RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/MIN(05)/SR/4 
24 February 2006 
 (06-0781) 
MINISTERIAL CONFERENCE 
Sixth Session Hong Kong, 13 - 18 December 2005  
 
  
SUMMARY RECORD OF THE FOURTH MEETING 
 
Held at the Hong Kong Convention and Exhibition Centre, Hong Kong, China
 
on Wednesday, 14 December 2005, at  8 p.m.  
 
Chairperson :  Secretary John C Tsang (Hong Kong, China) 
 
 Subjects
: Items Proposed by Members for Inclus ion in the Agenda (Agenda Item 2) 
 
 (a) Poverty Reduction – Sectoral Initiative in Favour of Cotton 1 
  
 (b) EC Compliance with all MFN Ri ght and Interests on Bananas under the 
Doha Ministerial Decision of 14 November 2001 (WT/MIN(01)/15), the 
Award of Arbitrator of 1 August 2005 (WT/L/616), the Award of 
Arbitrator of 27 October 2005 (WT/L/625), GATT Article XIII, GATT 
Article XXVIII, and all other WTO Obligations 2 
  (a) Poverty Reduction – Sectoral Initiative in Favour of Cotton 
 
 The Chairman
 recalled that this item was on the agenda  at the request of the delegation of 
Benin on behalf also of Burkina Faso, Chad,  and Mali, and noted that it was a matter in which the 
Least-Developed Countries and the African Group had strong interests and to which they attached 
great importance.   
 
 The representative of Benin  said he wished to thank the Ch airman for his exemplary conduct 
of the work of the Ministerial Conference.  This  was a crucial item on the Conference's agenda, and 
his delegation was certain that all were fully aware of the economic difficulties and hardships 
currently faced by the economies and populations of  the co-sponsors of the Sectoral Initiative in 
Favour of Cotton and other African cotton-producing countries in their efforts to take part in 
international trade.  Indeed, the populations of  these countries were feeling the full force of the 
dramatic consequences of the structural decline in  the price of this product on the international 
market, owing to the massive subsidies grante d by some developed countries to their cotton 
producers.  All would therefore understand what w as at stake in this regard for these poor and 
vulnerable countries whose farmers, men and women, worked the family fields in all weather and 
under the most difficult circumstances to earn barely one dollar a day – the threshold fixed by the United Nations to determine which countries were considered poor – yet it was from this work that 
they were supposed to draw the necessary resources to meet their considerable needs in respect of 
health, food, children's education and improved housi ng.  Therefore, it was clear that the success of 
this Conference depended on settling this vital issue. 
                                                     
 
1 Proposed by Benin also on behalf of Burkina Faso, Chad and Mali. 
2 Proposed by Honduras. WT/MIN(05)/SR/4 
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   As all knew, cotton was the economic mainstay of many African countries, including several 
LDCs.  Cotton played a vital role in the social life of several million people, including women, young people and children, the most vulnerable segments of the population.  In strictly economic terms, the 
enormous shortfalls created by the steady fall in cotton prices on the international market placed an intolerable burden on these countries, which were cu rrently experiencing an economic slump.  Over 
the past two cotton marketing years, the cumulative amount of the financial outlay by the four co-
sponsors of the Sectoral Initiative in Favour of Co tton to cover the deficit linked to falling cotton 
prices on the international market had been estimated  at more than $US450 million.  These countries 
could not continue to be bled financially much longer.  Their rural populations were aware of the 
situation and felt bitter and frustrated that their fa te was being decided thou sands of kilometres away, 
on international markets governed by rules that operate d to their detriment.  It was these rules that 
Members had decided to correct when the WTO General Council had mandated Members in 
July 2004 to address the cotton issue ambitiously, expe ditiously and specifically.  However, since then 
the question had remained unresolved.  The draft Mi nisterial declaration that had been submitted to 
Ministers for consideration and decision cont ained no elements that would contribute to 
operationalizing the July 2004 Decision.  Paragraph 10 of the draft Ministerial declaration, which 
dealt with the commercial aspect of the cotton issue,  still contained passages in square brackets, which 
meant that Members had to accelerate their efforts over the next four days in order to reach agreement 
on a helpful and worthwhile decision on cotton to  be taken in Hong Kong.  The elements of 
modalities proposed by the co-sponsors of the Sect oral Initiative in Favour of Cotton at their 
consultative meetings in Ouagadougou and N' Djaména on 10 and 16 November 2005 had been 
referred to only in the notes to the report on the agriculture negotiations.  However, these elements 
had been approved by the African Trade Ministers in Arusha on 24 November 2005 and by the Trade 
Ministers of the ACP countries and the G-90 devel oping-country Members meeting in Brussels at the 
end of November 2005.  In view of the scale of the difficulties being experienced by the cotton-producing communities in the African countries and th e disastrous economic and social repercussions 
on the economies of those countries, and pursuant to  the Decision on cotton adopted by the General 
Council over a year earlier, Benin urged this Conferen ce to take an urgent, explicit and fair decision 
on cotton, in order to help the African cotton-producing countries out of the serious economic and financial crisis in which they found themselves.   For this purpose, the African Trade Ministers and the Trade Ministers of the ACP countries 
and the G-90 developing-country Members had submitted the following explicit proposals: 
  - total elimination of cotton export subsidies by 31 December 2005;    - substantial reduction in do mestic support, which caused serious injury to trade in 
cotton, in accordance with the following timetable of implementation:  80 per cent by 
31 December 2006, the following 10 per cent by 1 January 2008, and the remaining 
10 per cent by 1 January 2009; 
 - elaboration of disciplines making it possible to control and monitor the conversion of 
non-authorized support into authorized support;   
 - establishment of a transitional emergency fund  in order to offset the deficits resulting 
from the fall in cotton prices on the international market;   
 - mobilization of technical and financial assistance for the deve lopment of the cotton 
sector in Africa.   
  Studies had shown that the elimination of dom estic support and export subsidies would result 
in a substantial rise in the price of cotton on the international market.  Benin appreciated the action 
and initiatives undertaken by certain countries and international, re gional and sub-regional 
organizations to strengthen the cotton sector in A frica from the standpoint of the development aspect 
of the cotton issue.  Benin thanked its partne rs who had already adopted such measures, and 
encouraged others to take bold initiatives along the same lines.  However, the African cotton-
producing countries would only be able to benefit from this aid if appropriate solutions were found to 
the distortions on the international market caused by  cotton subsidies.  By adopting the modalities set  WT/MIN(05)/SR/4 
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  out above, the Hong Kong Ministerial Conference woul d go down in history as having restored hope 
to millions of people whose requirements in respect of medical care, food, schooling for their children 
and permanent housing could not be met by the fr uit of their labour, and who had no option but to 
resort to illegal emigration.  The adoption of th is decision would undoubtedly enable Members to 
reduce the marginalization of the African countries and enhance the latter's share of international 
trade, thereby giving concrete expression to Me mbers' determination to  make the Doha Round a 
genuine development round.   The representative of Burkina Faso
 thanked those involved for having included cotton at the 
beginning of the agenda for this Conference.  This  showed the importance that was attached to this 
subject.  The present meeting gave his delegation an  opportunity to reaffirm the need for this 
Conference to find a concrete and immediate solutio n to the difficulties inherent in the cotton issue, 
which it hoped would become a symbol of the capac ities of the WTO to react satisfactorily to the 
interests of the poorest of its Members – which woul d not be the case if no results were achieved.  
This was even more imperative since the sectoral in itiative in favour of cotton was a subject on which 
all delegations had agreed – through the unanimo us adoption of the July 2004 package and the 
statements made since that date.  In order to see the commitments adopted in July 2004 honoured, his 
delegation and others who represented the hopes of so many producers, hoped there would be an 
opening of the dialogue at this Conference.  His dele gation and others had come to this Conference in 
order to have a decision taken that would elimin ate export subsidies and domestic support which 
distorted trade.  The hope of finding a negotiated solution had led the cotton producers in his country 
to gather hundreds of thousands of signatures app ealing to Ministers to take their situation into 
account in the work of this Ministerial Confer ence, and he would transmit these documents to 
delegations.   At present, positions seemed to be very far from a solution that took into account the concerns 
of the affected countries.  For this reason, he app ealed to the organization to do something.  The WTO 
was the appropriate framework in which all Me mbers should express their solidarity, because the 
existing situation would expose the cotton producers in Africa to famine and other catastrophes.  The 
cotton problem had gathered a consensus of all Memb ers, as could be seen in the July 2004 package.  
For this reason, his delegation had great difficult y understanding any hesitation being shown, because 
all had agreed that a speedy, ambitious and urgent  solution should be found.  One had to give hope, 
once again, to millions of banana producers, who we re asking for an immediate elimination of export 
subsidies, the elimination of trade-distorting domes tic support within three years, and the setting up of 
a support fund that would help these producers surv ive the decrease in the price of cotton on the 
international market.  This was not like asking for the moon, as some had suggested in the past few 
days.  The solution was at hand, and Burkina Faso was convinced that one did not need a magic wand, 
but rather a collective firmness, so that the Afri can cotton-producing countr ies too, could have the 
possibility of seeing the dream of economic and social welfare become reality.  It was for this reason 
that these countries had become Members of  the WTO,  which allowed them, with equity and justice, 
to obtain a better life by creating wealth through inte rnational trade.  This hope in the WTO was based 
on legitimate ambitions and was one of the basic reas ons that small countries continued to believe in 
the organization and to participate in its work.  If a just solution could not be found for such a 
legitimate and vital matter as the cotton issue, which all had recognized, no doubt the people of these 
countries would be entitled to ask why they were Members.  One could not merely give the impression that all were participating.  An adeq uate answer to this problem, which had been 
recognized by all, had to be found.  
 The representative of Chad
 said his statement would not be a speech, but an appeal to the 
conscience of the people gathered at this Conference.  Cotton should be in the minds of all those worthy of being called human beings.  Whenever one thought of cotton, one should ask whether or 
not one had a heart.  This was a matter that affect ed millions of human lives – it affected their sheer 
survival – and he appealed to all to enable Minist ers to leave Hong Kong with concrete proposals.  He 
hoped to return home with his soul and heart at peace, and knowing that he  had met human beings WT/MIN(05)/SR/4 
Page 4  
 
  worthy of the name – who, regardless of borders, were prepared to support the cause of those Africans 
who were living not just in misery, but in utter dej ection, and to remember that  these individuals, too, 
were human beings.   The representative of Mali
 said that, having heard the statements by the three preceding 
speakers, he did not have much to add because this was a dossier that had been presented collectively.  
The message being transmitted was collective, and Mali fully agreed with the previous statements.  In 
order not to repeat the same points, he merely wish ed to say the following.  The cotton issue had first 
been presented three years earlier and had reached the point of no return.  Mali was convinced that in 
the solution of the cotton issue, Members would find that the organization's credibility for the 
developing world was at stake.  Never before, or at  least rarely, in the WTO' s history, had developing 
countries presented such a complete and well justifie d dossier.  They were not asking for aid, but 
rather to be allowed to live off the fruit of their labo urs.  This was an emblem in international trade.  
The poorest people in the world were competing on the international market with the most powerful 
countries in the world.  It so happened that the rules of the game, defined collectively, had been 
defined by the most powerful and the richest, so th at when this Conference was over, if no acceptable 
solution to this problem had been found – and Ma li hoped this would not be the case – the proponents 
of this issue would be asked to present a better cas e than they had presented.  He appealed to the 
wisdom of all participants that they not leave Hong Kong with a new disappointment, as had been the 
case in Cancún.  Mali was convinced that all Members had well understood the hopes of this 
Conference.  For this reason, in exchanges his dele gation had had with various partners, it had insisted 
on the fact that the trade aspect of cotton, dealing with subsidies, had to find an answer, and the 
question of the development aspect and its financing had to find an answer.  However, the latter were 
measures that would accompany the so lutions to the trade problems. 
  The representative of Niger
 said that for a long time his country had believed that because the 
international community had decided to wage war on poverty, it would be sensitive to the appeal 
launched for the survival of cotton producers – the poorest amongst the poor of African farmers.  This 
was why Niger was more than disappointed to rea lize that exports of cotton, which was an essential 
part of the economies of many African countries, were threatened by subs idies, and that public 
opinion wrongly thought that an awareness of this blatant injustice would cause the authors of such 
measures to readdress them.  He stressed that these countries were not asking for charity, but simply 
for fair and equitable trade rules and that these be  respected by all.  They had tried dialogue and 
consultation, in the belief that this was the best way to find a solution to the stagnation of the cotton 
sector.  No decision-maker could remain in peace and in active when tens of millions of the poorest of 
the poor in one's country were seeing their inco mes severely cut by falling cotton prices on 
international markets, especially when it was known that the income from cotton production was the 
source of the daily livelihood and subsistence of millions of peop le.  The so-called Development 
Round should be strongly committed to addressing this  situation, unless this was a case of the most 
developed countries refusing to abide by the very rules they had committed themselves to with the 
goal of enabling the poorest Members to live in dign ity from the fruit of their work.  However, these 
countries were told time and time again that only a free-trading system would provide the driving engine for development.  This might be a joke in ba d taste, if the lives of so many people were not at 
stake.  The only remedy that had been provided was a few million dollars to help these countries, 
while the "donors" spent billions to steep them in further poverty.  Nothing could justify such an 
attitude.   The cotton-producing developing countries had acc epted in June 2004 to include cotton in the 
agriculture negotiations.  They had accepted the provisional composition of an emergency fund.  
However, their partners had reacted by not yieldi ng an inch.  These countries' farmers were looking 
up to them, and would not understand that thei r representatives had left Hong Kong without a 
satisfactory solution to the cotton issue.  All sh ould be moved by the voices of these populations who 
were crushed by the indifference displayed to thei r plight.  Since the Sectoral Initiative on Cotton had 
been presented in April 2003, his delegation had kept repeating to all its development partners that the  WT/MIN(05)/SR/4 
 Page 5 
 
