
including MFN and preferential suppliers—compete on the EC market.  The existing conditions of 
entry impact upon the relative competitiveness of each of these groups of suppliers, in that they partly 
define the competitive environment in which th e various suppliers operate.  Specifically, the 
conditions of entry for MFN suppliers have an impact on the competitive relationship between MFN 
and preferential suppliers.  To examine the conditi ons of entry for MFN banana suppliers under the 
envisaged rebinding—and the opportunity that w ould be afforded by such conditions—without 
consideration of the impact of the rebinding on th e preferential suppliers would amount to ignoring a 
key component of the market on which MFN (and preferential) suppliers compete.   
67. Furthermore, the fact that the mandate requires a specific focus on the position of the MFN 
banana suppliers inevitably involv es an examination of the supply response by the ACP suppliers as a 
result of the rebinding.      
68. The Arbitrator therefore finds that the potentia l impact of the preferences granted to ACP 
banana suppliers on the effective opportunities afford ed by the existing conditions of entry to the 
MFN banana suppliers is a necessary consid eration in assessing the European Communities' 
envisaged rebinding.  In reaching this conclusion, the Ar bitrator is not suggesting that it is required, or 
that it would be appropriate, to consider the treatment that will be granted by the European 
Communities to preferential suppliers per se .  Rather, the focus of the analysis, as set out in the 
mandate, is the access to the EC market for MFN banana suppliers .  The manner in which the WT/L/616 
Page 18  
 
European Communities may decide to preserve also  market access for ACP suppliers is, as such, 
beyond the realm of this arbitration.
55 
69. The European Communities has used the pric e gap methodology that was used in the 
Uruguay Round agriculture negotiations for the conversion of non-tariff measures to tariff 
equivalents.  Using the correct prices, this methodology would produce an estimate of the tariff 
equivalent that, all other things being equal, would confer the same  level of protection to domestic 
producers as the border measures being replaced by the tariff equivalent.  Correctly applied, the price 
gap methodology would be broadly neutral in its effects on domestic producers and on total imports.  
Thus the price gap methodology would accurately refl ect the level of protection accorded to domestic 
or EC growers from foreign competitors.  However, the standard price gap formula does not take into 
account how the competitive relationship may change  between imports from different sources, i.e., 
MFN and preferential banana suppliers.  In this in stance, the European Commu nities' proposed tariff 
equivalent would result in an increase of the marg in of preference enjoyed by ACP suppliers from €75 
per metric ton in respect of in-quota imports to €230 per metric ton, significantly increasing the advantage they have enjoyed over MFN banana suppliers  prior to the rebinding.  Given that the use of 
the price gap methodology means that the rebinding would have neutral effects on total imports, any 
gains achieved by the preferential suppliers in the EC market as a result of this added advantage 
would, other factors remaining constant, come at the expense of MFN banana suppliers.    
70. A positive supply response from preferential banana  suppliers to the in creased margin of 
preference can reasonably be expected.  Although the Arbitrator makes no finding as to the correct value to be attributed to that supply response, it observes that all available information on this matter 
provided by the parties suggests that the export supply elasticity of at least some of the ACP suppliers 
in this instance is in fact significant.
56  In the model presented by Honduras, Panama and Nicaragua, 
an export supply elasticity of between 1 to 6 was assumed for ACP suppliers.57  The European 
Communities has also provided information about the values of the export supply elasticities of 
various ACP suppliers based on a number of studies of the banana market.58  Out of thirteen such 
estimates listed, none is lower than 1 while the maximum is 1.1.59 
71. The Arbitrator is therefore satisfied that, in a tariff quota-free environment, at least some of 
the preferential suppliers would have the capacity to respond positively to the increase in the margin 
of preference resulting from the proposed rebinding .  That increase would therefore be such as to 
affect the effective opportunities affo rded to MFN suppliers by the ex isting conditions of entry to the 
EC banana market.  This has not been taken into account in the calculation of the proposed 
rebinding.60  This demonstrates that, absent any adjustment  to account for the impact of the rebinding on 
the margin of preference accorded to ACP supplie rs, the price gap methodology used by the European 
                                                      
