EUROPEAN COMMUNITIES – BANANA IMPORT REGIME AND ACP-EC PARTNERSHIP AGREEMENT
Document: Request for Consultations by Nicaragua
Date: 7 December 2005
Document codes: WT/DS27/64
Complainant: Brazil
Respondent: EU
Dispute stage: Consultation
Agreements cited: Art. III:4, XI:1  GATT 1994Art. 2.2, 2.3, 5.1, 5.2, 5.4, 5.5, 5.6, 5.7, 8, Annex C  Sanitary and Phytosanitary Measures (SPS)

WT/L/607/Add.18

COMMUNICATION FROM NICARAGUA

 The following communication, dated 30 Novemb er 2005, from the delegation of Nicaragua to
the delegation of the European Communities, to the Chairman of the Dispute Settlement Body and to
the Chairman of the General Council, is circulated at the request of Nicaragua.
1

EUROPEAN COMMUNITIES – BANANA IMPORT REGIME
AND ACP-EC PARTNERSHIP AGREEMENT

Request for Consultations by Nicaragua

pursuant to Article 21.5 of the DSU

 Pursuant to the expedited compliance re view procedures of Article 21.5 of the Understanding
on Rules and Procedures Governing the Settlement of Disputes (DSU), Nicaragua hereby request that
the European Communities (EC) engage promptly in consultations with my Government regarding
the WTO-inconsistency of the EC Council Regula tion governing the import regime for bananas
adopted on 29 November 2005 (the "new Regulation").
2

Background

 On 25 September 1997, the Dispute Settlement Bo dy (DSB) adopted the report of the Panel in
European Communities – Regime for the Importation, Sale and Distribution of Bananas , as modified
by the Appellate Body (" EC – Bananas III" ).3 The report's recommendations and rulings included,
among others, the recommendation that the EC bring all measures found to be inconsistent with the
GATT and GATS into conformity with its obligations under those agreements.

 As a result of EC – Bananas III , the EC in April 2001 reached two "Understandings on
Bananas", one between the EC and United States
4, and the other between the EC and Ecuador. 5 The
other MFN banana supplying countries that we re a party to, or had an interest in, EC – Bananas III
were not bound by those Understandings.

1 Note by the Secretariat: Circulation of this communication under the two document series referred to
above is without prejudice to any Member's rights and obligations.
2 Council of the European Union, Council Regulation on the tariff rates for bananas, 14441/05 AGRI
297 WTO 199 ACP 148 AMLAT 93 OC 832, 25 November 2005.
3 Panel Report, European Communities – Regime for the Importation, Sale and Distribution of
Bananas, WT/DS27/R, adopted 25 September 1997, as modified by the Appellate Body Report,

4 WT/DS27/59, 2 July 2001.
5 WT/DS27/60, 9 July 2001.

WT/L/607/Add.18

 On 14 November 2001, the WTO adopted a Ministerial Decision entitled European
Communities – The ACP-EC Partnership Agreement (the "Doha Waiver"), which requires with
respect to bananas that any new EC "rebinding" installed as of 2006 must "result in at least
maintaining total market access for MFN banana suppliers," taking into account "all EC WTO
market-access commitments relating to bananas".
6 The Doha Waiver further authorizes two rounds of
special arbitration to uphold its built-in legal sta ndard governing bananas. It mandates that if both
arbitrations determine that the EC's envisaged re binding(s) fail that standard, the Waiver of GATT
Article I will cease to apply to bananas upon entry into force of any new EC tariff regime. The Doha
Waiver also requires that Article XXVIII negotiati ons be concluded before any new EC banana
regime is implemented.