 
  cotton sector was on the brink of failure, but rather  than doing something meaningful, these partners 
had been satisfied with taking emergency measures that would garner them some good publicity, at 
the cost of true and genuine development.  In add ition to seeking the application of just and equitable 
trade rules, the cotton-producing countries knew they had to improve the productivity of their farmers and, if possible, the quality of the cotton they expo rted.  Regrettably, for all too long, the income 
derived from cotton production had not made it possible to invest in such improvements.  This was 
why the request by the four co-sponsors included a tr ade and a development element.  In this regard, 
the proponents of the Cotton Initiative encouraged  the prompt implementation of the measures 
suggested.  Niger urged Ministers to agree to a fi nal text where the brackets were removed and the 
dots filled in.  Thereon hinged the credibility of th e organization and the future of all cotton producers 
in Africa. 
  The representative of Cameroon
 said that while a number of delegations might be surprised to 
see Cameroon taking the floor on this issue, his dele gation wished to point out that Cameroon, with an 
annual production of 300,000 tonnes, was the third-largest cotton producer of French-speaking Africa 
and represented 14 per cent of that region's producti on.  The sector was made up of 370,000 small 
producers working areas of less than one hectare per fa rm – as compared to three hectares in Mali, for 
example – and provided a livelihood for 2.2 million in a country whose total population was 15 million.  Moreover, cotton, which represented 6.6 per cent of the total value of Cameroon's 
exports, was its fourth-largest export product.  Co nsequently, Cameroon, like the other countries of 
West and Central Africa, was suffering the full impact of the crisis affecting the African cotton 
industry, and thus fully supported the Sectoral Initia tive in Favour of Cotton.  He recalled that in 
Africa, and in particular West and Central Africa, cotton was an exclusively rain-fed crop in an area 
subject to significant climatic vagaries.  Co tton growing was very labour intensive, since 
mechanization was almost non-existent – indeed , labour accounted for about 60 per cent of total 
production costs.  An estimated 110-150 person days we re needed to cultivate one hectare – in other 
words, each tonne of cotton fibre produced repr esented approximately 320 person days of labour, 
provided either by salaried workers or by farmers and their families.  Added to this agricultural 
employment were the salaried jobs created by the cotton companies.   In addition to the impact of the income it gene rated, cotton provided a crucial contribution to 
the momentum and development of the areas concer ned, for the following reasons:  When prices so 
permitted, it enabled the cotton companies to improve  the network of rural tracks, thereby bringing 
production areas out of their isolation, an achieve ment that was now threatened, owing to the 
problems involved in maintaining this infrastructure.   It had brought about a significant improvement 
in the agricultural techniques used by farmers who,  thanks to cotton and the accompanying outreach 
programmes, were now familiar with the use of inputs and pesticides.  Similarly, the short-term credit 
provided by the cotton companies was often the only available means of purchasing inputs, while the 
medium-term credit that was also provided often represented, for the farmers, the only chance of 
using animal traction, which had developed co nsiderably in the cotton-growing areas.  The 
development of cotton had a direct positive impact  on maize production – with which it was rotated, 
benefiting from the residual effects of the fertilizers – and thus helped to ensure that food needs could 
be met more adequately at the national level.  Co tton had helped with the progressive structuring of 
farmers into professional groups and associations at  the village, departmental, regional and national 
levels.  These groups and associa tions, which had initially been i nvolved in distributing inputs and 
collecting the cotton, were called upon to play an  increasing role in every aspect of the sector's 
development and in helping farm ers to take control of their own development.  Although the 
structuring had been uneven among the countries i nvolved, and still remained fragile, it provided a 
crucial contribution to the future of rural development. 
  Thus, one could imagine the negative, indeed  catastrophic impact of the domestic support 
measures that were clearly pushing prices down, as s hown by the different studies carried out over the 
past few years.  One recent study estimated that in the absence of subsidies, prices would have been 
five cents per pound higher, i.e. 11 cents per kil ogram or 10 per cent of the average price for WT/MIN(05)/SR/4 
Page 6  
 
  2002/2003 and 2003/2004.  Generally speaking, the estim ates that appeared most plausible spoke of a 
short-term impact on prices of between 3 per cen t and 15 per cent.  Moreover, it was highly likely, 
whatever the impact might be, that the very existe nce of price and income support in certain countries 
that were among the leading producers, delayed or concealed the transmission of market signals to 
producers, thereby delaying the adjustment of supply to demand and amplifying price volatility.  
Thus, for Cameroon, the situation was serious.  His country could no longer afford simple statements 
of intent.  The time had come to act, and to act efficiently, without discriminating among the African 
countries that were victims of cotton price erosion on the international market.  He had been asked to 
hand over to the WTO deliberative bodies a petition signed by 200,000 farmers and cotton producers 
from Cameroon, explaining in very moving terms wh y they were fed up, which read, "The subsidies 
of the rich countries are killing the African econom ies ... more than 10 million African cotton farmers 
are living in misery because of the American and Eur opean subsidies, while only one per cent of those 
subsidies could save African lives."  His delegation wondered for whom the bell was tolling.  In any 
case, attempts to divide developing countries on the cotton issue had to cease.  There was no division between the LDCs, on the one hand, and another cat egory of African countries, on the other.  All 
African developing countries were suffering from the distortions caused by the subsidies of the 
wealthier countries in the cotton market.  The onl y possible treatment was equal treatment for all. 
  The representative of India
 said the cotton issue was a bleeding wound on the conscience of 
the world.  India fully supported making the Cotton Initiative a priority in the negotiations.  While it 
recognized the complementarily of the trade-polic y and developmental aspects of cotton, India 
supported the position that the removal of distortions  caused by a high level of subsidies on cotton in 
developed countries was essential to the success of this  Initiative.  Persistent  and high levels of 
subsidization had virtually decimated the economi es of countries dependent  on cotton and had pushed 
their farmers to the margins of impoverishment.  In other countries too, where cotton was a major crop, this phenomena had caused large-scale loss of  livelihood to thousands of farmers who were 
indebted and even committing suicide.  This was not  merely an economic or commercial issue, but an 
urgent and serious human imperative that should be addressed effectively, expeditiously and with all 
honesty.  Although India produced substantial quan tities of cotton, it was nevertheless a large net 
importer, importing almost half a billion dollars of  cotton a year.  These imports were necessitated by 
its growing textile industry and were likely to increas e substantially in the future, providing increased 
opportunities for the African cotton producers.  India al ready provided market a ccess in this area, with 
very low applied tariff rates of 10 per cent.  It  was not tariffs, but the high subsidies of developed 
countries that made producers in Africa non-competitiv e in markets like India's.  It was therefore 
crucial that subsidies of all kinds for cotton provide d by the developed countries be removed, in order 
to restore the African cotton-producing countries' competitiveness and provide them with an opening 
for free and fair trade.  He welcomed the presen ce of both the Chairman of the Conference and the 
Director-General for the discussion of such an importa nt issue.  He was certain that they would take 
up cotton as an urgent issue in the informal H eads of Delegation discussions, because addressing the 
cotton problem was the very minimum Members coul d do.  If they were to leave Hong Kong without 
having done this, the confidence of the world in th e international trading system would be shaken. 
  The representative of Brazil
 said that in referring to poverty reduction in the title of this item, 
the proponents could not have ma de a better choice.  Cotton was the most eloquent evidence that 
effective reform of multilateral trade rules in agri culture was not just a matter of better allocating 
economic resources, but more importantly of assisti ng developing countries – including some of the 
most impoverished of the world – in their fight against poverty.  The distortions arising from the agricultural subsidies provided by developed countri es were, in reality, a source of poverty creation.  
These policies deprived millions of people in the de veloping world of their sole means of livelihood 
by depressing international prices and capturing devel oping countries' market share in world exports.  
Unlike their competitors from the developed world,  developing-country producers did not have rich 
treasuries to guarantee prices that were often twice or three times as high as those of the world market.  
However, one should not deal with this issue from onl y a moral perspective.  The end of distortions in 
world cotton trade was a legal right, to which the WTO dispute settlement body had determined that  WT/MIN(05)/SR/4 
 Page 7 
 
 
  Members were entitled under the current rules.  This  should be fully respected and not undermined by 
the current negotiations.  Members should now take st eps to give concrete meaning to the Decision of 
July 2004 to address the cotton issue ambitiously, expe ditiously and specifically within the agriculture 
negotiations.  Further, one had to recognize that  despite the creation of the Sub-Committee on Cotton 
and the presentation of a proposal by the African countries, there had been no concrete progress as to 
the situation regarding the trade aspects of co tton.  Brazil was committed to the Cotton Initiative 
launched by the four African countries.  The G-20 at its highest level had made reference to this issue 
in its Ministerial Declaration and in all of its proposal s relating to this matter.  Ministers were in Hong 
Kong to take world cotton trade one step closer to a fair deal.  The proposals by the G-20 on domestic support and export competition contained elements such as the product-specific cap on AMS and its 
extension to the Blue Box, that could be used to address this issue.  The implementation of new 
commitments should take place as early as possible.  The G-20 considered that this was one of the main issues to be tackled in Hong Kong.  Cotton w as a fundamental issue of the negotiations.  It was a 
key part of agriculture and a key pa rt of development.  He wished to  stress that without an adequate, 
comprehensive and expeditious solution to the trade asp ect of cotton, efforts in the context of the so-
called development dimension to re form and improve cotton producti on in developing countries could 
be rendered useless if the distorting practices were not removed.   The representative of Australia
 thanked the proponents of the Cotton Initiative and other 
Members for their statements.  Australia had for many years been championing the cause of 
international trade reform to correct the huge distor tions in international trade in agriculture.  It 
therefore well understood and sympathized with th e concerns of the African proponents and the call 
for the elimination of cotton subsidies.  Austra lia was a major producer and exporter of fibres, 
including cotton.  It thus knew from first-hand e xperience the harmful impact of subsidies on these 
commodities in international trade.  Australian cotton producers, like their African counterparts, 
received no subsidies from their government.  The lo ng-held objective of cotton producers to remove 
market distortions would best be met through an ambitious outcome on agriculture.  Real progress on 
cotton would require ambitious outcomes on domesti c support, export subsidies and market access.  
Breaking the current impasse in the agriculture ne gotiations was critical to moving the cotton issue 
forward.  Nothing Members did in this Round woul d contribute more to their development objectives 
than ending discrimination against agriculture, incl uding cotton.  Strong political commitment would 
be required from all Members, but particularly from the major subsidizers.  While securing early 
progress in the agriculture negotiations represente d the most immediate priority, Australia also 
welcomed the progress that had been made with regard to the development-assistance aspects of 
cotton, including the consultative framework process initiated by the Di rector-General.  An important 
part of this work was to look at ways to enhance pr oductivity and efficiency.  This was vital in raising 
the export marketing and sustainability issues to make production more environmentally friendly.  
The critical area for progress on cotton at this Minist erial Conference was the agriculture negotiations.  
Australia urged all Members to consider the oppor tunities this Conference offered to advance the 
agriculture negotiations and to make progress on these cr itical issues, including cotton.  This would be 
good for Africa, good for development and, indeed, good for the membership as a whole.   The representative of th e European Communities
 said he had listened with great attention to 
the statements by Benin, Burkina Faso, Chad and Mali.  Their call for action had been clearly echoed 
by many other countries, not only from Africa and not only from the least-developed countries.  The EC understood completely the dependence on cotton production of many poor countries, and that very 
often cotton production was the only way millions of pe ople could make their livelihoods.  Therefore, 
the EC stood firmly on the side of the poor cott on-producing countries.  The Community had removed 
all of the obstacles to importing cotton into its market.  It had ceased competing on the world market 
with cotton from the poorest countries, and Members now had to follow this line at the multilateral 
level.  As stated in the July 2004 framework, Me mbers had to put more flesh into the three key 
elements regarding the cotton issue – ambition, e xpeditiousness and specificity.  All three elements 
had to be farther-reaching than those for agriculture  as a whole, and this principle should apply in WT/MIN(05)/SR/4 
Page 8  
 
