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Regime for the Importation, Sale and Distribution of Bananas

Key Facts
Short Title: EC — Bananas III
Respondent: European Communities
Third Parties: Cameroon; Ghana; Madagascar; Senegal; Belize; Brazil; Canada; Colombia; Costa Rica; Dominica; Dominican Republic; Grenada; Jamaica; Nicaragua; Panama; St. Lucia; St. Vincent and the Grenadines; Venezuela; Japan; India; Phillippines;
Complaintant(s): Ecuador; Guatemala; Honduras; Mexico; United States;
Dispute Number: DS27
Link to Dispute Site: http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds27_e.htm
Dispute Subject(s): Bananas;
Dispute Status: Concluded
Complaints by Ecuador, Guatemala, Honduras, Mexico and the United States.

The complainants in this case other than Ecuador had requested consultations with the EC on the same issue on 28 September 1995 (WT/DS16). After Ecuador's accession to the WTO, the current complainants again requested consultations with the EC on 5 February 1996. The complainants alleged that the EC's regime for importation, sale and distribution of bananas is inconsistent with GATT Articles I, II, III, X, XI and XIII as well as provisions of the Import Licensing Agreement, the Agreement on Agriculture, the TRIMs Agreement and the GATS.

On 11 April 1996, the five complainants requested the establishment of a panel. At its meeting on 24 April 1996, the DSB deferred the establishment of a panel. Further to a second request by the five complainants, a panel was established at the DSB meeting on 8 May 1996. On 29 May 1996, the five complainants requested the Director-General to determine the composition of the Panel. On 7 June 1996, the Panel was composed. The report of the Panel was circulated to Members on 22 May 1997. The Panel found that the EC's banana import regime, and the licensing procedures for the importation of bananas in this regime, are inconsistent with the GATT. The Panel further found that the Lomé waiver waives the inconsistency with GATT Article XIII, but not inconsistencies arising from the licensing system.

On 11 June 1997, the European Communities notified its intention to appeal certain issues of law and legal interpretations developed by the Panel. The report of the Appellate Body was circulated to Members on 9 September 1997. The Appellate Body mostly upheld the Panel's findings, but reversed the Panel's findings that the inconsistency with GATT Article XIII is waived by the Lomé waiver, and that certain aspects of the licensing regime violated Article X of GATT and the Import Licensing Agreement.

At its meeting on 25 September 1997, the Appellate Body report and the Panel report, as modified by the Appellate Body, were adopted by the DSB.

Appellate Body and Panel Compliance Reports (Article 21.5) Adopted

On 15 December 1998, the EC requested the establishment of a panel under Article 21.5 to determine that the implementing measures of the EC must be presumed to conform to WTO rules unless challenged in accordance with DSU procedures. On 18 December 1998, Ecuador requested the re-establishment of the original panel to examine whether the EC measures to implement the recommendations of the DSB are WTO-consistent. At its meeting on 12 January 1999, the DSB agreed to reconvene the original panel, pursuant to Article 21.5 of the DSU, to examine both Ecuador's and the EC's requests. Jamaica, Nicaragua, Colombia, Costa Rica, Côte d'Ivoire, Dominican Republic, Dominica, St. Lucia, Mauritius, St. Vincent, indicated their interest to join as third parties in both requests, while Ecuador and India indicated their third-party interest only in the EC request. On 18 January 1999, the Compliance Panels were composed. The two Compliance Panel Reports were circulated on 12 April 1999.

The Article 21.5 panel, requested by the EC, found that, because a challenge had actually been made by Ecuador regarding the WTO-consistency of the EC measures taken in implementation of the DSB recommendations, it was unable to agree with the EC that the EC must be presumed to be in compliance with the recommendations of the DSB. The report of the Article 21.5 panel requested by the EC was never adopted by the DSB. In the Article 21.5 panel requested by Ecuador, the panel found that the implementation measures taken by the EC in compliance with the recommendations of the DSB were not fully compatible with the EC's WTO obligations. The report of the Article 21.5 panel requested by Ecuador was adopted by the DSB on 6 May 1999.

