Recommendation for a Council Decision authorising the Commission to negotiate with countries having a substantial interest in the supply of bananas in order to reach an Agreement on allocation of the tariff quotas and the traditional ACP quantity
Date: 1998-01-14
Institutions: European Commission
Subjects: ACP countries, common organisation of markets, tariff quota, trade agreement (EU), tropical fruit

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  14.01.1998 
COM(1998)4  final 

98/0013(CNS) 

Proposal for a 

COUNCIL REGULATION HSC) 

amending Regulation (EEC) N° 404/93 on the common organisation 

of the market in bananas 

Recommendation  for a Council Decision  authorising the Commission to negotiate 

with countries having a substantial interest in the supply of bananas in order to 

reach an agreement on allocation of the tariff quotas and the traditional  ACP 

quantity 

(presented by the Commission) 

EXPLANATORY MEMORANDUM 

1.  The  Dispute  Settlement  Body  of  the  World  Trade  Organisation  has  found  in  a 

decision that  some of the import provisions of the common market organisation  for 

bananas infringe  GATT and GATS rules. 

The inrringements concern  import licences, the present allocation of the tariff  quota 

and  other  aspects  of the  Framework  Agreement  on bananas,  including  the  granting 

of  export  licences  in  signatory  countries,  and  certain  quantities  set  for  traditional 

imports from ACP States. 

2.  Other  aspects  of  the  CMO  are  not  questioned.  These  include  the  size  of  the  tariff 

quota  and  both  the  quota  and  non-quota  tariff  rates  bound  in  our  GATT 

commitments,  the  preference  for  traditional  imports  and  the  preferential  tariff 

treatment  for  non-traditional  imports  from  the  ACP  countries,  and  the  aid  scheme 

for Community producers. 

3 -  The Council  should therefore be requested to amend Regulation (EEC) No 404/93 to 

bring  it into line with our international  commitments  in the framework  of the WTO 

and  the  IVth Lome Convention  while  maintaining  support  for  Community  growers 

and an adequate supply to the market which respects the interests of consumers. 

k -  The attached proposal on Title IV of Regulation (EEC) No 404/93 "Trade with third 

countries" provides as follows: 

(1) 

The tariff  quota bound  under GATT is maintained  (at 2.2 million tonnes and 

duty  of ECU  75/t), as is the right to import beyond  the quota  (at a duty  rate 

ofECU765/tat  present). 

(2) 

To  cope  with  the  increase  in  consumption  stemming  from 

the  last 

enlargement  of  the  Community,  an  autonomous  tariff  quota  of  353  000 

tonnes  is opened.  Within  this  autonomous  tariff  quota,  the duty  for  imports 

beyond the bound quota is reduced to ECU 300/t in order to secure  adequate 

supply  to the market  while preserving  the  competitive  balance  with  imports 

from  the  ACP  countries.  The  principle  of  a  supply  balance  for  the 

Community  market  so  that  the  tariff  quota  can  bc  adjustcd  if  ncccssary  is 

retained. 

(3) 

It  should  remain  possible  to  assign  part  of  the  tariff  quotas  to  particular 

countries.  At  the  moment  only  Costa  Rice  and  Colombia  of  the  main 

supplier  countries have obtained  a fixed  share of the quota.  Allocations  will 

have to be granted to all suppliers with a substantial  interest (hence probably 

also to Ecuador and Panama). Other countries would have access to that part 

of the tariff quota not reserved to these four countries. 

(4) 

The  special  treatment  of  traditional  imports  from  the  ACP  countries  is 

retained  for a maximum  quantity of 857 700 t at nil duty. This preserves  the 

access  to  the  Community  market  provided  for  in  Protocol  5  to  the 

IVth Lome Convention. 

This  should  probably  not  be  allocated  between  ACP  countries  since  (a) the 

present allocation has been deemed to infringe  GATT rules and (b) the same 

criterion  should  be  used  for  allocating  tariff  quotas  and  traditional  ACP 

quantities. 

The  tariff  preference  for  non-traditional  ACP  importers  is  raised  to 

ECU 200/t in order to safeguard  import flows given the new allocation of the 

tariff quotas and the new duty rate for the autonomous tariff quota. 

(5) 

The present system of import licence categories (B licences and allocation by 

the activity  functions  of primary  importer,  secondary  importer  and  ripener) 

is scrapped. 

A system of import licences compatible with the rules of the WTO should be 

introduced. 

Nevertheless,  it  is  particularly  important  to  ensure  that  the  modification  of 

the import regime does not have negative consequences  for the marketing  of 

EU and ACP bananas. 