 Two Arbitration Awards have now found agains t the EC's 2006 banana proposals. The first
Award, issued on 1 August 2005, found that the EC's proposed increase in the MFN banana tariff to
230 €/mt would not satisfy the Doha Waiver standard.
7 The second Award, issued on 27 October
2005, found that the EC's proposed 187 €/mt MFN tariff, ACP tariff rate quota (TRQ), and zero-
duty/quota-free treatment for countries covered by "Everything But Arms" ("EBA") would fail to
"rectify the matter". 8 As required under the terms of the Doha Waiver, that second determination
against the EC will cause the Waiver of GATT Article I on bananas to terminate upon implementation
of any EC tariff-only regime.

 As of 31 December 2005, the EC's waiver of GATT Article XIII for its ACP banana quota of
750,000 mt will terminate.
9 On 11 October 2005, the EC circulated a request to extend that waiver
through 31 December 2007 to cover an enlarged ACP TRQ of 775,000 mt. 10 No WTO action has
been taken on that request.

New EC Measures

 On 29 November 2005, the Council of the European Union formally adopted the following
new banana import measures to apply as of 1 January 2006:

Article 1

1. As from 1 January 2006 the tariff rate for bananas (CN code 0803 00 19)
shall be EUR 176/tonne.
2. Each year from 1 January, starting fro m 1 January 2006, an autonomous tariff
quota of 775 000 tons net weight subject to a zero-duty rate shall be opened for
imports of bananas (CN code 0803 00 19) originating in ACP countries.
11
The new Regulation further authorizes the promul gation of implementing rules and "transitional
measures necessary to facilitate the switch-over" to the new EC banana arrangement.12

6 WT/MIN(01)/15, WT/L/436.
7 European Communities – The ACP-EC Partnership Agreement – Recourse to Arbitration Pursuant to
the Decision of 14 November 2001, Award of the Arbitrator, WT/L/616, dated 1 August 2005.
8 European Communities – The ACP-EC Partnership Agreement – Second Recourse to Arbitration
Pursuant to the Decision of 14 November 2001, Award of the Arbitrator, WT/L/625, dated 27 October 2005.
9 European Communities – Transitional Regime for the EC Autonomous Tariff Rate Quotas on Imports
of Bananas, WT/MIN(01)/16, 14 November 2001; WT/L/437, 7 December 2001.
10 G/C/W/529, 11 October 2005.
11 Council of the European Union, Council Regulation on the tariff rates for bananas, 14441/05 AGRI
297 WTO 199 ACP 148 AMLAT 93 OC 832, 25 November 2005.
12 Id.

 WT/L/607/Add.18

WTO Inconsistencies

 Without prejudice to whether consultations ar e required under DSU Article 21.5, and to all
rights under other provisions of the DSU, my Govern ment requests the EC to engage in consultations
without delay concerning the WTO-in consistency of all fundamental f eatures of this new Regulation,
including:

• the inconsistency of the 176€/mt MFN rate w ith the Doha Waiver in all its parts, the
Arbitration Awards of 1 August and 27 October 2005, GATT Article XXVIII, and
EC – Bananas III; and

• the inconsistency of the zero-duty ACP tariff quota of 775,000 mt and over-quota
ACP tariff of 176€/mt with the Doha Waiver in all its parts, the Arbitration Awards
of 1 August and 27 October 2005, GATT Articles I and XIII, and EC – Bananas III.

These inconsistencies also nullify and impair benefits accruing to my country, directly and indirectly,
under the GATT, and impede the objectives of the WTO Agreements and Doha Development
Agenda.

 My Government further reserves its rights to a review under Article 21.5 of other aspects of
the new regime, including the licensing and other im plementation and transitional provisions that are
now in the form of discretionary authority.

 Because the inconsistencies referenced above are to take effect on 1 January 2006 and will
have a serious adverse impact on our developing economies, we respectfully ask the EC to advise my
Government of the possible dates during the next week or two on which EC representatives would be
available to engage in consultations on the measures described above. As required by DSU
Article 21, this disagreement over the WTO-consiste ncy of the EC's new banana regime must be
resolved promptly in order to safeguard our developing-country interests.