25.1.93 OfficialJournaloftheEuropeanCommunities NoC19/99
OpinionontheproposalforaCouncilRegulation (EEC)
onthecommonorganizationofthemarketinbananas(*)
(93/C19/26
On24August1992theCouncildecidedtoconsulttheEconomicandSocialCommittee,
underArticle198oftheTreatyestablishingtheEuropeanEconomicCommunity,onthe
abovementioned proposal.
TheSectionforAgricultureandFisheries,whichwasresponsibleforpreparingtheCom­
mittee'sworkonthesubject,adopteditsOpinionon3November1992.TheRapporteur
wasMrOvideEtienne.
Atits301stPlenarySession(meetingof25November1992),theEconomicandSocial
CommitteeadoptedthefollowingOpinionby80votesto43with14abstentions .
—offerreasonableprices,intheconsumerinterest;
—respecttheLoméagreements;
—permitsuppliesfromthirdcountries;
—meetobligationsoftheGeneralAgreementonTar­
iffsandTrade(GATT).
1.4.2.Thearrangements aredesignedtomaintain
theexistingpatternofCommunityimports.
1.5.Generalprovisions
1.5.1.Thecommonmarketorganizationwillreston
twopillars:
a)amanagementcommitteecomprisingrepresenta­
tivesoftheMemberStatesandchairedbythe
Commission ;
b)anadhoccommitteecomprisingrepresentatives of
sectoralinterests.1.GistoftheCommissiondocument
1.1.Completionofthesinglemarketon1January
1993meansthataninternalmarketmustbeestablished
inthebananasector,withcommonarrangementsfor
theimportofbananasintotheEC.
1.2.TheCommissionisthereforeproposingthatthe
Councilsetupacommonmarketorganizationforthe
bananasector,withinternalandimport-related price-
supportmeasures .
1.3.Internalmeasures
1.3.1.Thecommonmarketorganization issched­
uledtolasttenyears.Itcoversfreshbananasand
productsprocessedfrombananas,
1.3.2.Theproductsmarketedmustcomplywithcer­
tainqualityandmarketingstandards.
1.3.3.Inordertoimprovethemanagementofsupply
andmatchitmorecloselytodemand,andtoencourage
consultations ,provisionismadeforthesetting-upof
producers'organizationsandof'concertationmechan­
isms'.
1.3.4.Pricesaretobesupportedbyimportarrange­
ments.
1.3.5.Supplementary aidwillalsobegranted,in
ordertomaximizetheincomesofproducerswhocom­
plywithqualitypolicyandstandards.
1.4.Theinternalarrangements
1.4.1.ThesystemdevisedbytheCommissionseeks
to:
—supportCommunityproduction;1.6.RelationswiththeAfrican,CaribbeanandPacific
States(ACP)
1.6.1.Theestablishment ofacommonmarket
organizationandECrulesonmarketaccessandprefer­
entialconditionsforbananaswillalterthepositionof
theACPStatesundertheLoméConventionandin
particularProtocol5thereof.
1.6.2.UnderProtocol5,ACPStates'accesstothe
traditionalmarketsfortheirbananaexportsmaynot
worsen.
(!)OJNoC232,10.9.1992,p.3.1.6.3.TheCommissionplanstoputforwardaRegu­
lationestablishinganaidsystemforaprogrammeto

NoC19/100 OfficialJournaloftheEuropeanCommunities 25.1.93
upgradequalitytogetherwithacompensatory aid
schemeforACPproducers.
1.7.RelationswithLatinAmericanproducercountries
1.7.1.TheCommissionconsidersthatitsproposals
willallowthetraditionalexportsfromthesecountries
tobemaintained .