  each pillar of the agriculture negotiations.  Therefore,  he appealed to all Members to do their part to 
achieve this goal.   The representative of Guinea
 said his delegation wished to underline the importance Guinea 
attached to the issue of cotton.  As a cotton producer and exporter, Guinea, like other African 
countries concerned, was confronted with the il legal measures applied by developed countries to 
favour their own cotton producers.  For many years,  cotton production had been developed in three 
major areas in Guinea.  This had made it possible to improve the cash income of producers in the 
region and the use of land resources, as well as f ood security.  Other sectors had also benefited from 
these activities, including increased tariff revenue fo r the Government.  However, in view of the 
changes resulting from subsidies and other protec tive measures implemented by developed countries, 
the whole industry was dying.  Guinea's cotton production was on the brink of disaster.  Many individual failures and suicides had been recorded between 2004 and 2005.  It was difficult for cotton 
farmers to convert to other products because the soil  in sub-Saharan Africa was not appropriate for 
other crops.  In any case, the Government could not  have implemented such a policy without massive 
aid from its developing partners.  This spelled a slow and programmed death of African cotton 
producers and millions of people who derived a liv elihood from cotton production.  Another serious 
problem was the precarious situation of other agri cultural outputs, such as tu tu, which was used to 
feed poultry.  Guinea was now compelled to import tu tu to keep its poultry farms going.  Participants 
in other activities had been pus hed to poverty and destitution. 
 
 Despite its financial difficulties, in early 2000 his Government had been obliged to provide 
several billion Guinea francs to help peasants make  up for their losses on the cotton market due to 
anti-competitive measures taken by developed countries.   The list of the nefarious effects of such 
measures on cotton-producing and exporting countries,  including Guinea, was very long.  The cotton-
producing countries were seriously suffering from anti-competitive measures on the world market.  It 
was high time that the Ministerial Conference brought  a final and advantageous solution to this 
problem, consistent with the common position take n by the cotton-producing countries, as expressed 
in the declarations of the LDCs, G-20, African a nd LDC Groups.  A fair and equitable solution would 
include, first and foremost, swift completion of th e trade negotiations with a view to the swift 
elimination of subsidies and the setting up of an emergency cotton-production fund.  His delegation 
appealed to all concerned dele gations and urged them to disp lay open-mindedness and goodwill in 
order to help restore hope in the poor cotton-pr oducing countries, who had great hopes from this 
Ministerial meeting.  Guinea had noted the financia l commitments made by some partners, as set out 
in the Director-General's report, and hoped and trusted that this aid would reach the countries 
concerned without delay.  However, only a commonly agreed multilateral solution would be 
appropriate. 
 
 The representative of Uganda
 said that this issue was an important one which held the key to 
the livelihood of many people in Africa, and in pa rticular Uganda.  Cotton remained one of the key 
sectors in Africa and had great potential to drive th e development process on that continent.  For a 
long time, the cotton sector had provided employmen t for many poor people and had acted as a 
springboard for the industrialization process.  Regretta bly, this sector was facing a great threat due to 
production subsidies and other trade-distorting pr actices, especially by the major subsidizing 
developed countries.  There was an incongruous situ ation in which, despite the reforms in the sector, 
the gains that would have accrued from reforms had b een wiped out by subsidies.  The sector was in 
danger of being wiped out if no major decision on the elimination of the production and trade-
distorting subsidies was taken at this Conference.  It was imperative that political will be urgently 
demonstrated to avoid this.  He stressed that one of the main causes of deteriorating world prices for 
cotton and its by-products was the continued applicati on of subsidies.  This had led to an artificial 
surge in production levels, thereby driving world cotton prices downward and forcing Africa's cotton 
farmers into misery and perpetual poverty.   WT/MIN(05)/SR/4 
 Page 9 
 
 
   The current negotiating mandate on cotton envi saged an expeditious, ambitious and specific 
solution to the problems affecting the cotton sector.  Uganda's expectation was that this would be 
reflected in all three pillars, namely, domestic s upport, export competition and market access.  While 
Uganda recognized some movement on the export co mpetition pillar, it was concerned about the lack 
of movement on domestic support.  The devel opment aspects of cotton were yet to be 
comprehensively addressed and dealt with.  Devel opment aspects of the cotton sector went beyond 
addressing adjustment costs.  Addressing supply-side constraints and adding value to cotton should be 
an integral part of the comprehensive approach  to addressing the development aspects of cotton.  
Interventions that would yield more sustainable out comes were needed, including creating sustainable 
capacity for African countries to process and add va lue to cotton and its by-products.  This would 
yield sustainable solutions to the plight of African  cotton producers, who would be able to get better 
prices, create more jobs and enjoy greater multiplie r effects.  Uganda took note of the palliative 
assistance that was being extended to some cotton-pr oducing countries.  Clearly, this needed to be 
augmented if it was to have appreciable effect.  The woes of cotton producers spread across all 
African cotton-producing countries.  Therefore, any measures to address these woes should cover all 
African cotton-producing countries.  Some Me mbers had indicated a willingness to reduce and 
ultimately eliminate all subsidies in the cotton sector .  Uganda looked forward to this pledge being 
reflected in the final text of this Conference.  Si milarly, it also looked forward to interventions and 
partnerships that would help enhance processing and value-addition capacity as market opportunities 
emerged.   
 The representative of Ghana
 expressed his delegation's confidence and support in the 
Chairman's ability to guide Ministers' deliberations .  On the cotton dossier, Benin had spoken for a 
very large constituency beyond the four proponents of  the Sectoral Initiative on Cotton.  There were 
29 African cotton-producing countries and several othe r developing-country producers.  Therefore, if 
development was really at the centre of the DDA nego tiations, and if the task in Hong Kong was to 
give effect to the development dimension, cotton had to be considered a priority.  Since Cancún, 
Members had consistently decl ared their commitment to addr ess the cotton issue ambitiously, 
expeditiously and specifically.  Therefore, it was a matter of great concern that while the West 
African cotton sector remained in crisis, while th e West African cotton farmers continued to be 
devastated, and while these farmers continued to lose their livelihood, very little progress had been 
made in respect of the cotton issue.  There had b een some initiatives on the development dimension of 
this issue, but without the elimination of subsid ies and substantial reducti on in support measures for 
cotton producers in developed countries, the co mpetitiveness of African cotton producers would 
continue to be seriously undermined.  Any further delay in resolving the cotton issue could well mean 
the disintegration of the West African cotton sector , which would lead to a complete loss of the 
livelihood of farmers and the serious consequential so cial disintegration of entire rural communities.  
This situation should be avoided at all cost, if poverty reduction was the ultimate objective of 
multilateral trade for Africa.  Therefore, the time for action was here and now in Hong Kong.  Members had the opportunity now to ensure an exp licit decision on cotton as an early harvest of the 
negotiations.  This would be an ambitious out come delivered in an expeditious manner. 
  The representative of Rwanda
 said his delegation agreed with previous speakers that market 
distortions in the form of subsidies, export cr edits, tariff and non-tariff barriers on cotton, coffee, 
cocoa, sugar, tea, bananas and ot her products should be totally elim inated.  According to the General 
Council's July 2004 Decision, which Rwanda held as a negotiating framework, cotton was part of the 
agriculture negotiations.  Produc t-by-product negotiations would make it look as though it had been 
agreed that one product suffered from more trade dist ortions than others.  Progress in the removal of 
market distortions, as well as the removal of supply- side constraints to enable agricultural producers, 
including cotton producers, to ac cess markets, would constitute a real effort towards sustainable 
development.   The representative of the United States
 said he had listened carefully  to all of the statements.  
It was interesting that no one had mentioned the United States so far, although this was no doubt on WT/MIN(05)/SR/4 
Page 10  
 
  the minds of all because the United States had subsid y programs in place that very much affected the 
present discussion.  While he appreciated Ministers' de ference at the present meeting, he knew that the 
United States had a responsibility in this area.  His Government took this issue very seriously and believed that the Doha Round was the right place to deal with a major part of this problem.  The 
United States acknowledged the General Council's Ju ly 2004 Decision, which he understood had been 
negotiated very carefully.  That Decision incl uded the words "ambitiously, expeditiously and 
specifically".  As many Ministers had acknowledged at the present meeting, that Decision also stated that cotton would be part of the overall agriculture ne gotiations.  As many had said, all three pillars in 
those negotiations would address the cotton issue.  He had spent a lot of time on this issue in the past 
few months since becoming the US Trade Representa tive, including meeting with the C-4 ministers in 
Geneva, in Hong Kong, and also in Burkina Faso.  In Burkina Faso, the US Secretary of Agriculture 
had also had the opportunity to meet with grower s and workers in a cotton gin they had visited in 
Ouagadougou.   The point he wished to make at the present meeti ng was twofold:  First, to resolve this issue, 
and to do it in the context of the agriculture nego tiations, these negotiations ha d to move forward, but 
there were certain things that could be done in th e interim.  That process had already begun, and he 
would touch on it later in his statement.  However, the reality was that unless Ministers could move the agriculture negotiations forward, the problems on  the subsidy side could not be solved.  Rwanda 
had rightly said that the problem was not only cotton, and had listed five or six products, some of which would be taken up later in the present meetin g.  The United States agreed with the European 
Agriculture Commissioner that Ministers should put more flesh on the bones in agriculture, but it was 
a fact that those negotiations were not yet ripe.  The United States had moved forward in these negotiations on its own with regard to export subsidies, in  part because of the WTO dispute settlement 
case and in part because of its interest in working closely with the C-4 and others.  The United States 
hoped that these export subsidies would be reduced  even in 2005, but this might not happen.  
However, even during the talks at the present Confer ence, he had been calling back to Washington to 
try to see that the "Step 2 program" – which was by far the largest US export subsidy program for 
cotton – was eliminated.  The legislation had been sent to Congress and was currently being processed.  Passage of the legislation might happen during the present week, and he hoped that it would.  If not, he would continue to fight hard to repeal that program.  The Secretary of Agriculture 
had already taken all the steps he could take admini stratively to eliminate all export credit guarantees.  
This was specific to cotton. 
  With regard to the WTO process, as all knew,  the United States had put a proposal on the 
table two months earlier to substantially reduce tr ade-distorting support, including the very support 
cotton farmers received in the United States.  The US  proposal also included the eventual elimination 
altogether of these supports.  This was not easy to do  politically.  In fact, in his view, this could not 
happen in the United States politically unless it was joined with the export competition pillar, where 
the US proposal was to eliminate all export subsidi es by 2010.  A date for this should be set in Hong 
Kong.  On market access, the United States believed,  as many had said, that this was part of the 
solution to cotton.  Market access had to be incl uded, in order for the subsidy elements of the 
negotiation to pass and also to meet the promise of the Doha Development Agenda.  Thus, Members 
would be acting multilaterally, and not only rega rding cotton.  If Members could move this 
negotiation forward, they could then get into th e sector-specific discussions, which would follow if 
the agriculture negotiations could be brought together.   Many of his colleagues from Africa – and he had met with the African Group earlier that day 
– shared the strong view that the agriculture issu e should be solved, not only because of the cotton 
issue, but because for so many countries in Afri ca, agriculture was the key to development and 
provided the largest employment opportunity.  Partic ularly on market access, he knew his colleagues 
were pushing hard, and he appreciated that.  In the interim, the United States was also acting very specifically on cotton and very specifically in West  Africa to provide assistance.  This was important 
because, as had been said by several  speakers at the present meeting, the efficiency and productivity  WT/MIN(05)/SR/4 
 Page 11 
 
