Communication from the Commission on the modification of the European Community's import regime for bananas
Date: 2004-06-02
Institutions: European Commission
Subjects: enlargement of the Union, import licence, import policy, tropical fruit

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 2.6.2004 
COM(2004) 399 final 

COMMUNICATION FROM THE COMMISSION 

on the modification of the European Community’s import regime for bananas 

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The current import regime for bananas 

The Understandings reached with respectively the United States and Ecuador in April 2001, 
after a challenge to the EC’s banana regime in the WTO dispute settlement system, provided 
for  a  number  of  modifications  to  the  EC’s  banana  regime.  Council  Regulation  (EEC) 
No 404/93 on the common organisation of the market for bananas was modified accordingly, 
and the relevant Commission regulations repealed and replaced. 

The Understandings provide for the introduction of a tariff-only import regime no later than 
1 January 2006 and until then for an interim regime in two phases. 

Since 1 January 2002 the import of bananas into the Community takes place through import 
licenses  distributed  on  the  basis  of  past  trade.  The  current  import  licence  arrangements  are 
largely managed on the basis of historical references (83% of the quantities of the quotas go 
to  "traditional  operators"  within  the  A/B  quota  and  89%  within  the  C  quota).  However,  to 
ensure that non-traditional operators can pursue trade in bananas, 17% of A/B quota and 11% 
of the C quota are reserved for operators who do not have a suitable historic reference (non-
traditional operators). 

The following three tariff quotas apply:  

•  Quota A 2 200 000 tonnes at a tariff of € 75/t (0 for ACP bananas), 

•  Quota B 453 000 tonnes at a tariff of € 75/t (0 for ACP bananas), 

•  Quota C 750 000 tonnes at a tariff of € 0/t (reserved to ACP bananas)  

Quotas  A  and  B  are  open  to  bananas  from  any  origin,  the  C  quota  is  reserved  for  ACP 
countries. 

Banana imports outside the quotas are subject to a customs duty of € 680/t.  

ACP countries benefit from a tariff preference of € 300/t. 

Adapting the present regime to enlargement 

In  view  of  the  accession  of  the  ten  new  Member  States  on  1  May  2004,  appropriate 
arrangements  have  been  made  to  ensure  sufficient  supply  of  bananas  to  consumers  in  the 
enlarged Community.  

To this  end, Commission Regulation (EC) No 838/2004 of  28 April 2004  has increased  the 
current import volumes of bananas by an additional quantity of 300 000 tonnes for the period 
1 May–31  December  2004.  This  quantity  was  determined  so  as  to  ensure  market  supply,  in 
particular  in  the  new  Member  States.  Regulation  (EC)  No  838/2004  together  with 
Commission  Regulation  (EC)  No  414/2004  of  5  March  2004  and  Regulation  (EC) 
No 839/2004 of 28 April 2004 define the detailed transitional measures necessary to manage 
the new additional quantity respecting the current licensing mechanisms. 

These  transitional  measures  are  without  prejudice  to  the  decision  taken  by  the  Council  to 
move  to  a  tariff-only  import  system  no  later  than  1  January  2006  and  to  the  outcome  of 
negotiations  to  compensate  relevant  WTO  members  for  the  enlargement  of  the  Community 
and the move to a tariff-only system. 

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Negotiating Article XXIV.6 GATT compensation for enlargement 

The Community intends to negotiate, according to WTO rules (Article XXIV.6 GATT), with 
relevant third countries possible trade compensations for the increase in the import duties for 
bananas resulting from the application of the Community 15 tariff to the new Member States. 

On  19  January  2004,  the  EC  notified  to  the  WTO  the  withdrawal  of  the  EC  schedule,  the 
withdrawal of the schedules of the ten new Member States and the temporary application of 
the  EC  schedule  for  the  EC-25  pending  the  finalisation  of  negotiations  concerning 
compensatory  adjustment  as  well  as  the  EC's  readiness  to  enter  into  negotiations  to  address 
compensatory adjustments under Article XXIV.6 of the GATT. 

