RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/235 
30 August 2007 
 (07-3636) 
Dispute Settlement Body 
12 July 2007  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 12 July 2007  
 
Chairman:  Mr. Bruce Gosper (Australia) 
 
 
1. European Communities – Regime for the impo rtation, sale and distribution of bananas 
(a) Recourse to Article 21.5 of the DSU by the Un ited States:  Request for the establishment of 
a panel (WT/DS27/83) 
1. The Chairman  drew attention to the communication from the United States contained in 
document WT/DS27/83, and invited the representative of the United States to speak. 
2. The representative of the United States  said that the Bananas dispute was the longest-running 
dispute in the history of the WTO.  Regrettably, mo re than a decade after th is dispute had begun, the 
EC still appeared not to have come into complia nce with the DSB's recommendations and rulings.  
The United States had been an original complainin g party in the Bananas dispute and retained an 
ongoing, substantial interest in compliance by the EC with the DSB's recommendations and rulings.  
As it had stated before, the United States believed a negotiated settlement to this dispute would best 
serve the interests of all parties.  The United States had delayed seeking establishment of a panel 
because it had thought this would help the EC and MF N suppliers to reach an agreement.  However, 
the United States had reluctantly c oncluded that delay in seeking rec ourse to Article 21.5 of the DSU 
did not seem to have helped to resolve this issu e, and it must request that a compliance panel be 
established at the present meeting.  
3. The original panel, established on 11 April 1996, had found – and the Appellate Body had 
later confirmed – over a dozen breaches of the GATT 1994 and the GATS.  The EC's reasonable 
period of time had expired on 1 January 1999.  Th e EC's first modifications  to its banana import 
regime had been found in breach shortly thereafter.   The EC had then announced a second set of 
changes;  namely, that after a five-year "transiti onal period", it would implement a tariff-only regime 
for bananas.  The United States had considered th at such a development would be a positive step 
towards resolving this dispute.  And, despite th e fact that this would entail a lengthy delay in 
compliance with the DSB's recommendations and rulings , it had agreed to give the EC the "transition" 
time that it had requested. 
4. After exhausting the "transition" time, however, th e EC had chosen not to implement a tariff-
only banana import regime.  Rath er, it applied a zero duty to imports of bananas originating in 
African, Caribbean and Pacific (or "ACP") countries in any quantity up to 775,000 metric tons.  For 
bananas originating in other countries, however, the EC  applied a duty of 176 euros/metric ton.  These 
"MFN" bananas had no access to the duty-free tariff-ra te quota.  The United States considered that, 
due to these features, the EC's banana import regime remained inconsistent with the EC's obligations WT/DSB/M/235 
Page 2  
 