 
  of cotton production should be im proved in the C-4 countries.  It was also important because cotton 
production was currently not efficient in those countries.   He wished to provide some numbers in this 
regard, while maintaining that the United States believed  the subsidy program should be dealt with.  
On the basis of eleven studies that had been done on the impact of the US subsidy program on cotton 
prices for West Africa, the impact on the price of cotton had ranged from 2 per cent to 12 per cent.  
An IMF study had indicated 2.8 per cent.  The UN Food and Agriculture Organization had indicated 
3 per cent.  Both studies had indicated that the imp act of the US subsidy program was 2 per cent.  He 
had heard a figure of US$460 million mentioned at th e present meeting, but could not find that figure 
in any of these studies.  Two per cent represented about US$20 million dollars per year.  He reiterated 
that he was not saying one should not deal with the subsidy issue.  The US proposal dealt with it, and 
this willingness to deal with the subsidy issue was unprecedented.  His Government had not been able 
to put something like this forward earlier.   However, it would be very irresponsible to te ll the cotton farmers that  eliminating subsidies 
would solve their problems.  He had met with a nd heard the Ministers from Africa, who were his 
friends, and would be meeting with them again in th e coming days.  He wished to inform them that 
progress was being made, and he hoped to be able to resolve these issues that week.  He understood 
their passion, and had seen the situation first-hand in  Africa.  However, he had to express his concern 
that some were saying the problem was subsidies, when in fact, the problem was much bigger.  For 
example, the yields in Africa were one half of the yi elds in the rest of the world for cotton, and less 
than that if compared to the Un ited States, where there was very efficient production, although not as 
efficient as in Australia or Brazil who had spoken at the present meeting.  If African farmers had the 
same yields as the rest of the world, the impact of  that would be over 20 times greater than the impact 
of subsidies, assuming one believed the UN and IMF figures.  Even using the highest of the other figures, the efficiency of production would make mu ch more difference than the subsidies.  He 
challenged people to look at these numbers.  The data and the studies were there, available in French 
and in English. 
  Thus, the aid program the United States had already begun – the Cotton Improvement Initiative in West Africa, to which his country had already given US$7 million and was prepared to give a lot more – was very important.  He urged hi s colleagues who had spoken about this issue to do 
the following:  For those who were  blocking progress on the agriculture  negotiations, if they really 
wanted to help, they should come up with propo sals in market access that really did provide 
substantial improvements in market access.  This was the Doha requirement, not a US  requirement, and would enable Members to get to the subsidy issu e.  For those who had expertise in cotton – and a 
number of countries which had spoken on this issue di d – they should help the United States help its 
friends in Africa to make their production more effi cient.  Also, in the area of marketing, a cotton 
farmer in the United States got about 80 cents for every dollar of cotton he sold, which was roughly 
the same worldwide.  In West Africa, the figure was 50 cents.  Again, there were studies indicating 
this, so it was not just a problem of production.  The money the United States was sending was going 
for soil, seeds, planting and production, and also for more efficient marketing, because the farmers were not getting what they deserved.  He believed th at the subsidy issue coul d be dealt with, and had 
spent a lot of time on this issue over the past few m onths, but the more he learned, the more he was 
concerned and confused.  He asked why the other parts of the problem were being ignored.  The 
United States had been criticized for putting an assistance program in place because it did not solve 
the problem, but that program, if successful, would have an even greater impact than removal of the 
subsidies.  He was not suggesting that one could snap one's fingers or wave a wand to change the 
production or marketing practices of the parastatal organizations in cotton-producing countries, but 
unless those practices were changed, it would be unfair to the cotton farmer in West Africa to say that 
subsidies were the only problem.  If, in five years'  time, the United States removed the subsidies, there 
would still be a problem in West Africa and throughout the continent unless these underlying issues were dealt with.    WT/MIN(05)/SR/4 
Page 12  
 
   He reiterated that the United States had had eff ective meetings with colleagues in the C-4 plus 
and expected to continue those meetings the following  day.  His country very much wished to resolve 
this issue, and believed this could be done thro ugh the WTO, including all three pillars in the 
agriculture negotiations.  Some of the countries who had spoken on the cotton issue bought a lot of cotton.  Those countries had tariffs that were at leas t 10 per cent.  Regarding tariff levels, he suggested 
that Members think about the 10 per cent versus the 2 to12 per cent he had men tioned.  Market access 
and tariffs did matter.  A big potential gain from th e Doha Round was to reduce tariffs that were in 
some cases as high as 60 per cent for African cotton.   The United States was willing to do more on all 
these pillars and did not shirk its responsibility.  Ho wever, it wanted Members' help to be able to 
achieve a successful agriculture negotiation, and to  reach the point where it could provide assistance 
to the countries and farmers who needed it the most .  The United States felt that its C-4 colleagues 
were working in very good faith, and his country hope d to have a solution to this issue that week. 
  The Chairman
 proposed that the Ministerial Conference take note of the statements and also 
take note that the issues that had been raised were  being considered as part of the negotiations on 
agriculture as agreed in the Decision adopt ed by the General Council on 1 August 2004. 
  The Ministerial Conference so agreed
. 
 
(b) EC Compliance with all MFN Right and Interests on Bananas under the Doha 
Ministerial Decision of 14 November 2001 (W T/MIN(01)/15), the Award of Arbitrator of 
1 August 2005 (WT/L/616), the Award of Ar bitrator of 27 October 2005 (WT/L/625), 
GATT Article XIII, GATT Article XXVIII, and all other WTO Obligations 
 
 The Chairman  recalled that this item was on the agenda at the request of Honduras.  
 
 The representative of Honduras  said he wished to begin his statement by reiterating Honduras' 
commitment to the multilateral trading system.  Mi nisters were meeting in Hong Kong to fulfil an 
historic duty to obtain better trading terms that  would advance development and strengthen the 
credibility and prestige of the system.  In furt herance of those shared objectives, Honduras had 
requested the inclusion on the agenda of the EC's  non-compliance regarding bananas.  In fact, the 
importance of this matter transcended the single pro duct it involved and required the attention of the 
whole membership.  He recalled that the EC had r ecently taken a decision to establish a new banana 
import regime that needlessly put at risk deve loping-country interests, the functioning of the 
multilateral system, and the premises of the Round itself.  Honduras was convinced that the EC was 
still able to reverse those measures before 1 January 2006, the date scheduled for their 
implementation.  Otherwise, it was difficult to envision how the Round could progress. 
 
 He wished to explain the fundamentals of this  issue and, above all, how Honduras had come 
to this volatile point.  Starting with a reference to what was obvious – the banana-producing countries 
were all developing economies and were among the countries that should benefit from the work of 
this Round.  They stood at the heart of the Doha  Round.  His country had an annual gross national 
income (GNI) per capita of US$704.  To put this in perspective, Honduras's GNI was lower than the 
GNIs of 32 ACP countries.  Honduras's banana indus try was an indispensable source of revenue, 
employment and growth, particularly in its most impoverished rural areas.  During recent days, the 
EC had called on this Ministerial meeting to improve  the trading interests of the developing world.  
Even as it was pressing for this result, the EC had unilaterally announced a new import arrangement 
that put in motion a catastrophic result for the bana na sectors in developing countries.  The EC had 
unilaterally decided that, as of 1 January 2006, Latin American bananas would be subject to a tariff of 
€176 per metric tonne, which was far higher than – more than double – the tariff Honduras currently 
paid.  The tariff increases were from €75 per metric tonne, or US$1.74 per box, to €176 per metric 
tonne, or over US$4.00 per box.  For ACP suppliers , who were already competitive, the EC intended 
to give a zero-duty expanded quota and a new margin of preference of over US$4.00 per box.  These  WT/MIN(05)/SR/4 
 Page 13 
 
 
  were border measures that did not even pretend to comply with WTO rules.  The EC could not deny 
this, since it had lodged a request for a waiver from GATT rules in this regard.   As troubling as these illegalities were, the harm that  would be done by them was even greater.  
According to economic studies, the new measures w ould diminish Latin America's access by over one 
million tonnes.  Stated differently, in the midst of the Doha Round, Honduras was losing its most 
important market, the EC.  The recent EC decision was nothing more than the latest chapter in the 
long and shameful legacy of EC non-compliance w ith its obligations in the banana sector.  Its 
discriminatory policies had been challenged more than  any other import arrangement in the history of 
the multilateral trading system, and had been conde mned by ten WTO dispute settlement processes.  
Every one of those rulings had been ignored by th e EC, sometimes entirely and at other times for an 
extended period of time.  The EC might say that its non-compliance was in re sponse to the needs of 
the ACP countries, but the truth was quite different .  The real beneficiaries were the EC's own 
generously subsidized banana fa rmers and investors.  Under the EC's Common Agricultural Policy, 
bananas were one of the most subsidized produc ts.  EC banana farmers received on average US$7.69 
per box, a subsidy level far higher than most Latin Americans received for their bananas. 
  The situation was very clear –  in order to ma ke sure that its generously subsidized producers 
prospered, the EC was requiring the developing ec onomies of Latin America to bear the burden of 
steep access restrictions.  To a great extent, bana nas were a reflection of what was happening in the 
larger context of the Doha agricultural market- access negotiations, where an insistence on border 
restrictions masked a desire to protect subsidized producers.  For the sake of brevity, he would not go 
into detail about the background of the new banana import regime.  It was enough to say that these EC protectionist measures originated from the ruli ng in "European Communities – Regime for the 
Importation, Sale and Distribution of Bananas" (Bananas III) and a Ministerial Decision granting a waiver for the EC that had been adopted four y ears earlier at the outset of the Doha Round.  The 
Bananas III case, to which Honduras had been a party, had led to a 2001 settlement, to which 
Honduras had not been a party.  Several months af ter the settlement had been reached, as the Round 
was being launched in Qatar, Honduras had been asked  to accept a Ministerial waiver that the EC 
needed in order to continue granting banana pr eferences to the ACP countries.  This had been a 
complex decision, because his country had invested  large resources to pursue the dispute settlement 
case.  Four years after adoption of the Panel's re port, Honduras had still not obtained redress of its 
legitimate rights.  However, as a contribution to the new Round, it had joined the consensus to 
approve the waiver.  However, it had done so on  the sole condition, properly codified in the 
Ministerial Decision, that no new EC banana import regime would be installed unless it resulted in at 
least maintaining total market access for Latin American suppliers.  
 The Annex to that Ministerial Decision est ablished that Honduras's prospective access rights 
would be protected by arbitration procedures.  It further established that if the EC lost twice in 
arbitration regarding its proposed tariff level, its waiver for banana preferences would automatically 
be lost.  The EC had now lost twice in arbitration.   Its first proposed tariff level of €230 per tonne had 
been decisively invalidated, as had its second prop osed tariff level of €187 per tonne.  Following 
those rulings, under the stated rules of the Ministeria l Decision granting the waiver, the EC had lost its 
authority to continue granting banana preferences to  the ACP countries.  The EC had reacted to these 
two arbitration losses as if neither had occurred.  As unbelievable as it might seem, it had rushed 
through a new tariff that was only eleven digits lower than the tariff condemned by the WTO arbitrators one month earlier.  The EC had told Honduras that the new regime was non-negotiable and that Honduras had to learn to live with the new restri ctions, however ruinous they might be.  In short, 
for the EC this case was closed. 
  Honduras had faced that same attitude and refusal  by the EC to open discussions regarding its 
request that the EC recognize it as a "substantial supplier," which was indispensable in defending 
Honduras's rights.  The EC had told Honduras that because it had lost market share, it no longer 
mattered in the EC marketplace.  It had been of no consequence to the EC that Honduras had lost that WT/MIN(05)/SR/4 
Page 14  
 
  market share because of the EC's discriminatory ba nana measures.  According to the EC, the case was 
again closed.  When Honduras had first acceded to  the GATT in 1993, it had seen the Bananas III 
case as its first opportunity to demonstrate that its a ccession expectations had been fulfilled, and that 
membership in the organization had value for it.  Because Ministers at the present meeting were 
responsible for the trading interests of their own co untries, they would understand better than anyone 
the difficult position Honduras currently faced.  He asked how his Government could explain to the 
men and women on Honduras's banana farms that – having won the Bananas III and other cases – at 
the end of the day it was left with a regime fa r more harmful to Honduras than the one it had 
challenged, how it could make th em understand that it had lost the EC market, and how it could 
explain that this injury was happening on the watch of  the Doha Round.  He as ked if this was how the 
WTO system was supposed to work.  Honduras's an swers these questions was a loud and clear no, 
and it would do what was necessary to defend its ba nana industry and the country itself.  No one 
could deny that what was happening on bananas – a product of such importance to the developing 
countries of Latin America – exposed the entire WTO membership to the risk  that the same would 
happen on other products of importa nce to his country and others. 
 
