WORLD TRADE  
ORGANIZATION  WT/MIN(05)/24 
17 December 2005 
 (05-6127) 
MINISTERIAL CONFERENCE 
Sixth Session Hong Kong, 13 - 18 December 2005 Original:   English 
 
  
EC COMPLIANCE WITH ALL MFN RIGHTS AND INTERESTS ON 
BANANAS UNDER THE DOHA MINISTERIAL DECISION 
OF 14 NOVEMBER 2001, TH E AWARD OF AR BITRATOR 
OF 1 AUGUST 2005, THE AWARD OF ARBITRATOR OF  
27 OCTOBER 2005, GATT ARTICLE XIII, GATT  
ARTICLE XXVIII, AND ALL OTHER 
WTO OBLIGATIONS 
 
Statement by Honduras under Item 2(b) of the Agenda
 
   The following statement, made by the delega tion of Honduras under Agenda Item 2(b) on 
14 December 2005, is being circulated at the request of that delegation.  
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  I wish to begin my intervention by reiterating Honduras's commitment to the multilateral trading system.  We convene in Hong Kong to fulfil a historic duty to obtain better trading terms that 
will advance our development, and strengthen th e credibility and strengthen the credibility and 
prestige of this system.   In furtherance of those shared objectives, Honduras requested that the agenda of this 
Ministerial Conference include the EC's non-co mpliance regarding bananas.  The truth is, 
distinguished Ministers, the importance of the ma tter transcends this single product and now requires 
the attention of the full Organization. 
  As a short introduction, the EC has recently taken a decision to establish a new banana import 
regime that needlessly puts at risk developing-coun try interests, the functioning of the multilateral 
system, and the premises of the Round itself.  We ar e convinced that the EC is still able to reverse 
those measures before 1 January, the date scheduled fo r its implementation.  It is otherwise difficult to 
envision how the Round can progress.   Allow me to explain the fundamentals of this i ssue and, above all, how we have come to this 
volatile point. 
 
Developing country interests 
 
 I will start by making reference to what is obvious:  the banana-pr oducing countries are all 
developing economies.  We are among the countries that  should benefit from the work of this Round.  
We stand, so to speak, at the heart of the Doha Round. 
 
 My country has a gross national income per capita  of 704 dollars.  To put this in perspective, 
Honduras's GNI is lower than the GNIs of 32 ACP count ries.  Our banana industry is an indispensable WT/MIN(05)/24 
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 source of revenue, employment, and growth for my country, particularly in our most impoverished 
rural areas.  
The new illegal restrictions 
  During recent days you may have heard the EC call on this Ministerial Meeting to improve 
the trading interests of the developing world.  Ev en as it was pressing for this result, it unilaterally 
announced a new import arrangement that puts in motion a catastrophic result for the banana sectors in our developing countries.  
 The EC unilaterally decided that, as of 1 January , Latin American bananas will be subject to a 
tariff of 176 euros per metric tonne, which is far higher, more than double, the tariff we currently pay.  The tariff increases from 75 euros per metric tonne (or 1.74 dollars per box) to 176 euros per metric 
tonne (or over 4.00 dollars per box).  For ACP suppl iers, who are already competitive, the EC intends 
to give a zero-duty expanded quota, and a new marg in of preference of over 4.00 dollars per box. 
 
 Distinguished Ministers, these are border measures that do not even pretend to comply with WTO rules.  The EC cannot deny this, since it h as lodged a request for a waiver from GATT rules. 
  As concerning as these illegalities are, the harm  is even more so.  According to economic 
studies, the new measures will diminish Latin America's access by over 1 million tonnes.  Stated 
differently, in the midst of the Doha Round, we are losing our most important market, the EC. 
 
A legacy of EC non-compliance 
 
 This recent EC decision is nothing more than the latest chapter in the long and shameful 
legacy of EC non-compliance with its obligations in the banana sector.  Its discriminatory policies 
have been challenged more than any other impor t arrangement in the history of the multilateral 
system, and have been condemned by ten reviewin g bodies.  Every one of those rulings has been 
ignored by the EC, sometimes entirely and at other times for an extended period of time.  
The real beneficiaries 
 
 The EC may tell you that its non-compliance is in  response to the needs of the ACP countries.  
The truth is quite different.  The real beneficiar ies are the EC's own gene rously-subsidized banana 
farmers and investors.  Under the EC's Common Ag ricultural Policy, bananas are one of the most 
subsidized products.  EC banana farmers receive on average 7.69 dolla rs per box, a subsidy level far 
higher than most Latin Americans receive for their bananas. 
  The situation is very clear, distinguished Minister s.  In order to make sure that its generously 
subsidized producers prosper, the EC is requiring th e developing economies of Latin America to bear 
the burden of steep access restrictions.  To a great extent, bananas are a reflection of what is happening in the larger context of the Doha agricu lture market access talks,  where an insistence on 
border restrictions masks a desire to protect subsidized producers. 
 