1.7.2.TostrengthenECcooperationwiththese
countries,italsoproposesadiversification anddevelop­
mentfundforthem.2.4.TheCommitteehopesthattheproposed
arrangements willhavemaximumeffect.Fivemain
measuresareinvolved:
a)anoverallquotaforbananaimportsfromthird
countries,comprisingabasicquotaoftwomillion
tonnestobeconsolidated withintheGATTanda
separateadditionalquota(Article17);
b)theestablishment of'partnershiparrangements '
covering30%oftheoverallquota,toensureoutlets
forbananasproducedintheECandACPStates
(Article17);
c)acompensatory aidschemetooffsetanyincome
lossessufferedbyECandACPproducers;
d)astructuralaidschemeformodernizingproduction
systems(Article10).TheCommitteehopesthatthis
schemewillformpartofaspecificprogrammefor
developingtheECandACPbananasector;
e)asafeguardclausetotriggerappropriatemeasures
atECfrontiersintheeventofthreatstotheCom­
munitymarket.
2.5.However,theCommitteecannotoverlookcer­
tainpointswhichitfeelscouldhinderthecommon
marketorganization .
2.6.Theseconcern:
—thegrantingofawaiverunderGATTArticle
XXV(5);
—theconsolidatedquotaanditsrelationtotrendsin
marketdemand;
—theorganizationofproducers;
—clarificationoftheestablishmentoftheaverageEC
price;
—clarificationoftheterm'importer'.1.8.GATTnegotiations
1.8.1.TheCommissionpointsoutthattheproposal
makesitnecessarytoasktheGATTcontractingparties
toapprovetheCommunityimportregimeunderArticle
XXV(5)oftheGATT.
1.8.2.Theregimewillonlybeconsideredincon­
formitywiththeGATTifandwhenithasbeen
approvedintheformofawaiver.
1.9.Accordingly ,theCommission :
a)askstheCounciltoadopttheproposedRegulation ;
b)informstheCouncilthatconsultations willbegin
withtheACPStatesinduecourse;
c)recommendstheCounciltoauthorizeittoopen
negotiationsunderGATT.
2.Generalcomments
2.1.TheCommitteerecognizesthemeritsofthe
proposalswhichtheCommissionissubmittingtothe
Council.3.Specificcomments
Thefollowingcommentsconcernpointswhichthe
CommitteefeelswouldclarifyorenhancetheCom­
missionproposal.
3.1.Points45and46oftheCommission'sexplana­
torymemorandum raisetwotypesofproblem:
—alegalone;
—apoliticalone.
3.2.Thelegalproblemstemsfromtheobligationto
haveatwo-thirdsmajoritytoobtainawaiverunder
GATTArticleXXV(5).Supportwillthereforebe
necessaryfromoutsidethecontractingparties,andthis
inturnwillmeanparallelnegotiationscallingforsome
formofcompensation .2.2.ItrecognizesthattheCommissiondocument
fillsanimportantgap,giventheeconomicimportance
ofthebananasectorintheCommunityintermsof
bothtradeandconsumption .
2.3.TheCommitteeisalsopleasedthattheCom­
mission'ssubstantiveproposalsadoptthesamegeneral
lineastheESCSectionforAgricultureandFisheries'
InformationReportontheCommunity'sbananamar­
ketintherun-upto1993,issuedon9December1991
(CES1012/91fin).

25.1.93 OfficialJournaloftheEuropeanCommunities NoC19/101
3.3.Thepoliticalproblemfollowsonfromthelegal
one.TheDunkelpaper(Annex3,Section1,Para­
graph1)callsforanendtoquotarestrictionsmaintai­
nedunderpastGATTwaivers.Thissuggeststhatit
wouldbedifficultfortheECtoobtaina'banana'
waiver.
3.4.Asregardstheoverallquotaofbananaimports
fromthirdcountries,theCommitteewouldnotrule
outtheestablishment ofamonitoringsystem,backed
byamechanismtosafeguardECproductionifthe
internalmarketbecomesdisturbed .
3.5.Sinceaconsolidatedquotaobtainedunder
GATTcouldnotbealtered,anyfallindemandbelow
theleveloftheadditionalquotamightcauseECand
ACPbananastolosegroundtodollarbananas.
