WORLD TRADE  
ORGANIZATION  WT/DS27/65/Rev.1 
29 November 2006 
 
 (06-5737) 
 Original:   English 
  
 
EUROPEAN COMMUNITIES – REGIME FOR THE IMPORTATION, 
SALE AND DISTRIBUTION OF BANANAS 
 
Recourse to Article 21.5 of the DSU by Ecuador
 
 
Request for Consultations 
 
Revision  
  
 The following communication, dated 28 Nove mber 2006, from the delegation of Ecuador to 
the delegation of the European Communities and to the Chairman of the Dispute Settlement Body, is 
circulated in accordance with Article 21.5 of the DSU.  
_______________ 
  
 This letter supersedes my letter to you of 16  November, so as to avoid the unwarranted and 
unintended concern that my letter of 16 November , by its reference to Article XXIII of the GATT 
1994, was intended to exclude particip ation by other interested parties in the consultations.  This letter 
is identical to that of my letter of 16 November, ex cept that this paragraph is additional and that the 
reference to Article XXIII of the GATT has been changed to Article XXII in what was the first 
paragraph of the letter of 16 November.  This lette r will also serve as a response to your letter to me 
of 24 November.     The Government of Ecuador considers that  measures taken by the European Communities 
(EC) to comply with the recommendations and rulings of European Communities – Regime for the 
Importation, Sale and Distribution of Bananas  ("Bananas III ")
1 are inconsistent with the obligations 
of the EC under Articles I, II and XIII of the General Agreement on Tariffs and Trade 1994 (GATT 
1994).  The measures are contained in EC Counc il Regulation No. 1964/2005 ("Regulation 1964")2 
and its associated implementing regulations.  Without prejudice to Ecuador's position that 
consultations are not required to have recourse to Article 21.5 in these circumstances, Ecuador 
requests prompt consultations with the EC pursuan t to Article 4 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes (D SU) and Article XXII of the GATT regarding the 
compliance of these EC measures with Articles I, II and XIII of the GATT 1994.  
Background 
 
 On 25 September 1997, the Dispute Settlement Body ("DSB") adopted the recommendations and rulings of Bananas III , which found the EC's tariff, tariff quota, and licensing measures to be in 
                                                     
 
1  Panel Report , European Communities – Regime for the Importation, Sale and Distribution of 
Bananas , WT/DS27/R, adopted 25 September 1997, modified by the Appellate Body Report, WT/DS27/AB/R.  
2  Council of the European Union, Council Regulation (EC) No. 1964/2005 of 29 November 2005 on 
the tariff rate for bananas , OJL 316/1, 2 December 2005.  WT/DS27/65/Rev.1 
Page 2  
 
  violation of GATT Articles I, III, and XIII, and GATS Articles II and XVII.
3  On 1 January 1999 the 
EC implemented a banana regime, which the EC clai med to remedy the regime that had been found 
inconsistent with its WTO obligations. On 18 D ecember 1998, Ecuador requested a DSU Article 21.5 
review of the modified regime, on grounds that it did not conform with EC obligations under the 
WTO Agreements.  Shortly thereafter, on 14 Janua ry 1999, the United States sought authority under 
DSU Article 22.6 to suspend concession against the EC for its failure to conform with the rulings and 
recommendations of the DSB.  In separate, but c onsistent findings, the Article 21.5 Panel and the 
Article 22.6 Arbitrator found that the EC's modifi ed regime violated GATT Articles I and XIII, and 
GATS Articles II and XVII, and failed to comp ly with the recommendations and rulings of 
Bananas III . 4   
 
 In April 2001, the EC reached two "Understa ndings on Bananas," one with the United States5 
and the other with Ecuador.6  On 2 July 2001, the EC notifie d the Understandings to the WTO, 
characterizing both as covering "the implemen tation by the EC of the conclusions and 
recommendations adopted by the DSB in the dispute 'Regime for the Importation, Sale and 
Distribution of Bananas.'"7 
  The Understandings provided for the EC to implement a multi-stage/multi-year new regime for banana to comply with Bananas III .  The final stage of that framework required the EC to 
introduce "a 'Tariff-Only regime for imports of bananas' no later than 1 January 2006."
8 
 
 The Understandings further re quired that Ecuador and the United States "lift their reserves 
concerning the waiver of Article I of the GATT" needed for the EC's preferential tariffs for ACP 
products and "actively work towards promoting the acceptance of an EC request for a waiver of 
Article XIII of the GATT 1994" needed for the ACP tariff quota on bananas.9  Pursuant to these 
provisions, suitable GATT Article I and GATT Article XIII waiver conditions applicable to bananas 
were negotiated and granted at the D oha Ministerial in November 2001.   
  The Article I Waiver included an annex on bana nas requiring that the EC's future tariff-only 
regime "result in at least maintaining total mark et access for MFN banana suppliers," taking into 
account "all EC WTO market-access co mmitments relating to bananas."
10  In the event of 
disagreement over whether the proposed regime met the conditions of the Annex, the Annex provide 
                                                      
