Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation (EC) amending Regulation (EEC) No 404/93 on the common organization of the market in bananas'
Date: 1998-05-27
Institutions: European Economic and Social Committee
Subjects: common organisation of markets, import licence, production aid, tariff quota, tropical fruit

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C 235/63

of the CSS is to meet all needs for statistics in the EU in
an integrated and harmonized manner’ (see point 2.2 of
the Commission document). The Committee therefore
feels that it is very important to improve and develop

the CSS, including national statistical institutes, and
work out new working methods so as to make available
at the right time the statistics necessary for the major
policy decisions of the EU.

Brussels, 27 May 1998.

The President

of the Economic and Social Committee

Tom JENKINS

Opinion of the Economic and Social Committee on the ‘Proposal for a Council Regulation
(EC) amending Regulation (EEC) No 404/93 on the common organization of the market in
bananas’ (1)

(98/C 235/15)

On 27 January 1998 the Council decided to consult the Economic and Social Committee,
under Articles 43 and 198 of the Treaty establishing the European Economic Community, on
the above-mentioned proposal.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee’s
work on the subject, adopted its opinion on 12 May 1998. The rapporteur was Mr Espuny
Moyano.

At its 355th plenary session (meeting of 27 May 1998) the Economic and Social Committee
adopted the following opinion by 82 votes to 16 with 19 abstentions.

1.

Introduction

1.1.
In its proposal the Commission amends those
aspects of the CMO which have been condemned in the
reports of the World Trade Organization’s Panel and
Appellate Body so as to bring Community arrangements
for the import of bananas into line with WTO rules.

The Commission document is based on the

1.2.
following points:

1.2.1.
A tariff quota of 2,2 million tonnes for imports
of third country bananas (at a duty rate of ECU 75/t)
and non-traditional ACP bananas (nil duty).

1.2.2.
An additional tariff quota of 353 000 tonnes at
a duty rate of ECU 300/t for third country bananas and
ECU 100/t for non-traditional ACP bananas.

1.2.3.
(B licences and allocation by activity) is scrapped.

The present

system of

import

licences

(1) OJ C 75, 11.3.1998, p. 6.

A system of import licences is proposed based
1.2.4.
on traditional
trade flows (traditionals/newcomers
method). The arrangements for the practical manage-
ment of the system will be laid down in the Commission’s
implementing rules which will be adopted by the
management committee procedure.

1.2.5.
Should there be no reasonable possibility of
securing agreement of all WTO contracting parties with
a substantial interest (Costa Rica, Colombia, Ecuador
and Panama), the Commission will be authorized to
allocate a specific quota to each of these four countries.

1.2.6.
The traditional ACP quantities will not be
allocated between countries; a maximum quantity of
857 700 tonnes is set.

The proposed additional autonomous tariff
1.2.7.
quota may be increased if demand in the Community
rises as indicated by a balance sheet of production,
consumption, imports and exports. The elements of the
balance sheet,
its adoption and the increase in the
additional quota are determined under the management
committee procedure.

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1.2.8.
Should supply of the Community market be
affected by special circumstances affecting production
or importation, the Commission will adopt the specific
measures necessary in accordance with the management
committee procedure. In such cases the additional tariff
quota may be adjusted and specific measures may be
adopted. These measures must not discriminate between
supply origins.

1.2.9.
1 January 1999.

The new arrangements enter into force on

1.3.
The proposal for an amendment of the CMO in
bananas is accompanied by a recommendation for
a Council decision authorizing the Commission to
negotiate with third countries having a substantial
interest: Costa Rica, Colombia, Ecuador and Panama.

2. General comments

2.1.
The Committee acknowledges the efforts made
by the Commission to bring certain provisions of
Regulation (EEC) No 404/93 into line with the Com-
munity’s international commitments vis-à-vis the WTO
and the IVth Lomé Convention and in particular its
Protocol No 5 on bananas.

The Committee notes that, as a result of the
2.2.
verdict of the WTO Panel and Appellate Body, it is
necessary to amend one of the pillars of the common
market organization (CMO) in bananas, namely the
system for allocating import licences.

2.3.
The Committee notes that in its proposal the
Commission is unable to compensate EU and ACP
producers for the abolition of import B licences, which
were found to have broken GATT rules; the Commission
proposal does not provide for any kind of measure to
compensate these producers in this respect. The changes
in the way of allocating import licences may deprive
Community and ACP producers of guaranteed access to
the Community market at prices which are reasonable
for both producers and consumers, a condition which is
a sine qua non for maintaining the income of producers.

2.3.1.
The Committee therefore fears that the pro-
posed changes may exacerbate the present employment
situation in banana producing regions which already
suffer from high unemployment.

that they are compensated for the changes in the import
system. A legal basis for this necessary reassessment can
be found in Article 299 of the new Amsterdam Treaty
which allows Community policies to be applied flexibly
in very remote regions.

