The European Union has suffered comprehensive losses in separate disputes brought by Ecuador and the United States against its import regime for bananas. The complainants had requested compliance panels to determine whether the EU had reformed its banana import regulations as required by earlier WTO rulings in the dispute.
The Case
By January 2006, the EU was to eliminate all import quotas and negotiate a new most favoured- nation (MFN) tariff with its banana suppliers, making sure that new the regime would ‘at least maintain total market access’ for countries that did not benefit from preferences. However, the EU import regime that entered into force on 1 January 2006, maintains a 775,000 tonne annual duty-free quota for suppliers from African, Caribbean and Pacific (ACP) countries, while applying a • 176/tonne MFN tariff to banana to all other exporters. The tariff was set unilaterally by the EU rather than negotiated with trading partners. The complainants argued that these measures were contrary to the EU’s stated intentions on the implementation of previous rulings, and did not allow MFN suppliers to maintain pre- 2006 level of exports to the European banana market. The compliance panels found both the ACP quota and the level of the new MFN tariff inconsistent with the EU’s WTO obligations. Compliance rulings are expected shortly on similar complaints from Colombia and Panama.
EU Reaction
Commenting on the 10 December ruling on Ecuador’s complaint, EU officials said the compliance panel had taken a ‘purely formalistic approach’, overlooking EU data that demonstrated that European imports of Latin American bananas were increasing. In both disputes, the European Commission maintains that any findings regarding the ACP quota have been rendered ‘irrelevant’ by the full duty- and quota-free access for bananas granted to ACP countries as of 1 January 2008 under Economic Partnership Agreements (EPAs). Some analysts contacted by Bridges warned, however, that the current legal status of the EPAs remains unclear since only one of them has been formally concluded and none have been notified to the WTO (see related article on page 8). The commission also blasted the US for bringing the dispute in the first place, since the country does not export any bananas to the EU. “The fact that US multinationals are engaged in exports of Latin American bananas to the [European] market should not be sufficient to establish a prejudice” to US trade interests, it argued. The multinational in question are Chiquita, Dole and Del Monte, all of which own large plantations in Latin America. With regard to the claim that the • 176/tonne tariff is too high, commission spokesperson Michael Mann said it would be through ‘negotiations, not litigation’ that a solution satisfactory for all suppliers would emerge.
More Negotiations Possible, Appeal Probable
It is not entirely clear when such negotiations would take place. Confidential discussions between the EU and MFN suppliers were held last year. However, sources contacted by Bridges were uncertain about the current status of those talks. In particular, they noted that the options for a lower MFN tariff proposed by the EU in July 2007 were conditioned on an end to WTO litigation on its banana import regime (Bridges Year 11 No.5 page 8). In addition, the European Union is expected to appeal the rulings. Critics suggest the move is motivated by a desire to prolong dispute until a Doha deal on agricultural tariffs is clearer rather than a genuine belief that the Appellate Body would overturn the compliance verdicts.