WORLD TRADE  
ORGANIZATION  WT/MIN(05)/9 
13 December 2005 
 (05-5905) 
MINISTERIAL CONFERENCE 
Sixth Session Hong Kong, 13 - 18 December 2005 Original:   English 
 
  
HONDURAS' "SUBSTANTIAL SU PPLYING INTEREST" CLAIM  
IN RELATION TO BANANAS 
 
Response to Arguments of the European Communities
 
 
Communication from Honduras 
 
 
 
 The following communication, dated 8 December 2005, is being circulated at the request of 
the Delegation of Honduras. 
_______________ 
 
 
 
1. The Government of Honduras hereby responds to the 30 November 2005 paper submitted by 
the European Communities (EC) en titled "Honduras' paper on the jus tification of its substantial 
supplying interest claim in relation to banan as", which wrongly disputes Honduras' "substantial 
supplying interest" (SSI) in the EC's rebinding of its tariff commitments on bananas (0803.00.19). 
2. As demonstrated in Honduras' SSI analysis circulated on 18 May 2005, Honduras is entitled 
to be recognized by the General Council as a substan tial supplier of bananas to the EC market on the 
basis that it could reasonably be expected to ha ve achieved a market share approximating 10 per cent 
in the absence of EC discriminatory quantitative restrictions on bananas.1  Its SSI entitlement is 
further confirmed by prior WTO findings and the small-country considera tions required by GATT 
Article XXVIII.2 
3. None of the arguments advanced in the EC's pa per of 30 November disproves that SSI status. 
I. THE EC WRONGLY EXAMINES RE FERENCE YEARS 2000-2002, A PERIOD 
WHEN DISCRIMINATORY QUANTITATIVE RESTRICTIONS WERE IN EFFECT 
4. The EC argues that during reference period 2 000-2002, Honduras held only a 3 per cent share 
of total EC imports of MFN bananas, thereby depr iving it of SSI status.  In so arguing, the EC 
disregards Ad Article  XXVIII:1, paragraph 7, which requir es a reference period undistorted by 
"discriminatory quantitative restrictions".3 
                                                      
1 WT/GC/90, 18 May 2005. 
2 Id. 
3 Paragraph 7 of Ad Article  XXVIII:1 stipulates that although the term " 'substantial [supplying] 
interest' is not capable of a precise definition", it minimally must cover Members "which have, or in the absence 
of discriminatory quantitative restrictions affecting th eir exports could reasonably be expected to have, a 
significant share in the market". WT/MIN(05)/9 
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 5. From July 1993 to the present, the EC has app lied a discriminatory quantitative restriction to 
bananas of ACP origin in violation of GATT Article XIII.  The WTO inconsistency of that restriction 
has been affirmed in multiple WTO proceedings.
4  The EC also recognizes the inconsistency of that 
ACP reserve, as evidenced by its pending request for a GATT Article XIII Waiver.5 
6. Because of the enduring presence of quota discrimination over the last thirteen years, 
Honduras' market share during the 2000-2002 3-year reference period would not reflect the market 
share that Honduras "could reasonably be expe cted" to have achieved "in the absence of 
discriminatory quantitative restrictions a ffecting [its] exports", as required by Ad Article  XXVIII:1. 
II. THE PROPER REFERENCE PERIOD IS 1989-1991, YEARS IMMEDIATELY 
PRIOR TO THE EC'S ADOPTION OF ITS DISCRIMINATORY BANANA 
RESTRICTIONS 
7. The EC is wrong to question Honduras' use of the 1989-1991 reference period.  This is the 
3-year period immediately prior to the adoption of  the EC's discriminatory common organization of 
the market for bananas, when MFN banana volum es entered the northern EC member States under 
tariff-only or duty-free access.6  These were the very same years embraced by the Banana III panel to 
evaluate supplier market share prio r to the discriminatory 1993 regime.7 
8. Honduras is accordingly justified in using this peri od to analyse its SSI share.  That analysis 
confirms that during 1989-1991, Honduras' share of th e EC import market was in excess of 8 per cent, 
and exceeded 10 per cent in one of the years8, which established WTO finding s consider a substantial 
share.9 
III. IT IS OF NO RELEVANCE UNDER ARTICLE XXVIII THAT EC MEMBERSHIP 
WAS LIMITED TO 12 STATES DURIN G THE 1989-1991 REFERENCE PERIOD 
9. The EC errs, too, in suggesting that Honduras should have calculated its market share on the 
basis of volumes into the twelve countries comprising the EC during 1989-1991.  Ad Article XXVIII:1 requires a construction of trade leve ls that reasonably could be expected in 
today's market absent discrimination.  As the EC is no longer a union of 12 countries, data for only 
12 EC countries would not accura tely construct Honduras' Ad Article  XXVIII:1 market share. 
                                                     
