“I welcome the news that a comprehensive agreement on bananas has now been
reached. This has been one of the most technically complex, politically
sensitive and commercially meaningful legal disputes ever brought to the WTO. It
has also been one of the longest running “sagas” in the history of the post-WWII
multilateral trading system,” he said.


“After lengthy consultations, legal examinations, negotiations, and gentle
prodding by an “honest broker”, a solution has been found. This proves there is
no trade issue which lies beyond the reach of WTO members when they exhibit good
will and a spirit of compromise. I hope that the same pragmatism, creativity and
diplomacy will help move forward the Doha Round negotiations.”



 

Chronology of the banana
disputes in GATT/WTO

Introduction

The banana issue is one of the longest running
disputes in the post-WWII multilateral trading system. It has generated
considerable debate and litigation among the widest range of the entire WTO
membership. And it has resulted in multiple legal rulings by dispute panels,
the Appellate Body and special arbitrators. All this attention has focussed
on the treatment the EU gives to the import of bananas from the African,
Caribbean and Pacific (ACP) countries in preference to bananas from Latin
America. Today, the final, comprehensive agreement has been announced by the
EU.

In the GATT

In July 1991, Costa Rica expressed concern
in the GATT Council meeting that an impending EU banana import regime would
discriminate against Central American countries. It urged agreement in the
Uruguay Round for free trade in bananas. Colombia, Honduras, Peru, Venezuela
and Mexico shared this concern.


In June 1992, Colombia, Costa Rica, Guatemala, Nicaragua and
Venezuela requested consultations with the EU. In September 1992,
they announced that the consultations had failed and requested the GATT
Director-General to use his good offices.


In December 1992, these five Latin American countries accepted the
DG's suggestion that, in order to make progress, the formal good offices be
suspended until January 1993 and to leave the door open for informal
negotiations that would make it possible to find a solution within the
Uruguay Round commitments.


In February 1993, the five complainants stated at the GATT Council
that the good offices exercise had failed as a result of the decision by the
EU Council of Ministers on 17 December 1992 to establish a common banana
regime that would enter into force in July 1993. According to the five Latin
American countries, the new regime would violate the 20 per cent maximum
tariff binding on bananas granted by the EU in the 1961 Dillon Round, as
well as various other GATT provisions.


At the request of the five countries, a panel was established which ruled in
June 1993 that the banana import restrictions applied by several EU
member states violated GATT Article XI (quantitative restrictions) and that
the tariff preference granted by the EU to bananas from African, Caribbean
and Pacific (ACP) countries violated the MFN principle and could not be
justified under GATT Article XXIV (FTAs & customs unions).


Until 1 July 1993, each EU member state maintained its own banana import
regime, with some member states having special arrangements favouring their
former colonies. On 1 July 1993, a new EU-wide banana import
regime came into effect. The same five Latin American countries requested a
new panel to examine the new unified banana import regime.


On 11 February 1994, the second panel also ruled against the new
banana import regime.

  

In the WTO

In February 1996, dissatisfied with the
EU's implementation of the GATT panel reports, Ecuador, Guatemala, Honduras,
Mexico and the US filed a new complaint, under the WTO's dispute settlement
system, against the EU’s banana import regime, which had been in force since
July 1993, claiming that it unfairly restricted the entry of their bananas
to the EU.


In September 1997, the WTO ruled that the EU’s banana import regime
was inconsistent with WTO rules for the following reasons:

a) the EU’s tariff quota allocation,
particularly to the ACP (African, Caribbean, Pacific) countries, was
contrary to the rule of non-discriminatory administration of quotas
(Article 13 of the GATT - General Agreement on Tariffs & Trade);

b) the EU’s licensing procedures, which involve the purchase of EU and/or
ACP bananas in order to obtain rights to import some Latin American (or
other third countries’) bananas, were contrary to the MFN
(most-favoured-nation) rule and the national treatment rule (Articles 1 &
3 respectively of the GATT); and

c) through the impact of this licensing system on the service suppliers of
the complaining countries, the licensing procedures were also contrary to
the MFN rule and the national treatment rule (Articles 2 & 17) of the GATS
— General Agreement on Trade in Services.

