COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 4.10.2000
COM(2000) 621 final
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
on the‘First Come, First Served’ method forthe banana regime
and theimplications ofa ‘tariffonly’ system
2COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
on the‘First Come, First Served’ method forthe banana regime
and theimplications ofa ‘tariffonly’ system
1. B ACKGROUND
Following successive rulings from the WTO, certain aspects of the Community’s banana
import regime (Council Regulation (EEC) No 404/93, as amended in 1998 by Regulation
(EC) No 1637/98)have been found not to be inconformitywiththe WTO.
Following the latest WTO ruling in 1999 the Commission had extensive contacts with
interested parties with a view to putting forward a proposal which would be generally
accepted as resolving this dispute. The Commission has provided the Council with a
successionofdocuments onthis matter the most recent being a Communication in July20001.
Following contacts with interested parties the Commission put forward its proposal in
November 1999 (COM (1999) 582 final) for the modification of the existing import regime
for bananas based on a ‘tariff only’ system after a transitional period during which a tariff
quota system would apply, with preferential tariff access for ACP countries. A ‘tariff only’
system implies negotiations under Article XXVIII GATT and therefore, the Commission put
forward a proposal for a mandate for such negotiations (SEC(1999) 1820). A ‘tariff only’
systemshould be introduced by1 January2006 at the latest.
Under the proposedtransitionalsystem, there would be three tariffquotas:
– Quota ‘A’ which would maintain both the current GATT bound quota of 2.2 million
tonnes and the tariff rate ofEUR 75/tonne,
– Quota ‘B’ an autonomous quota of 353 000 tonnes also at a tariff rate of
EUR 75/tonne,
– Quota ‘C’a new third autonomous quotaof850 000tonnes.
Allthree quotas would be opento allsuppliers.
ACP bananas would have a tariff preference ofEUR 275/t both under and outside ofthe tariff
quotas (effectively they would enter at zero in quotas ‘A’ and ‘B’. They would also enter at
zero inquota‘C’provided that the tariffwithin the quota did not exceed EUR 275/tonne).
1COM(2000) 431 final of 5.7.2000 ‘Communication from the Commission to the Council on the
consultationsundertaken bytheCommission with theaim ofresolvingthebananadispute’.Previous documents were:SEC(1999) 799 final of 26.5.1999 ‘Communication from the Commission to the Council on bananas’.SEC(1999) 1397 final of 8.9.1999 ‘Report from the Commission to theCouncil on consultations with aviewtosettlement ofthebananadisputes’.COM(1999) 582 final of 10.11.1999 ‘ Proposal for a Council Regulation amending Regulation (EEC)No404/93on thecommon organisation ofthemarketin bananas’.SEC(1999) 1820 final of 10.11.1999 ‘Recommendation for a Council Decision authorising theCommission to open negotiations on an amendment of the bound customs tariff for bananas’.
3As regards the management of quotas ‘A’ and ‘B’ and ‘C’, the Commission’s proposal
indicates that they can be managed through the Commission implementing regulation using
traditional/newcomer and/orother methods.
The Commission indicated in its explanatory memorandum that the preferred option for
managingthe TRQ during the transitionalphase was a systemoflicense distribution based on
a historical reference period. The Commission further indicated that a historical system could
be adopted only if a mutually satisfactory solution was reached, respecting EC and
international obligations and that the Commission would continue discussions with interested
parties during the period when the Council and the Parliament examine the proposal.
Parliament has not yet given its formal opinion on the proposal although it has adopted a
report containingvariousproposedamendments2.
At the 11 July 2000 Council the Commission presented its Communication on the further
consultations it had undertaken in order to resolve the banana dispute. In that document the
Commission detailed the steps it had taken in order to reach a compromise, notably on a
system based on historical references. These included the Commission’s own suggestion
based on historical references, consideration of the so-called ‘Caribbean’ proposal and finally
the allocation of licences to so-called ‘primary operators’ (ie a redefinition of which operators
would have access to quotas). As US operators fall under this definition, their licence
allocation would also substantially increase. This solution was not accepted by the US and
certainLatin Americancountries.
