Proposal for a Council Decision on the signature and provisional application of a "General Agreement on Trade in Bananas" between the European Union and Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela and of an "Agreement on Trade in Bananas" between the European Union and the United States
Date: 2010-03-17
Institutions: European Commission
Subjects: CCT duties, United States, customs regulations, import, signature of an agreement, third country, trade agreement (EU), tropical fruit

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EUROPEAN COMMISSION 

Brussels, 17.3.2010 
COM(2010)97 final 

2010/0058 (NLE) 

Proposal for a 

COUNCIL DECISION 

on the signature and provisional application of a Geneva Agreement on Trade in 
Bananas between the European Union and Brazil, Colombia, Costa Rica, Ecuador, 
Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela and of an 
Agreement on Trade in Bananas between the European Union and the United States 

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EXPLANATORY MEMORANDUM 

Council  Regulation  (EEC)  No  404/93  of  13  February  1993  established  a  common 
organisation  of  the  market  in  bananas  in  the  European  Communities.  After  the  adoption  of 
this Council Regulation, several Latin American WTO Members supplying bananas to the EU 
on  a  Most  Favoured  Nation  basis  as  well  as  the  United  States  initiated  WTO  dispute 
settlement  proceedings  against  the  EU  (notably  the  longstanding  dispute  WT/DS27)  with 
respect to the different treatment of bananas introduced into the European Union market by 
different suppliers. 

On 11 April 2001 and 30 April 2001, respectively, the Commission reached Understandings 
with  Ecuador  and  the  United  States  which  set  the  conditions  to  resolve  the  disputes.  Those 
Understandings envisaged the introduction of a 'tariff regime only' for the imports of bananas 
in  2006.  On  14  November  2001,  the  WTO  Doha  Ministerial  Conference  adopted  waivers 
from the EU obligations under Articles I (Doha Waiver) and XIII of the GATT regarding the 
preferential  treatment  granted  to  products  of  ACP  origin  under  the  Cotonou  Agreement. 
Those waivers established as a condition for the waiver with respect to bananas that the new 
tariff only regime to be introduced in 2006 "would result in at least maintaining total market 
access  for  MFN  banana  suppliers"  and  provided  for  an  arbitration  mechanism  in  case  of 
disagreement. 

On 12 July 2004, the Council authorised the Commission to open negotiations under Article 
XXVIII of the General Agreement on Tariffs and Trade 1994 ("GATT 1994") with a view to 
introducing a tariff only regime for bananas in the EC schedule. Accordingly, the Community 
notified the WTO on 15 July 2004 of its intention to modify concessions on item 0803 00 19 
(bananas) in the EC WTO Schedule (CXL). Negotiations were conducted by the Commission 
in consultation with the Committee established by Article 133 of the Treaty and the Special 
Committee  on Agriculture  and  within the framework of  the negotiating directives issued by 
the Council. These negotiations failed to lead to an agreement. 

On  31  January  2005  the  Community  notified  the  WTO  of  its  intention  to  replace  its 
concessions  on  item  0803 00 19  (bananas)  with  a  bound  duty  of  €230/tonne.  On  30  March 
2005 several WTO Members (Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, 
Nicaragua,  Panama  and  Venezuela)  requested  arbitration  under  the  Doha  waiver.  The 
Arbitrator’s Award issued on 1 August 2005 concluded that the MFN tariff rate of €230/tonne 
proposed by the Community was not consistent with the conditions of the Doha Waiver. The 
Commission revised the Community proposal in light of the arbitrator’s findings. In a second 
arbitration  award,  issued  on  27  October  2005,  the  Arbitrator  concluded  that  the  revised 
proposal for an MFN tariff rate of €187/t onne also failed to rectify the matter. 

In  view  of  its  obligation  to  introduce  a  tariff  only  regime  by  1  January  2006,  and  in 
consideration of the lack of agreement on a bound duty, the EU introduced an applied MFN 
duty  of  €176/tonne  through  Council  Regulatio n  (EC)  No  1964/2005.  This  regulation  also 
opened an autonomous tariff quota of 775 000 tonnes net weight subject to a zero-duty rate 
for  imports  of  bananas  originating  in  ACP  countries.  The  EU  did  not  notify  any  further 
proposal  to  modify  its  tariff  schedule  on  bananas,  pending  an  agreement  with  MFN  banana 
suppliers. 

Since 1 January 2008, ACP banana suppliers have enjoyed duty-free quota-free access to the 
EU market on the basis of Economic Partnership Agreements with the EU. 

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On  23  February  2007  and  on  29  June  2007,  respectively,  Ecuador  and  the  United  States 
requested  the  establishment  of  a  panel  pursuant  to  Article  21.5  of  the  WTO  Dispute 
Settlement Understanding concerning the alleged inconsistency with the WTO agreements of 
measures  adopted  by  the  EU  to  comply  with  the  WTO  Dispute  Settlement  Body  (DSB) 
reports  in  the  dispute  WT/DS27.  The  final  reports  were  adopted  by  the  DSB  in  December 
2008.  Tbhe  report  in  the  case  brought  by  Ecuador  stated  that  the  EU  applied  tariff 
(€176/tonne)  on  bananas  was  inconsistent  with  the  EU  tariff  bindings  under  GATT  1994. 
Both reports also ruled that the preference granted by the EU at the time of the establishment 
of the panel (775 000 tonnes duty free) was inconsistent with the GATT 1994. 

