1 – REGIME FOR THE IMPORTATION OF BANANAS (DS361) INITIATED BY COLOMBIA
Document: EC1 – REGIME FOR THE IMPORTATION OF BANANAS (DS364) INITIATED BY PANAMA Report by the Director-General on the Use of His Good Offices in the Above-Mentioned Disputes (pursuant to Article 3.12 of the DSU)
Date: 22 December 2009
Document codes: WT/DS361/2; WT/DS364/2
Complainant: Panama
Respondent: EU
Dispute stage: Consultation
Agreements cited: Art. I:1, II, XIII:1, XIII:2, XXVIII  GATT 1994

EC
1 – REGIME FOR THE IMPORTATION OF BANANAS (DS361) INITIATED
BY COLOMBIA

EC1 – REGIME FOR THE IMPORTATION OF BANANAS (DS364) INITIATED
BY PANAMA

Report by the Director-General on the Use of His Good Offices
in the Above-Mentioned Disputes
(pursuant to Article 3.12 of the DSU)

 The following communication, dated 21 Dece mber 2009, from the Director-General of the
WTO to the Chairman of the Dispute Settlement Body, is circulated to Members for their information.

DSU and the Procedures under Article XXIII – Decision of 5 April 1966. As the parties have recently
agreed on a way to settle these disputes, the use of my good offices as WTO Director-General in these
disputes is no longer needed and resort to such go od offices for this purpose is therefore deemed to
have ended.
Introduction

2. In the dispute EC-Bananas III
2, certain aspects of the European Communities banana import
regime in force at the time the dispute was initiated in 1996 were found to be inconsistent with WTO
law. A number of proposals by the EC to modify its regime to bring it into compliance with the
recommendations and rulings of the Dispute Settle ment Body in this dispute were rejected by
complaining countries. In April 2001, an agreemen t was reached between the EC, Ecuador and the
United States that entailed, inter alia, the establishment by no later than 1 January 2006 by the EC of
a tariff-only import regime for bananas as well as an interim arrangement consisting of: (1) a tariff
rate quota scheme for MFN suppliers providing for an in quota tariff rate of 75 euros per tonne up to
2.2 million tons and an out of quota tariff rate of 680 euros per tonne thereafter; and (2) duty-free
preferential tariff treatment to bananas for up to 750,000 tonnes originating in ACP countries. This
interim arrangement would be made legally pe rmissible under WTO rules through the adoption of
several waivers agreed at the Doha Ministerial, as explained further below.

1 On 1 December 2009, the Treaty of Lisbon amendi ng the Treaty on Europe an Union and the Treaty
establishing the European Community (done at Lisbon , 13 December 2007) entere d into force. On 29
November 2009, the WTO received a Verbal Note (WT/L/779) from the Council of the European Union and the
Commission of the European Communities stating that, by virtue of the Treaty of Lisbon, as of 1 December
2009, the European Union replaces and succeeds the European Community.
2 European Communities — Regime for the Importation, Sale and Distribution of Bananas , WT/DS27

3. A waiver from the application of Article I of the GATT was granted in Doha in
November 2001 (the "Doha waiver") for the Cot onou Agreement trade prefer ence, with a duration
commensurate with these trade preferences, i.e., until 31 December 2007. This waiver also covered
the trade preference for ba nanas. The waiver specified that the European Communities would rebind
its WTO-bound import tariff of 680 euros per tonne on ba nanas at a level that "would result in at least
maintaining total market access for MFN banana s uppliers" comparable to that provided for under the
interim arrangement. The waiver further provided for multilateral control ove r the implementation of
this commitment through a two-stage arbitration procedure and specified that both the Article XXVIII
negotiations and the arbitration procedures would have to be concluded before the entry into force of
the new EC tariff-only regime. At the same time, a second waiver to cover the temporary duty-free
allocation of 750,000 tonnes to ACP countries was granted until 31 December 2005.
4. During the course of 2005, the European Communities and interested MFN countries
attempted but failed to reach agreem ent on the level of a new EC tariff rate that would maintain the
MFN countries' "total market access" as set forth in the Doha waiver. Two arb itrations were held in
accordance with the provisions of this waiver. Th ese arbitrations concluded that the tariff levels
proposed by the European Communities would not r esult in at least maintaining total market access
for MFN banana suppliers comparable to that unde r the interim arrangement, taking into account all
EC WTO market access commitments relating to bana nas. The EC was therefore required to rectify
the matter.
5. In response to the second ar bitration award and without the prior agreement of MFN
suppliers, the EC implemented a new banana import regime on 1 January 2006 (through Council
Regulation 1964/2005). This was the EC banana regime in force when there was a subsequent request
by several of the MFN suppliers for the DG to pr ovide his good offices in this dispute as explained
further below. Under this new EC regime, the MFN tariff applied to all bananas regardless of their
origin was € 176 per ton and there were no quantita tive restrictions. In addition, the European
Communities offered until the end of 2007 a preferen ce to bananas imported from countries that had
signed the "Cotonou Agreement"
3. This preference took the form of an annual quota of 775,000
tonnes of bananas free of duty from Cotonou particip ating countries (the "Cotonou Preference"). All
bananas imported from Cotonou countries beyond this amount were also subject to the tariff of € 176
per ton.
6. In the meantime, at the Hong Kong Ministeria l in December 2005, several Latin American
countries had expressed serious concern over wh at they considered to be the EU's
non-implementation of the earlier WT O's legal rulings and recomme ndations from the late 1990s in
the banana dispute, particularly in the aftermath of the two arbitrations carried out earlier in 2005
under the Doha Waiver. To address these concerns, I nominated Mr Jonas Store, the Norwegian
Foreign Minister, to act as a "Facilitator" to assist the parties in trying to find a solution and asked him
to report to the General Council in due course. Minister Store conducted regular meetings for the next
18 months, assisting the parties and reporting peri odically to the General Council on his efforts.
During this process, the participants collected and shared data on imports/exports of bananas in the
EU with a view to advancing the search for what s hould be the appropriate new EC tariff level within
the framework of the agreements that had been reached in 2001.
7. Concurrently, implementation of the EC's new import regime for bananas on 1 January 2006
also triggered a number of legal complaints in the WTO by various MFN suppliers in late 2006,
including legal proceedings initiated by Ecuador and the United States under the compliance panel