Bananas III and the Ministerial Waiver Decision 
 
 For the sake of brevity, I will not go into great detail about the backgroun d of this new banana 
import regime.  Suffice it to say that these EC prot ectionist measures originate from the Bananas III 
ruling and a Ministerial Decision taken four years ago at the onset of this Round.     The Bananas III case, to which Honduras was a party, led to a 2001 settlement, to which 
Honduras was not a party. 
  WT/MIN(05)/24 
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  Several months after the settleme nt was reached, as this Round was being launched in Qatar, 
Honduras was asked to accept a Minist erial waiver that the EC needed in order to continue granting 
banana preferences to the ACP countries.  This was a complex decision because my country had 
invested large resources to pursue the case;  four years after adoption of the panel report, Honduras 
had still not obtained redress of its legitimate rights.   However, as a contribution to the new Round, 
we joined the consensus to approve the waiver.  We did so, however, 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 estab lished that our 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, the EC waiver for banana preferences would automatically by lost. 
  The EC has now lost twice in arbitration.  It s first proposed tariff level of 230 euro per tonne 
was decisively invalidated, as was its second proposed  tariff level of 187 euro per tonne.  Following 
those rulings, under the stated rules of the Minister ial Decision taken in Doha, the EC has lost its 
authority to continue granting banana preferences to the ACP.  
EC unilateralism 
 
 The EC has reacted to these two arbitration losses as if neither occurred.  As unbelievable as 
it may seem, it has rushed through a new tariff only eleven digits lower than the tariff that was 
condemned by the WTO Arbitrators one month before.   The EC has said to us that the new regime is non-negotiable, that we must learn to live with 
the new restrictions, however ruinous.  In short, for the EC this case is closed. 
 
 We have faced that same attitude, that refu sal to open discussions, when dealing with our 
request that the EC recognize Honduras as a "subst antial supplier," which is indispensable in 
defending our rights.  The EC tells us that because Honduras has lost share, we no longer matter in the 
EC marketplace.  It is of no consequence to the EC that we have lost that ma rket share because of the 
Community's discriminatory banana measures.  According to the EC, the case is again closed. 
 
Multilateral implications 
 
 Distinguished Ministers, when Honduras first acceded to the GATT in 1993, we saw 
Bananas III as our first opportunity to demonstrate that our accession expectations had been fulfilled, 
that membership in this Organization had value for our country. 
  Distinguished Ministers, because you are responsible for the trading interests of your own countries, you will understand better than anybody the difficult position we currently face.   How do we now explain to the men and wo men on our banana farms that having won 
Bananas III and other actions, at the end of the day we are left with a regime far more harmful to 
Honduras than the one we challenged?   How do we make them understand th at we have lost the EC market? 
 
 How do we explain that this injury is  happening on the Doha Round's watch? 
  Is this how the WTO system is supposed to work?   Honduras answers these questions with a loud a nd clear "NO", and will do what is necessary 
to defend its banana industry and the country itself.  No one can deny that what is happening on WT/MIN(05)/24 
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 bananas, a product of such importance to the deve loping countries of Latin America, exposes the 
entire membership of the Organization to the risk  that the same will happen on other products of 
importance to my country and yours.   We must clearly understand the systemic rele vance of this matter.  If these EC actions are 
tolerated, if our requests for support and solidarity ar e met with a collaborative silence, the Round, the 
WTO system, and our developing economy interests will be the biggest losers.  
Ministerial request 
  My Government closes, Distinguished Ministers, by respectfully making the following call.  
Honduras requests that this Ministerial Conference condemn these new EC measures and work with 
us over the ensuing days of the Conference to ensure that they are not installed. 
  Honduras stands ready in good faith to accept pr ocedures for future negotiations, but cannot 
accept a Doha Development Agenda outcome that allows  the EC to inflict new destructive tariffs of 
any kind on our developing economies.  We will raise our voice to prevent such an outcome.   
  If the EC has come to this Conference with the genuine objective of supporting trade expansion for developing countries, we  invite all delegates present here  today to join us in requesting 
that the EC prove that commitment on bananas and comply with the obligations of WTO membership. 
 
 
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