3.6.Thereseemstobeanimbalanceontheproposed
adhoccommitteebetweenproducersontheonehand
andprocessors,traders,distributorsandconsumerson
theother.
3.7.Thearrangements forestablishingtheaverage
ECpriceneedfurtherclarificationtoavoidambiguity .
3.8.Theterm'importer'(Articles18and19)is
imprecise.Alistofimportersmustbedrawnup.
3.9.TheCommitteestronglyregretsthattheRegu­
lationforACPbananashasnotyetbeenpublishedand
urgesthattheCommissionissuethisimmediately .
3.10.Article15sets1990importsasthebasefigure
forcalculatingACPimports(ayearwhenseveralACP
countrieswerehitbyahurricane)whileArticle12
calculatesECproductiononamuchhigherbase.Both
quotasshouldbecalculatedonthesamebasis,prefer­
ablytheaverageannualsalesintheECforthelast
threeyears.3.11.Theglobalfigurefor'traditionalACPbananas'
mustbesupplemented byaquantitativebreakdownof
theamountforeachsupplierinthebaseyearorbase
years,ashasbeendoneforCommunityproducersin
Article12.Unlessthisisdone,thereisadangerthat
theACPquotawillgraduallybetakenoverbythe
potentiallyefficientmainlandproducersattheexpense
ofthedisadvantaged islandproducers.
4.Conclusion
4.1.Thefollow-uptotheproposals,inparticularby
theCouncil,willneedcarefulmonitoring .
4.2.Anydelaywillhindertheestablishment ofthe
singlemarketon1January1993.WorkinGATTmust
thusbespeededupandbroughttoarapidconclusion .
4.2.1.Ifitprovesimpossibletointroducethecom­
monmarketorganizationby1January1993,theCom­
missionwillhavetoapplyeffectivetransitional
measurestoensurethattheCommunitybananamarket
doesnotoperatetothedetrimentofECandACP
producers.
4.3.Withoutdelayingtheapprovalofthedraft,the
Commissionshouldclarifysuchpointsastheguarantee
tomaintainthecurrentoverallconsumerpricelevel.
4.4.TheCommitteeapprovesthesubstanceofthe
proposalsubjecttoreservationsoncertainmatters
whichhavenotyetbeenreferredtoit,suchasthe
proposalsforstructuralaidandcompensatory aidfor
ACPproducers .
4.5.InparticulartheCommitteewouldaskthat
a)ECbananaproducers'incomesbeguaranteedona
morepermanentbasis(compensatory aid,offsetting
oflossesinrevenuecausedbygrubbing-upofplan­
tations),inthelightoftheirspecialproduction
conditions (highcosts,etc.);
b)thebasicquotabesetatalevelwhichaffords
protectiontoCommunityandtraditionalACPpro­
ducers.
DoneatBrussels,25November1992.
TheChairman
oftheEconomicandSocialCommittee
SusanneTIEMANN

NoC19/102 OfficialJournaloftheEuropeanCommunities 25.1.93
APPENDIX
totheOpinionoftheEconomicandSocialCommittee
Thefollowingamendments ,tabledinaccordancewithArticle40oftheRulesofProcedure,weredefeated
duringthediscussion :
ThewholeoftheSectionOpinionistobereplacedbythefollowingtext.Thefirstchapterismoreorless
thesameasintheSectionOpinion.Theamendmentstothischapteraresimplydesignedtosetthetextout
moresystematically andmakeitmorelogical.
'1.ContentoftheCommission document
1.1.Completionofthesinglemarketby1January1993meansthataninternalmarketmustbeestablished
forthebananasector,with—inparticular—commonarrangements'for theimportofbananasintotheEC.
1.2.ForthisreasontheCommissionhaspresentedtheCouncilwithaproposalforaRegulationonthe
commonorganizationofthemarketinbananas.