55It should be noted that any rebinding above €75 per metric ton automatically increases the preference 
enjoyed by ACP suppliers over MFN suppliers.  Under the EC's proposal of €230 metric ton, and using its 
calculation of the external price of €559 per metric ton, the preference enjoyed by ACP suppliers would rise 
from 13.4 per cent for in-quota imports to 41.1 per cent.  
56The elasticity of export supply is a measure of how much additional export volumes can be produced 
in response to a given increase in price.  It is defined as  the ratio of the percentage change in exports supplied to 
the percentage change in price.  The higher the export supply elasticity, the greater the amount of exports that 
can be supplied from a given increase in price. 
57Respective First Submissions of Honduras, Nicaragua and Panama, para. 281.  
58Exhibit EC-24. 
59Exhibit EC-24 also contains information on sixteen estimates of domestic supply elasticities of 
various ACP suppliers.  These reflect a wider range in  the values of domestic supply elasticities, from a 
maximum of 1.3 to a low of 0.16.  But nine of these sixteen domestic supply elasticities are equal to or greater 
than 1. 
60Indeed, in its written submissions, the EC did not suggest that the €230 per metric ton envisaged 
rebinding would have no effect on the margin of preference to ACP suppliers.  Rather, it simply considered that 
this was not relevant to the assessment.   WT/L/616 
 Page 19 
 
 
Communities to arrive at its envisaged rebinding leads to an outcome that would not result in at least maintaining total market access for MFN banana suppliers.  
72. This conclusion is not modified by the European Communities' assertion at the oral hearing that 
it would limit duty-free/preferenti al imports from ACP countries by means of a tariff quota once the 
rebinding would come into force.
61  According to the European Communities, this intention is based on 
its objective that the whole change  of regime should be "neutral in  terms of the level of protection 
offered in respect both of MFN suppliers an d in respect of preferential suppliers".62  The Interested 
Parties questioned the consistency with the European Communities' WTO obligations of such an approach, and asked for clarification of the de tails of what was envisaged by the European 
Communities.
 63   
73. The European Communities declined to provide an y further indication as to how such a tariff 
quota might be implemented.  In particular, it has no t indicated at what level the tariff quota might be 
set, in other words, what volumes  of preferential ACP imports woul d be granted duty-free access.  The 
European Communities argued that this aspect of the regime is not pertinent to  the assessment because 
it relates to the ACP prefer ences rather than to the MFN rebindi ng.  However, as found earlier, the 
Arbitrator considers that the impact of the margin  of preferences for the ACP suppliers on the rebinding 
is a necessary consideration in assessing whether th e envisaged rebinding would maintain total market 
access for MFN suppliers.   
74. The Arbitrator is not convinced that a simple cap in the volume of preferential  imports would 
necessarily address the concern of ensuring that the envisaged rebinding w ould result in at least 
maintaining total market access for MFN banana suppliers.  Indeed, in the absence of any information as 
to how such a tariff quota might be administered, it is impossible to assess the effects that would be 
created by the new system.  The Arbitrator also notes that least-developed countries benefiting from the European Communities' Ever ything But Arms initiative ("EBA") are to be granted duty-free 
access to the EC market as of 1 January 2006.  The terms of access to be granted to certain countries 
under the EBA do not involve tariff quota restrictions  and may affect the competitive situation of 
MFN banana suppliers.
64  Leaving aside the procedural issues related to the late stage at which the 
argument was put forward by the European Commun ities, the Arbitrator th erefore sees no basis for 
modifying its earlier conclusion th at the envisaged rebinding would not  result in at least maintaining 
total market access for MFN banana suppliers.   
75. In making this determination, the Arbitrator is  mindful that it is not requested, in this 
proceeding, to determine any specific appropria te level of rebinding, or even any specific 
methodology through which such level might be appropr iately determined.  Rather, the Arbitrator is 
required to assess specifically whether the Europ ean Communities' proposed rebinding would meet 
the standard defined in the manda te for this Arbitration.   
76. The Interested Parties have suggested that onl y economic simulation models would provide an 
adequate tool to determine an appr opriate level of rebinding for banana s, and they have presented some 
results of economic modelling to illustrate the effects of the proposed rebinding on competitive 
opportunities for MFN suppliers.65  Specifically, Honduras, Nicaragua and Panama used a simulation 
                                                      