On 22 March 2004 and on 29 January 2007 the Council authorised the Commission to open 
negotiations  under  Article  XXIV:6  of  the  GATT  1994  in  the  course  of  the  accession  to  the 
European Union of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the 
Republic  of  Latvia,  the  Republic  of  Lithuania,  the  Republic  of  Hungary,  the  Republic  of 
Malta,  the  Republic  of  Poland,  the  Republic  of  Slovenia,  the  Slovak  Republic  and  the 
Republic of Bulgaria and the Republic of Romania, respectively. 

The  negotiations  under  Article  XXVIII  and  Article  XXIV:6  of  the  GATT  1994  were 
successfully concluded on 15 December 2009 by the initialling of a "Geneva Agreement on 
Trade  in  Bananas"  with  Brazil,  Colombia,  Costa  Rica,  Ecuador,  Guatemala,  Honduras, 
Mexico,  Nicaragua,  Panama,  Peru  and  Venezuela  ("the  Geneva  Agreement")  and  of  an 
"Agreement  on  Trade  in  Bananas"  with  the  United  States  of  America  (the  "EU/US 
Agreement"). 

The agreements negotiated by the Commission provide for the settlement of the claims of the 
countries  concerned  under  Articles  XXIV:6  and  XXVIII  of  the  GATT.  In  addition,  they 
implement the Understandings by binding a 'tariff regime only' and provide a solution to all 
the  pending  disputes  concerning  the  tariff  treatment  of  bananas,  which  should  therefore  be 
formally settled upon certification of the new EU tariff schedule on bananas. 

The Geneva Agreement provides for the application of tariff reduction commitments from the 
date of signature and retroactively to the date of initialling. In view of the need to implement 
the  initial  tariff  cuts  accordingly  and  to  prevent  the  continuation  of  the  pending  disputes, 
paragraphs 3, 6 and 7 of the Geneva Agreement and paragraphs 2, 3(a) and 3(b) of the EU/US 
Agreement should be applied provisionally, in accordance with paragraph 8(b) of the Geneva 
Agreement and paragraph 6 of the EU/US Agreement, respectively, from the day of signature 
of each agreement, pending their entry into force. 

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2010/0058 (NLE) 

Proposal for a 

COUNCIL DECISION 

on the signature and provisional application of a Geneva Agreement on Trade in 
Bananas between the European Union and Brazil, Colombia, Costa Rica, Ecuador, 
Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela and of an 
Agreement on Trade in Bananas between the European Union and the United States 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 207(4), first subparagraph, in conjunction with Article 218(5) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

The  Commission  reached  Understandings  with  Ecuador  and  the  United  States,  on 
11 April  2001  and  on  30  April  2001  respectively  (the  "Understandings"),  which 
identified means to resolve the disputes brought by those countries in the World Trade 
Organization (WTO) with respect to the tariff treatment of bananas imported into the 
Union.  Those  Understandings  envisaged  the  introduction  of  a  tariff-only  regime  for 
the  imports  of  bananas.  To  that  effect,  on  12  July  2004  the  Council  authorised  the 
Commission  to  negotiate  the  modification  of  the  bound  tariff  with  a  view  to 
introducing  a  tariff-only  regime  for  bananas  in  the  EC  schedule  for  bananas  under 
Article XXVIII of the General Agreement on Tariffs and Trade 1994 ("GATT 1994"). 

On 22 March 2004 and on 29 January 2007 the Council authorised the Commission to 
open  negotiations  under  Article  XXIV:6  of  the  GATT  1994  in  the  course  of  the 
accession  to  the  European  Union  of  the  Czech  Republic,  Estonia,  Cyprus,  Latvia, 
Lithuania,  Hungary,  Malta,  Poland,  Slovenia  and  Slovakia  and  of  Bulgaria  and 
Romania, respectively. 

The negotiations were successfully concluded on 15 December 2009 by the initialling 
of  a  Geneva  Agreement  on  Trade  in  Bananas  with  Brazil,  Colombia,  Costa  Rica, 
Ecuador,  Guatemala,  Honduras,  Mexico,  Nicaragua,  Panama,  Peru  and  Venezuela 
("the Geneva Agreement") and of an Agreement on Trade in Bananas with the United 
States of America (the "EU/US Agreement"). 

The  agreements  negotiated  by  the  Commission  meet  the  claims  of  the  countries 
concerned  under  Articles  XXIV:6  and  XXVIII  of  the  GATT.  In  addition,  they 
implement  the  Understandings  by  providing  for  the  binding  of  a  'tariff  only'  regime, 
and  provide  an  adequate  solution  to  all  the  pending  disputes  concerning  the  tariff 
treatment of bananas, which should therefore be formally settled. 