There is a range of options for doing this which include the method based on 

the  chronological  order  of  submitting  applications  ("first  come,  first 

served"),  the  method  of  allocation  in  proportion  to  quantities  applied  for 

when the applications  were submitted  ("simultaneous  examination")  and  the 

method 

based 

on 

consideration 

of 

traditional 

trade 

flows 

("traditionals/newcomers"). 

The  Commission  considers  that  the  most  appropriate  method  for  dealing 

with trade in bananas is "traditionals/newcomers".  However,  at this juncture 

it would not wish to exclude other possibilities complying with WTO rules. 

(6) 

A legal basis for dealing with exceptional circumstances pertaining to supply 

of the market is established. It covers all supply origins without exception. 

.5"- 

In submitting the present proposal the Commission withdraws the previous ones for 

amendment of Regulation (EEC) No 404/93. 

Proposal for a Council Regulation (EC) 

amending Regulation (EEC) N° 404/93 on the common organisation 

of the market in bananas 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 

Article 43 thereof, 

Having regard to the opinion of the European Parliament, 

Having regard to the opinion of the Economic and Social Committee, 

(1)  Whereas  a  number  of  changes  are  required  in  the  provisions  on  trade  with  third 

countries  contained  in  Title  IV  of  Regulation  (EEC)  N°  404/93l,  as  last  amended  by 

Regulation (EEC) N° 3290/942; 

(2) Whereas the Community's international  commitments in the framework  of the World 

Trade  Organisation  (WTO)  and  to  the  other  signatories  of  the  IVth  Lome  Convention 

should  be  met  simultaneously  with  achievement  of  the  purposes  of  the  common 

organisation of the market in bananas; 

(3) Whereas a basic tariff  quota of 2 200 000 tonnes at the reduced  duty  of  ECU  75 per 

tonne is bound in the WTO; 

(4)  Whereas the  increase  in consumption  resulting  from  enlargement of the  Community 

warrants  opening  of  an  autonomous  tariff  quota  of  353  000  tonnes;  whereas  this 

autonomous  tariff  quota  should  involve reduction  to  ECU  300 per tonne  of the  customs 

duty applicable beyond the above bound tariff  quota; whereas this reduction is warranted 

1  OJ N°L 47, 25.2.1993, p. 1 

2  OJN°L  149, 31.12.1994, p. 185 

by  the  need  to  guarantee  adsquate  supply  of  the  Community  market  while  preserving 

competitive balance with banana imports originating in ACP countries; 

(5) Whereas for traditional ACP bananas retention of the total quantity of 857 700 tonnes 

that  may  be  imported  at  nil  duty  preserves  access  to  the  Community  market  for  the 

supplier  countries  of  the  traditional  quantities,  in  line  with  Protocol  5  annexed  to  the 

IVth Lome Convention and with WTO rules; 

(6)  Whereas  in view  of the  obligations  under  the  Lome Convention,  particularly  Article 

168  thereof,  and  of  the  need  to  guarantee  proper  conditions  of  competition  for  non-

traditional  ACP bananas, application  to imports  of these of an ECU  200 preference  will 

allow  the  trade  flows  in  question  to  be  maintained  under  the  new  import  arrangements 

introduced by this Regulation; 

(7)  Whereas  for  the purpose  of  subdividing  the  tariff  quotas  and,  if the  situation  arises, 

the  traditional  ACP  quantity,  a  single  criterion  should  be  used  for  determining  those 

producer  countries  with  a  substantial  interest  in  the  supply  of  bananas;  whereas  should 

there  be  no  reasonable  possibility  of  reaching  agreement  with  these  countries,  the 

Commission, assisted by a committee of representatives of the Member States, must have 

the authority to carry out allocation using that criterion; 

(8) Whereas provision should be made for the autonomous tariff  quota to be modified  to 

take account of any increased Community demand found when a supply balance is drawn 

up;  whereas  provision  should  also  be  made  for  suitable  specific  action  to  be  taken  in 

response to exceptional circumstances liable to affect  supply of the Community  market; 

(9) Whereas operation of the provisions of the present Regulation  should be reviewed  at 

the end of an adequate trial period; 

(10)  Whereas  appropriate  amendments  should  therefore  be  made  to  Title  IV  of 

Regulation (EEC) N° 404/93, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Articles  16 to 20 of Title IV of Council  Regulation  (EEC) N° 404/93 are replaced  by the 

following: 

"Article 16 

Articles  16  to  20  of  this  Title  shall  apply  only  to  fresh  products  of  CN  code  ex 

0803 00 19. 

