WRITTEN QUESTION P-1029/00

by Fernando Fernández Martín (PPE-DE) to the Commission

(29 March 2000)

Subject: Banana dispute

Various sources have indicated in recent weeks that there may have been a rapprochement between the respective positions of the European Commission and the United States Government with a view to resolving the banana dispute.

Agreement would seem to hinge on a proposal regarding the allocation of the quota by the Commission, which would allocate 80 % of the A and B quotas to what are known as primary operators, i.e. those operating prior to 1993 (for the most part those which introduced dollar bananas before this date, in other words mainly American multinationals). The remaining 20 % all would be divided up between other (new) operators.

According to various sources, one of the main elements of the proposed agreement submitted to the United States could be an automatic switch to a tariff system at the end of a transitional period.

What is the current state of these negotiations, particularly as regards the allocation of quotas and the length of the transitional period?

Is the Commission aware that an automatic switch to a tariff-only system could lead to the end of Community banana production?

Answer given by Mr Lamy on behalf of the Commission

(29 May 2000)

Following the finding of World Trade Organisation (WTO) incompatibility of various aspects of the current Community banana regime (a regime which had already been revised after the WTO ruling on the previous regime), the Commission proposed in November 1999 a two step approach to modify the import rules for bananas: a tariff rate quota (TRQ) system should be established on a temporary basis and should be replaced by a flat tariff on January 2006. The management of the TRQ system in particular as regards the licence allocation, is at present the subject of extensive discussion with all concerned. In the absence of agreement on licence allocation of all concerned, the Commission proposal foresees the possibility of establishing a flat tariff system immediately.

In parallel with consultations with all countries exporting bananas to the Community, including the African, Caribbean and Pacific (ACP) countries as well as with the commercial operators and the Community producers, the Commission is also pursuing bilateral discussions with the United States (US). The latest meeting was held in Washington on 30 March 2000. So far, however, it has not been possible to agree on a mutually acceptable solution to the banana dispute.

The main problem in drafting a Commission proposal to establish a TRQ system remains the question of how import licences should be attributed to operators. Most operators appear to be in favour of a licence distribution based on historic performance during a representative period. The difficulty is that they cannot agree on a single period acceptable to all. The US insists on a reference period pre-1993, i.e. a period that predates the establishment of the internal market for bananas. This position is reflected in the so-called Caribbean proposal. However, Ecuador favours a very recent period, but in any case post-1993, whereas the ACP countries advocate a long period covering both pre- and post 1993.

Regarding an automatic switch to a tariff only system, this is already foreseen in the Commission proposal and as such this is not a part of the discussion with the US.

Concerning Community production, it is important to note that the WTO panel has never put in question the deficiency payment system in the Community banana sector. The Commission is of the opinion that the farm income of the European banana producer can be guaranteed by this current aid system, which therefore ensures the continuation of Community banana production.