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(5) 

(6) 

Those two Agreements should be signed on behalf of the European Union, subject to 
their conclusion at a later date. 

In  view  of  the  need  to  implement  expeditiously  the  initial  tariff  cuts,  to  prevent  the 
continuation of the pending disputes and to ensure that the Union's final market access 
commitments for bananas in the next WTO multilateral market access negotiations for 
agricultural products do not exceed those provided for in paragraphs 3, 6 and 7 of the 
Geneva  Agreement  and  paragraphs  2,  3(a)  and  3(b)  of  the  EU/US  Agreement,  both 
Agreements should be applied provisionally, in accordance with paragraph 8(b) of the 
Geneva Agreement and paragraph 6 of the EU/US Agreement, respectively, from the 
day of signature of each Agreement, pending their entry into force, 

HAS ADOPTED THIS DECISION:  

Article 1 

The Commission is hereby authorised to sign, on behalf of the European Union, the following 
Agreements and to designate the persons empowered to proceed to their signature: 

(a) 

(b) 

the Geneva Agreement on Trade in Bananas between the European Union and Brazil, 
Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, 
Peru and Venezuela (the "Geneva Agreement"); 

the  Agreement  on  Trade  in  Bananas  between  the  European  Union  and  the  United 
States of America (the "EU/US Agreement"). 

The texts of those Agreements are attached to this Decision. 

Article 2 

1. 

2. 

Paragraphs  3,  6  and  7  of  the  Geneva  Agreement  shall  be  applied  provisionally,  in 
accordance with paragraph 8(b) thereof, from the day of signature of that Agreement, 
pending its entry into force. 

Paragraphs 2, 3(a) and 3(b) of the EU/US Agreement shall be applied provisionally, 
in  accordance  with  its  paragraph  6,  from  the  day  of  signature  of  that  Agreement, 
pending its entry into force. 

Article 3 

This Decision shall enter into force on the day of its adoption.  

Done at Brussels, 

For the Council 
The President 

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FINANCIAL STATEMENT 

BUDGET HEADING: 
Chapter 12 – Customs duties and other duties  

FichFin/10/50124(DDG/EM/tm)
6.9.2010.1 

DATE: 27/01/2010 
APPROPRIATIONS: 
B2010 : 14.079,7 Mio € 

TITLES: 
Proposal for a Council Decision on the signature and provisional application of a "General Agreement on 
Trade in Bananas" between the European Union and Brazil, Colombia, Costa Rica, Ecuador, Guatemala, 
Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela and of an "Agreement on Trade in Bananas" 
between the European Union and the United States, 
& 
Proposal for a Council Decision on the conclusion of a "General Agreement on Trade in Bananas" between 
the European Union and Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, 
Nicaragua, Panama, Peru and Venezuela and of an "Agreement on Trade in Bananas" between the 
European Union and the United States, 
& 
Proposal for a Regulation of the European Parliament and of the Council repealing Council Regulation 
(EC) No 1964/2005 on the tariff rates for bananas 

LEGAL BASIS: 
Treaty on the Functioning of the European Union. Articles 207(4), 218(5)(6) and 207(2). 

AIMS: 
Signature, provisional application and conclusion of two Agreements on Trade in Bananas and repealing 
the regulation on the tariff rates for bananas. 

FINANCIAL IMPLICATIONS 

CHARGED TO THE EC BUDGET 

EXPENDITURE 
- 
(REFUNDS/INTERVENTIONS) 
- 
- 

NATIONAL AUTHORITIES 
OTHER 

PAST 
FINANCIAL 
YEAR 
2009 
(EUR million) 

CURRENT 
FINANCIAL 
YEAR 
2010 
(EUR million) 

- 

- 

FOLLOWING 
FINANCIAL 
YEAR 
2011 
(EUR 
million) 
- 

FOLLOWING 
FINANCIAL 
YEAR 
2012 
(EUR million)

- 

REVENUE 
- 
(LEVIES/CUSTOMS DUTIES) 

OWN RESOURCES OF THE EC  

-3.5 

-74.8 

-88.1 

-106.8 

1. 

2. 

3. 

4. 

5. 

5.0 

5.1 

5.2  METHOD OF CALCULATION: Based on applying the reduced tariff rates on imports of NC Code 

0803.00.19 of the recent 12 months available. 

6.0  CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE 

YES NO 

RELEVANT CHAPTER OF THE CURRENT BUDGET? 

6.1  CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF 

YES NO 

THE CURRENT BUDGET? 

6.2  WILL A SUPPLEMENTARY BUDGET BE NECESSARY? 
6.3  WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS? 

YES NO 

YES NO 

OBSERVATIONS: 

The Agreements reduce progressively the tariff rates for bananas. It can be estimated that these measures 
will lead to smaller own resources which is indicated at point 5.1, net amounts after deduction of 
collecting costs by Member States. (An estimate of the loss of own resources for 2009 was included 
because of the retroactive validity of these Agreements to 15/12/2009). 

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