On 16 November 2006, Ecuador requested consultations under Article 21.5 of the DSU and Article XXIII of the GATT 1994. On 28 November 2006, Ecuador submitted a revised request for consultations under Article 21.5 of the DSU and Article XXII of the GATT 1994. Belize, Cameroon, Colombia, Côte d'Ivoire, Dominica, the Dominican Republic, Jamaica, Panama, Saint Lucia, St. Vincent and the Grenadines, Suriname and the United States requested to join the consultations. The European Communities informed the DSB that they had accepted all the requests to join the consultations. On 23 February 2007, Ecuador requested the establishment of a compliance panel. At its meeting on 20 February 2007, the DSB deferred the establishment of a compliance panel. At its meeting on 20 March 2007, the DSB agreed to refer to the original Panel, if possible, the question of whether the new EC banana regime was in conformity with the DSB's recommendations and rulings. Cameroon, Colombia, Côte d'Ivoire, Dominica, the Dominican Republic, Ghana, Jamaica, Japan, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and the United States reserved their third-party rights. Subsequently, Belize, Brazil, Madagascar, Nicaragua, Panama and Suriname reserved their third-party rights.

On 5 June 2007, Ecuador requested the Director-General to determine the composition of the Panel. On 15 June 2007, the Director-General composed the Panel. On 5 December 2007, the Chairman of the Panel informed the DSB that it would not be possible to circulate its report within 90 days after the date of referral. The Panel expected to issue its final report to parties in December 2007 and, following translation, the final report was expected to be circulated to Members in February 2008.

On 29 June 2007, the United States requested the establishment of a compliance panel as it considered that the EC has failed to bring its import regime for bananas into compliance with its WTO obligations and the regime remains inconsistent today. At its meeting on 12 July 2007, the DSB referred the matter to the original panel, if possible. Brazil, Cameroon, Colombia, the Dominican Republic, Ecuador, Jamaica, Japan, Nicaragua and Panama reserved their third-party rights. Subsequently, Belize, Côte d'Ivoire, Dominica, Mexico, St. Lucia, St .Vincent and the Grenadines, and Suriname reserved their third-party rights.

On 3 August 2007, the United States requested the Director-General to determine the composition of the Panel. On 13 August 2007, the Director-General composed the Panel. On 21 February 2008, the Chairman of the Panel informed the DSB that it would not be possible to circulate its report within 90 days after the date of referral. The Panel expected to issue its final report to parties no later than the end of the first week of March 2008.

On 7 April 2008, the compliance panel report requested by Ecuador was circulated to Members. The Panel rejected the preliminary issue raised by the European Communities that Ecuador is prevented from challenging the European Communities' current import regime for bananas, including the preference for ACP countries, because of the Understanding on Bananas, signed by both Members in April 2001. Accordingly, and after having examined the substantive claims raised by Ecuador as well as the defences invoked by the European Communities, the Panel concluded that:

1. The preference granted by the European Communities to an annual duty-free tariff quota of 775,000 mt of imported bananas originating in ACP countries constitutes an advantage for this category of bananas, which is not accorded to like bananas originating in non-ACP WTO Members, and is therefore inconsistent with Article I:1 of GATT 1994;

2. With the expiration of the Doha Waiver from 1 January 2006 as it applied to bananas, there is no evidence that, during the period that is relevant for this Panel's findings, that is, from the time of the establishment of the Panel until the date of this Report, any waiver from Article I:1 of GATT 1994 has been in force to cover the preference granted by the European Communities to the duty-free tariff quota of imported bananas originating in ACP countries;

3. The European Communities' current banana import regime, in particular its preferential tariff quota reserved for ACP countries, is inconsistent with Article XIII:1, with the chapeau of Article XIII:2, and with Article XIII:2(d) of the GATT 1994;

4. The tariff applied by the European Communities to MFN imports of bananas, set at €176/mt, without consideration of the tariff quota for 2.2 million mt bound at an in-quota tariff rate of €75/mt, is an ordinary customs duty in excess of that set forth and provided for in Part I of the European Communities' Schedule. This tariff is therefore inconsistent with the first sentence of Article II:1(b) of the GATT 1994; and,

5. It is unnecessary, for the resolution of this dispute, to make a separate finding on Ecuador's claim under Article II:1(a) of the GATT 1994.