61The EC, in response to a question by the Arbitrator, indicated that it was simply providing this 
information in order to highlight that the assumptions  upon which the Interested Parties were basing their 
calculations, i.e. an unlimited duty -free access to the EC market for pr eferential suppliers, were incorrect. 
62EC statement at the oral hearing,  in response to a question.  
63The Interested Parties have questioned in particular  how this would be compatible with the provisions 
of Article XIII of GATT 1994.  
64First Submission of Honduras, Nicaragua and Panama, paras. 89 and 91. 
65Honduras, Nicaragua and Panama stress that it is a theoretically consistent tool for analyzing a wide 
range of potential changes in the world banana market over time (respective First Written Submissions of 
Honduras, Nicaragua and Panama, paras. 264-265).  Brazil states that the use of models would offer more WT/L/616 
Page 20  
 
of a specific model
66 to argue that the proposed EC rebinding using the price gap methodology would 
not maintain total market access for MFN banana suppliers.  
77. The Interested Parties argue in particular that  a simulation model can take into account the 
capacity of certain ACP banana suppliers to increase exports under various tariff scenarios.67  These 
models take into account a range of factors and atte mpt to capture certain future evolutions in the 
market, based on certain assumptions about the beha viour of the market under the proposed rebinding.  
The European Communities, however, has questioned the validity of a number of these assumptions as 
well as their relevance in the context of its tariff rebinding on bananas.   
78. The arguments and factual elements presented in the course of this proceeding suggest that 
economic modelling affords the analyst the possibility of taking into acc ount a range of factors, as well 
as the ability to conduct simulations  in the banana market that may a llow one to obtain a range of tariff 
equivalents corresponding to the scenario that the an alyst believes is the most  likely to occur.    
79. Some of the factors relied upon by the Interested Parties in their arguments ap pear to reflect in 
particular an intention to capture future evolutions of the market, including evolutions based on factors 
extraneous to the imposition of duties and other charges on importation by the European Communities.  
The Arbitrator sees difficulty in the suggestion that  that hypothetical future evolutions not resulting 
from the rebinding itself should necessarily be part of the assessment.  More generally, alt hough the 
requirement of "maintaining" total market access for MFN suppliers involves some degree of prospective assessment, the Arbitrator is not convi nced that this standard necessarily implies a 
preservation "at all times into the future" as some Interested Parties have argued.  It was also apparent from the exchange of arguments between the parties that  the choice and assignment of specific values to 
the various parameters in an economic modelling simula tion can in itself be a source of complexities.  
Simulation models require more data  than the price gap methodology, and the choice of parameters as 
well as the assignment of values to them make the results of such modelling as vulnerable (or as solid) 
as the assumptions upon which they are based.  The Ar bitrator does not find it necessary or appropriate, 
to take a position on the relative merits and adequacy of the various models pres ented by the Interested 
Parties as such.  It notes that the benefits from their use must be carefully balanced against the technical 
hurdles and uncertainties posed by the c hoice of parameters  and data.     
C. R
EFERENCE PERIOD  
80. The use of the reference period 2000-2002 by the European Communities for its price gap 
calculation has been criticized by so me of the Interested Parties.  Brazil noted in its submission that 
over the base period selected by the European Communities, 2000-2002, the EC common market 
organization for bananas had at least three different regimes.  It submits that an aggregation of these 
regimes into the same base period renders any result of the price gap methodology meaningless.68   
81. Colombia, Costa Rica, Ecuador, and Guatemala ha ve submitted that the appropriate reference 
period should commence in 2002.  This is because th e EC banana regime, as it is currently applied, 
was implemented on 1 January 2002, in accordance with the understandings between the European 
Communities and Ecuador, and the European Communities and the United States, in the EC - 
Bananas III  dispute.  It is this modified regime, which includes tariff quotas for both MFN suppliers 
                                                                                                                                                                     
accurate results and that modelling c ould provide a far better idea about how the market would behave after the 
adoption of the single-tariff regime (First Written Submission of Brazil, para. 235).  The Bolivarian Republic of 
Venezuela, Colombia, Costa Rica, Ecuador and Guatemala believe that the use of a model will demonstrate the 
effects of the envisaged tariff on total market access fo r MFN bananas, taking into account competition between 
MFN bananas and ACP bananas (First Written Submission of Colombia, Costa Rica, Ecuador and Guatemala, 
para. 120). 
66Attachment 2 of the respective First Written Submissions of Honduras, Nicaragua and Panama. 
67Respective First Written Submissions of Honduras, Nicaragua and Panama, para. 266. 
68First Written Submission of Brazil, para. 216.  WT/L/616 
 Page 21 
 