1.3.TheExplanatoryMemorandum statesthattheaimoftheproposalistointroduceCommunity-wide
arrangementsforbananastocoincidewiththeestablishment oftheinternalmarket.TheseCommunity
arrangementsmustalsoreplacethedivergentnationalarrangements inexistenceatthemoment.
TheExplanatoryMemorandum alsostatesthattheCommissionwishestotakeaccountoftheneedto:
—continuewithbananaproductionintheEC;
—complywiththeLomeConventions ;
—respecttheGATTagreements;
—maintainthird-countryimports;
—supplyconsumersatreasonableprices.
1.4.Theproposedarrangementsforthebananasectorarebasedonthefollowingconsiderations :
a)anoverallquotaforbananaimportsfromthirdcountries,comprisingabasicquotaof2milliontonnes
tobeconsolidatedinGATTandaseparateadditionalquota(Art.17);
b)theestablishmentof«partnershiparrangements »covering30%oftheoverallquota,inordertopromote
thesaleofCommunitybananasandtraditionalACPimports;
c)acompensatory aidschemetooffsetanyincomelossessufferedbyECandACPproducers;unlikethe
schemeoptedforundertheCAPreform(paymentofapremiumperhectare),aschemeforsubsidizing
thedifferencesinincomebetweenECandthird-countrybananaproducersistobeintroduced;
d)astructuralaidschemeformodernizingproductionsystems(Art.10);
e)asafeguardclausetotriggerappropriatemeasuresatECfrontiersintheeventofaseriousmarket
disturbance ;
f)theestablishmentofqualitystandardsforbananas;
g)theformationofproducers'organizationsandassociationstodrawupCommunityprogrammessothat
themanagementofCommunitybananasalescanbeimproved.Article8specifiesthattheprovisionsto
beadoptedaretoincludethepossibilityofmakingtherulesbindingonnon-members ,too;
h)financialsupportfromtheECfortheimplementation oftheseinstruments .
2.Generalcomments
2.1.TheCommitteehastakennoteoftheproposalandwishestomakethefollowingcomments.

25.1.93 OfficialJournaloftheEuropeanCommunities NoC19/103
2.2.TheCommitteethinksthatinviewoftheinternalmarket'sforthcomingcompletionanewpolicy
approachisrequired.ThedifferentregimesapplicableintheMemberStates—liberalimportrules,apercentage
advaloremduty,quotaarrangements ,Communitypreference—shouldbereplacedbyaCommunityscheme.
2.3.TheCommitteewonders,however,whetherthissector'sproblemsshouldbesolvedbygoingasfar
astheCommissiondoeswithitsproposedmarketregime.
2.4.AtthemomentECproducerssupplyapproximately 18%ofCommunityconsumption .Thisfigure
risesto35%ifproductionfromtraditionalACPcountriesisincluded.Thevastmajorityofthemarket—i.e.
moreorlesstwo-thirds—issuppliedbythirdcountries.
2.5.TheCommitteeendorsesthefactthatprogrammestoimproveproductionstructuresaretobe
developedforECproducersandthatauniversallyacceptablesolutionistobefoundtotheproblemofhow
theprincipleofCommunitypreferencewhichisenshrinedintheCAPistobeappliedsatisfactorily .
2.6.TheCommitteealsodrawsattentiontothecommitments whichtheCommunityhasenteredinto
withtheACPStatesregardingthebananasectorunderArticle1ofProtocol5oftheLomeConvention .
2.7.Theproposedschemeestablishesarigidquotasystemandacomplicatedsystemofmarketmanage­
ment,butthisdoesnotfitinwiththenewfarmpolicyapproachbasedontheextensionofthemarket
mechanismandopennessvis-a-visthirdcountries.
