TRADE: Banana Ruling Favours Ecuador While Protecting ACP Sales

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Apr 12 1999 (IPS) - The latest World Trade Organisation (WTO) ruling against the European Union banana import regime benefits Ecuador without removing protection from former European colonies in Africa, the Caribbean and the Pacific (ACP), according to trade sources.

On Monday, the WTO officially distributed the texts of the resolutions by the dispute settlement panel which acted as “arbitrator,” and other cases in the banana dispute pitting the European Union (EU) against the United States and Ecuador.

The panel recommended last Wednesday that the preferential treatment enjoyed by ACP banana exporters in the European market could be preserved only as long as the EU regime complied with WTO norms, said WTO spokesman Keith Rockwell.

But it ruled that EU preferences for banana imports from ACP countries failed to conform to global trade rules, he added.

Among the multiple facets of the long-running dispute over bananas, the EU has alleged that reforms to its system of imports would hurt the weakest link in the chain, former European ACP colonies.

The panel ruled that the EU quota assigned to purchases from 12 ACP countries, 857,700 tonnes of bananas a year, was too high.

The ACP countries cannot satisfy that level of demand, because even during peak production years, they have only exported 685,000 tonnes at the most, said Ecuador’s trade negotiator in the WTO, Roberto Betancurt.

The WTO came down in Ecuador’s favour in its complaint against the EU’s new, reformed regime for the import, sale and distribution of bananas, which went into effect on Jan 1. The panel recommended that the WTO Dispute Settlement Body demand that the EU make further changes to its import arrangements.

The panel also gave the United States permission to impose 191.4 million dollars in retaliatory sanctions against the EU in compensation for trade the WTO determined that U.S. banana companies operating in Latin America had lost as a result of the EU banana regime.

Washington has been defending, in the WTO, the interests of U.S.-based transnational corporations which distribute, in Europe, bananas grown in Latin America.

The panel determined that the 2.55 million tonne-annual quota assigned to Latin American countries must be modified, in order to bring the quotas into line with agreements adopted within the system of multilateral trade.

Of that total, Ecuador was assigned a quota of 668,000 tonnes (26 percent), Costa Rica 653,000 tonnes (25 percent), Colombia 588,000 (23 percent) and Panama 402,000 (15 percent).

The remaining nine percent was distributed among countries in the “others” category: Mexico, Guatemala, Honduras, Nicaragua, Venezuela, the Dominican Republic and Ghana.

The quotas assigned to the Latin American banana producers, which have a substantial interest in the European market, violate the rules of the international trade body, according to the panel.

The special panel also determined that the new system of licenses for banana imports perpetuated the discriminatory aspects of the previous EU licensing system.

The new licensing regime has put Ecuadorean providers of services in the European market, based in Belgium, Germany, Italy and Great Britain, at a competitive disadvantage, state the resolutions distributed Monday.

Ecuador presented evidence to clearly substantiate its claims of unequal treatment and losses incurred, said Betancurt.

The EU “should consider compensating Ecuador for these damages,” argued Betancurt, who failed to specify, however, the amount sought.

The trade negotiator admitted the possibility that the EU might appeal the ruling before the Dispute Settlement Body confirms it within 60 days of Monday’s distribution of the resolutions.

But “the decision to appeal must be weighed politically,” he added. Not only by the European Commission, but also the 15 EU member states, must thoroughly consider the merits of appealing, he pointed out.

Betancurt and other negotiators said several EU countries had begun to indicate weariness over the long-running banana dispute, which has dragged on since the beginning of the decade.

“We should decide once and for all how far we will take this process, which has taken on shades of a trade war,” said Betancurt.