2.3.3.
The Committee also considers that the Com-
mission should propose establishing a mechanism which
continues to encourage operators to market traditional
Community and ACP bananas. This incentive is neces-
sary because the specific conditions under which these
bananas are produced, in particular the lack of any
economies of scale and the higher social costs, mean
that the profit margin on their sale is far smaller than
that for Latin American bananas.

The Committee considers that the sustainable
2.4.
production and marketing of bananas produced under
fair social conditions and appropriate environmental
conditions should be strengthened. It regrets that no
substantial measure is proposed to this end.

2.4.1.
The Committee would therefore welcome the
proposal by the Commission of a series of support
measures for the marketing and promotion of these
bananas, including alerting European public opinion to
the problems of third world banana producers. Such
measures are especially needed because these bananas
are grown by small producers who have to contend
with much higher production costs than the large
multinationals which frequently run an integrated oper-
ation from production to import, including transport.

Consumers would also benefit

2.4.2.
from such
measures since, according to information from the survey
carried out by the European Commission, bananas
produced under proper social and environmental con-
ditions are widely accepted by EU citizens, who are also
very concerned at the abusive use of pesticides and other
chemical inputs in some parts of Latin America.

2.4.3.
An effective control system should be estab-
lished so that only bananas produced under proper
social and environmental conditions can be regarded as
such. An international banana charter, codes of conduct
and labels could usefully serve this end.

2.3.2.
Consequently the Committee thinks that the
Commission should provide for a 20 % increase in the
flat-rate reference income for the calculation of the
compensatory aid granted to Community producers so

2.4.4.
At the same time it will be essential that
producers’ returns are maintained through appropriate
market mechanisms or by direct support to growers.
For EU growers this should take the form of enhanced
compensatory payments. For ACP producers this should

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be through aid in a form which is compatible with
WTO, in addition to the structural aid measures for
improving the competitiveness of the industry.

3.1.1.
The oversupply of the EU market in recent
years justifies capping the additional quota. This quota
could be adjusted up or down annually in line with the
real needs of the market.

2.5.
The Committee considers that consumers should
be guaranteed a reliable and varied supply of bananas
from different geographical sources and different pro-
duction and marketing methods. For this, the new
system will have to ensure that Community, ACP and
Latin American bananas co-exist on the market.

2.6.
In view of the growth of the Community banana
market since the CMO was established and the prospect
of future EU enlargements, the Committee thinks that
provision should be made for an increase in the quantity
of Community bananas entitled to compensatory aid,
thus enabling these products to share in the growth of
domestic consumption. Otherwise the growth in the
Community market will be claimed entirely by third
country bananas.

2.7.
The Committee considers that the Commission’s
proposal to allocate a maximum quantity for the
traditional ACP countries could unbalance supplies
from these countries and that means will have to be
found to ensure that no traditional ACP supplier is
denied access for its traditional quantities.

2.7.1.
Consequently the Committee urges the Com-
mission to find the most suitable formula for ensuring
that no one ACP country is penalized in relation to the
others.

2.7.2.
The Committee notes that the Commission
proposal makes no provision for helping resolve the
particular issue of Somalia, previously raised by the
Committee in its opinion of 30 May 1996 (CES 704/96,
points 1.3 and 1.3.1).

The Committee believes that assigning a large specific
quota to Somalia, on an exceptional, one-off basis, is
the only possible way of contributing to the economic
and social recovery of the country, which is continuing
to suffer an acute crisis as a result of the civil war and
the disastrous floods of 1996, which destroyed almost
half the area under cultivation.

3. Specific comments

The Committee considers that the quantity of
3.1.
353 000 tonnes proposed for the additional autonomous
quota is excessive and should be limited to 100 000
tonnes. In fact, the sum total of the quotas, the traditional
ACP quantities and the Community reference quantity
is such that supply (4,26 million tonnes) will outstrip
demand (3,9 million tonnes).

3.2.
In the Committee’s view, the new mechanism for
allocating import licences must ensure proper compe-
tition between all commercial operators so as not
to upset the Union’s balance of supply between all
production sources, without exception. For this reason
it is essential that these new arrangements provide an
effective guarantee for the marketing of Community
and ACP bananas and provide viable returns to growers.
In particular, the competitiveness of European banana
producers should be further improved. The Commission
is urged to report in detail on the means deployed and
the progress made, and also on any opposition.

The Committee considers that the reference
3.3.
period for the allocation of import rights should be the
last year for which market data are available. This will
ensure that the figures are more in line with the actual
situation on the market. If the calculation of the reference
quantities is to be simpler, more reliable and fairer, it is
necessary to take into account only those quantities
actually imported into the Member States as shown on
import licenses which have been checked (or certified
by the customs).