After several months of intensive contacts with the discussion’s on historical references
getting nowhere, the Commission concluded in its July Communication that ‘Since the
negotiations on a method of managing tariff quotas on a historical basis have reached an
impasse, the Commission will conclude its examination of the ‘first come, first served’ method
as soon as possible, in consultation with interested third parties, in order to seek a solution to
the administrative and technical problems inherent in such a method’.
As explained in the July Communication, the Commission explored with the US a historical
reference system in which only so-called primary importers would qualify. The US position
remains unchanged. We therefore, consider that the negotiation on historical references
remainsat an impasse.
Following presentation of the July Communication to Council the Council asked the
Commission
‘…to examine the possibility of managing the market using a quota system based on ‘first
come, first served’. It asked the Commission to report back after it had investigated the
possible solutions, including the tariff solution and its implications.’
This Communicationresponds to that request.
2Textadopted on 13.4.2000(PE289.456).
42. F IRSTCOME,FIRSTSERVED(FCFS)
2.1. Why FCFSSince there remains an impasse onthe discussions on a system based on historicalreferences,
other systems should be considered. In its November 1999 proposal the Commission
indicated that within the proposed transitional phase to a ‘Tariff Only’ system several
methods could be adopted to manage quotas, one of which was the ‘FCFS’ system. In
addition, as outlined in its July Communication, the US Trade Representatives Office (USTR)
proposed a version ofthe FCFS system involving a commitment to deliver bananas to the EU
and veryshort sub-quota periods.
A FCFS system has several positive characteristics: it is recognised as a valid instrument for
quota management following panel rulings on the EU banana regime; it is a straightforward,
transparent and flexible way of administering quotas with no special management tools (e.g.
licence allocation or definition of operator); and the current distinction between traditional
and newcomers would disappear.
However, as has been previously reported to Council in earlier Communications, there are
several aspects of the banana market which require specific solutions. These are principally
that bananas are perishable goods and therefore, must be marketed within a certain timeframe
which includes a delicate balance between the travelling time from areas of production to the
EU and the ripening period on arrival. Secondly, there may be technicaldifficulties in view of
the large number ofEU ports, ships arriving (boats are the main means of transport used), and
no on-line customs network.
Informal consultations with a wide range of interested parties have established that a viable
alternative to a system based on “historic references” would be: the “First Come First Served
System (FCFS)”, tailored to deal with the specific challenge of ensuring the regular import
throughoutthe year ofa perishable product like bananas.
2.2. The essentialelements ofa FCFS systemforbananas within aEuropean context
The Commission has examined the ways in which a FCFS system can be adapted to reduce
any inconvenience and provide equal access to suppliers of the Community banana import
market (Annex1). This Annex has been prepared as a result ofdiscussions at a technical level
including documents prepared by the Commission services and circulated to Member States
representatives within the Customs Code and Banana Management Committees.
In preparing the system set out in Annex 1 the Commission has considered the main elements
outlined in the USTR proposal.
The main elements include a pre-allocation procedure based on operators declaring their
intention to import a specified quantity. This commitment should be substantial. Since the
pre-allocation will be decided when vessels are a sailing distance fromEurope there would beno discrimination against the countries which are further away (e.g. Ecuador). The problems
of possible congestion at ports which could occur under a FCFS systemwould be resolved by
a sub-quota (‘windows’) system. The declarations would be linked to the vessel carrying the
bananas, the cargo and the release into free circulation of the goods. In order to deter
speculation, there would be the need for the bananas to be committed to the vessel before the
declaration of intent to import is submitted and the lodging of a sufficiently high security for
5this purpose. This security would only be released when the total quantity requested for
import withthe benefit oftariffquotas has beencontrolled byEuropeanCustoms.