 One had to understand clearly the systemic releva nce of this matter.  If the EC's actions were 
tolerated, if Honduras's requests for support and solida rity were met with a collaborative silence, the 
Round, the WTO system, and the developing-economies ' interests would be the biggest losers.  His 
Government respectfully asked that this Minister ial Conference condemn these new EC measures and 
work with Honduras over the coming days to ensu re that the EC's planned measures were not 
implemented.  Honduras stood ready in good faith to  accept procedures for future negotiations, but 
could not accept a DDA outcome that allowed the EC to  inflict new destructive tariffs of any kind on 
the developing economies, and would raise its voice to prevent such an outcome.  If the EC had come to this Conference with the genuine objective of supporting trade expansion for developing countries, 
Honduras invited all delegations present to join it in requesting that the EC prove that commitment on 
bananas and comply with the obligations of WTO membership. 
  The representative of Panama
 said that as a principal supplier of bananas to the EC market, 
Panama wished to associate itself with the statemen t by Honduras.  His country believed in a viable 
and durable multilateral trading system that expanded tr ade for the benefit of all its Members.  It also 
believed in a successful Doha Round that remained true to its original principles and objectives of 
social and economic development for the develo ping countries.  However, what Panama saw 
happening on bananas was impossible to reconcile with those beliefs.  The European Community's 
new arrangement – a more than doubled MFN tari ff rate and greatly expanded benefits for some 
suppliers, which were illegal in the WTO – ruthlessl y punished the developing-country producers of 
Latin America and defied everything the WTO and this Round – the so called "Development Round" 
– were supposed to stand for.  One had to face the facts – in order to protect subsidized EC banana 
producers from external competition, the EC had approve d, in the days leading up to this Ministerial 
Conference, a 135 per cent increase in its banana  tariff, from €75 to €176 per metric tonne.  
Moreover, the €176 per metric tonne rate was what  the EC called an "autonomous" rate, meaning it 
could change at any time.  The autonomous rate  would impose a tax of over USD$4.00 per box on 
Latin American bananas.  This amounted to an in crease of USD$2.40 per box over the current tariff, 
expressed on a per box basis – an outrageous amount to pay on a product so central to the economic 
and social stability of developing countries.   Under the burden of this new arrangement, to tal Latin American banana exports to Europe 
were projected to fall by at least one-third.  The ex ports of some of these countries, due to the latter's 
high labour standards, would fall even more.  What  made this economic harm  all the more shocking 
was that Latin America, at great expense, had just completed a year of "successful" WTO arbitration.  Those procedures, and the two favourable awards recei ved, had been intended to prevent all of this 
from happening.  Instead, after losing twice, without any negotiation and disregarding the calls for fair 
and good faith negotiations, the EC had enacted in h aste a new arrangement virtually identical to the 
one already condemned in arbitration.  The EC had presented this as an accomplished fact, had  WT/MIN(05)/SR/4 
 Page 15 
 
 
  explained that its effects would be "monitored," and had encouraged the affected countries to be 
satisfied with that outcome.  Panama was not and w ould not be satisfied with that outcome.  As all 
would surely understand, Panama was far from satisfied .  It was anguished and affronted by what had 
happened, and was prepared to take a stand.  Pa nama's anguish on this issue had been building over 
many years.  Eleven years earlier, when his de legation had come to Gene va to begin negotiating 
Panama's accession to the WTO, the Panamanian pe ople had been promised that in exchange for 
accession sacrifices, Panama would become part of a rules-based system that would protect its trading interests.  His delegation had used bananas as a shining example of a sector, one of the few export 
products of Panama, that would profit from a multilateral system and its dispute settlement 
mechanism. 
 
 For the Panamanian banana sector, the reality of  accession had fallen far short of the promise.  
Panama had been hit far harder than most suppliers  by the EC's persistent banana discrimination.  
Since 1994, Panama's banana shipments to the EC ha d fallen by nearly half, its banana export value 
had dropped by at least $100 million, employment had been cut in half, and cultivated hectares were 
down a third.  As bad as these numbers were, the EC's new arrangement was certain to make them 
much worse.  The new harm from this arrangement  would be particularly harsh on Panama's rural 
areas, where no alternative production was available a nd poverty levels ran as high as 95 per cent.  In 
those areas, and in other producing regions throug hout the country, more land would go idle, more 
jobs would be lost and more revenues would di sappear – all because a developed-economy Member 
had chosen to defy the rules and erect new, mo re punitive access barriers.  There was something 
profoundly wrong with this. 
  In order for this Round to foster the interest s of all developing countries, and not just some, 
the membership could not turn away when one  of its leading Members initiated alarming new 
measures that accomplished the opposite.  For m onths, the affected countries had called for a 
negotiated solution with the EC.  The latter had i gnored these requests.  These countries were again 
calling for a good-faith negotiated solution that woul d prevent this illegal regime from coming into 
effect on 1 January 2006.  Panama stood ready to ne gotiate an alternative path and could not accept a 
unilaterally imposed, extremely high and destructiv e tariff, nor could it accept a solution under which 
the EC was permitted to wreak devastation on 1 Janua ry and talk later.  If this was how the EC 
intended to fulfil its development commitment to the poor of Latin America, it was hard for Panama 
to see how this Conference and Round could advance.  He urged Members to join together in finding 
a rational solution that would stop this or any ot her regressive regime from taking effect, and that 
would reinvigorate confidence in a rules-based system  that stood true to its development objectives.  
He implored all to help deliver a solution that told  the people of Panama that their expectations upon 
accession to the WTO had not been misplaced – th at trade could deliver economic and social 
development and opportunities for them. 
  The representative of Ecuador
 said that this was an extremely sensitive topic of crucial 
economic and social importance to his country.3  Ecuador was the world's leading banana exporter, 
and more than one million Ecuadoria ns depended on this industry for their livelihood.  The banana 
import regime had indelibly st amped relations between the La tin American countries and the 
European Union, and the evolution of that regi me had served as a benchmark and precedent in WTO 
dispute settlement.  Despite the length of time that  had elapsed and the findings favourable to Latin 
American countries that had emanated from various authorities, there had been no success thus far in 
achieving a mutually agreed settlement reflecting th e priority interests of the parties involved and 
consistent with the multilateral rules and objec tives adopted upon the establishment of the WTO.  
Thus, on 29 November 2005, the Council of Mini sters of the European Union had reached an 
agreement on the Commission's proposal for the new banana import regime to be introduced on 
1 January 2006.  Ecuador considered that the propos al to apply a tariff of €176 per tonne on banana 
                                                      
 3 At the request of Ecuador, the full text of this statement was subsequently circulated in document 
WT/MIN(05)/33 . WT/MIN(05)/SR/4 
Page 16  
 
  imports from Latin America, together with the establishment of a tariff quota of 775,000 tonnes in 
favour of the ACP countries at a zero tariff rate, did not reflect the EC's obligation to maintain "at 
least total access for MFN suppliers", and was doubly in breach of that obligation because it allowed a 
higher quota for imports from ACP countries.  It w as even more inconceivable that ACP imports in 
excess of that quota would be subject to the same tariff that was applicable to the MFN suppliers.  
Obviously, with the entry into force of the ne w banana import tariff regime, the waiver under 
Article I.1 of the GATT would cease to be applied, and consequently the Artic le XIII and Article I.1 
waivers would lapse on 31 December 2005, thus oblig ing the EC to apply a single tariff on all its 
banana imports.  
 His delegation wished to recall that Ecuador and the United States had entered into 
understandings with the European Union in 2001 in or der to bring closure to the long-standing banana 
dispute.  The understandings provided that, not later th an 1 January 2006, a single tariff regime was to 
be put into effect, which by definition could not include preferential treatment or quotas for the ACP 
suppliers.  Thus, the regime approve d by the Council of Ministers of the European Union specifically 
violated the understanding with Ecuador, and this regime could not be sanctioned by a new waiver 
under Article XIII of the GATT, since it required the pr ior agreement of the parties signatory to that 
understanding.  Throughout this leng thy process, Ecuador had consistently  displayed its desire to find 
a solution that satisfied the interests of all pa rties through dialogue and direct negotiation.  His 
delegation therefore hoped that at this Ministerial Conference, the European Union would be prepared 
to negotiate a settlement with the Latin American countries that satisfied all concerned.  Ecuador 
reserved the right to use all the lega l instruments at its disposal in the WTO to safeguard its legitimate 
rights, as it had demonstrated in the past with successful results.   The representative of Jamaica
 said his country had three primary agricultural exports – cotton, 
sugar and bananas.  Bananas and s ugar were by far the largest cont ributors to Jamaica's agricultural 
export earnings.  Production of bananas was especia lly critical to the generation of employment for 
thousands of rural women, and this in a matriarc hal society.  For some CARICOM states, bananas 
represented almost 70 per cent of total agricultural e xports.  The very survival of the banana industry 
was hanging on a thread, following the WTO arbitration ruling which had prompted the EC to take certain decisions.  The second ruling of the WTO arb itrator had obliged the EC to propose a regime 
that would allow MFN banana producers to maintain  their market access, taking into account all of 
the EC's market-access commitments on bananas.  The Doha Ministerial Conference had addressed 
the issue of the tariffication of tariff-quota regimes.  In taking decisions in this regard, Ministers at 
Doha had had no intention of compromising the market  access of any supplier to the EC market.  In 
fact, the thought had clearly been to keep the mark et relatively stable in a manner that would not 
penalize MFN bananas which enjoyed a growing shar e in the EC banana regime, and that would 
ensure market opportunities for all suppliers to the EC market.  The previously announced reforms of 
the European banana trading system had created wide spread uncertainty in the Jamaican industry, as it 
had in other CARICOM producers of bananas.  Th e current proposal by the EC, with an announced 
tariff of €176 per tonne, had led to grave concern in the Jamaican industry, as a tariff at this level 
would threaten its viability.  A tariff below this level would be catastrophic.  While it remained 
concerned that the CARICOM banana industry would disappear with a low tariff, Jamaica recognized 
the commendable efforts of the EC to find a solution  based on the interests of all concerned.  In an 
interdependent world, one should seek solutions that benefited all parties concerned, recalling that the 
ACP banana producers were particularly vulnerable at  the present time.  Jamaica recognized that this 
was a difficult and complex process that would take time.  It therefore wished to urge all MFN suppliers and the EC to continue to engage in a c onstructive dialogue that would work to the benefit 
of farmers in the Caribbean, the Americas and Afri ca.  Those farmers looked to the world trading 
system for leadership in ensuring a stable market with remunerative prices for both MFN and ACP suppliers.   WT/MIN(05)/SR/4 
 Page 17 
 
 
   The representative of Colombia  thanked Honduras for having put this issue on the agenda of 
this Ministerial Conference.4  The main purpose of this Confer ence was to make headway in the 
Development Round, and bananas were a product of great importance to the development of 
Colombia's economy.  The banana sector was a majo r generator of employment in rural areas and the 
sole means of subsistence in Urabá, a region afflic ted by serious armed conflict in the past, but which 
his Government had managed to pacify thanks to the stability created by banana growing.  Bananas 
were one of Colombia's main exports, and the sector  was one in which his country was competitive.  
Consequently, ensuring MFN access to foreign mark ets was a priority for Colombia's economic and 
social development – hence, Colombia's  participation on this agenda item. 
 