3.4.
To smooth over the transition from the present
import arrangements to the new arrangements intro-
duced in the Commission proposal, the Committee
considers that a number of transitional measures should
be laid down so as to reduce to a minimum the disruption
caused by the major changes to the present system.
During this transitional period, operators would have a
chance to make the changes to their industrial and
commercial infrastructure required to adapt to the new
import system.

3.5.
The Committee considers it essential that the
arrangements for allocating import licences in the event
of exceptional circumstances be maintained.

The Committee thinks that such exceptional
3.5.1.
circumstances should cover the situation of
those
countries which have traditionally supplied the Com-
munity market but are going through a period of
governmental anarchy which prevents them from keep-
ing up with their historic export quota.

4. Conclusions

The Committee is aware of the need to bring the
4.1.
banana import arrangements established in Regulation

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(EEC) No 404/93 into line with the decision of the WTO
Dispute Settlement Body, but argues that this should
not compromise the efficiency of the CMO in bananas
in achieving its fundamental objectives, especially in
maintaining the market access guarantee for Community
and ACP bananas, ensuring a decent income for both
EU and ACP producers, and providing consumers with
access to a varied range of bananas of different origins
at reasonable prices which are uniform throughout
the Community. The new arrangements should also
encourage the marketing of bananas produced under
proper social and environmental conditions so that third
country producers and workers can obtain a better
return from the sale of their bananas without risk to
their health and the ecological balance of the growing
regions.

4.1.1.
The Committee therefore hopes that due
account will be taken of its arguments with regard to
the CMO in bananas.
the present amendment of
Under no circumstances can the Committee accept that
Community preference, a fundamental pillar of the
CAP, be dismantled because of the loss of guaranteed
market access for Community producers. The Com-
mittee also considers it essential to preserve the preferen-
tial access to the Community market and traditional
benefits guaranteed to ACP producers under the Lomé
agreements, which are a cornerstone of the Community’s
external and development policies.

4.2.
The Committee would like to be informed as
soon as possible and consulted by the Commission on
any draft regulations applying the new CMO in bananas.

Brussels, 27 May 1998.

The President

of the Economic and Social Committee

Tom JENKINS

APPENDIX

to the opinion of the Economic and Social Committee

The following amendments, having received at least one quarter of the votes cast, were rejected during
the deliberations.

1. Point 2.3.2

Point 2.3.2 to read as follows:

‘Consequently the section thinks that the Commission should step up the use of all appropriate means
for bringing about structural improvements in the areas concerned. A careful analysis of the impact of
structural aid to date should first be carried out.

In this context consideration could also be given to reassessing the flat-rate reference income for the
calculation of the compensatory aid granted to Community producers.

Once the Treaty of Amsterdam has been ratified, Article 299 of this Treaty could provide the legal basis
for this reassessment; under this Article suitable conditions may be attached to the application of EU
policies in very remote regions.’

Reason

The necessary structural support in the relevant regions should in no way be limited to a possible
increase in the compensatory aid. Such aid should only be granted as part of an overall package.

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Result of the vote

For: 36, against: 48, abstentions: 13.

2. Point 2.6

Point 2.6 to read as follows:

‘The Committee notes that, as a result of the aid, banana production in the EU has increased since the
CMO was established. Nevertheless, current production (680 000-700 000 t) is still substantially below
the maximum quantity eligible for aid established in 1993 (854 000 t).

If the EU production targets for quantity and quality were met, a decision could be taken on whether
— contrary to the general trend in the CAP — the quantity eligible for aid should be increased, bearing
in mind especially the prospect of future enlargement of the EU.’

Reason

Self-explanatory.

Result of the vote

For: 39, against: 52, abstentions: 15.

3. Points 3.1 and 3.1.1

Delete.

Reason

The 353 000 t additional quota corresponds to the non-EU imports of the three most recent Member
States prior to accession. Since then their consumption has increased slightly (with changes in the
breakdown of origins).

The figure of 4,26 million t given for supply was not actually reached because it was not possible, for a
variety of reasons in the growing regions, to use up the EU and ACP quotas eligible for aid. Even the
quotas for third country imports are below their target, mainly for administrative reasons (including
license trading).

Result of the vote

For: 34, against: 49, abstentions: 24.

4. Point 3.3

First sentence:

For ‘last year’ read ‘the last three years’.

Reason

Taking a single year for allocation of import licence allocation would operate most unfairly on countries
which for climatic and other reasons had unduly low production in that year.

Because of the dependence of weather conditions an average of years usually forms the basis of allocation
entitlement.

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Result of the vote

For: 35, against: 38, abstentions: 26.

5. Point 3.3

Insert after the first sentence:

‘However, the market-distorting effect of the old system, declared contrary to GATT, should be
discounted.’

Reason

Self-explanatory.

Result of the vote

For: 32, against: 49, abstentions: 25.

6. Point 3.4

Delete.

Reason

Under WTO rules the new system must be fully operative by 1 January 1999.

Result of the vote

For: 35, against: 53, abstentions: 18.