In consequence, the Panel concluded that, through its current regime for the importation of bananas, established in Council Regulation (EC) No. 1964/2005 of 29 November 2005, including the duty-free tariff quota for bananas originating in ACP countries and the MFN tariff currently set at €176/mt, the European Communities had failed to implement the recommendations and rulings of the DSB.

The Panel recommended that the DSB request the European Communities to bring the inconsistent measures into conformity with its obligations under the GATT 1994.

On 19 May 2008, the compliance panel report requested by the United States was circulated to Members. Regarding the preliminary objections advanced by the European Communities, the Panel found that:

1. the United States had, under the DSU, the right to request the initiation of the current compliance dispute settlement proceedings;

2. the European Communities has not succeeded in making a prima facie case that the United States is prevented from challenging the European Communities' current import regime for bananas, including the preference for ACP countries, because of the Bananas Understanding, signed between the United States and the European Communities in April 2001; and

3. the European Communities has failed in making a case that the United States' complaint under Article 21.5 of the DSU should be rejected, because the European Communities' current import regime for bananas, including the preference for ACP countries, is not a "measure taken to comply" with the recommendations and rulings of the DSB in the original proceedings.

The Panel accordingly rejected the preliminary issues raised by the European Communities.

After having examined the substantive claims raised by the United States, as well as the defences invoked by the European Communities, the Panel concluded that:

1. The preference granted by the European Communities to an annual duty-free tariff quota of 775,000 mt of imported bananas originating in ACP countries constitutes an advantage for this category of bananas, which is not accorded to like bananas originating in non-ACP WTO Members, and is therefore inconsistent with Article I:1 of GATT 1994;

2. With the expiration of the Doha Waiver from 1 January 2006 as it applied to bananas, the European Communities has failed to demonstrate the existence of a waiver from Article I:1 of GATT 1994 to cover the preference granted by the European Communities to the duty-free tariff quota of imported bananas originating in ACP countries; and

3. the European Communities' current banana import regime, in particular its preferential tariff quota reserved for ACP countries, is also inconsistent with Article XIII:1 and Article XIII:2 of the GATT 1994;

In consequence, the Panel concluded that, through its current regime for the importation of bananas, established in Council Regulation (EC) No. 1964/2005 of 29 November 2005, in particular its duty-free tariff quota for bananas originating in ACP countries, the European Communities had failed to implement the recommendations and rulings of the DSB.

The Panel also concluded that, to the extent that the current European Communities bananas import regime contains measures inconsistent with various provisions of the GATT 1994, it has nullified or impaired benefits accruing to the United States under that Agreement.

Since the original DSB recommendations and rulings in this dispute remain operative through the results of the current compliance proceedings, the Panel made no new recommendation.

Pursuant to a request from Ecuador and the European Communities, at its meeting on 2 June 2008, the DSB agreed to an extension of the time-period in Article 16.4 to enable them to explore the possibility of reaching a mutually agreed solution.

Pursuant to a request from the United States and the European Communities, at its meeting on 24 June 2008, the DSB agreed to an extension of the time-period in Article 16.4 to enable them to explore the possibility of reaching a mutually satisfactory solution.

On 28 August 2008, the European Communities notified its decision to appeal to the Appellate Body certain issues of law and certain legal interpretations developed by the Panel relating to the compliance panels requested by Ecuador and the United States. On 9 September 2008, Ecuador notified its decision to appeal to the Appellate Body certain issues of law and certain legal interpretations developed by the Panel.

On 21 October 2008, the Chairman of the Appellate Body notified the DSB that it would not be able to circulate its reports within 60 days due to the time required for completion and translation of the report. It was estimated that the reports would be circulated no later than 26 November 2008.

On 26 November 2008, the Appellate Body reports were circulated to Members.

In the appeal of the Panel report, European Communities - Regime for the Importation, Sale and Distribution of Bananas - Second Recourse to Article 21.5 of the DSU by Ecuador (WT/DS27/RW2/ECU), with respect to procedural issues, the Appellate Body found the Panel did not act inconsistently with Article 9.3 of the DSU by maintaining different timetables in the Article 21.5 proceedings between the European Communities and Ecuador and between the European Communities and the United States; and upheld the Panel's finding, albeit for different reasons, that Ecuador was not barred by the Understanding on Bananas from initiating this compliance proceeding.