2.8.ECproducers'shareoftheCommunity'sbananamarketdoesnotjustifytheproposedorganization
ofthismarketaroundtheseproducersthroughouttheCommunity .ArecentWorldBankreportbytwo
WorldBankofficialsreferstotheadverseconsequenceswhichtheRegulation'simplementation willhave
forthevariousparties.Inparticular,consumerpriceswillsuffer.Apartfroma60-100%riseinprices,afall
inconsumption isexpectedisthosecountrieswherethemarketisfreeandconsumption is30-50%higher
thanincountrieswithamorestrictlyregulatedmarket.
2.9.IntheCommittee'sview,theproposedquotasystemdoesnotsquarewiththegeneraltrendtowards
greateropennessinworldtradenowbeingsoughtintheGATTnegotiations .GATTapprovalforthe
proposalisconsidered—interaliabytheCommission—tobenecessary,butisnotlikelytobeforthcoming .
2.10.Thepartnershiparrangementswhicharetoapplyto30%oftheoverallquotaconflictnotonlywith
theprovisionsoftheEECTreaty—inparticularArticles39to43andtheArticlesoncompetition—butalso
withgenerallaw:prohibitionoftyingagreements .TheEuropeanCourtofJusticehasrejectedsucha
procedureintyingcases(requirementtoaddskimmedmilkpowdertofeedingstuffs).
2.11.TheCommitteewoulddrawattentiontotheproposal'scompetitionaspects.Theproposalswith
regardtotheformationofproducers'organizationsandotherassociationsdesignedtoconcentratesupplies
shouldbeexaminedforcompliancewiththeEECTreaty'sprovisionsoncompetition .Theencouragement
ofcartelsdoesnotaccordwiththeletterandspiritoftheEECTreaty.
2.12.TheCommitteethinksthatthereisabettersolutiontothebananaproblemthantheoneproposed
bytheCommission .ThiscouldconsistofaCommunity-wide advaloremimportdutyonthird-country
bananaswhichcouldbebasedinitiallyonthe20%dutyalreadyinforceinanumberofMemberStatesbut
wouldhavetobereviewedafterafive-yearperiodinthelightofthesituationobtainingthen.Presumably,
thepositiveeffectsofthestructuralsupportforECproductionareaswouldbesufficientlyvisibleby"then.
ACPcountriesshouldbeexemptfromsuchanimportduty.
Suchascheme,takeninconjunctionwiththesupportforimprovingECproductionstructures,wouldalso
gofarenoughtoensurethattheprincipleofCommunitypreferenceisapplied.However,itwouldalso
preventnewproblemsfrombeingcreatedintheGATTdiscussions,andwouldsafeguardsuppliesand
reasonablepricesforconsumers .

NoC19/104 OfficialJournaloftheEuropeanCommunities 25.1.93
3.Specificcomments
3.1.Article2—qualitystandards
Althoughtheestablishmentofqualitystandardsperseistobewelcomed,theCommitteewondersaboutthe
criteriawhicharetoapply.Giventheheterogeneous natureofsupplies,itwillbeextremelydifficultifnot
impossibletoestablishthesortofqualitystandardsthatwillhelptoimprovethequalityofthebananas
offeredtotheconsumer.Thelastthingtheconsumerwantsisqualitystandardsthatareinfactnothing
morethantraderequirements .
3.2.Article8—restrictionofcompetition
TheCommitteewouldaskwhethertherestrictionsoncompetitionproposedinArticle8(2)arenotinconflict
withtheEECTreaty'srulesoncompetition .
3.3.Article17—quotas
Theproposedbasicquotaof2milliontonnesismuchlowerthanthepresentlevelofconsumption .Itisalso
expectedthatthelinkbetweenthebasicquotaandthesaleofCommunityandACPbananaswillcause
manyproblems.Thesystemofimportcertificateswillacquirealifeofitsownandinalleventswillleadto
ariseincosts.
4.Inthelightoftheabove,theCommitteestronglyurgestheCommissiontowithdrawitsproposalas
currentlywordedandtosubmitarevisedversionwhichtakesaccountoftherecommendations madeinthe
presentOpinion.'
