News and Analysis • Volume 11 • Number 5 • August 2007
Banana Update
The European Union now faces four separate WTO disputes – by Ecuador, Colombia, Panama and the US – on its revised banana import regime. Following the loss of a long-running WTO dispute in 1997, the EU was supposed to eliminate all quotas and establish a single tariff that would apply as of 1 January 2006 to all suppliers except those from the African, Caribbean and Pacific (ACP) Group of States. The new tariff was to be set at a level that would at least preserve the total market access previously enjoyed by most-favoured-nation (MFN) suppliers. When negotiations with trading partners failed, the EU unilaterally set the MFN tariff at €176/tonne, and established a 775,000 tonne duty-free import quota for ACP suppliers.
All complainants allege that the ACP import quota is WTO-inconsistent. The Latin American complainants also maintain that the new tariff is too high.
Compliance panels have already been established on Ecuador’s and the United States’ claims that the EU has not implemented WTO rulings adopted in 1997. Panelists were appointed on 15 June to hear Ecuador’s complaint. Compliance panels should in principle complete their work within three months.
Meanwhile, the EU has reportedly proposed to lower the applied MFN tariff to €123 per tonne over five years provided that there are no more WTO disputes over its banana import regime. According to Reuters, the EU’s favoured option would be to solve the problem in the context of the Doha Round negotiations. This would involve binding the tariff somewhere between €273 and €307, depending on the tariff bands and associated percentage cuts agreed in the agriculture negotiations. Without a Doha deal, the EU would bind the duty at €185. In either case, the applied rate would start at €170 per tonne and end at €123 five years later.
At the time of writing it was not clear whether the EU would maintain the controversial ACP quota.