With respect to Article XIII of the GATT 1994, the Appellate Body upheld the Panel's findings that, to the extent that the European Communities argues that it has implemented a suggestion pursuant to Article 19.1 of the DSU, the Panel was not prevented from conducting, under Article 21.5 of the DSU, the assessment requested by Ecuador; and that, therefore, the Panel did not need to assess whether the European Communities has effectively implemented any of the suggestions of the first compliance panel requested by Ecuador. The Appellate Body also upheld, albeit for different reasons, the Panel's finding that the EC Bananas Import Regime, in particular, its duty-free tariff quota reserved for ACP countries, was inconsistent with Article XIII:1 and Article XIII:2 of the GATT 1994.

With respect to Article II of the GATT 1994, the Appelalte Body reversed the Panel's finding that the Doha Article I Waiver constituted a subsequent agreement between the parties extending the tariff quota concession for bananas listed in the European Communities' Schedule of Concessions beyond 31 December 2002, until the rebinding of the European Communities' tariff on bananas. The Appallate Body also reversed the Panel's finding that the European Communities' tariff quota concession for bananas was intended to expire on 31 December 2002 on account of paragraph 9 of the Bananas Framework Agreement.

The Appellate Body upheld, albeit for different reasons, the Panel's findings that the tariff applied by the European Communities to MFN imports of bananas, set at €176/mt, without consideration of the tariff quota of 2.2 million mt bound at an in-quota tariff rate of €75/mt, is an ordinary customs duty in excess of that provided for in the European Communities' Schedule of Concessions, and thus inconsistent with Article II:1(b) of the GATT 1994 and that the European Communities, by maintaining measures inconsistent with different provisions of the GATT 1994, including Article XIII, had nullified or impaired benefits accruing to Ecuador under that Agreement.

The Appellate Body recommended that the DSB request the European Communities to bring its measure, found to be inconsistent with the GATT 1994, into conformity with its obligations under that Agreement.

In the appeal of the Panel report, European Communities - Regime for the Importation, Sale and Distribution of Bananas - Recourse to Article 21.5 of the DSU by the United States (WT/DS27/RW/USA), with respect to procedural issues, the Appellate Body found that the Panel did not act inconsistently with Article 9.3 of the DSU by maintaining different timetables in the Article 21.5 proceedings between the European Communities and Ecuador and between the European Communities and the United States, albeit for different reasons, upheld the Panel's findings that the United States was not barred by the Understanding on Bananas from initiating this compliance proceeding and that the EC Bananas Import Regime constituted a "measure taken to comply" within the meaning of Article 21.5 of the DSU and was therefore properly before the panel. The Appellate Body also found that the panel did not err in making findings with respect to a measure that had ceased to exist subsequent to the establishment of the panel, but before the panel issued its report. The Appellate Body also found that the deficiencies in the European Communities' Notice of Appeal do not lead to dismissal of the European Communities' appeal.

With respect to Article XIII of the GATT 1994, the Appellate Body upheld, albeit for different reasons, the Panel's finding that the EC Bananas Import Regime, in particular, its duty-free tariff quota reserved for ACP countries, was inconsistent with Article XIII:1 and Article XIII:2 of the GATT 1994 and the Panel's finding that to the extent that the EC Bananas Import Regime contained measures inconsistent with various provisions of the GATT 1994, it nullified or impaired benefits accruing to the United States under that Agreement.

As the measure at issue was no longer in existence, The Appellate Body did not make any recommendation to the DSB pursuant to Article 19.1 of the DSU.

At its meeting on 11 December 2008, with respect to the compliance panel requested by Ecuador, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report.

At its meeting on 22 December 2008, with respect to the compliance panel requested by the United States, the DSB adopted the Appellate Body report and the Panel report, as upheld by the Appellate Body report.