On  22  March  2004,  the  Council  authorised  the  Commission  to  conduct  Article  XXIV.6 
negotiations with the Community’s trading partners. 

A  number  of  countries  consider  they  have  negotiating  rights  on  bananas  under  Article 
XXIV.61 with the EC and have submitted claims of interest accordingly, notably Colombia, 
Costa Rica, Ecuador and Panama. The Commission is currently evaluating the various claims 
submitted and will negotiate with relevant third countries as a matter of priority. 

Move to tariff-only under Article XXVIII GATT 

As mentioned, in the Understandings on bananas the EC undertook to introduce a tariff-only 
regime  for  the  imports  of  bananas  no  later  than  1  January  2006.  The  Understandings  also 
provide  that  GATT  Art.  XXVIII  negotiations  shall  be  initiated  in  good  time  to  that  effect. 
Article  XXVIII  of  the  GATT  sets  out  rules  and  procedures  to  be  followed  when  a  WTO 
member intends to modify its schedule of commitments. 

The  decisions  of  the  WTO  Doha  Ministerial  Conference  in  2001  as  regards  the  ACP-EC 
Partnership  Agreement,  which  waive  certain  WTO  obligations  in  respect  of  the  Partnership 
Agreement2, also contain a number of provisions concerning bananas. In particular the waiver 
from  Article  I  GATT  provides  for  the  possibility  of  an  arbitration  procedure  to  determine 
whether  the  envisaged  rebinding  of  the  EC  tariff  would  result  in  at  least  maintaining  total 
MFN access for MFN bananas suppliers, which may be requested after the EC has provided 
information to interested parties on the methodology used for such rebinding. 

In view of the above, the Commission has requested negotiating directives to the Council in 
order  to  modify  the  bindings  on  bananas  in  the  Community  GATT  tariff  schedule  for 
agricultural  products.  Once  the  negotiating  mandate  is  adopted  by  the  Council,  the 
Commission will proceed with the appropriate notification to the WTO under Article XXVIII 
of the GATT. 

As the Article XXIV.6 negotiations for enlargement and the Article XXVIII negotiations to 
move to tariff-only will be running in parallel, it is possible that the latter be concluded earlier 
than the former, in which case the consequences of enlargement will be taken into account. 

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i.e. initial negotiating rights, principal or substantial supplier status in one or more of the new Member States. 
Waivers from Articles I and XIII of the GATT 1994. 

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Safeguarding Community producers and ACP’s interests 

In the course of the negotiations to move to the tariff-only regime, the Commission will pay 
particular  attention  to  the  impacts  of  the  proposals  on  Community  production  and  on  the 
situation  of  Community  producers  of  bananas.  The  Commission  intends  to  safeguard  the 
interests  of  the  Community  banana  producers  and  ACP’s  interests.  As  to  the  Community 
producers,  the  Commission  will  seek  to  maintain  a  level  of  protection  equivalent  to  that 
currently existing in order to ensure that Community production is maintained and that these 
producers  are  not  put  in  a  less  favourable  situation  as  before  the  entering  into  force  of  the 
import quota regime in 1993. 

Commission Regulation (EC) No 914/2004 fixed the compensatory aid for bananas produced 
and marketed in the Community in 2003 and the advances for 2004. 

Compensatory  aid  is  granted  as  the  difference  between  the  so  called  "flat  rate  reference 
income" and the "average production income" as communicated by Member States. 

The mechanism of the current CMO leads to higher compensation in the event that average 
EU banana prices fall. 

As far as the ACP banana suppliers are concerned, the Commission is committed to respect its 
obligations stemming from the Cotonou Agreement and accordingly intends to pay particular 
attention to the implications of the change in its import regime for the ACP banana producers, 
to examine appropriate ways to address their specific situation, including preferential access 
for ACP products, and seek to maintain a level of preference to the ACP countries equivalent 
to that afforded by the enlarged Community of 25. 

The EC, in order to address the problems of competitiveness of ACP banana producers, has 
put in place in 1999 the Special Framework of Assistance for traditional banana suppliers. 

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