3 Bananas III , Panel Report, para. 9.1; Appellate Body Report, European Communities – Regime for the 
Importation, Sale and Distribution of Bananas , WT/DS27/AB/R, adopted 25 September 1997, para. 255. 
4 Panel Report, European Communities – Regime for the Importation, Sale, and Distribution of 
Bananas – Recourse to Article 21.5 of the DSU by Ecuador , WT/DS27/RW/ECU, adopted 6 May 1999, 
para. 7.1; Decision by the Arbitrators, European Communities – Regime for the Importation, Sale and 
Distribution of Bananas – Recourse to Arbitration by  the European Communities Under Article 22.6 of the 
DSU , WT/DS27/ARB, 9 April 1999, paras. 5.33, 5.80.   
5 European Communities – Regime for the Importation, Sale and Distribution of Bananas – 
Understanding  on Bananas between the European Communities and the United States , WT/DS27/59, 2 July 
2001 ("EC-US Understanding"). 
6  European Communities – Regime for the Importation, Sale and Distribution of Bananas – 
Understanding  on Bananas between the European Communities and Ecuador , WT/DS27/60, 9 July 2001 ("EC-
Ecuador Understanding"). 
7 Notification of Mutually Agreed Solution, European Communities – Regime for the Importation, Sale 
and Distribution of Bananas , WT/DS27/58, 2 July 2001. 
8  See Award of the Arbitrator, European Communities – The ACP-EC Partnership Agreement – 
Recourse to Arbitration Pursuant to the Decision of 14 November 2001 , WT/L/616, 1 August 2005, paras. 1 
and 2. 
9 EC-US Understanding, para. E; EC-Ecuador Understanding, para. F. 
10 European Communities – The ACP-EC Partnership Agreement , WT/MIN(01)/15, 14 November 
2001, Annex, tiret 4.  WT/DS27/65/Rev.1 
 Page 3 
 
 
  for arbitration.  If the EC were found by the Arbitrat or twice to have failed to satisfy the terms of the 
Annex standard, the waiver of Article I with respect to bananas expired. 
  In 2005, two Arbitration Awards found that the EC's banana proposals failed the Annex 
standard, causing the Waiver of GATT Article I on bananas to terminate upon implementation of the 
EC's tariff-only regime on 1 January 2006.
11 
  As of 31 December 2005, the EC's waiver of GATT Article XIII for its ACP banana quota of 
750,000 mt also terminated.
12  
 The EC's Current Banana Regime 
 
 Regulation 1964 and its associated implemen ting regulations authorize significantly 
differentiated MFN and ACP access treatment through the following measures:  
• A tariff-quota volume of 775,000 mt is exclusively reserved for bananas of ACP 
origin.  ACP bananas within the quota enter duty-free ( i.e., at a 176 €/mt margin of 
preference), with unlimited ACP over-quota access authorized at a tariff of 176 €/mt.  The 775,000 mt ACP tariff quota volume is subject to import licenses and allocation. 
 
• An "autonomous" tariff of 176 €/mt (a rate more than double the previously-
applicable rate of 75 €/mt) applies to all other bananas. 
 
 Without prejudice to whether consultations ar e required under DSU Article 21.5, or to any 
other WTO rights, Ecuador requests consultations regarding the consistenc y of the EC's banana 
regime with the EC's obligations under the WT O, in particular in the following respects: 
 
• The consistency with GATT Article I of the different duties applied to ACP countries 
and to other countries; 
 
• The consistency with GATT Article XIII:1 and 2 of the tariff rate quota system 
reserved exclusively for bananas of ACP origin; and 
 
• The consistency with GATT Article II of the "autonomous" 176 €/mt tariff now 
applied to all countries and bananas not  benefiting from the tariff rate quota. 
 
 Ecuador reserves its right to seek review of  other aspects of the current regime under the 
authority of Article 21.5.   As the EC has itself acknowledge d, Ecuador is a developing coun try that is heavily dependent 
on banana trade for export revenues, national inco me, and employment. Accordingly, Ecuador asks 
the EC to consult without delay on the measures described above and to work with our government to 
resolve this disagreement on the promptest possible basis.   
__________ 
 
                                                     
 
11 Award of the Arbitrator, European Communities – The ACP-EC Partnership Agreement – Recourse 
to Arbitration Pursuant to the Decision of 14 November 2001 , WT/L/616, 1 August 2005, para. 94; Award of 
the Arbitrator, European Communities – The ACP-EC Partnership Agreement – Second Recourse to Arbitration 
Pursuant to the Decision of 14 November 2001 , WT/L/625, 27 October 2005, para. 127. 
12 European Communities – Transitional Regime for the EC Autonomous Tariff Rate Quotas on 
Imports of Bananas , WT/MIN(01)/16, 14 November 2001, para. 1.