Bridges Weekly 20 March 2007

WTO Members on 20 March agreed to establish a panel to examine whether the EU's banana import policies violate multilateral trade rules, in response to a complaint by Ecuador. Brussels blocked Ecuador's initial request for a panel earlier this month, but was prevented by WTO practice from doing so a second time when Quito repeated its request at a meeting of the Dispute Settlement Body.

The spat, which has lasted for over a decade, pits several Latin American banana producers and the US, against the EU's trade preferences for bananas from its former colonies in the African, Caribbean, and Pacific (ACP) group of countries.

Since the late 1990s, Ecuador has claimed that Brussels' banana import rules violate its WTO obligations, including a series of adverse dispute rulings, by discriminating in favor of bananas from ACP countries. It remains unhappy with the EU's latest reform, introduced at the beginning of 2006, under which it levies a 176 euros per ton tariff along with a duty-free quota of 775,000 tonnes for ACP bananas (see BRIDGES Weekly, 28 February 2007).

The EU's reformed banana import regime was supposed to "at least maintain total market access" for countries like Ecuador that did not benefit from preferences. Quito claims that this has not been the case, and that since 2006, its exports have fallen by 3 percent. Brussels refutes these numbers.

Brussels expressed disappointment with Ecuador's decision to pursue the creation of a panel to rule on its compliance with WTO obligations. Spokesperson Michael Mann said that bilateral consultations aimed at settling the spat "were going rather well."

The long-running dispute, with its various rulings against the EU, has generated much debate about the ability of developing countries to enforce WTO rulings, particularly against major developed economies.

The panel will have 90 days to issue its opinion.

ICTSD reporting, "WTO to Rule Whether EU Still Flouts Decisions on Banana Imports" BLOOMBERG, 20 March 2007.