2.3. Evaluation3
The initial evaluation of the system has involved a number of informal consultations. This
initial evaluation is made within the context of the Commission’s proposal for a transitional
tariffrate quotasystemleading to a‘tariffonly’ system.
2.3.1. Technical discussions
During August and early September consultations were held with a representative number of
operators with an economic interest in importing bananas into the EU. These consultations
centred on the viability of a system with the features outlined by the US and on an appraisal
of the impact of applying such a method to banana imports within a European context. In
particular, it was necessaryto devise workable arrangements taking account of the absence of
an on-line system in the EU and of our specific customs procedures. These discussions also
included possible amendments to overcome any administrative difficulties, which were
identified, and to minimise any undesirable effects which could occur. There is also the need
to ensure equaland non-discriminatoryaccess tothe EU market.
In addition, the Commission services held comparable technical discussions with Member
States representatives in two fora: the Banana Management Committee (13 September 2000)
and the Customs Code Committee (18September 2000).
During discussions with operators some concern was expressed that a FCFS system would
strengthen the position of the larger operators who are better able to determine shipping
arrangements to the detriment of the small and medium-sized operators. The majority of
operatorswouldstillprefer asystembasedonhistoricalreferences.
The technical discussions indicated that a FCFS system tailored to bananas was
administratively feasible. Implementation would require additional consideration to solve
certaintechnicaland practicalproblems that have been identified.
2.3.2. Other relevant contacts
Although discussions of the technical aspects were confined to meetings with technical
experts, the Commission has also had discussions in the European Parliament since the July
Council meeting, without however specific examinationofthe FCFS method.
Certain third countries have also taken contact with the Commission in order to have a
general discussion. There was no discussion with those parties of the specificities of the
system as it would apply to bananas, because such questions relate to technical rather than
political aspects. However, while the general preference for a quota system with licences
distributed on the basis of traditional trade remained, none questioned the WTO consistency
ofaFCFSsystem
3The precise details of a comprehensive tailored FCFS system, which would cover all likely
circumstances would be set out in the detailed implementing rules which would be established byCommission implementing legislation. Nevertheless, it is clear that, to be consistent with European lawand practise, the complete system would need to contain general provisions for dealing with unforeseencircumstances or exceptional conditions which might arise when an operator is trying in good faith toimportgoods intotheEuropean Union.
62.3.3. WTO considerations
FCFS is generally recognised as a WTO compatible system for the management of tariff
quotas. It was also specifically referred to as a WTO compatible quota allocation system in
the Ecuador panelreport under Article 21.5 ofthe DSU (Dispute Settlement Understanding).
As stated in section 2.1 given that there are several aspects of the banana market which
require specific solutions, a FCFS system requires certain adaptations to suit those aspects.
The Commissionconsiders that the above described FCFS systemis WTO compatible.
The FCFS system proposed by the Commission also overcomes the difficulty encountered in
the past with respect to trade in licenses. In fact, in the absence of a paper trade the
distribution among operators of the ‘quota rent’ coincides with the physical market access of
bananas and ofsuppliers ofbananas into the EC.
2.3.4. Budget considerations
The November 1999 Commission proposal (see Annex 2), which includes reference to a
quota management systembased onthe FCFS method, alreadydetails budgetary implications.
These were estimated at 77 MEUR due notably to expanded volumes of imports due to the
abolition of any country allocation and the fact that the proposed ‘C’ quota would be fully
utilised because it will be open to non-ACP suppliers. The effect of an increase in imports
would depress prices and consequently lead to an increase in compensatory aid payments.
With an increase of the level of imports the tariff receipts in the form of traditional own
resources to the general budget will be offset against other revenue. As any regular revenue,
theycannot be earmarked for specific expenditure.
Together with the other elements ofthe Commission proposalof11 November 1999, “FCFS”
would implyadditionalexpenditure at the upper end ofthe range ofpossible costs which were
considered when the Commission finalised its financial estimate (77 MEUR additional
expenditure annually).