 
and ACP suppliers, that will be c onverted into a tariff-only regime.69  But the European Communities 
contends that the period 2002-2 004 is not representative due to abnormally high freight rates in 2003 
and 2004.70  Moreover, it was pointed out by the European Communities that the  2000-2002 period 
was based on the most recent Eurostat data availa ble at the time when the European Communities 
notified its intention to modify its con cessions regarding bananas (15 July 2004).71 
82. The Arbitrator notes that the practice to date  in the GATT and the WTO suggests that the 
reference period should normally be the most recent representative three-year period for which data is 
available.  For example, the "Procedures for Negotiations Under Article XXVIII" (adopted on 
10 November 1980) foresee that the notification or re quest for negotiations should by accompanied by 
statistics of imports of the produc ts involved "for the last three years for which statistics are 
available".72  Paragraph 6 of the Understanding on the Interpretation of Article XXVIII of the General 
Agreement on Tariffs and Trade 1994  also provides for the use of trade data on "the most recent 
representative three year period" in the calculation of future trade prospects in the context of 
compensation to be granted upon replacement of an  unlimited tariff concession by a tariff quota.    
83. In the light of the foregoing, the Arbitrator's view  is that it is important to reflect in the price 
gap calculation the existing EC banana regime.  Th e use of the most recent representative reference 
period minimizes the need for ad hoc  adjustments to be made to the data and corresponds as closely 
as possible to the trade regime as applied.  
D. PRICE DATA  
84. The Interested Parties also challenged the va lidity of the European Communities' proposed 
rebinding on the basis that the data upon which it h as relied upon in its calculation of the price gap is 
flawed.  Whereas the data used for the calculation of the external price is not in dispute, the European 
Communities and the Interested Parties differed significantly on what data was appropriate for calculating the internal price of bananas.   
85. The European Communities used price data from the FAO to calculate the internal price.
73  The 
European Communities indicated that it chose to base its calculations on data from the FAO, an 
international organization, in an effort to avoid co nflicts of interests in the characterization of the 
internal price.74   The European Communities also noted that the FAO web site, from which it 
downloaded the prices, also publishes prices concerning  other international markets for bananas, like the 
United States, Eastern Europe and European Free Trade Area countries.  It thus considered FAO prices as "the most reliable actual prices." 
75   
                                                      
69Replies of Colombia, Costa Rica, Ecuador, and Gu atemala to Questions Po sed by the Arbitrator. 
70The EC explained that  
"According to an article published in 'Fruitrop' in January 2005 (Exhibit EC-
30) and based on the presentation made by the director of the company 
Fruta Rica in Guayaquil (Ecuador) in N ovember 2004, full season prices in 
2003 were the highest for seven years and spot market prices were 20 to 25 
per cent higher than in 2002.  The upward trend continued or even increased 
in 2004."   
(Comments of the European Communities on the Responses of the Interested Parties to the Questions from the 
Arbitrator, para. 3.) 
71Reply to question by the Arbitrator. 
72"Procedures for negotiations under Article XXVIII", Guidelines adopted on 10 November 1980, 
BISD 27S/26-28, para. 2. 
73Supra , para. 54. 
74Rebuttal Submission of the EC, para. 136. 
75First Written Submission of the EC, para. 146. WT/L/616 
Page 22  
 