 
4 European Communities – Regime for the Importation, Sale and Distribution of Bananas, Recourse to 
Article 21.5 by Ecuador,  WT/DS27/RW/ECU, (hereinafter “ EC-Bananas - Article 21.5-Ecuador ”) adopted 
6 May 1999, paras. 6.29, 6.160 [wherein the panel found that the quantitative limitations adopted as of 
January 1999 by EC Regulation 1637 regarding the 857,7000 mt reserve for ACP bananas was inconsistent with Article XIII];  European Communities – Regime for the Importation, Sale and Distribution of Bananas, 
Recourse to Arbitration by the EC under Article 22.6 of the DSU , WT/DS27/ARB, 9 Apr il 1999 (hereinafter 
EC-Bananas – Article 22.6-U.S .), paras. 5.96, 5.98; and 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/ECU (hereinafter  EC-Bananas – Article 22.6-Ecuador ), 24 March 2000, para. 14. 
5 Request for Extension of a Waiver Under GATT Artic le XIII, Tariff Rate Quota for Bananas of ACP 
Origin, G/C/W/529, 11 October 2005. 
6 EEC-Members States' Import Regimes for Bananas  (hereinafter " Bananas I "), 3 June 1993, 
unadopted, DS32/R, pp. 3-7. 
7 Panel Report, European Communities-Regime for the Importation, Sale and Distribution of Bananas , 
WT/DS27/R, adopted 25 September 1997, as modified by the Appellate Body Report, WT/DS27/AB/R, (hereinafter " Bananas III"),  para. 7.83. 
8 WT/GC/90, 18 May 2005, para. 9. Honduras’ share of the EC import market was 10.29% in 1989, 
7.37% in 1990, and 6.87% in 1991. 
9 Bananas III , WT/DS27/R, paras. 7.83, 7.84, and fn 370.  WT/MIN(05)/9 
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 10. For the 1989-1991 period, because Eurostat data  for the ten newest EC Members are not 
publicly available10, the most representative, reliable data available are Eurostat EC-15 statistics.11  
Honduras accordingly used those data to construct its share. 
IV. HONDURAS' MODESTLY  FLUCTUATING SHARE DURING THE 1989-1991 
REFERENCE PERIOD, FROM 10.3 PER CENT TO 7 PER CENT, IS NO BAR TO 
SSI STATUS 
11. A 3-year reference period is commonly used to  calculate market share under Article XXVIII 
precisely because volumes and shares will differ from year to year, particularly with a highly perishable agricultural product, like bananas.
12 
12. In any case, Honduras' annual shares at issue here are in all instances substantial, as 
confirmed by WTO findings.  The Banana III panel explicitly  found that a substantial-supplier share 
need not reach 10 per cent, especially if the expor ting Member is a small developing country that 
heavily relies on exports of the product at issue.13  Honduras is a small developing country with a 
Gross National Income per capita of only $704.14  Bananas are one of the country's most important 
sources of export revenue, employ ment, and economic growth, gene rating over 11,000 jobs and over 
$200 million annually in export revenue.  The bana na sector is especially important to the 
impoverished rural areas of the country.  Honduras'  8 per cent average share during the undistorted 
reference period should, thus, fully qualify as a substantial share. 
13. Indeed, the Banana II  GATT panel already stipulated that Honduras (along with Ecuador, 
Costa Rica, Colombia and Panama) was a "major supp lie[r]" of MFN bananas to the EC market prior 
to the EC's discriminatory 1993 EC-wide regime.15  T h e  Banana III panel likewise  identified 
Honduras as a "leading supplie[r]" of MFN bananas to the EC market.16  If previous panels considered 
Honduras among the most substantial suppliers to the EC market prior to the onset of discrimination 
in 1993, the EC should not be arguing otherwise. 
14. For the reasons stated above and in WT/GC/90,  Honduras respectfully reiterates its request 
that the General Council recognize its substantial-s upplier claim in connection with the EC's banana 
rebinding. 
__________ 
                                                      
10 Less reliable FAO data reflect an EC-25 market share for Honduras of 10 per cent for 1989, 
7 per cent for 1990, and 6 per cent for 1991, again yielding a 3-year average of approximately 8 per cent.  See, 
Banana statistics for 1989-1991 reported to the FAO by importing countries and cited in FAO reports prepared 
for the Intergovernmental Group on Bananas. 
11  WT/GC/90, 18 May 2005.  
12 EC-Bananas – Article 21.5–Ecuador , para. 6.37. 
13 Bananas III , WT/DS27/R, paras. 7.83, 7.84, and fn 370 [wherein the panel in explaining how a 
"substantial interest might well vary somewhat based on the structure of the market", cited by analogy to paragraph 1 of the Understanding on Article XXVIII.  The panel found paragraph 1 to be relevant in 
determining the factors that could influence the recogn ition of a substantial supplying interest even though 
paragraph 1 refers to principal supplying interests.  Th at paragraph calls on Members to take into account the 
special needs and circumstances of "s mall- and medium-sized Members" to help secure a "redistribution" of 
Article XXVIII rights in favour of those countries.  This is especially important where the small- or 
medium-sized country is heavily reliant on exports of the product in question  and/or the market of the modifying 
Member as an outlet for that product.] 
14 G/SCM/110/Add.2, 11 May 2005, based on constant 1999 dollars.  Honduras' 2004 per capita GNI, 
based on 2004 dollars, is $1,030, the same as Angola and below the per capita GNI of many ACP countries.  
World Development Indicators database, World Bank, 15 July 2005. 
15 EEC-Import Regime for Bananas,  11 February 1994, unadopted, DS38/R, para. 10. 
16 Bananas III , WT/DS27/R, para. 3.3.