2.3.5. Effects on community producers and ACP
The implementation of a first come, first served system would have no direct impact on
Community producers. Indirectly, insofar as the transitional system facilitates increased
imports, prices can be expected to decrease somewhat, and compensatory payments to
Communityproducers willtherefore increase.
Concerning the ACP countries, it is clear that they prefer to maintain a quota system as long
as possible. Given the impasse in discussions on a licence system based on historic trade, the
FCFS system is envisaged also with their interests in mind. In other words, while it is not
ideal it is the best alternative in terms of ACP interests for a transitional system. The increase
foreseen in the tariff preference in the third quota (see section 4.1) is also in the interests of
theACP.
3. ‘T ARIFFONLY’-GAT TA RTICLEXXVIII NEGOTIATIONS
3.1. Background
The Commissionproposalfor a Councilregulationto modifythe commonorganisation ofthe
market ofbananas foresees a modificationofthe existing import regime, based on a flat tariff
7after a transitional period during which a tariff quota system should apply. If however, no
feasible administrative system to manage a TRQ can be found, the Commission will not be
able to maintain its proposal for a transitional regime.
The Council asked for further analysis of this aspect of the Commission proposal. The
objective of this section is to clarify the procedure to be followed in the Article XXVIII
negotiations.
3.2. Proceduralaspects
The EC reserved its Article XXVIII: 5 rights to modify its WTO Schedule at any time during
a three year period (the current reservation runs until end 2002). Article XXVIII enables a
Member to modify or withdraw a concession, provided that it does not do so before
negotiating with principal suppliers and holders of initial negotiating rights (INRs) and
consulting with substantial suppliers. The Member seeking modification or withdrawal is
expected to give compensatory trade concessions on other products. If agreement is not
reached, the Member may, nevertheless, modify or withdraw its concession, but affected
contracting parties have the right to withdraw substantially equivalent concessions initially
negotiated with the Member making the changes (i.e. where the EC holds INRs in their
schedules). There are no time limits regarding when negotiations invoked under Article
XXVIII:5 areto beginorbe concluded.
Article XXVIII does not interfere with the MFN requirements of Article I. Thus, both
concessions offered by the Member making the changes and equivalent trade concessions on
other products withdrawn by INR holders, principal suppliers and substantial suppliers have
tobe implementedonaMFNbasis.
When the EC notifies its intention to invoke Article XXVIII, it should identify the Members
that have INRs. Members that consider themselves to have principal supplier or substantial
interests should claim their rights within 90 days of the notification. Principal suppliers and
substantial suppliers (by convention at least 10% share of MFN trade) would be identified
when the EC modifies or withdraws its concession on the basis of trade during the 3-year
reference period.
If a contracting party involved in an Article XXVIII negotiation considers that the Member
intending to withdraw or modify a concession is not offering adequate compensation to
maintain a general level of reciprocal and mutually advantageous concessions not less
favourable to trade, it can withdraw substantially equivalent concessions initially negotiated
withthe Member making the changes or refer the matterto a panelfor arbitration.
3.3. The leveloftariffand its implications forcompensation
The Commission’s intention is, on the basis ofthe most up-to-date information, to establish a
level of tariff which would provide a level of protection and hence of trade which is as close
as possible to that provided by the system of tariff quotas. Thus, the balance of the market
would be maintained and suppliers would not suffer anyloss oftrading prospects.
3.4. Effectson the budget
Given that the objective of the negotiations would be to avoid a change in import volumes, in
principleno impactonEC prices oronthe costto the regime would be envisaged beyond that
indicated for the transitional system. However, EC prices would inevitably followdevelopments in world prices, and would thus be less predictable. On the basis of the present
8system of compensatory aid for Community producers, every 1 EUR fluctuation in the level
of average market prices involves a change in expenditure on compensatory aids of about
0.8 MEUR.
A tariff only regime providing a level of protection close to that of the tariff quota system
would generate additional import duty receipts for the Community budget equal to the
difference between the tariffquota and tariff only levels, thus reducing Member States budget
contributions. Such additional receipts, however, would not increase the total resources
availabletofinanceexpenditure.