For the purposes of this Title 

(1) "traditional  imports from ACP States" means imports into the Community  of bananas 

originating in the countries listed in the Annex hereto up to a limit of 857 700 tonnes (net 

weight) per year; these are termed "traditional ACP bananas"; 

(2)  "non-traditional  imports  from  ACP  States"  means  imports  into  the  Community  of 

bananas  originating  in  ACP  States  but  not  covered  by  definition  (1);  these  are  termed 

"non-traditional ACP bananas"; 

(3)  "imports  from  non-ACP  third  countries"  means  bananas  imported 

into  the 

Community  originating  in  third  countries  other  than  the  ACP  States;  these  are  termed 

"third country bananas". 

Article 17 

All  importation  of  bananas  into  the  Community  shall  be  subject  to  presentation  of  an 

import  licence  issued  by Member  States to any  interested  party  irrespective  of his place 

of establishment  in the  Community  without  prejudice  to  specific  provisions  adopted  for 

application of Articles  18 and  19. 

Import  licences shall be valid throughout the Community. Except by  derogation  adopted 

under the procedure set out in Article 27, the issue of licences shall be subject  to  lodging 

of a security  against  a commitment  to  import  on the terms of this Regulation  during  the 

period  of  the  licence's  validity.  Except  in  cases  of  force  majeure  the  security  shall  be 

wholly or partly forfeit  if the operation is not or is only partly carried out within the time 

allowed. 

Article 18 

!. A tariff  quota of 2,2 million tonnes (net weight) shall be opened  each year for  imports 

of third country and non-traditional ACP bananas. 

Imports of third country bananas under the tariff quota shall be subject to duty of ECU 75 

per tonne, while imports of non-traditional ACP bananas shall be free of duty. 

2. An additional tariff  quota of 353 000 tonnes (net weight) shall be opened each year  for 

imports of third country and of non-traditional ACP bananas. 

Imports  of  third-country  bananas  under  this  tariff  quota  shall  be  subject  to  duty  of 

ECU 300 per tonne and of non-traditional ACP bananas to duty of ECU  100 per tonne. 

3. No duty shall be payable on imports of traditional ACP bananas. 

4.  Should  there  be  no  reasonable  possibility  of  securing  agreement  of  all  WTO 

contracting  parties  with  a substantial  interest  in the  supply  of bananas, the  Commission 

may  under  the  procedure  set  out  in  Article  27  allocate  the  tariff  quotas  provided  for  in 

paragraphs  1  and  2  and  the  traditional  ACP  quantity  between  those  countries  with  a 

substantial interest in the supply. 

5. By derogation from  Article  15 non-traditional  ACP bananas imported outside the tariff 

quotas indicated in paragraphs  1  and 2 shall be subject to duty per tonne equal to the duty 

indicated in Article  15 less ECU 200. 

6. The duty  rates set  in this Article  shall  be converted  into  national  currency  at the  rates 

applicable for the products in question for the purposes of the common customs tariff. 

7. The additional  tariff  quota provided  for  in paragraph  2 may be increased  if demand in 

the  Community  increases  as  indicated  by  a  balance  sheet  of  production,  consumption, 

imports and exports. 

Determination  of  the  elements  of  the  balance  sheet,  its  adoption  and  increase  of  the 

additional tariff  quota shall be effected  under the procedure set out in Article 27. 

8.  Should  suppiy  of  the  Community  market  be  affected  by  exceptional  circumstances 

affecting  production  or  importation,  the  Commission  shall  adopt  the  specific  measures 

necessary under the procedure set in Article 27. 

In  such cases the additional  tariff  quota provided  for  in paragraph  2 may be  adjusted  on 

the  basis  of  the  balance  sheet  indicated  in  paragraph  7.  The  specific  measures  may 

derogate from the rules adopted under Article  19(1). They must not discriminate  between 

suppiy origins. 

9. Third  country, traditional  ACP and non-traditional ACP bananas re-exported  from  the 

Community shall not be counted against the corresponding tariff quotas. 

Article  19  ^ 

1.  The  tariff  quotas  indicated  in  Article  18(1)  and  (2)  and  imports  of  traditional  ACP 

bananas  shall  be  managed  in  accordance  with  the  method  based  on  taking  account  of 

traditional trade flows ("traditionals/newcomers"). 

The  Commission  shall  adopt  the  implementing  arrangements  required  under  the 

procedures set out in Article 27. 

Where necessary, other suitable methods may be adopted. 

2.  The  metbod  adopted  shall  as  appropriate  take  account  of  the  suppiy  requirements  of 

the Community market and of the need to safeguard  its equilibrium. 