3 The Cotonou Agreement obliged the European Comm unities to accept the im portation of products
originating from Cotonou beneficiary developing countries free of custom duties and charges having equivalent
effect or, at least, at preferential terms, until 31 December 2007.

procedures of Article 21.5 (c) of the DSU. Th e reports of the two compliance panels and the
Appellate Body in these two proceedings, wh ich were adopted by the DSB in late 2008 4, confirmed
that the new EC regime on banana introduced on 1 January 2006 was still inc onsistent with the EU's
WTO obligations.
Use of the Good Offices of the WTO Director-General

8. On 21 March and 22 June 2007, Colombia and Panama, respectively, requested new
consultations under the DSU with the EC regarding its new banana regime of 1 January 2006 as set
out in EC Council regulation (EC) No. 1964/2005 5. When these consultations failed to lead to a
satisfactory settlement, pursuant to Article 3.12 of the DSU and the Procedures under Article XXIII –
Decision of 5 April 1966, Colombia and Panama , referred the matter to me on 2 November and
14 December 2007, respectively, with the request that, acting in my ex-officio capacity, I use my
good offices with a view to facilitating a solution to their dispute with the EC.
9. Initially, Colombia and the EC had requested that their good offices process not include any
third parties. They foresaw, however, that if they were to make progress, subsequent phases of the
process could then involve other principal suppliers and parties in the dispute. In the meantime,
however, Panama requested me to carry out a separ ate good offices procedure for its dispute with the
EC. Colombia, Panama, and the EC then agreed that the two good offices procedures should run in
parallel, although it was envisaged that at a later stage the two processes could be merged if there
were sufficient progress toward a solution in both processes.
10. As this was the first time that the provisions of Article 3.12 of the DSU and the Procedures
under Article XXIII – Decision of 5 April 1966 were used since the inception of the WTO, I initially
sought from the parties their expectations as to wh at should result from the good offices process. In
this regard and in accordance with paragraph 2 of the 1966 procedures, parties were requested to
furnish me with all relevant information relating to the matter, including written explanations. I also
requested the parties' views on which other Memb ers or inter-governmental organisations they
believed appropriate for me to consult with a view to promoting a mutually acceptable solution.
11. The parties stated their preference for a ne gotiated settlement as opposed to a purely legal
process. The parties also agreed in both good offi ces processes to adhere to confidentiality with
respect to the content of the proceedings. It was in this spirit that the two good offices processes were
conducted.
12. I held four formal meetings in the Colo mbia-EC good offices process. There were also
several informal bilateral/plurilateral meetings a nd contacts between the parties and the parties and
myself. I also held two formal meetings in the Panama-EC process, with several informal
bilateral/plurilateral contacts and meetings between the par ties and the parties and myself. 6 During
these two processes, with a view to assisting the par ties in recording in text their apparent points of
agreement and possible agreement, I put forward a series of written options as to what might be
considered by the parties as an acceptable EC import tariff for bananas and under what conditions.

4 See See EC – Bananas III (Article 21.5 – Ecuador II), WT/DS27/RW2/ECU and
WT/DS27AB/RW2/ECU adopted on 11 December 2008; and EC – Bananas III (Article 21.5 – US) ,
WT/DS27/RW/USA, and WT/DS27/AB/RW/USA and Corr.1,adopted on 22 December 2008.
5 Colombia's request for consultation available in documents WT/DS361/1 and G/L/818. Panama's
request is available in documents WT/DS364/1 and G/L/822.
6 Formal meetings of the Colombia-EC good offices were held on 6/12/2007; 17/01/2008; 4/02/2008;
and, 7/02/2008. Formal meetings of the Panama-EC good offices were held on 26/02/2008 and 10/03/2008.

13. In parallel to these two formal good offices process es, and in the interest of transparency -
which could contribute to an agreement among th e parties that would be acceptable to all WTO
Members – I also held a number of formal
7 and informal meetings with other WTO Members,
including other MFN suppliers, ACP banana producers, other banana producers and importers.8
14. The good offices processes intensified in the first pa rt of July 2008. In attempting to reflect
the evolving positions of the parties and in an effort to lead them towards a balanced result, I then put
forward in writing the elements of a draft compre hensive banana agreement on 12 July 2009. I
informed the parties that these elements were my be st effort at helping them find a solution to their
disputes. I reiterated that I remained available should the parties need my assistance.
15. Consultations then continued directly between the parties during the latter half of July 2008
and through 2009. These direct consu ltations finally resulted in two agreements between the EC and
its MFN bananas suppliers – one with all Latin MFN suppliers and the other with the United States.
These two agreements were initialled by the parties on 15 December 2009. The text of the agreement
between the EC and its Latin MFN suppliers - the "Geneva Agreement on Trade in Bananas" was then
circulated to the General Council for its in formation (WT/L/784). At its meeting of
17-18 December 2009, the General Council took note of this agreement.

India, Indonesia, Malaysia, Nicaragua, Peru, Philippines, Thailand, United States and Vietnam. On occasions I
held informal meetings with representatives of the ACPs, including with Amb Hiwat from Suriname, as head of
the ACP working group on bananas.