4. O THERCONSIDERATIONS
4.1. Tariff preference
The Commission’s November 1999 proposal includes a tariff preference of EUR 275 per
tonne for importsoriginating in ACP countries bothunder and outside ofthe tariffquotas.
In that proposal an alternative method was indicated as a possibility for the management of
quota ‘C. It is now proposed that all three quotas should managed in the same way in the
interest ofthe WTO consistency. In the light ofthis change and of market developments, it is
proposed that the leveloftariff in this quota and the level of tariff preference should initially
be set at EUR 300/t,the levelproposed bythe EuropeanParliament.
The Commission considers that this level of preference will protect ACP interests without
involving a level of tariff which would be prohibitive. However, in case this assessment,
which may be contested by the suppliers from Latin America, proves to be wrong, the
Commission should be given the power to reduce this tariff during the year should this prove
to be necessary4.
4.2. Revision ofCommission proposal
For this FCFS system (see Annex 1) to be implemented the following modifications to the
Commissionproposalof10.11.1999(COM(1999) 582 final) would be necessary:
i) amendment of Article 18(3) – the reference to the tender procedure for the fixing of
the dutyenvisaged for quota ‘C’would be replaced bythe fixing ofa maximum tariff
ofEUR 300/t;
ii) amendment of Article 18(4), in order to increase from EUR 275/t to EUR 300/t the
tariffpreference grantedto the importsoriginating in the ACP countries.
iii) the inclusion of a provision enabling the Commission, according to Management
Committee procedures, to reducethe maximumtariffin quota‘C’.
4The impact of this system on ACP imports within the ‘C’ quota cannot be predicted accurately in
advance. To the extent that the least competitive traditional ACP producers may be adversely affectedbythenewsystem, theneed for special arrangements could be reviewed.
95. C ONCLUSIONS
The Commission continues to consider that the most appropriate solution to the banana
dispute is a system of tariff quotas during a transitional period followed by a flat tariff. In
view of the considerations explained in this Communication, it considers that all three tariff
quotas should be managed on the basis of first come first served as outlined in Annex 1,
subject to any fine-tuning arising from consultations with our trading partners, and that the
leveloftariffin the third tariffquota should be set at a maximumlevelofEUR 300, subject to
the possibilityofanabatement to ensurethat while ACP suppliers receive an appropriate level
ofprotection, this tariffquota is not reserved exclusively forthem.
This solution requires the amendments to its proposal COM(1999) 582 set out in
paragraph4.2 above. The Commission calls upon the European Parliament to give its opinion
onthe proposal, including the amendments, as soon as possible, and upon the Council on this
basis to adopt it immediately thereafter, and to mandate the Commission to start GATT
Article XXVIII negotiations intime to establisha flat tariffsystemby1 January2006.
Subsequently the Commission will present in an expeditious manner the implementing
regulation necessary to put in place this system of management of a TRQ system on a
transitionalbasis, until1 January2006.
10ANNEX 1
Essentialelementsofa new management system fortariffquotasforbananas
The services of the Commission received an informal initiative to reconcile the diverging
views as to how to resolve the dispute about EU imports of bananas. The USTR indicated that
a modified version of First Come First Served (FCFS) was in their view compatible with WTO
rules. Therefore, subject to verification of a draft final legal text, a modified version of FCFS
could be the basis for a settlement ofthe dispute with the US.
Informal consultations with a wide range of interested parties have established that a viable
alternative to a system based on “historic references” would be: the “First Come First Served
System (FCFS)”, tailored to deal with the specific challenge of ensuring the regular import
throughout the year of a perishable product like bananas. This system would respect the
following principles.
Unless otherwise specified, the import arrangements would be the same as those set out in the
Commission proposal COM(1999) 582 of 10.11.1999. The elements specific to the system for
bananas are in italics.