In January 1999, the EU introduced a new
banana import regime but in April 1999 the WTO ruled that this new regime
was also incompatible with the EU’s WTO obligations.


On 19 April 1999, the WTO granted US authorization to impose
sanctions upto an amount of US$191.4 million per year on EU products
entering the US market.


In May 2000, the WTO granted Ecuador authorization to impose
sanctions upto an amount of US$201.6 million per year on EU exports to
Ecuador.


In April 2001, the three countries reached an agreement whereby
Ecuador and the US would suspend their sanctions so long as the EU changed
its banana import regime from the existing tariff-rate quota system to a
tariff-only system by 1 January 2006. Under this new tariff-only system,
banana imports would not be subject to quotas; there would be a single
tariff for all banana imports, except for ACP bananas which would continue
to benefit from a preferential tariff arrangement but not from
country-specific tariff quota shares.


In order to change from a tariff-rate quota system to a tariff-only system,
the EU has to modify all its existing WTO market-access commitments relating
to bananas. Hence, under WTO rules (Article 28 of GATT), the EU has to
re-negotiate with all countries which supply bananas on a non-preferential
basis to the EU and reach agreement on the details of the new tariff-only
system. At the end of these negotiations, the share of the EU market for
these suppliers should be no less than before.


In November 2001, at the WTO Ministerial Conference in Doha, Qatar,
all member governments of the WTO adopted a Ministerial Decision which
formalized the above elements of the agreement between Ecuador, the US and
the EU. The Ministerial Decision also spelt out the procedures and timetable
for possible arbitration in the event the EU is unable to reach an agreement
with the banana-supplying countries on the new tariff-only system. A related
Ministerial Decision adopted at Doha allows ACP bananas to be imported into
the EU tariff-free until 31 December 2007.


On 31 January 2005, after several months of consultations with
non-preferential banana-supplying countries, the EU informed the WTO of its
new banana tariff: Euro 230/tonne.


In March/April 2005, Brazil, Colombia, Costa Rica, Ecuador,
Guatemala, Honduras, Nicaragua, Panama, and Venezuela requested arbitration
under Doha Ministerial Decision.


In August 2005, the arbitration panel ruled that EU’s proposed Euro
230/tonne tariff would not maintain existing market-access for
non-preferential banana suppliers in Latin America.


On 12 September 2005, the EU proposed a revised tariff of Euros
187/tonne. Further consultations were held among the parties but they were
unable to reach a mutually-satisfactory solution.


On 26 September 2005, the EU requested a second arbitration, saying
that, with the exception of a proposal for a zero tariff, the EU had not
been presented with an alternative figure to its proposed tariff, and that
there was no basis for seeking a mutually-satisfactory solution in the
absence of a counter proposal from the other parties. Hence, the EU was
requesting an arbitration to determine, within 30 days, whether the new EU
proposal “has rectified the matter”.


On 27 October 2005, the second arbitration report was issued. It
determined that the EU's proposed rectification, consisting of a new MFN
tariff of Euro 187/tonne and a 775,000 ton tariff quota on imports of
bananas of ACP origin, would not result in “at least maintaining total
market access for MFN banana suppliers”. The arbitrator, therefore,
concluded that the EU had failed to rectify the matter.


On 29 November 2005, the EU adopted new banana import measures which
would come into effect on 1 January 2006. A new tariff for MFN bananas was
set at Euros 176/tonne with a zero tariff for ACP bananas up to a level of
775,000 tons.


On 30 November 2005, Honduras, Panama and Nicaragua separately
requested consultations with the EU under DSU Article 21.5.

In December 2005 at the Hong Kong
Ministerial, several Latin American countries expressed serious concern over
what they considered to be the EU's non-implementation of the WTOs rulings
in the long-standing banana dispute, particularly in the light of the two
arbitrations under the Doha Waiver. WTO DG Lamy, therefore, nominated Mr
Jonas Store, the Norwegian Trade Minister, as Facilitator to try to find a
solution and asked him to report to the General Council accordingly.
Minister Store conducted regular meetings under a good offices process for
more than 18 months.