 The European Communities was one of the largest  Members of this organization and one that 
Colombia watched, not only because global agricult ural reform depended to a large extent on its 
decisions, but also because of its treatment of MFN ba nanas, i.e. bananas other than those produced in 
the European Union or in ACP countries.  In its dealings with Latin America, the Communities had 
failed to honour several multilateral commitments re garding bananas, a matter his delegation wished 
to place on record at this Conference in its quest fo r a final settlement.  This agenda item comprised 
four sub-items:  (i) compliance with all rights an d interests on bananas under the Doha Ministerial 
Decision of 14 November 2001;  (ii) the arbitra tion awards of 1 August 2005 and 27 October 2005;  
(iii) GATT Article XIII;  and (iv) GATT Article XXVIII and all other WTO obligations.  On sub-item 
(i), regarding compliance with the annex to th e waiver adopted on 14 November 2001 and the 
understandings reached with the United States a nd Ecuador, the Communities had disregarded its 
obligations and, hence, Colombia's rights.  Th e Communities had undertaken to adopt a single tariff 
regime for banana imports and at least to mainta in total access to the European market for Latin 
American producers.  Despite that undertaking, the Communities had taken a decision to establish a 
new import regime which was not a single tariff re gime, and did not, as a minimum, maintain total 
access for Colombia's exports to the European Union market, quite  simply because what it proposed 
was a mixed import system which set a single tariff  of €176 per tonne for imports from MFN banana 
suppliers, and a quota of 775,000 tonnes at zero duty for the ACP countries.  As for the tariff rate of €176 per tonne the Communities planned to apply to  Colombia, his country had no idea where that 
figure had come from.  Two weeks earlier, the EC could have decided on €171, €173, €176 or €179 
per tonne, and in the end had chosen €176, but Colo mbia did not know why.  His delegation had held 
three meetings with the Commission, but had still not  been told where the figure had come from.  The 
EC was ignoring the fact that two arbitration awards  had found against it – a matter he would turn to 
under the second sub-item raised by Honduras.   What appeared to be a solution to this l ongstanding banana disput e was found in the Doha 
Decision – if the single tariff proposed by the EC faile d to at least maintain total market access for the 
Latin American suppliers, the latter could have re course to a special dispute settlement procedure 
consisting of two rounds of arbitration.  Since th e tariff originally proposed by the EC had been €230 
per tonne, Colombia had resorted to arbitration, a nd the first award had found the EC to be in breach 
of the Doha Decision.  The Commission had conseq uently lowered the tariff to €187 per tonne and, as 
a new proposal, had included a duty-free quota of 775,000 tonnes for the ACP countries, asserting that 
this complied with the EC's commitments.  The Commission itself had filed the second arbitration 
request, but again the finding had been overwhelmingly against the EC.    In the meantime, before the 
second ruling had been issued, and ignoring the fact that a decision from the arbitrator was pending, 
the EC had submitted to the membership a request fo r an Article XIII waiver to cover the quota it was 
establishing for the ACP countries.  The membership had clearly not been in a position to entertain 
the matter, and had declined the wa iver.  Accordingly, it appeared that the request should be dealt 
with by this Ministerial Conference.  Colomb ia believed that in D oha it had negotiated a non-
discriminatory arrangement for Latin American ba nanas.  Now it felt frustration at a process that 
                                                     
 
4 At the request of Colombia, the full text of this statement was subsequently circulated in document 
WT/MIN(05)/25. WT/MIN(05)/SR/4 
Page 18  
 
  seemed to have brought it to the verge of a final settlement after 12 years of dispute, but which in 
practice appeared only to prolong the uncertainty.   The regime now proposed was obviously not a tariff-only regime:  it was a mixed regime 
consisting of an MFN tariff and a duty-free quota for bananas of ACP origin.  Nor did the European 
Communities meet its commitments under the Doha Mi nisterial Conference when it stated that the 
declared tariff was autonomous.  The EC did not intend to bind the tariff, in spite of the fact that one of its Doha commitments was to  conduct negotiations under Article XXVIII of the GATT in relation 
to rebinding the tariff.  Colombia was particularly frustrated, given that it had negotiated the Decision 
of 14 November 2001 in good faith – it had agreed to  grant a waiver to enab le transparency in the 
European market, where Latin America was efficien t and competitive, with a view to improving the 
situation within a few years.  However, it had also  had taken precautions in this respect – precautions 
it intended to enforce.  The annex to the waiver st ated that if, at the end of the two arbitration 
proceedings, it was found that the EC had not introdu ced a tariff resulting in at least the maintenance 
of total market access for MFN banana suppliers, the waiver enabling the EC to grant preferential 
treatment to bananas from ACP countries would cease to apply. 
  The EC now claimed that, in spite of two arb itration awards against it, it had remedied the 
situation, merely by lowering the tariff contested  in the most recent arbitration proceedings by 
11 points, and that the proposed scheme at least maintained total market access for MFN banana 
suppliers.  It also contended that the arbitrators ha d given no indication of how to calculate the tariff.  
Colombia had shown that the arbitrators had indeed  pointed out how this was to be done, and that 
using the same statistical sources as the EC itself, the tariff after the first ruling had stood at €95.5 per 
tonne and, after the second, €92 per tonne.  These ta riff levels were far removed from those submitted 
by the EC – a difference of €80 per tonne in the first instance and €84 in the second, neither of which were insignificant amounts.  Finally, he wished to point out that Colombia and several other Latin 
American countries were engaged in three separate  proceedings with the European Communities, all 
with the same cause of action – namely, improved access for their bananas to the EU market.  The 
first concerned the above-mentioned single tariff, and the second, the negotiations on the enlargement 
of the European Union to include ten new member s, which affected these countries dramatically, 
given that, prior to that enlargement, their bana nas had entered the market of the new EU members 
quota- and duty-free, whereas subsequent to enlargemen t, they had to pay €75 per tonne in-quota, i.e., 
their access had been restricted by being subject to the complex regime of the European Union of 15 
Member states.  Colombia sought compensati on for the severe injury caused, and requested 
preferential access subject to zero duty for a limited ba nana quota.  It had made this request on many 
occasions but had failed to receive a satisfactory an swer.  Unbelievably, the European Communities 
had made an oral statement the previous week to the effect that enlargement compensation had been 
included in the new tariff of €176 per tonne. 
  In counter-response, Colombia had informed  the European Communities that, by way of 
compensation, it sought the tariff reduction resulting fr om the arbitration decisions, and had calculated 
what had to be recognized in terms of tariff points.  Needless to say, if the scheme proposed by the EC 
failed to reflect either compliance with the arbitra tion awards or the amount th e EC owed Colombia in 
compensation, Colombia reserved all its rights under the WTO rules.  The third procedure concerned 
the Doha Development Round whereby, like all Member s, and as stated in the Ministerial Decision of 
November 2001, Colombia aimed to improve access for all the goods it exported, including bananas, 
to the EC market.  Colombia hoped the EC understood that there was still time for it to rectify this 
new historical error and thereby avoid both part ies having to resort once again to the dispute 
settlement system over the very same product and th e very same arbitrary behaviour.  Moreover, it 
was essential that Colombia was able to rely both  on the EC as a trading partner that honoured its 
commitments, and on the WTO as an organization that  enforced its own rules.  Colombia therefore 
hoped that the Chairman would take action on this issue, and reiterated its readiness to reach a 
negotiated settlement.   WT/MIN(05)/SR/4 
 Page 19 
 
 
   The representative of Cameroon  said that in order to allow all present at this Ministerial 
Conference to form what he hoped would be an obj ective opinion on this controversial issue of the 
regime for the importation of bananas into the Eu ropean market, he wished to provide a brief 
historical review of this matter.  The disputed sy stem had come into existence on 13 February 1993 as 
a result of a decision by the European Commun ities to create a Common Market Organization for 
Bananas (CMO), applicable to all member states .  Under the CMO, market access was regulated by 
quotas, distributed at the time as follows:  The ACP quota, reserved for imports of traditional ACP bananas, was 857,700 tonnes;  and the third-country  quota was 2 million tonnes, with possible access 
for up to approximately 600,000 tonnes of non-traditional ACP banan as, depending on the availability 
and allocation of import licences.  As early as 19 94, the third-country quota had already been 
increased from 2 million tonnes to 2,100,000 tonnes, a nd then to 2,200,000 tonnes, while under that 
quota, the scope for access by ACP bananas was lim ited to a mere 90,000 tonnes.  The 1995 
enlargement of the European Union to include three new members had brought the third-country 
quota to 2,553,000 tonnes, with the ACP market share remaining unchanged at 857,700 tonnes plus 90,000 tonnes.  There had been yet another refo rm in 1999, under which access for traditional ACP 
bananas had moved from 857,700 tonnes to 857,000 to nnes, ahead of the agreement reached in 
April 2001 between the United States, Ecuador a nd the European Commission, under which, pending 
the elimination of quotas on 1 January 2006 in favour of a tariff-only system, the ACP quota of 
857,000 had again been cut by 100,000 tonnes, an amount that had been added to the dollar quota bringing it to 2,653,000 tonnes.  The further enlargement of the European Union on 1 May 2004 had increased this quota by a further 300,000 tonnes, and a further 460,000 tonn es had been added on 
1 January 2005. 
  Such had been the inexorable train of events that had eroded market share for ACP bananas.  
In the meantime, the US market, 3.9 million tonnes,  had been drawing its supplies exclusively from 
countries in Central and South America, while Jap an, which consumed 1 million tonnes of bananas 
per year, was supplied by the Philippines and Ecua dor.  Lastly, the Russian Federation, which had 
imported 973,000 tonnes in 2004, was also supplied ex clusively by Central and South America.  He 
could provide even more figures of this kind, showin g that this was a situation of David and Goliath.  
The 13,712,000 tonnes of bananas exported worldwide in 2004 had been distributed by main exporting country as follows:  Ecuador – 4,444,000 tonnes;  Costa Rica – 2,004,000 tonnes;  Philippines – 2,383,000 tonnes;  Colombia – 1,468,000 tonnes;  Guatemala – 984,000 tonnes;  
Honduras – 544,000 tonnes;  Panama – 493,000 tonnes;  Cameroon – 262,000 tonnes only, as the 
leading ACP supplier;  and Côte d'Ivoire – 229,000 tonnes only.  Short of clearly recognizing that the 
goal being pursued was to eliminate ACP bananas from the market, the present dispute made no sense 
– at any rate, not from the standpoint of fairness.  Unless his delegation had perhaps misconstrued the 
stated objectives of the Doha Round, which it understood as promoting development for all through 
trade, and not merely developing trade with no re gard whatsoever for victims or collateral damage. 
  The new regime proposed by the European Un ion offered a two-fold guarantee to underpin 
full market access for bananas from MFN countries, in  the form of:  (i)  A tariff rate of €176 per 
tonne, which was well below the competitive differen tial confirmed by various independent studies 
between MFN and ACP bananas, amounting to some €275.  One needed only refer to the reaction of 
the Delmonte Group, which had officially announced th at at a tariff of €187, it would be increasing its 
market share as well as the quantity of MFN bananas.  (ii) A 775,000-tonne ceiling on ACP 
bananas designed to freeze the ACP market share a nd thereby reassure MFN countries that they 
would not lose their traditional advantages on the European market to ACP bananas.  It should be recalled that this was a so-called tariff-only system  – in other words, one that excluded the use of 
quotas.  However, the ACP countries were prepared to  accept this deviation for the sake of peace and 
solidarity among countries supplying the European ma rket, all of which were developing countries.  
Moreover, the July 2004 package had ratified the ba nana dossier as it was.  For all of these reasons, 
Cameroon took the view that:  (i) the new regime as it now stood should be applied on 1 January 2006 
as scheduled, and a reasonable timeframe – of say, tw o years – should be set in which to draw the WT/MIN(05)/SR/4 
Page 20  
 