Theessentialelementsare:
1. QUOTAS
1.1. The three Tariff quotas (“A” – 2.2 million tonnes, “B” – 0.353 million tonnes and
“C” – 0.850 million tonnes would be managed on a fortnightly or weekly basis (sub-
quotas).For practical reasons, quotas “A” & “B” would be administered in all
respects as a single quota. Quota “C” would be handled in the same way but
separately.
1.2. Forthe first two quotas (“A” &“B”), the in-quota dutywill be EUR 75/t. Forthe third
quota “C”, the in-quota dutywould be EUR 300*/t.
1.3. Allthree quotas would be opento allbananas, irrespective oftheir origin.
1.4. Bananas from all ACP origins would have a maximum preference of EUR 300*/t.
This preference would applytothe dutyofall3 quotas and, to out-of-quotaimports.
2. M ANAGINGOF THE SUB -QUOTAS
2.1. At the earliest, a few days (e.g. the previous Monday) before the sub-quota period
(called the window) importers would be able to file an “Import request with the
benefit of tariff quotas ” with the competent authority of the Member State in which
the place of first arrival (e.g. ports) is situated. The order of priority for access to the
tariff quotas would be established as a function of the date of the presentation of theimport request. All the “import requests” presented on the same day would be treated
togetherinthe two days following their presentation. The Commissionservices would
communicate without delay the results to Member States. The unused quantities
withina sub-quota would be transferred to a later sub-quota period.
112.2. This document should contain the following elements:
–Import window (sub-quota period) number, volume - including an unambiguous
identification of the consignment of bananas in question e.g. vessel, importer,
“consignment”, port (from a specified list) &expected arrival date. (Country of
origin). Confirmation thatthe security had been lodged.
–For any “window”(sub-quota period), only one application would be possible
in respect of a specific “consignment” of bananas i.e. this would require an
operator to choose which sub-quota (A&B or C) he would apply for in respect
of a particular consignment. N.B. This would neither preclude a separate
application for each consignment of merchandise carried by the same vessel for
the same window (sub-quota period) nor preclude the re-use of bananas, which
had not been imported forming the basis of an application for a subsequent
window (sub-quota period).
2.3.If the volumes notified for a specific sub-quota were to exceed the available quantity,
a reduction coefficient (established pro-rata) would be communicated before the
“window”(sub-quota period) was open i.e. if the quantity available in a sub-quota, of,
say, 90 is over-subscribed because requests total, say, 100 then the reduction co-
efficientto be appliedfor each applicationfor this sub-quota would be 10%. Intending
importers would be notified, before the “window”(sub-quota period), of the quantity
of bananas which they would be able to import with the benefit of tariff quotas.
2.4.Quantities not used in one “window”(sub-quota period) could be made available in
subsequent windows(sub-quota period).
2.5. Bananas could be imported at anytime during the period “window”(sub-quota period)
on the appropriate quota import terms. However, failure to present for Customs
control the totality of the quantity initially requested for import with the benefit of
tariff quotas would entail at least the following minimum penalties: the forfeit of the
allocation of a quantity with the benefit of tariff quotas and, the loss of the security
lodged.
3. S ECURITY
3.1. At the suggestion of certain operators the amount of the security required would be
relatively high. For example the security could be set at 200 EUR/t or more for the
quantities for whichaccess with the benefitof tariffquotas was requested.
3.2. The securitylodged would onlybe released after:
it had been verified that the conditions for import set out in 2.2. had been respected,
notablythat:
– the total volume requested had been presented for Customs control at the
prescribed port, during the “window”(sub-quota period);and
– the quantity for which access with the benefit of tariff quotas had been granted
had entered into free circulationwithinthe Community.
12ANNEX 2
(N.B. Fixing the duty at the maximum level of EUR 300/t, on the basis of the assumptions in
the 1999 financial statement, would result in additional (gross) receipts of around EUR 2m
per year.)