86. The Interested Parties challenged the relevance of these prices.  In particular, Colombia, Costa 
Rica, Ecuador and Guatemal a submitted that the prices were derived from price quotations obtained 
from traders, not actual prices.  These price quotations in the banana  sector are, according to them, 
typically well above the actual se lling prices at wholesale level.
76  Colombia, Costa Rica, Ecuador and 
Guatemala also produced affidavits  from traders to support their argu ment that the FAO prices were 
quoted prices and that actual prices  were lower than quoted prices.77  One of these affidavits was from a 
trader certifying that it regularly transmitted data to the FAO on quoted prices of bananas.78  The 
European Communities disputed the validity of the di stinction between quoted and actual prices.  It has 
also pointed to the difficulties associated with obt aining actual price data from transactions on the 
market, as this is information is private. 
87. In the light of the questions raised by the partie s' arguments in respect of the nature and sources 
of the FAO data, the Arbitrator wrote to the FAO to  obtain further clarificati on of these issues.  In 
response to a question in the letter in relation to the collection of th e relevant data, the FAO confirmed 
that "... these are price quotations announced by the traders at the ports of entry and probably not the 
prices paid by purchasers of banana s at the end of the transaction".79  In reply to the question "Could the 
FAO provide information as to the precise source ... and an indication as to the number of sources from 
which data is obtained ...", the FAO replied that though it could not disclo se the source of the data, "the 
data come from one source".80   
88. The parties do not appear to differ on the necess ity of using data reflec ting actual prices in a 
price gap calculation.  The replies provided by  the FAO support the proposition put forward by the 
Interested Parties that the data relied upon by the Eu ropean Communities reflects offer prices rather than 
actual prices.  The FAO also clarified that the collection of this data was initiated "in the context of a 
proposal for an international banana agreement."81  The submissions by Colombia, Costa Rica, Ecuador 
and Guatemala provide some evidence that actual prices are lower.  They include an attachment82 
from Sopisco News83 which documents "Banana selling prices in Euro at the Hamburg market for 
deliveries next week".  It distinguishes between "a ctual" and "official" prices of various brands of 
bananas sold in the EC market, with the "actual" pr ices being in a range that is generally lower than 
the "official" prices.  
89. On the basis of the evidence provided, the Arbi trator concludes that the data from the FAO does 
not reflect actual internal prices.84  
90. The Interested Parties have submit ted various alternative calculations  of the internal price, based 
on reports by external auditors, "rec onstructed prices", or data obta ined from Corbana in Costa Rica.85  
                                                      
76Respective First Written Submissions of Honduras, Nicaragua and Panama, para. 316. 
77Exhibits CCEG-13, CCEG-14 , CCEG-18 and CCEG-25. 
78Exhibits CCEG-13, CCEG-14 and CCEG-15. 
79Ibid. 
80FAO letter addressed to the Secretary of  the Arbitrator, dated 5 July 2005. 
81Ibid. 
82Exhibit CCEG-17. 
83Sopisco News is a newsletter dealing with the international banana trade and reefer shipping. 
 84The EC has argued that the Attachment to Annex 5 of the Agreement on Agriculture  provides an 
appropriate basis for the calculations.  The use of the F AO data as such will not produce the "actual difference" 
between external and internal prices referre d to in paragraph 1 of that Attachment. 
85The submissions by Honduras, Nica ragua and Panama provide four alternative calculations of the 
internal price, progressively widening the coverage of  bananas:  (i) EC grown;  (ii) EC and ACP bananas;  
(iii) EC, ACP and MFN bananas (using German ZMP85 and Aldi/Cirad85 prices);  and (iv) EC, ACP and MFN 
bananas (using audited data provided by the German Fruit and Vegetable Importers Association).  Prices for EC-grown bananas are obtained from "compensatory aid" documents.  ACP banana prices are taken from 
CIRAD.  The internal price calculated by Honduras, Nicaragua and Panama range from €552 per metric ton to 
€617 per metric ton.  The submission by Colombia, Costa Rica, Ecuador, and Guatemala provides an internal  WT/L/616 
 Page 23 
 
 
These alternative sources of price data, however, are all criticized by the European Communities.86  In 
particular, the European Communities questioned the price gap calculations derived from these 
alternatives data by the Interested Parties, which lead  to price gaps of less than €75 per metric ton.  
The Arbitrator notes that this is l ess than the current in-quota tariff rate, and does not appear to reflect 
any value for the existence of the tariff quota itself.   
91. The Arbitrator takes note that some Interested Parties87 have also claimed that the internal 
price used by the European Comm unities constitutes an f.o.t. (free on truck) price and as such is 
distorted by the inclusion of discharge and handli ng costs borne by the seller.  These costs arise from 
discharging the bananas from the ve ssel at the port of entry and lo ading them onto railway wagons or 
truck for transport.88  Costa Rica, Colombia, Ecuador and Guat emala submit that such costs should be 
deducted because "it is essential that the difference between the external and internal prices reflects 
only the effects of the trade restriction and is not di storted by other elements affecting prices that are 
unrelated to the trade restriction, such discharge and loading costs."89   The European Communities 
observed that its internal price is a wholesale price that properly includes handling and transport costs, 
consistent with the guidelines for price gap calculations in the Agreement on Agriculture .90  T h e  
Arbitrator notes that how these charges are accounted for could have a significant bearing on the price 
data calculation.    
92. While the Arbitrator does not discount the diffi culties associated with  the availability and 
reliability of actual market prices and does not excl ude that an estimation or approximation may be 
required, it is satisfied that the internal price calculated by the European Communities in order to 
arrive at its envisaged rebinding does not reflect as accurately as possible the actual prices at which 
bananas are sold on the EC market.   
                                                                                                                                                                     
