Introduction The banana dispute between the United States, the European Union and the Latin American countries was as a result of disagreements on importation of bananas into EU 1 . In 1993, the European Union implemented a trade policy aimed at regulating importation of bananas within the market that it controlled. The policy gave preferential treatment to banana imports from certain regions and those from former EU colonies 2 . However, bananas imports from Latin American countries and the United States were restricted entry into the EU market. The main reason why this dispute affected Latin American countries and EU member countries can be explained by the forces of demand and supply. Latin American countries are the biggest producer of bananas. On the other hand, the EU is one of the largest markets for bananas in the world. EU countries only supply 10% of their banana demands. This means that the EU is not able to meet its banana demands. Prior to establishment of the single market, most members of the European Union had their practice with regard to importation of bananas. For example, France sourced its banana imports from its former colonies such as Cameroon and Cote d’Ivoire while Spain imported from the Canary Islands 3 . One of the main factors that led to emergence of the dispute between EU and Latin American countries is the tariffs that were imposed on banana imports by EU. For example, in 1993, UE established a tariff-quota system on banana imports. However, the quota system was biased in that it was implemented depending on the origin of the bananas 4 . For example, imports from some territories and its members were unrestricted. On the other hand, banana imports from ACP countries were tax exempted. Additionally, a higher import tariff was charged on imports from ACP countries [African, Caribbean and Pacific countries] 5 . Latin American countries were assigned an import quota of 2.2 million tons. EU was also discriminative in its issuance of licenses to banana distributors from Latin America. In June 1993, a panel that was established by a number of Latin America countries (Colombia, Guatemala, Venezuela, Nicaragua and Costa Rica) ruled that the import restrictions implemented by EU countries violated Article XI of the GATT provisions. Additionally, these countries also argued that the import quotas and tariffs were unfair and that they were in breach of the free trade regulations that were implemented by WTO. In 1996, a number of Latin American countries (Mexico, Honduras, Ecuador, and Guatemala) in collaboration with the United States challenged EU’s import regime to the World Trade Organization (WTO). In an effort to resolve the dispute, WTO ruled that the EU import regime was illegal and discriminative. According to WTO, EU was also discriminative in issuing licenses to banana marketing companies located in Latin America. Additionally, WTO also ruled that the new trade system implemented by EU was illegal since it limited the quantity of banana imports from ACP countries. WTO considered this to be discriminative. In response, EU introduced a new import regime on 1 st January 1999 and established a new set of rules. Some of the rules entailed increasing the tarif