Andrew Harper,

Scott Hoefke,

and Jon Hoffman

ITRN 603

March 2, 2009

Original roots of the Banana controversy Colonialism Treaty of Rome 1957

Preferential Treatment Tariffs and quotas imposed on

non-member countries

Lomé I, 1975 Agreement between EEC and ACP Institutionalized Political Cooperation Types of Commodities

Lomé 2, 1980Lomé 3, 1985Lomé 4, 1989

Continued strengthening of ties between EEC and ACP

ACP countries and “no less favorable position” status

In 1993, the EU created a New Banana Regime, a single system to regulate bananas. Common Market Organization for

Bananas (CMOB) New Trade Barriers resulted

Problems with CMOB Conflicting practices No way to resolve disputes

Five Latin American countries requested a GATT panel on the issue. Most Favored Nation Principle National Treatment Principle Article XI and XIII of GATT

Result GATT ruled against EU EU grants concessions in “Framework

Agreement” EU largely kept original position

Unhappy with the results, the same countries initiated another dispute under the newly formed WTO. GATS Agreement on Import Licensing

Procedures

This resulted in a WTO panel ruling against the EU. Banana Regime discriminatory on

both counts

The period ended with no substantive change.

US and Ecuador took retaliatory measures.

EU responded and put the issue on the upcoming Doha Round.

Two Banana related Ministerial Decisions ACP-EC Partnership Agreement

(Doha Waiver) Decision on EC Transitional Regime

for Banana Imports

In response, the EU proposed to modify the CMOB.

Doha Waiver authorized two rounds of special arbitration.

Both Arbitration Awards went against the EC. Issued August 1, 2005 Issued October 27, 2005

DS 27/80 Ecuador argued that the new rules failed to comply with WTO obligations. Preferential Tariff Rate Tariff Rate Quota System for ACP

Suppliers

DS 27/83 The US requested a Panel to investigate EU’s compliance based on Ecuador’s charges

In both cases, the WTO ruled against the EU

The EU banana dispute shows that cases brought to the WTO DSU are politically chosen with great latitude of choice by the administration.

Chiquita was shown to be the largest political contributor to both parties in the 1993-1994 election cycle, and most of the affected parties from the EUBR were not American.

EU defended favoritism of ACP as a foreign aid policy tool, called any reforms that leveled import tariffs “agricultural genocide”.

In both the US and EU, agriculture is a heavily protected industry and political will to reform agriculture policy is lacking.

Dispute between EU and US has become a broader one containing genetically modified foods. The US still believes that the EU regime is discriminatory, and also states the EU is openly in noncompliance with a judicial body ruling on bio-tech products.

The EU says it is examining the issue, but has only approved 20 products, ever.

EU is attempting to develop a financial aid package to offset losses for ACP exports.

The EU also says that any further discussions on banana changes will be tied to the Doha round, which are currently suspended indefinitely. The issue with bringing up the banana issue in the WTO is that ACP countries will have the veto power.

The EU has offered Latin America’s top banana suppliers to initially cut duties on bananas to 148 euros per ton from 176 euros now to try and end the world’s longest running trade dispute.

The European Commission has proposed gradually lowering taxes on banana imports from Latin American countries to 114 euros per ton by 2016.

Costa Rica believes that the EU will make a new offer in March 2009.

EU implement recommendations made by WTO

Limited sanctions against the EU

Further define the term “Banana Regime”

Resolution will affect other cases DS165 DS54, DS55, DS59, DS64 GMF

On going EU will have to implement new banana

regime Doha

“Developing country preferences, quota allocation schemes, trade dispute rules, multilateral trading firms, competition for market shares, political sensitivities” (Josling 195)

Sugar Similar under Lomé Convention

Non-colonial competition Latin America US (Chiquita, Del Monte, Dole)

“The U.S.-EU Banana Agreement” http://www.ustr.gov/Document_Library/Press_Releases/2001/April/The_US-EU_Banana_Agreement.html

Barfield, Scott. “Multilateral Agreement on an EU Banana Trade Regime- A Political Compromise.” Sheffield University, 2002. http://www.bananalink.org.uk/images/wto%20and%20companies%20barfield.pdf

T.B. Simi, and Kaushik, Atul, “The Banana War at the GATT/WTO” Trade Law Brief, CUTS Centre for International Trade, Economics, and Environment, http://www.cuts-citee.org/pdf/TLB08-01.pdf

“Banana Wars.” The World Next Week, Oxford Analytica, July 14-20 2007, http://www.oxan.com/worldnextweek/2007-07-12/Bananawars.aspx

Grynberg, Roman, “WTO at the Margins,” Cambridge University Press, 2006. p 451. http://books.google.com/books?id=0rTW-eyoOFQC&pg=PA451&lpg=PA451&dq=treaty+of+rome+1957+bananas&source=bl&ots=VbPKqA-rRa&sig=r46meINWIjL2usvMOW8hjYDnBxk&hl=en&ei=YlqoSdKUF4-ctwe66_T7Dw&sa=X&oi=book_result&resnum=1&ct=result

ed. Josling, Timothy E. and Taylor, Timothy G. “Banana Wars: The Anatomy of a Trade Dispute”  CABI Publishing, 2003 http://www.netlibrary.com/Reader/

“A slippery case, but EU loses WTO Banana Appeal” http://www.neurope.eu/articles/90859.php

WTO Legal Affairs, “WTO Dispute Settlement: One-Page Case Summaries”  WTO 2008 Malawer, Stuart S. “WTO Law, Litigation & Policy: Sourcebook of Internet Material”, William S. Hein & Co. 2007