  lessons therefrom;  and (ii) the WTO should take note of this and accordingly approve the requested 
waivers.   The representative of European Communities
 said the question of bananas that Honduras had 
put on the agenda was very important.  Bananas pl ayed a very important role in the economies and 
societies of a number of developing-country Member s.  The EC recognized the importance of this 
issue and had actually devoted considerable effort during the past 12 months to try to find a solution 
acceptable to all.  Needless to say, this was not because the EC was a major producer of bananas.  In 
fact, its market was predominantly supplied with ba nanas originating in Latin America and Africa.  
The EC's efforts had been due to the need to ensu re that its commitments to all developing countries 
concerned were respected and that all interests were  adequately taken into account in this difficult 
process.  As had been said at the present meeting, the EC had international commitments concerning 
both the Latin American suppliers and the ACP supp liers – two big groups wh ich had very different 
interests.  Regarding the ACP suppliers, the EC  had obligations under the Cotonou Agreement.  
Regarding MFN bananas, it had a clear commitm ent to move to a tariff-only system as from 
1 January 2006.  For this purpose, the EC had star ted negotiations under the WTO.  Unfortunately, it 
had not been possible to find a negotiated outcome within the timeframe, and arbitration had then 
been undertaken.  Regrettably, the two arbitration awards had not given the EC any clear guidance on 
the level of the MFN tariff.   The EC's aim had always been to ensure that  the change from the MFN tariff-quota regime to 
an MFN tariff only regime was a neutral and transp arent operation that maintained, for all developing-
country suppliers, their access opportunities to the European market.  Therefore, the new import 
regime was to be measured in terms of whether th e rebinding of the EC tariff on bananas maintained 
market access for MFN suppliers.  The EC trusted th at its new tariff, as from 1 January 2006, of €176 
per tonne would maintain market access for MFN supplie rs and, furthermore, was ready to put this to 
the test with the appropriate market monitoring mechan isms.  At the same time, the EC had left intact 
the preferential access of the AC P suppliers to its market.  A number of Latin American countries 
were not convinced that this operation was in line with the EC's WTO commitments.  The EC's reply 
was that it was continuing its negotiations with ever y Member, irrespective of their legal status as an 
interested party, and wished at the same time to s ee how the market reacted to this new import regime.  
The door for negotiations with the Latin American s uppliers was therefore not closed, and the EC was 
very pleased to see those countries now really engagi ng in this process.  The EC would much prefer 
negotiated solutions than dispute settlement.  Howeve r, a negotiated solution had to be balanced, in 
the sense that he had mentioned earlier, and this mean t full respect for the vested interests of both the 
Latin American and the ACP suppliers.  Again, he assured all that throughout this process, the EC had 
always had this respect, and would continue to ta ke very seriously its responsibilities to all Members, 
and in particular to all de veloping countries concerned. 
  The representative of Saint Lucia
 said that bananas were the main agricultural export and an 
important source of income and foreign exchange for Saint Lucia, representing 70 per cent of total 
agricultural export earnings just a few years earlier.  Banana farming and rela ted activities employed a 
quarter of the labour force, a large portion of whic h were women.  Should the forced changes to the 
EC's banana import regime result in the further c ontraction or loss of the industry, the consequences 
would be stark.  Of particular concern would be  the loss of employment, with no alternative job 
opportunities for these workers they would lose their liv elihoods.  The banana industry of Saint Lucia, 
as for other Windward Islands, was based on small hol dings operated by farmers and their families, 
and was the mainstay of its rural communities.  Sa int Lucia did not benefit from economies of scale 
and therefore posed no threat to any other banana supplier to the EU market.  The consequences of a 
tariff on bananas that was too low would be consider able.  In fact, the previous reforms to the EC 
banana regime had already led to  considerable and widespread economic damage to Saint Lucia and 
its neighbouring islands.  Thus, the e ffects of a tariff that was too low would be to reduce the margin 
of preference, with serious and long-lasting conse quences for the viability of banana production.  The 
other result would be to precipitate a collapse in ba nana prices, with the consequence that the more  WT/MIN(05)/SR/4 
 Page 21 
 
 
  vulnerable banana producers like Saint Lucia would be  driven out of the market.  The consequences 
would be far reaching, with a major portion of th ese countries' foreign exchange earnings lost and 
their economies crippled.   It was due to the importance of bananas and th e possibility of losing Saint Lucia's only market 
that it was essential to find the right solution.  The ACP States needed to leave Hong Kong with the 
assurance of being able to continue to market their bananas as of 1 January 2006, whatever the 
decision on the tariff and marketing arrangements.  Among other things, the Article I waiver for the 
Cotonou trading arrangements had to  continue for all products, incl uding bananas, until the agreed 
end of the transitional period on 31 December 2007.  It would be completely unacceptable for Saint 
Lucia to be deprived of its ability to trade by bein g relegated to the status of a mere pawn to be 
sacrificed in some broader conflict.  Should countri es seek to use WTO rulings as a ploy to deprive 
Saint Lucia of its rights, they would be calli ng into question not only their own good faith, but 
undermining any residual illusions that the system exis ted to advance the interests of all, and not just 
some, of its Members. 
 
 The Decision on bananas adopted by Ministers at Doha envisaged the simple tariffication of the existing tariff quota arrangement, and that was to leave market access unchanged.  One earlier 
speaker had suggested that perhaps the ACP should no longer have any preferences for bananas.  That 
was certainly not what Saint Lucia had agreed to in Doha, and his delegation had no intention of 
agreeing to that now, nor did it think Members would be a party to such an attempt to deprive Saint 
Lucia of its rights.  The ACP countries were gravel y concerned that the EC proposal as it currently 
stood would not guarantee them the level of market acce ss to which they were entitled.  In fact, the 
proposal had gone the other way, to the point where it sought to ensure there would be absolutely no 
problem with MFN suppliers.  Anyone who knew and understood the banana trade would know that a 
lot of what had been said about the likelihood of a decrease in MFN imports into the EC market was 
not true.  Given the current situation, Saint Lucia knew that there was a regulation, that there were 
licences, and that there were implicit values placed on those licences.  It knew that with a tariff of 
€165 there would be a substantial increase in imports  from MFN suppliers.  Of course, it was not from 
all MFN suppliers that the increased volume would come, and that was perhaps the problem.  There 
had been extensive debate in the arbitration pro cess, but the reality at present was that there was no 
tariff on which the parties agreed, and absolutely no  indication from the arbitrator as to what level 
would at least maintain total market access for th e MFN suppliers.  The ACP considered that the EC 
proposal was too low and would lead to price collap se.  MFN suppliers argued that it was too high.  
He asked how one could get out of this impasse.  This  intractable problem could not be resolved at the 
present meeting, nor indeed in the remaining weeks of December.   
 
 His delegation had fundamental concerns and grave difficulties with some of the arguments 
made at the present meeting that suggested a hierarc hy of rights of Members, with those of the most 
vulnerable suppliers at the bottom and dispensable.  Nonetheless, some of the suggestions made had 
merit, such as postponing the changes and working on  devising an arrangement that was fair to all and 
preserved market access and prices – in other words,  to have a moratorium, which, in the present 
circumstances, was the only viable option.  He ha d heard Panama suggest – and he had hoped that 
delegation might go farther – that perhaps there mi ght be a need to explore an alternative.  His 
delegation did not know precisely what Panama had in mind, but Saint Lucia would of course prefer 
an amicable outcome to this problem.  If Pana ma had some constructive ideas, Saint Lucia hoped 
there would be an opportunity later to develop this idea.    It was a pity that this situation had reached 
the present state.  The EC had just spoken of an openness to negotiation, and Saint Lucia certainly 
supported negotiation.  However, one thing was certa in, and on this point his delegation could not 
compromise – the tariff of €176 proposed by the EC was bad for many countries as it was too low.  
Saint Lucia had no certainty of being able to surviv e with such a tariff, and his delegation was certain 
that the rest of the ACP countries, while supporting negotiations, w ould not agree under any 
circumstances on a negotiation that would en tail a further reduction in that tariff. 
 WT/MIN(05)/SR/4 
Page 22  
 
   The representative of India
 said his country generally supporte d the issues raised by Honduras 
relating to the market-access interests of developing countries.  The concerns of developing countries 
with specific trade interests in specific products  should not get short-changed in the process of 
developed countries taking measures to meet their WTO obligations.  These issues should therefore be 
addressed adequately and expeditious ly, in order to arrive at a balanced outcome for the developing 
countries concerned. 
  The representative of the United States
 said that as one of the original co-complainants in the 
banana dispute, the United States had long had an inter est in this issue.  It had been very disappointed 
by the recent developments surrounding the EC's implementation measures in that dispute.  In 2001, 
in an agreement that included the United States, th e EC had committed to move to a tariff-only regime 
by 2006 and that it would at least maintain total market access for MFN banana suppliers.  As had 
been heard at the present meeting, there were seri ous questions about whether the regime the EC had 
unilaterally imposed met its commitments.  In partic ular, the United States had serious concerns about 
the EC's new tariff level which more  than doubled the existing tariff.  It was concerned that this 
significant increase would, in fact, substantially reduce the promised total market access for Latin 
American producers.  The United States also had con cerns about the fact that the EC would maintain 
a special preferential tariff-rate quota which it would allocate only to ACP suppliers.  This was hard to 
reconcile with the EC's promise to have a tariff- only regime.  The United States noted a certain irony 
here – the EC had confirmed its commitments as a part of the launch of the Doha Development 
Agenda, yet developing-country Members had said th e EC regime contradicted its commitments to 
developing countries.  The United States noted the re quests for consultation that had been filed by 
Honduras, Nicaragua and Panama, and urged the EC  to maintain total market access for Latin 
American producers while a mutually satisfactory resolution was completed. 
 
 The representative of Costa Rica  said that access to the European Union for banana exports 
from Latin American countries had been the subject of  protracted trade disputes within the WTO that 
had brought the affected countries together to discuss this issue at this Ministerial Conference.  More 
recently, during 2005, two arbitration awards had ag ain found in favour of the complainant countries 
with respect to the announced modification of the EU  regime for the importation of bananas.  While 
his delegation did not doubt that Members had move d in the right direction, it had hoped that the 
proposed EU solution would have resulted from cons ultations and negotiations between the EU and 
Latin America.  However, this had never been po ssible, and although Costa Rica recognized that the 
EU decision did have some positive aspects, the present context of a negotiating round and this 
Ministerial Conference constituted a singular opportuni ty for the affected coun tries to tackle what 
they regarded as still unresolved matters.   Costa Rica believed it had cogent reasons to be optimistic that a mutually satisfactory solution 
would be found.  Members had made headway in eliminating a restrictive and flawed regime, but 
there were still aspects of great concern to Costa Rica  as well as to other delegations.  His delegation 
was concerned over the tariff level on bananas recen tly adopted by the EU of €176 per tonne for MFN 
countries.  It was concerned over the enlargement of  the already historically generous preferences 
being accorded to a group of developing countries to the detriment of other – also developing – MFN 
countries.  It was concerned over aspects of predicta bility of the proposed tariff, mainly pertaining to 
the level that would be bound by the European Unio n.  It was concerned about the manner in which 
the EU would legitimize these exemptions within th e framework of the organization.  Costa Rica was 
a small country with acknowledged accomplishments in  human development.  It was a country whose 
banana industry was currently an example of high environmental, labour and quality standards, and 
which could sustain heavy losses as a result of the discriminatory trade policies that were currently 
affecting 50 per cent of banana exports and a popula tion that depended heavily on this industry.  His 
delegation firmly believed that it had been thanks to a strengthene d multilateral trading system that 
world trade had been able to expand, based on rul es that Members had undertaken to respect.  This 
was a golden opportunity to help create a more equita ble world by means of the most important factor  WT/MIN(05)/SR/4 
 Page 23 
 