price based on a certified report made by an auditor (Osterloh & Nottbohm GmbH) hired by the association of 
German banana importers and wholesalers (Deutscher Fruchthandelsverband e. V.) to verify the actual f.o.t. 
selling price of green bananas in Hamburg.  This results in an estimated internal price of €592.09 per metric ton.  
Brazil calculates an internal price base d on weekly market reports issued by  Corbana adjusted for discharge and 
loading costs estimates from Sopisco News.  Corbana (National Banana Corporation) is a public non-governmental body in Costa Rica which was created by national law in 1971.  It has been designated as the 
regulatory body of the Costa Rican banana industry, and its mission is to " serve national producers".  Sopisco 
News publishes a weekly newsletter covering informat ion on banana prices, freight rates, reefer vessel 
schedules, exchange rates, etc.  Based on these sources  of information Brazil calcula tes the internal price at 
€690.37 per metric ton. 
86The EC disputes the calculation of  the internal price based on a cer tified report made by an external 
auditor submitted by Colombia, Costa Rica, Ecuador a nd Guatemala on the grounds that the audited companies 
are directly involved in the banana business and have a strong conflict of interest in this matter.  (Rebuttal 
Submission of the EC, para. 164)  It also takes issue with the use by Honduras, Panama and Nicaragua of "reconstructed" price data from sp ecific sources, suggesting that these data were used "to avoid already 
available German, Swedish, Dutch, and other EC Memb er States' prices transmitted by the 15 competent 
authorities, on the basis of a Commission Regulation, for wholesale yellow banana prices." ( Ibid., para. 170)  
With regard to Brazil's use of price da ta from Corbana, the EC states that  it has no access to the information (it 
does not appear in the website of Corbana) and that Brazil does not advance any evidence to prove that this data 
is reliable ( Ibid., para. 175)  In addition, some of the Interested Parties themselves have questioned Corbana 
prices. Honduras makes the point that these prices "are informal, unpublishe d data that are intended by Corbana 
only to spot broad pricing trends, not to reflect real pr ices.  Moreover, even if Co rbana's tracking mechanisms 
were more comprehensive, Costa Rican banana volume repr esents less than 30 per cent of MFN trade into the 
EC and no more than 17 per cent of total EC banana consumption.  That country is among the highest-cost 
producers in Latin America.  Costa Rican industry 'prices,'  thus, can in no sense be considered a 'representative 
wholesale price ruling in the domestic market'." (Res ponses by Honduras to Written Questions from the 
Arbitrators, answer to Question 9) 
87Colombia, Costa Rica, Ec uador and Guatemala. 
88First Written Submission of  Colombia, Costa Rica, Ecuador and Guatemala paras. 89-92.  
89First Written Submission of Colombia, Costa Rica, Ecuador and Guatemala, para. 89. 
90Rebuttal of the EC, para. 151. WT/L/616 
Page 24  
 
VI. CONCLUDING REMARKS 
93. This arbitration raises questions of considerab le political, economic and social importance to 
the Members concerned.  The Arbitrator must, of course, decide the issues before it on their merits 
according to the evidence and submissions before it.  Nevertheless, the Arbitrator takes note of the 
high importance of this matter to the WTO Members involved.  
VII. DETERMINATION 
94. For the reasons stated above, the Arbitrator  determines that the European Communities' 
envisaged rebinding on bananas would not result in at least maintaining total market access for MFN banana suppliers, taking into account all EC WTO ma rket-access commitments relating to bananas.   
_______________  
 
 
  Signed in Geneva this first day of August 2005. 
 