Article 20 

The Commission  shall adopt provisions to appiy this Title under the procedure  set out in 

Article 27. Their scope shall include: 

a)  guarantee of the nature, provenance and origin of the product: 

b)  recognition of the document serving to verify these guarantees; 

c)  terms of issue and period of validity of import licences; 

d)  any  specific  provisions  needed  to  facilitate  the  switch  from  the  import  arrangements 

applying on and after  1  July  1993 to the present arrangements of Title IV; 

e)  measures  needed  to  ensure  respect  for  obligations  stemming  from  agreements 

concluded by the Community under Article 228 of the Treaty." 

Article 2 

Article 32 of Council Regulation (EEC) N° 404/93 is replaced by: 

"Article 32 

1. By  31 December 2005 the  Commission  shall present  a report  on the operation  of this 

Regulation to the European Parliament and the Council. 

2.  The  report  shall  in particular  analyse  the  marketing trends  for  Community,  ACP  and 

third country bananas and assess how the import arrangements have worked." 

Article 3 

1. Article  15a of Regulation (EEC) N° 404/93 is deleted. 

2. The Annex to Council Regulation (EEC) N° 404/93 is replaced by the Annex hereto. 

Article 4 

This  Regulation  shall  enter  into  force  on the  third  day  following  its  publication  in  the 

Official  Journal of the European Communities. 

It shall apply from  1  January  1999. 

This Regulation shall be binding in its entirety and directly applicable in all Member 

States. 

ANNEX 

Traditional imports from the ACP States 

Imports originating in the following  supplying countries, up to a limit of 857,700 tonnes 

(net weight) annually: 

Ivory Coast 

Cameroon 

Surinam 

Somalia 

Jamaica 

St Lucia 

St Vincent and the Grenadines 

Dominica 

Belize 

Cape Verde 

Grenada 

Madagascar 

10 

Recommendation for a Council Decision authorising the Commission to negotiate 

with countries having a substantial interest in the supply of bananas in order to 

reach an agreement on allocation of the tariff quotas and the traditional  ACP 

quantity 

Following  a  decision  by  the  World  Trade  Organisation's  Dispute  Settlement  Appellate 

Body  the  Commission  has  sent  the  Council  a  proposal  for  changes  in  the  import 

arrangements 

for  bananas 

introduced  by  Title 

IV  of  Council  Regulation 

(EEC) N° 404/93, as last amended by Regulation (EC) 3290/94. 

In  line  with  this  proposal  the  Commission  recommends  that  the  Council  authorise  it  to 

open  negotiations  with  countries  with  a  substantial  interest  in  supplying  bananas  to the 

Community  so  that  the  import  tariff  quotas  and  the  traditional  ACP  quantity  can  be 

allocated  among  them,  in  accord  with  the  attached  negotiating  instructions  and  in 

consultation with the Article  113 Committee. 

A  single  criterion  for  determining  the  countries  with  a  substantial  interest  in  supplying 

bananas will be used, based on total imports into the Community. 

The above proposal includes a provision that, should there be no reasonable possibility of 

reaching  agreement  with the countries concerned, the Commission  would have  authority 

to  make  the  allocation  between  them  assisted  by  a  committee  of  Member  States' 

representatives. 

11 

ANNEX 

» 

A  single  criterion  for  determining  the  producer  countries  with  a substantial  interest  in 

supplying bananas, based on total imports into the Community,  shall be used to allocate 

the  tariff  quotas  and,  if  the  situation  arises,  the  traditional  ACP  quantity,  with  the 

agreement of the countries concerned. 

The negotiations shall be conducted by the Commission  in consultation with the Article 

113 Committee and in line with further instructions that the Council may address to it. 

12 

FINANCIAL STATEMENT 

BUDGET  HEADING: 
1000 andB 1-1508 

DATE:  09/12/97 

APPROPRIATIONS: 

ECU 623.9 and 205 million (PB) 

TITLE: 
Proposal  for  a  Council  Regulation  amending  Regulation  (EEC)  No  404/93  on  the  common  organization  of  the 
market in bananas 

3. 

LEGAL BASIS: 
Article 43 of the EC Treaty 

AIMS OF DRAFT  LEGISLATION: 
Modifying  the banana regime in the light of WTO panel conclusions, with effect  from  1 January  1999 

5. 

FINANCIAL  IMPLICATIONS 

5.0. 

5.1. 

EXPENDITURE 
- CHARGED TO THE  EC BUDGET 

(REFUNDS/INTERVENTION) 

REVENUE 
- OWN  RESOURCES OF THE EC 
(LEVIES/CUSTOMS  DUTIES) 

5.0.1. 

ESTIMATED  EXPENDITURE 

5.1.1. 