 
  of cohesion in this organization – namely, non- discrimination.  Members should not miss this 
opportunity.  To do so would be to ignore all that  this institution had built up over almost 60 years.  
Costa Rica urged all Members to use the coming days  and to take the time necessary to engage in 
dialogue about fundamental problems that could un dermine the strength and purpose of the WTO.  
Maintaining access for banana exports to the Europe an market, based on agreed principles and rules 
and assumed commitments, was a major challenge which, if met, would give all the confidence to 
believe that this Development R ound, coupled with the right nationa l policies, would make a genuine 
contribution to development.   The representative of Dominica
 said that the future trading regime for bananas was a cause 
for great anxiety to the people of Dominica and other Caribbean States who had derived their 
livelihoods from bananas for the past 50 year s.  Banana production in Dominica provided 
employment for over 85 per cent of the rural popul ation and was the primary source of employment 
for women.  Banana exports represented over 80  per cent of agricultural exports and yielded 
approximately 20 per cent of total export earnings.  While this demonstrated the importance of 
bananas to Dominica's economy in terms of producti on and trade, the value of Dominica's production 
and trade in bananas as a percentage of global production and trade was minuscule.  It was well 
known that the ACP's share of the world market fo r bananas was less than three per cent.  The 
foundation of Dominica's small and vulnerable economy had been built for the most part with export 
earnings from bananas.  This had been done in the face of a considerable decline in overseas 
development assistance over the past 20 years.  Trad e was indispensable to Dominica's development, 
and his country continued to seek all opportunities to  bolster its capacity to trade.  Dominica had 
therefore come to Hong Kong with the hope that th is Conference would contribute to the realization 
of an equitable and fair multilateral trading regime  that would ensure Dominica's continued economic 
survival and development.  
 The objectives of the Doha Round had placed an  emphasis on development.  For Dominica 
and the Caribbean, this meant, among other thin gs, achieving poverty reduction and the attendant 
realization of the Millennium Development Goals.  It was vitally important that this did not get lost at 
this Conference.  Therefore, any new banana regime should positively advance poverty reduction 
goals and facilitate continued pr osperity for farmers, women and children in Dominica and other 
developing and small, vulnerable ba nana-producing countries.  In other words, the new banana regime 
should not lead to increased poverty, destruction of livelihoods or reduction in the standard of living 
of those in Dominica and other ACP states involve d in banana trade.  The EC had proposed a new 
tariff of €176 per tonne to be app lied as of 1 January 2006.  This had come in response to the ruling of 
the WTO arbitrator, as well as the EC's commitment to introduce a single tariff regime in connection with the waiver granted on bananas by Ministers in Doha.  This new tariff represented the third 
consecutive reduction from the original proposal of €230 per tonne.  It was well known that the 
original proposed tariff rate had been below what  Dominica and the ACP considered adequate to 
maintain their level of market access to the EU market  and the survival of the banana industry in their 
countries.  It should therefore come as no surprise that  the latest tariff proposal was of serious concern 
to these countries, as it would result in further eradication of small farmers from the industry.  
 The continuation of preferential access to the EU market for bananas originating in the ACP 
was critically important for Dominica.  In fact, th e continuation of the present arrangement, at least 
for the immediate future, would be the most prefer red outcome to this long -standing dispute.  Belize 
was fully aware of what the immediate response to this statement would be from other non-ACP 
banana producers.  However, it was not outside the realm of possibility, or the ability of those 
gathered in Hong Kong, to bring about such an outc ome.  In a Member-driven organization, where the 
rules were written by the Members for the Member s, the rules should be made to accommodate the 
Members, and not the other way around.  The EU did not produce bananas for export.  It offered access to its market to ACP States and to others.  It was not a case of EU subsidized bananas unfairly competing with bananas from developing countries.  The real issue was that there was one set of 
developing-country producers adoptin g positions which could wipe out the trade of other, more WT/MIN(05)/SR/4 
Page 24  
 
  vulnerable, developing countries, with the attenda nt consequences for unemployment and increased 
poverty.  However, if an equitable outcome proved illusive, in a tariff-only regime, the latest proposal 
by the EU of €176 per tonne was the minimum tariff le vel Dominica would be ab le to support.  In any 
event, he wished to reiterate the need for continuing preferential access for bananas from Dominica 
and the ACP to the EU market. That preference was now at its lowest possible level.  He reiterated 
that development and the eradication of poverty ha d to be essential elements underpinning any regime 
governing trade at the multilateral level and, therefor e, by necessity, trade in bananas.  Members had 
to strive for a fair and equitable trading regime th at guaranteed prosperity for all people of the world, 
especially the marginalized small farmers and wo men.  One should not demand one's pound of flesh 
regardless of the impact.  Members should work towards realizing the noble development objectives 
enunciated in paragraph 35 of the Doha Declara tion and the General Council's July 2004 Decision, 
and not condemn small farmers and small, vulnerable countries to a future of persistent poverty. 
  The representative of Belize
 said the process Members were engaged in should, by definition, 
cater to the development of economies such as Beliz e, which was small, vulnerable and already very 
open.  This Round was supposed to right the wrongs in the multilateral trading system and provide a 
framework for all to benefit from economic growth  resulting from trade liberalization.  Belize's 
experience, and that of many other countries in th e Caribbean, had been the reverse.  This was very 
evident in the drastic reform of the EU regime for imports of bananas and sugar.  This forced 
liberalization had so far meant only hardship an d economic ruin for thousands in the affected 
countries.  The continuous litigation in the WTO of th e EU banana regime had meant, at every stage, 
an erosion of preferential market access for ACP s upplying countries, to the benefit of the so called 
"dollar suppliers".  This was most evident in th e increased quota for dollar suppliers and the reduced 
quota allocation for the ACP suppliers.  One was now at a critical juncture in the implementation of 
the transitional framework for bananas agreed in Do ha.  The EC had undertaken to implement a tariff-
only regime for the importation of bananas and had undertaken a Sisyphean task of trying to find a 
middle ground with the dollar suppliers.  He stressed  that in this process, the EC had reneged on many 
of its treaty obligations to the ACP.  Belize had in  good faith tolerated this, in search of a consensus 
solution, but enough was enough.  The latest proposal from the EC for a tariff of €176 per tonne would undermine the viability of many ACP suppliers, of which Belize was one, and this forced exit 
from the market would create even better market access for dollar suppliers.  This latest proposal 
would not only allow MFN countries to maintain tota l market access, it would in fact increase their 
market access.  Belize therefore urged the EC to hol d firm to this less-than-acceptable tariff level, as 
any further reduction would severely prejudice ACP countries' rights under the Cotonou Agreement.   Looking back at the statements by the United St ates and other complainants at the start of the 
most recent dispute settlement panel on bananas, his delegation recalled vividly those countries' 
assurances that the dispute was not intended to ha rm the ACP producers.  Those assurances now rang 
very hollow in light of the conti nuing erosion of ACP market share a nd prices.  The complainants had 
extracted more than their pound of flesh.  Beliz e called on the EC to implement a true tariff-only 
regime for both dollar and ACP suppliers by removi ng all quota restrictions, to retain the tariff 
preference at €176 per tonne for the ACP, and to pr ovide new resources to those ACP States that had 
to exit the industry due to this unsustainable resu lt.  One of Belize's sister Caribbean States had 
already exited banana production for export, and another had enc ountered severe fiscal difficulties 
due to the reform of the EU bana na regime.  In 2005, another had cl osed its sugar industry due to the 
impending price cuts on the EU market.  In light of  this, he was sure Members would appreciate it 
when Belize said that for the Caribbean countries, it was becoming increasingly difficult to find the 
"development" in this so-called Development Round. 
 
 The representative of Côte d'Ivoire
 said his country was worried about this issue on three 
counts – it was a producer of cotton, sugar and bananas.   While his delegation subscribed to all of the 
statements made concerning cotton, he wished to unde rscore the dire situati on of the banana market, 
and to fully support the statements by Jamaica, Beli ze and Cameroon.  Côte d'Ivoire joined all the 
ACP countries to denounce the treatment that was bei ng imposed on them in the banana case.  In the  WT/MIN(05)/SR/4 
 Page 25 
 
 
  arbitration, although the preferences given to ACP s uppliers were at the centre and core of discussions 
in Geneva, his delegation had to express its frustra tion at this Ministerial Conference.  Members had 
decided to make the Doha Round the negotiations to help populations in developing countries out of 
their misery and destitution.  Food production in  his country was one element of agricultural 
diversification.  One element of its development had always been the production of fruit, and bananas 
in particular had made it possible to integrate rura l populations into a dynamic of development which, 
for example, provided access to drinking water and education.  Bananas also ensured maritime 
transport and access to other markets.  Latin Am erican countries in 2004 had exported over 10 million 
tonnes throughout the world.  He asked how it could be believed that the measly 750,000 tonnes of bananas from ACP countries were a true threat to those countries.  International commitments could 
not be wiped out overnight in the name of trad e.  Competition had already eradicated countless 
banana growers in African, Caribbean and Asia Pacific countries.   The banana war had to end.  In Geneva, even  the EC had a hard time justifying the tariff 
figures.  It was a fact that none of the Latin Amer ican complainants had been able to produce reliable 
figures.  Some had even gone to the extent of s uggesting a tariff lower than  that suggested in the 
overall quota.  This was either misreading or disr egarding the relevant WTO provisions, according to 
which quotas were to be converted to strictly tariff quotas.  By manipulating the international 
statistics, the MFN countries had now managed to confuse the arbitrators, and lessons should be 
drawn from this collective failure.  His delegation strongly opposed any further reduction of tariffs, 
and believed that the tariff of €176 per tonne was a major concession to the Latin American Members.  
That tariff had already been cut by 25 per cent ove r the initial offer, which would result in many ACP 
growers being crowded out of the market.  In view  of the threats hovering over cotton, sugar and other 
products, he asked what Côte d'Ivoire's future was likely to be.  History showed that in order to 
develop, the major trading nations had resorted to protectionist measures.  The banana-producing 
countries were benefiting from human rights measur es in being guaranteed fair prices.  Their 
populations had simply been guaranteed the right to liv e, by their countries' being helped to develop.  
The developing countries had always advanced as a group in solidarity.  This should be remembered 
at all times.  His delegation would stand firm on this.   The representative of Nicaragua
 said his Government wished to express its support for the 
statements and requests made by Honduras.  As the Chairman of the Special Session of the 
Committee on Agriculture had said, the main challenge  and responsibility of the organization arose in 
the need to fulfil the development objectives of th e DDA.  The measures recently taken by the EC 
were not acceptable and prevented Members from mee ting this challenge and responsibility.  The EC 
system which for years had eroded the banana ma rket for Latin America would now destroy all 
prospective future access for his country.  In Qatar,  Nicaragua had joined the consensus on the waiver 
for the EC, which was an extraordinary excep tion from Article I of the GATT in favour of 
76 developing countries whose products competed direc tly with Nicaragua's expor ts.  This was a clear 
demonstration of Nicaragua's solidarity with the ACP countries, who were friends, and demonstrated 
that Nicaragua was ready to contribute to a multilat eral trading system in this Round.  However, 
Nicaragua had not granted a blank check when it had approved the waiver.  The Decision clearly 
demanded that the new EC regime result at least in maintaining total access for the Latin American 
bananas to the European market.  The new EC ta riff was more than twice the tariff Nicaragua was 
currently paying, which meant that the EC was very  far from fulfilling this condition and did not even 
come close to fulfilling the development dimension of the Round.   Nicaragua was one of the most indebted of  the developing countries and the second poorest 
country in the Western hemisphere after Haiti.  It s per capita income was just above US$70, and was 
very much less than that of the ACP countries.   At the same time, like many ACP countries, 
Nicaragua had fertile land, on wh ich thousands of people were employed.  Bananas had been an 
important industry in his country for many decades.   Thousands of jobs de pended on it.  Further, 
30,000 Nicaraguans worked on the Costa Rican banana plantations.  Thus, the survival of the banana 
industry in Latin America, of all of central Americ a, was very important to his country.  The new EC WT/MIN(05)/SR/4 
Page 26  
 
  regime would destroy the Nicaraguan industry, with  the central objective of benefiting an internal 
production that was highly subsidized.  In fact, this  contradicted everything Members were trying to 
achieve in Hong Kong during the course of the presen t week.  For this reason, his delegation joined 
the requests made by Honduras and asked that Member s prevent the EC's unilateral action.  It could 
not be allowed that in Hong Kong, Ministers a pproved a package on development without a solution 
to the banana problem.  Nicaragua hoped that the EC  would sit down to negotiate with MFN countries 
in order to find a solution within the limits of WT O rules, and that this regime would be examined 
once again by a neutral body.  Nicaragua could accept su ch a solution, but could not allow a regime to 
enter into effect which clearly di d not respect the Doha commitments. 
 
 The representative of Brazil
 said the importance of banana trade for some of the Latin 
American Members was well known.  For Brazil, ba nana exports originated in an economically 
depressed area in the northeast of the country.  A ccess to foreign markets w as essential to maintaining 
economic and social conditions in these areas.  Also , the banana issue was part of a long history of 
controversy in which the EC import regime was th e subject of a long series of disputes within the 
multilateral trading system.  The most recent chapter in  this history had been concluded in 2005, with 
the rulings against the EC of the two arbitratio n procedures envisaged in the Ministerial waiver 
Decision of 14 November 2001.  These issues were very complex, and the statements heard at the 
present meeting were testimony to that.  However, Brazil was ready to contribute to any constructive 
effort to try to ensure fair and equitable market acc ess to all parties involved, in a solution that would 
bring satisfaction to all and that w as fully consistent with the WTO. 
 
 The Chairman  thanked all delegations for their statem ents and proposed that the Ministerial 
Conference take note of the statements.  In the light of the concerns that had been brought to 
Ministers' attention by Honduras, he would refl ect on possible next steps in consultation with 
Honduras and other interested delegations.5 
 
 The Ministerial Conference so agreed . 
  The meeting adjourned
 at 11.40 p.m. 
 
__________ 
 
 
                                                      
5 Further discussion relating to th is matter, at the closing session  of the Conference on 18 December 
under Agenda Item 4 (Action by Ministers), is reflected in the summary records of that meeting in WT/MIN(05)/SR/12.