 
   WT/L/616 
 Page 25 
 
 
ATTACHMENT 1 
 WORLD TRADE  
ORGANIZATION  WT/MIN(01)/15 
14 November 2001 
 (01-5786) 
MINISTERIAL CONFERENCE 
Fourth Session Doha, 9 - 14 November 2001  
 
 
 
 
EUROPEAN COMMUNITIES – THE ACP-EC PARTNERSHIP AGREEMENT 
 
 
Decision of 14 November 2001  
 
 
 The Ministerial Conference,   Having regard  to paragraphs 1 and 3 of Article IX of the Marrakech Agreement Establishing 
the World Trade Organisation (the "WTO Agreemen t"), the Guiding Principles to be followed in 
considering applications for waivers adopted on 1 November 1956 (BISD 5S/25), the Understanding 
in Respect to Waivers of Obligations under th e General Agreement on Tariffs and Trade 1994, 
paragraph 3 of Article IX of the WTO Agreem ent, and Decision-Making Procedures under Articles 
IX and XII of the WTO Agreement agreed by the General Council (WT/L/93);   Taking note of the request of the European Communiti es (EC) and of the Governments of the 
ACP States which are also WTO members (hereinaft er also the “Parties to the Agreement”) for a 
waiver from the obligations of the European Co mmunities under paragraph 1 of Article I of the 
General Agreement with respect to the granting of preferential tariff  treatment for products originating 
in ACP States as required by Article 36.3, Annex V and its Protocols of the ACP-EC Partnership 
Agreement (hereinafter also referred to as “the Agreement”)
1; 
 
 Considering  that, in the field of trade, the provisions of the ACP-EC Partnership Agreement 
requires preferential tariff  treatment by the EC of exports of pr oducts originating in the ACP States; 
  Considering  that the Agreement is aimed at impr oving the standard of living and economic 
development of the ACP States, including the least developed among them; 
 
 Considering  also that the preferential tariff  treatment for products originating in ACP States 
as required by Article 36.3, Annex V and its Protoc ols of the Agreement is designed to promote the 
expansion of trade and economic development of beneficiaries in  a manner consistent with the 
objectives of the WTO and with the trade, financia l and development needs of the beneficiaries and 
not to raise undue barriers or to create undue difficulties for the trade of other members; 
 
                                                     
 
1 As contained in documents G/C/W/187, G/C/W/204, G/C/W/254 and G/C/W/269). WT/L/616 
Page 26  
 
 Considering  that the Agreement establishes a prep aratory period extending until 31 December 
2007, by the end of which new trading arrangements shall be concluded between the Parties to the 
Agreement;   Considering  that the trade provisions of the Agreem ent have been applied since 1 March 2000 
on the basis of transitional measures adopted by the ACP-EC joint institutions; 
  Noting  the assurances given by the Parties to the Agreement that they will, upon request, 
promptly enter into consultations with any interest ed member with respect to any difficulty or matter 
that may arise as a result of the implementation of the preferential tariff  treatment for products 
originating in ACP States as required by Article 36.3, Annex V and its Protocols of the Agreement; 
  Noting  that the tariff applied to bananas importe d in the "A" and "B" quotas shall not exceed 
75 €/tonne until the entry into force of the new EC tariff-only regime.  
 Noting  that the implementation of the preferential tariff treatment for bananas may be affected 
as a result of GATT Article XXVIII negotiations; 
 
 Noting  the assurances from the Parties to the Agre ement that any re-binding of the EC tariff 
on bananas under the relevant GATT Article XXVIII pr ocedures should result in at least maintaining 
total market access for MFN banana suppliers a nd their willingness to accept a multilateral control on 
the implementation of this commitment. 
  Considering that, in light of the foregoing, the ex ceptional circumstances justifying a waiver 
from paragraph 1 of Article I of  the General Agreement exist; 
 
 Decides  as follows: 
 1. Subject to the terms and conditions set out he reunder, Article I, para graph 1 of the General 
Agreement shall be waived, until 31 December  2007, to the extent necessary to permit the 
European Communities to provide preferential tariff  treatment for products originating in 
ACP States as required by Article 36.3, Annex V and its Protocols of the ACP-EC Partnership 
Agreement,
2 without being required to extend the same preferential treatment to like products 
of any other member.  
 2. The Parties to the Agreement sha ll promptly notify the General Council  of any changes in the 
preferential tariff  treatment to products originating in ACP States as required by the relevant 
provisions of the Agreement covered by this waiver.  
 