Reasons
TherearemanyreasonsforopposingtheCommission'sproposaltoestablisha'traditional'cumbersome
commonmarketorganizationforthebananasector,basedonArticles42and43oftheEECTreaty,in1992.
SomeofthesearementionedintheSectionOpinion,butitiswrongtoconcludethattheCommission
proposalistobeendorsed.Themainreasonsforopposingtheproposalareasfollows:
TheCommissionproposalistotallyatoddswiththenewapproachtoagriculturalpolicy,wherethe
experienceofthelastfewdecadeshasbroughtaboutamoremarket-oriented policy.Inordertoprotecta
relativelysmallproductionarea,theentireCommunityistobesaddledwithamarketorganizationinwhich
productionandmarketingaresubjectedtoatightstraitjacketofrulesandinwhichtradewiththirdcountries
willberegulatedbyaveryrestrictivequotasystemandcertificatestoguaranteeoutletsforECbananas.
TheCommissionproposalclasheswithexistingGATTrulesanditisundesirablethat,atatimewhenefforts
arebeingmadetofurtherliberalizeworldtrade,theECshouldsubmitproposalswhichactuallyincrease
protectionism .
ItisgenerallyagreedthataCommunitypolicyonthebananasectorisneededwithintheframeworkofthe
internalmarket,butintheinterestsofbothECbananaproducersandtheCommunityasawhole,the
Commissionshouldreviseitsproposal.
Inthelongterm,theproposedprotectionofECbananaproductionisnotintheinterestsoftheproducers
concerned.FortheCommunityasawhole,bananapriceswouldalmostdouble.Allpartieswouldbefar
betterservedbyaschemeinwhichapplicationofanimportdutygaveacertainpreferencetodomestic
production (Communitypreference)—abenefitwhichshouldalsobeextendedtoACPStates.Thelevelof
theimportdutycouldbenegotiated.
Thereisnosenseinfurtherburdeningtheinternalmarketwithalotofredtapewhichcanonlyharmthe
operationofamarketeconomy.
Voting
For:35,against:93,abstentions :12.
Addanewpointafter3.7:
'Thecompensatoryaid(Article12)shouldbelimitedintimeandshouldbedegressivejustasthatproposed
forACPbananasinaparallelproposal.Furthertheremustbeadetailedplanforhelpingtomakeboth
CommunityandACPproducerscompetitivewithoutindefiniteproduct-related subsidies.'

25.1.93 OfficialJournaloftheEuropeanCommunities NoC19/105
Reasons
TheCAPisslowlybeingreformedsoastoreduceproduct-related subsidies.Thisproposalisananomaly
bothinthatitstartsanewCAPregimeandinthatpaymentisbythequantityofbananasproduced.Inthe
longrunthereforeEECproducersmustbehelpedtobecomecompetitivewithoutsuchsubsidiesandstand
ontheirownfeet.
SincetheSectiondiscussedthisOpinion,theACPproposalhasbeenpublished.ForACPbananasitprovides
foraidbutonadegressivebasis.ThisseemsreasonableintheinterestsoftheCommunityasawhole,butto
befareandequitable,aidforCommunityproductionmustbeonthesamebasis.
Voting
For:40,against:68,abstentions :7.
Addanewpoint3.11:
'Eligibilityforcompensatorypaymentshouldbeconditionalonproducerorganizationsor,whereapplicable,
individualproducerslimitingtheirmarketingtopredetermined quantities,preferablytheiraveragesalesin
thelastthreeyears.'
Reasons
ToensurethatCAPexpenditureiscontainedandtheinterestsofEC,ACPanddollar-bananaproducersare
reconciled,itisnecessarytoensurethatECmarketingsarestabilized.Althoughcompensationpaymentswill
onlyapplytoquotaamounts,therelativelyhighreturnsonthesecouldmakeitprofitabletosellextraoutput
atthemuchlowerpriceswhichwillruleonECmarkets.
Voting
For:36,against:77,abstentions :9.