COMMISSION OFTHE EUROPEAN COMMUNITIES
Brussels, 19.11.1999
COM(1999)582 final/ 2
99/0235 (CNS)
ADDENDUM
Au document COM(1999) 582finaldu 10.11.1999. Fiche financière
Proposalfora
COUNCIL REGULATION
amending Regulation(EEC) N°404/93onthe commonorganisation
ofthe market inbananas
(presented bythe Commission)
13FINANCIAL STATEMENT
1.BUDGET HEADING:
B1-1508APPROPRIATIONS:
EUR267 million (LA)
2. TITLE:
CouncilRegulation amendingRegulation (EEC)No404/93 on thecommon organisation ofthemarketin bananas.
3. LEGAL BASIS: Article 37 of theTreaty
4.AIMS:
Toamendthesystem of bananaimports.
5. FINANCIAL IMPLICATIONS PERIOD OF
12 MONTHS
(EURmillion)CURRENT
FINANCIAL
YEAR[2000]
(EURmillion)FOLLOWING
FINANCIAL
YEAR[2001]
(EURmillion)
5.0 EXPENDITURE
- CHARGEDTOTHE EC BUDGET(REFUNDS
/INTERVENTION)
- NATIONAL AUTHORITIES
- OTHER77 31 * 76
5.1 REVENUE
- O W NR ES O U R C ESO FTH EE C(LEVIES/CUSTOMS DUTIES)
- NATIONAL30 15 30
2002 2003 2004 2005
5.0.1 ESTIMATEDEXPENDITURE 76 76 77 77
5.1.1 ESTIMATEDREVENUE 30 30 30 30
5.2METHOD OF CALCULATION:
See annex.
6.0CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN
THE RELEVANT CHAPTEROF THE CURRENT BUDGET? YES / NO
6.1CAN THE PROJECT BE FINANCED BY TRANSFERBETWEEN CHAPTERS
OF THE CURRENT BUDGET? YES / NO
6.2 WILL A SUPPLEMENTARY BUDGET BE NECESSARY? YES / NO
6.3 WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? YES / NO
OBSERVATIONS:
Thecalculationsassumethatthetransitional system isapplied.Afigurecannotbeputatthisstageon the
impact of a "tariff only" system.
It should also be noted that the figure of EUR 77 million could be reached even under the current system if the
ACPcountriesincreasetheirproductionandreachtheduty-freeexportquotacurrentlyavailabletothem.* The figure for 2000 is based on thegrant of an advance equal to 70% of thenewestimated compensatory
aidinrespect ofthequantities marketedin 2000.Should theaid be set at 70% of the estimated aid beforereform, theadditional amount of expenditureestimated for 2000 would becarried over entirelytothe2001 budget year;totaladditionalexpenditurewould then amounttoEUR107 million.
14Bananas
Calculation ofthe proposal's financialimplications
Calculation data Normal year
1. The Union'ssupply balance in bananas 3 934000
a. EU quota 854 000
volumeused 854 000
balance
unused0
b. Bound quota(A) 2 200000
c. Autonomous quota(B) 353 000
volume
available2 553000
average
volumeused2 420000
balance
unused133 000
d. Traditional ACP bananas (C) 850 000
volumeused 660 000
balance
unused190 000
Additionaltotalavailable 323 000
2. Utilisation ofavailable quantities
a. Totalquantityadded t 323 000
b. Increase insupply %8 , 2 %
c. Inverse elasticityofdemand -1,54
d. Resulting reduction inprice % -12,6%
e. Average cifprices recorded EUR/t 528,0
f. Unit reduction inprice EUR/t -66,7
g. New price EUR/t 461,3
h. Additional reduction by virtue of increased
competition%- 5 %
i. Additionalunit reductioninprice EUR/t -23,1
j. Totalunit reduction EUR/t -89,8
k.Totalf alli npri ce % -17,0%
3. Totalextra expenditure EUR m 77
4. Revenue fromcustoms duties
a.Duties fromquotasAandB 75 10
b. Estimated duties fromquota C 20
5. Totaladditionalduties EUR m 30