3. The Parties to the Agreement will, upon request , promptly enter into consultations with any 
interested member with respect to any difficu lty or matter that may arise as a result of the 
implementation of the preferential tariff  treatment for products originating in ACP States as 
required by Article 36.3, Annex V and its Pr otocols of the Agreement; where a member 
considers that any benefit accruing to it under the General Agreement may be or is being 
impaired unduly as a result of such implementa tion, such consultations shall examine the 
possibility of action  for a satisfactory adjustment of the matter. 
                                                     
 
2 Any reference to the Partnership Agreement in th is Decision shall also in clude the period during 
which the trade provisions of this Agreement are applie d on the basis of transitional measures adopted by the 
ACP-EC joint institutions.  WT/L/616 
 Page 27 
 
 
3bis With respect to bananas, the additional provisions in the Annex shall apply.  
 4. Any member which considers that the preferential tariff  treatment for products originating in 
ACP States as required by Article 36.3, Annex V and its Protocols of the Agreement is being 
applied inconsistently with this waiver or that any benefit accruing to it under the General 
Agreement may be or is being impaired undul y as a result of the implementation of the 
preferential tariff treatment for products origin ating in ACP States as required by Article 36.3, 
Annex V and its Protocols of the Agreemen t and that consultations have proved 
unsatisfactory, may bring the ma tter before the General Council , which will examine it 
promptly and will formulate any recommendations that they judge appropriate. 
 
5. The Parties to the Agreement will submit to  the General Council an annual report on the 
implementation of the preferential tariff  treatment for products originating in ACP States as 
required by Article 36.3, Annex V a nd its Protocols of the Agreement. 
 
6. This waiver shall not preclude the right of affected members to have recourse to 
Articles XXII and XXIII of the General Agreement. 
 
 WT/L/616 
Page 28  
 
ANNEX 
  
 The waiver would apply for ACP produc ts under the Cotonou Agreement until 
31 December 2007.  In the case of bananas, th e waiver will also apply until 31 December 2007, 
subject to the following, which is without prejudi ce to rights and obligations  under Article XXVIII. 
 
- The parties to the Cotonou Agreement will in itiate consultations with Members exporting to 
the EU on a MFN basis (interested parties)  early enough to finalize the process of 
consultations under the procedures hereby establishe d at least three months before the entry 
into force of the new EC tariff only regime. 
 - No later than 10 days after the conclusion of  Article XXVIII negotiations, interested parties 
will be informed of the EC intentions concerni ng the rebinding of the EC  tariff on bananas.  
In the course of such consultations, the EC will provide information on the methodology used 
for such rebinding.  In this regard, all EC  WTO market-access commitments relating to 
bananas should be taken into account. 
 
- Within 60 days of such an announcement, any such interested party may request arbitration. 
 - The arbitrator shall be appointed within 10 days, following the request subject to agreement 
between the two parties, failing which the arbitrator shall be appointed by the Director-General of the WTO, following consultations wi th the parties, within 30 days of the 
arbitration request.  The mandate of the arbitrator  shall be to determine, within 90 days of his 
appointment, whether the envisaged rebinding of the EC tariff on bananas would result in at 
least maintaining total market access for MF N banana suppliers, ta king into account the 
above-mentioned EC commitments. 
 - If the arbitrator determines that the rebinding  would not result in at least maintaining total 
market access for MFN suppliers, the EC shall rectify the matter.  Within 10 days of the 
notification of the arbitration award to th e General Council, the EC will enter into 
consultations with those interested parties that requested the arbitration.  In the absence of a 
mutually satisfactory solution, the same arbitrat or will be asked to determine, within 30 days 
of the new arbitration request, whether the EC has rectified the matter.  The second arbitration 
award will be notified to the General Council.  If the EC has failed to rectify the matter, this 
waiver shall cease to apply to bananas upon entry into force of the new EC tariff regime.  The 
Article XXVIII negotiations and the arbitration procedures shall be concluded before the 
entry into force of the new EC tariff only regime on 1 January 2006. 
  
 
  WT/L/616 
 Page 29 
 
 
ATTACHMENT 2 
 
TABLE 1 
EC-15 IMPORTS OF BANANAS (CN 08030019), 2000-2004 
(Metric Tons) 
 
YEAR ACP SUPPLIERS MFN SUPPLIERS TOTAL 
2000 755,794.3 2,543,130.2 3,298,924.5
2001 728,775.8 2,474,585.8 3,203,361.6
2002 726,871.5 2,561,065.8 3,287,937.3
2003 786,798.4 2,578,827.0 3,365,625.4
 
 
 For year 2004, the data is for the twenty fi ve member states of the European Communities 
(also see footnote 12). 
 
2004 785,583.8 3,084,937.4 3,870,521.2
 
Source: Eurostat (data extracted or downloaded on 20 and 22 July 2005).  
 
 
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