  under the GATT 1994, and the EC had not come in to compliance with the DSB's recommendations 
and rulings.  Similar concer ns had been raised by Members repeatedly in DSB meetings over the past 
year and a half.  And the United States had heard repeatedly about the serious disadvantage to which 
the EC's banana import regime was putting MFN suppliers, including developing countries like 
Ecuador, Honduras, Panama, and Nicaragua, whose economies were  heavily dependent on their 
bananas trade.  The United States had called on the EC to engage in serious ne gotiations to put an end 
to this dispute. 
5. Unfortunately, these efforts had been unsuccessf ul.  The United States remained fully 
committed to a negotiated settlement to this dispute that was both mutually-acceptable and consistent 
with the EC's WTO obligations.  Nonetheless, wi th over a decade of delay and the deteriorating 
market conditions for MFN suppliers, the United States now sought recourse to dispute settlement 
under Article 21.5 of the DSU to help secure the EC's compliance with the DSB's recommendations 
and rulings.  The United States, therefore, request ed that the DSB establish a panel pursuant to 
Article 21.5 of the DSU at the present  meeting.  The United States understood that the EC was prepared to accept the establishment of a panel at the present meeting. 
6. The representative of the European Communities
 said that this unfortunate move by the 
United States disregarded the efforts that the EC continued to make in order to reach a negotiated 
solution, which would take into account the interest s of all the banana exporting countries.  The US 
move was even more regrettable, taking into cons ideration that the United States was not a producer 
or exporter of bananas, so its interest in this case was more than questionable.  Furthermore, the US 
case, like Ecuador's case, was targeted against the long-standing preferential treatment for developing 
countries such as the ACP countries.  The EC strongl y objected to the US claims under Article 21.5 of 
the DSU.  The EC had already implemented the ol d banana WTO dispute settlement ruling in 2001.  
In addition, the current regime was fully co mpatible with the EC's WTO commitments.   
7. From a procedural point of view, the EC would first like to note that the US request for the 
establishment of a panel should have been preceded  by consultations with the EC.  Article 21.5 
procedures were also subject to disciplines under Ar ticle 4 of DSU.  Having said that, in order to 
facilitate the task of the Panel composed in the context of the case initiated by Ecuador in 
harmonizing both DS proceedings, as envisaged in Artic le 9.3 of the DSU, the EC had decided not to 
object to the US request.  
8. The representative of Ecuador  said that his country supported the US request for the 
establishment of a panel at the present meeting to determine whether the EC had complied with its 
obligations under the WTO Agreement, concer ning its regime for the importation, sale and 
distribution of bananas.  His delegation shared th e legal concerns of the United States.  The same 
concerns had led Ecuador to file a similar compla int before the DSB, which was now being carried 
out under Article 21.5 of the DSU.  However, hi s delegation regretted that despite the willingness 
shown by Ecuador to reach a negotiated solution to  this dispute, which meant delaying the legal 
process for almost three months in the hope that  a serious and concrete proposal would be 
forthcoming, the EC had decided to exclude Ec uador from the negotiations it was currently holding 
with all MFN banana suppliers.  The EC had taken its decision on the grounds that Ecuador exercised 
a legitimate legal right under the WTO Agreement.  
9. The EC's attitude set a negative precedent for any future dispute, since it disregarded the DSU 
provisions that encouraged the parties to a disput e to seek a negotiated solution at any stage of the 
process.  Ecuador wondered how the EC would have  reacted if the situation were the other way 
around;  i.e. if the EC were ready to negotiate, while exercising its legal rights, and met with the 
opposite attitude from the other party.  This preceden t is even more contradictory since this was a 
dispute between a developed Me mber and a developing Member.  Notwithstanding the foregoing, 
Ecuador reiterated its readiness to seek a negotiated solution that would put an end to this long- WT/DSB/M/235 
 Page 3 
 