ESTIMATED REVENUE 

CURRENT 
FINANCIAL 
YEAR 
(98) 
million ecu 

FOLLOWING 
FINANCIAL 
YEAR 
(99) 
million ecu 

227.2 

PERIODOF 12 
MONTHS 

million ecu 

228.8 

262.7 

2000 

228.8 

262.7 

2001 

228.8 

262.7 

2002 

228.8 

262.7 

5.2. 

6.0. 

6.1. 

6.2. 

6.3. 

METHOD OF CALCULATION: 
See Annex 

CAN  THE  PROJECT  BE  FINANCED  FROM  APPROPRIATIONS  ENTERED  IN  THE  RELEVANT 
CHAPTER  OF THE CURRENT  BUDGET? 

CAN  THE  PROJECT  BE  FINANCED  BY  TRANSFER  BETWEEN  CHAPTERS  OF  THE  CURRENT 
BUDGET? 

IS A SUPPLEMENTARY  BUDGET  NECESSARY? 

WILL FUTURE BUDGET  APPROPRIATIONS  BE NECESSARY? 

OBSERVATIONS: 

The  system  of  aid  for  Community  producers  (see  Annex  'Expenditure  -  compensatory  aid')  remains 
unchanged,  so there will be no extra expenditure compared with the present situation. 

In terms of revenue,  the new system will mean an increase of ECU 78.0 million. 

A\ 

262.7 

2003 

228.8 

262.7 

YES/NO 

YES/NO 

¥BS/NO 

YES/N© 

Aitncx  to financial  statement attachecl  to VI/8901/97 dated  8 December  1997 
1. 

Revcnue - customs  dutics 

Thc  consolidated  quota  of  2  200  000  tonnes  at  a  duty  rate  of  ECU  75/tonne  includes  a  share  for  non-traditiona! 
ACP  bananas  (estimated  at  30  000  t  or  50%  in  relative  quantities)  to  be  imported  at  a  zero  rate.  The  autonomous 
quota  of  353  000  t  bears  a  duty  rate  of  ECU  300/tonne  but  also  includes  the  remaining  non-traditional  bananas 
(30 000 t) qualifying  for  a tariff  preference  of ECU  200/tonne. 

Outside the quotas  mentioned,  importing bananas  will not be commercially  viable. 

Calculation  of estimated  annual  revenues: 
(2 200 000 - 30 000) tonnes x ECU  75/tonne 
(353  000 - 30 000) tonnes x ECU  300/tonne 
(30 000 t x ECU  0/tonne)  + (30 000 t x ECU  (300-200)/tonne) 
(per  12 months and  budget  year) 

Currcnt  revenues  cstimated  at: 
(2 200 000  i  353 000 - 90 000) t x ECT J  75/tonne 

The  dilTcrence therefore  comes to 

2. 

Expenditure  - compensatory  aid 

ECU  162.8  million 
ECU  96.9  million 
ECU  3.0  million 
ECU  262.7  million 

ECU  184.7  million 

ECU  78.0  million 

In year n-1 

Forecast  quantity  marketed 

Advances: instalments  4(50%), 5 and  6 

Year n = 

B 99 

1998 

BOO 

1999 

12m'ths 

(tonnes) 

(tonnes) 

800  000 

810  000 

333  333 

337  500 

Advances estimated  at 

(ECU/tonne) 

196.8 

Remaining  balance estimated  at 

(ECU/tonne) 

84.3 

196.8 

84.3 

Total  estimated  aid* 

(ECU/tonne) 

281.1 

281.1 

-  Total  advances 

- Estimated  remaining  balance 

(ECU  m) 

(ECU  m) 

Expenditure  in 

(ECU  m) 

In year n 

65.6 

67.5 

133.1 

1999 

66.4 

68.3 

134.7 

2000 

Forecast  quantity  marketed 

(tonnes) 

810  000 

810  000 

Advances:  instalments  1, 2, 3 and  4(50%) 

(tpnnes) 

472  500 

472  000 

Advances estimated  at 

(ECU/tonne) 

196.8 

-  Total  advances 

TOTAL COST TO  BUDGET 

(ECU  m) 

(ECU  m) 

dt  1.005 

93.0 

226.0 

227.2 

196.8 

93.0 

227.7 

227.7 

228.8 

228.8 

* Estimc.ted aid  based  on average  ofaid  levels  set  in 1993-96  (cxtremcs  exchided) 

/)L 

ISSN 0254-1475 

COM(98)  4  final 

DOCUMENTS 

EN 

03  11  01 

Catalogue number  :  CB-CO-98-022-EN-C 

ISBN 92-78-30213-9 

Office  for Official  Publications of the European Communities 

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