On 28 November 2006, Ecuador requested consultations with the EU
under DSU Art 21.5, and a panel was established on 20 March 2007.
Panel composed on 15 June 2007. On 10 December 2007, report
issued to parties, and published on 7 April 2008. The panel ruled
that the duty-free tariff quota for bananas originating in ACP countries and
the MFN tariff of Euros 176/tonne were in violation of Art 1, 2, &13 of
GATT. Time period for adoption was extended to 29 August 2008.


Colombia and Panama filed new disputes respectively on 21 March 2007
& 22 June 2007.


On 12 July 2007, the DSB established Art 21.5 panel at request of US.
Panel composed on 13 August 2007. Report issued to parties on 29
February 2008, and published on 19 May 2008. The panel ruled that
the duty-free tariff quota for bananas of ACP origin was in violation of Art
1 & 13 of GATT. Time period for adoption was extended to 29 August 2008.


On 28 August 2008, the EU appealed both reports. Both Appellate Body
reports published on 26 November 2008, upholding the panels'
findings.


On 11 December 2008, the DSB adopted the reports dealing with
Ecuador's complaint.


On 22 December 2008, the DSB adopted the reports dealing with the US'
complaint.


Since then, the EU has regularly reported to the DSB that it is engaged in
discussions with Latin American banana-supplying countries to conclude a
comprehensive agreement that would include the level of the new EU bound
tariff duty.


Concurrently since November 2007, at the request of some of the
parties, the WTO Director-General Pascal Lamy has been using his good
offices to help broker an agreement.


DG Lamy's Good Offices under DSU Art 3.12


On 2 November 2007, Colombia referred the matter to the
Director-General, acting in an ex-officio capacity, to use his good offices
to help facilitate a solution under Article 3.12 of the DSU. Panama
similarly requested the DG's good offices on 1 February 2008.


Both processes agreed to adhere to confidentiality of content of proceedings
with the aim of seeking a comprehensive solution that covered all
outstanding banana issues in the WTO, including the six disputes filed under
the DSU (DS16,
DS27,
DS105,
DS158,
DS361 &
DS364), the two arbitrations
under the Doha Waiver (WT/L/616 &
WT/L/625), the
EU enlargement/compensation
negotiations under Artciles XXIV and XXVIII of GATT 1994, and the issue of
non-recognition of negotiating rights raised at the Hong Kong Ministerial
and discussed subsequently in the General Council (WT/MIN(05)/9,
WT/GC/85,
WT/GC/90 &
Corr.1, and
WT/GC/100).


During the period November 2007 July 2008, the DG conducted several
meetings under the Colombia/EU and the Panama/EU good offices processes.
In addition, he had a number of meetings with other interested WTO members
including other MFN suppliers, ACP banana producers, other banana producers
and importers.

During the last ten days of July 2008, several Ministers attended a
meeting of the TNC in Geneva to participate in the Doha Round negotiations
to reach an agreement on the modalities in agriculture and industrial
products. As part of these larger Doha Round negotiations, consultations
continued among the parties to seek a comprehensive solution of the banana
issues. The TNC was unable to reach an agreement on the Doha Round
modalities for agriculture and industrial products. No deal was reached on
bananas either.


Parties continued to work in search of a solution, until the announcement of
a comprehensive agreement on Tuesday 15 December 2009.

• 
  

  
  
  WT/L/784 Geneva Agreement on Trade in Bananas

  
  

Banana trade figures

Note: Bananas are defined as HS 0803: Bananas, Including Plantains, Fresh Or Dried.


Based on available data, imports are better estimates for world trade in bananas as they include mirror data for non-reporting countries.


World estimate exclude intra-EU27 trade. World imports are valued CIF
(include cost, insurance and freight) while exports are valued, FOB (free on
board), thus as the data are not adjusted for cif/fob factors, share of
exporting countries are under-estimated.
1 Countries for which data are readily available
2 World imports: Based on sum of all importing countries for which data are readily available ( exclude intra-EU (27) trade)

Source: UN Comtrade and Global Trade Atlas (GTA)