 
  standing dispute.  As the world's first exporter of bananas and a principal supplier to the EC's market, 
Ecuador would not accept any agreement to be ne gotiated without its par ticipation.  Ecuador 
reiterated its support for the US re quest and hoped that the DSB would establish a panel at the present 
meeting.  
10. The representative of Jamaica  said that her country had always been supportive of the 
attempts made in the past by the parties concer ned to seek a negotiated solution in respect of the 
Bananas dispute;  a negotiated solution which shoul d aim at preserving the long-term interests of 
Jamaica and other ACP banana supplie rs.  Jamaica, therefore, regretted that the United States had now 
joined this already complex dispute and was now requesting that the DSB establish a panel.  The 
adverse implications of this new development fo r her country's already scarce human and financial 
resources and for its wider economic development should not be underestim ated.  Nevertheless, 
Jamaica wished to signal its intention to request enhanced third-party par ticipation in the panel's 
proceedings.  
11. The representative of Nicaragua  said that her country joined others in endorsing the US 
request for an Article 21.5 panel to review the measures taken by the EC to comply with the 
recommendations in the Bananas III dispute.  Ni caragua, too, regretted the EC's continuing 
discrimination and the absence of a mutually satisf actory solution.  Nicaragua had been seeking relief 
from that discrimination for over 19 months, since th e EC's regime had first been announced.  While 
the EC had consistently expressed a preference for negotiations, rather than litigation, no meaningful 
immediate relief had yet been offered.  Nicaragua's  banana industry had no prospect of returning to 
the EC's market under the burden of a US$4.30/box tariff at the border, especially when other 
competitive supplying countries were entering duty-free.  Unless that discriminatory burden was 
substantially lifted, quickly and on an enforceable  basis, Nicaragua's industry would face permanent 
exclusion from the EC's market.  Nicaragua was, ther efore, grateful for the United States' decision to 
use the DSU expedited enforcement procedures, along with  others in Latin America, to try to facilitate 
a solution.  Nicaragua looked forward to working in close coordination with the United States and 
other concerned MFN parties as these efforts progressed. 
12. The representative of Panama  said that his country fully supported the US request for the 
establishment of a panel.  Panama believed that the request was properly raised under Article 21.5 of 
the DSU and encouraged its approval at the present meeting.  When the EC had announced its regime 
19 months ago, it had called its ne w measures the EC's final "comp liance" step in the Bananas III 
dispute.  While the EC was right to relate the curre nt regime to the Bananas III dispute, it was wrong 
to claim compliance.  The inconsistencies in these tariff and tariff-quota arrangements had been 
discussed in many previous meetings of the DSB:  (i ) the current tariff treatment violated Article I of 
the GATT 1994 by granting ACP bananas far better tr eatment than MFN bananas;  (ii) the EC's 
775,000 mt ACP tariff quota violated Article XIII  of the GATT 1994 by denying MFN suppliers 
access to that quota or comparable treatment;  and (iii) the EC's "autonomous" 176 €/mt rate violated 
Articles II and XXVIII of the GATT 1994 by br eaching the EC's schedule commitments and 
compensatory obligations. 
13. The unusually large number of WTO proceedi ngs that had been brought against these 
violations in recent months should make clear how troublesome the EC's banana regime had become.  
For Panama, this arrangement had b een particularly concerning, striking at the heart of its economy.  
Bananas constituted Panama's most important agricu ltural crop and represented nearly 60 per cent of 
its total agricultural exports.  Most of Panama's bananas were exported to the EC, making Panama a 
"primary supplier" to the EC's market.  Since Ja nuary 2006, the EC's 135 per cent increase in ACP 
preferences had led to trade and investment shifts  in favour of the ACP countries, to the competitive 
detriment of Panama and other MFN suppliers.  Pana ma needed relief and stood ready to negotiate a 
solution that provided immediate,  substantial, and enforceable access improvements.  Until that 
solution could be found, Panama joined Ecuador's Ar ticle 21.5 case as a third party, and had requested WT/DSB/M/235 
Page 4  
 
  its own separate 1966 procedures on this matter.  Pa nama would join the dispute initiated by the 
United States under Article 21.5 of the DSU as a thir d party to make clear its commitment to secure 
an acceptable solution through all means necessary. 
14. The representative of Cameroon
 said that first he wished to ask whether the United States 
exported bananas to the EC's market.  In previ ous meetings, Members had had the opportunity to 
listen to the US delegation which emphasized the n eed for a negotiated solution for all the parties 
concerned;  i.e. the EC, the Latin American and AC P banana suppliers.  As th e EC had rightly stated, 
the US request for a panel at this stage disregarde d and disrupted the efforts the EC continuously tried 
to make to reach a negotiated solution, which w ould take into consideration and into account the 
interests of all the banana exporting countries.  The panel would put additional pressure on the EC to 
depart from negotiations of a solution amongst the parties concerned.  Cameroon strongly supported 
the negotiations.  Like Jamaica, if and when such  a panel were to be established, Cameroon would 
seek enhanced third-party participa tion in the panel's proceedings.  
15. The DSB took note  of the statements and agreed , pursuant to Article 21.5 of the DSU, to refer 
to the original Panel, if possible, the matter ra ised by the United States in document WT/DS27/83.  
The Panel would have standa rd terms of reference.  
16. The representatives of Brazil , Cameroon , Colombia , Dominican Republic , Ecuador , Jamaica , 
Japan , Nicaragua  and Panama  reserved their third-party rights to participate in the Panel's 
proceedings.  
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