Implementation Status of Adopted Reports

On 17 November 1997, the complainants requested that the "reasonable period of time" for implementation of the recommendations and rulings of the DSB be determined by binding arbitration, pursuant to Article 21.3(c) of the DSU. The Arbitrator found the reasonable period of time for implementation to be 15 months and 1 week from the date of the adoption of the reports i.e. it expired on 1 January 1999. The report of the Arbitrator was circulated to Members on 7 January 1998.

On 18 August 1998, further to the EC's revision of their legislation, the complainants requested consultations with the EC (without prejudice to their rights under Article 21.5), for the resolution of the disagreement between them over the WTO-consistency of measures introduced by the EC in purported compliance with the recommendations and rulings of the Panel and Appellate Body. At the DSB meeting on 25 November 1998, the EC announced that it had adopted the second Regulation to implement the recommendations of the DSB, and that the new system will be fully operational from 1 January 1999. On 15 December 1998, the EC requested the establishment of a panel under Article 21.5 to determine that the implementing measures of the EC must be presumed to conform to WTO rules unless challenged in accordance with DSU procedures. On 18 December 1998, Ecuador requested the re-establishment of the original panel, under Article 21.5, to examine whether the EC measures to implement the recommendations of the DSB are WTO-consistent. At its meeting on 12 January 1999, the DSB agreed to reconvene the original panel, pursuant to Article 21.5 of the DSU, to examine both Ecuador's and the EC's requests.

On 14 January 1999, the United States, pursuant to Article 22.2 of the DSU, requested authorization from the DSB for suspension of concessions to the EC in an amount of US$520 million. At the DSB meeting on 29 January 1999, the EC, pursuant to Article 22.6 of the DSU, requested arbitration on the level of suspension of concessions requested by the United States. The DSB referred the issue of the level of suspension to the original panel for arbitration. Pursuant to Article 22.6 of the DSU, the request for the suspension of concessions by the United States was deferred by the DSB until the determination, through the arbitration, of the appropriate level for the suspension of concessions.

In the arbitration under Article 22.6 of the DSU, necessitated by the EC's challenge to the level of suspension sought by the United States (US$520 million), the arbitrators found that the level of suspension sought by the United States was not equivalent to the level of nullification and impairment suffered as a result of the EC's new banana regime not being fully compatible with the WTO. The arbitrators accordingly determined the level of nullification suffered by the United States to be equal to US$191.4 million. The arbitrator's report and the reports of the panels were issued to the parties on 6 April 1999, and circulated to Members on 9 and 12 April 1999 respectively. On 9 April 1999, the United States, pursuant to Article 22.7 of the DSU, requested that the DSB authorize suspension of concessions to the EC equivalent to the level of nullification and impairment, i.e. US$191.4 million. On 19 April 1999, the DSB authorized the United States to suspend concessions to the EC as requested.

The report of the compliance panel requested by Ecuador, under Article 21.5 of the DSU, was adopted by the DSB on 6 May 1999. On 8 November 1999, Ecuador requested authorization from the DSB to suspend the application to the EC of concessions or other related obligations under the TRIPS Agreement, GATS and GATT 1994, pursuant to Article 22.2 of the DSU, in an amount of US$450 million. At the DSB meeting on 19 November 1999, the EC, pursuant to Article 22.6 of the DSU, requested arbitration on the level of suspension of concessions requested by Ecuador. The DSB referred the issue of the level of suspension to the original panel for arbitration. Pursuant to Article 22.6 of the DSU, the request for the suspension of concessions by Ecuador was deferred by the DSB until the determination, through the arbitration, of the appropriate level for the suspension of concessions.

Also at the DSB meeting on 19 November 1999, the EC informed the DSB of its proposal for reform of the banana regime, which envisages a two-stage process, comprising a tariff rate quota system for several years. This system should then be replaced by a tariff only system no later than 1 January 2006. The proposal includes a decision to continue discussions with interested parties on the possible systems for distribution of licences for the tariff rate quota regime. If no feasible system can be found, the proposal for a transitional tariff rate quota regime would not be maintained and negotiations under Article XXVIII of GATT 1994 would be envisaged to replace the current system with a tariff only regime. At the DSB meeting on 24 February 2000, the EC explained that there continued to be divergent views expressed by the main parties concerned and that, as a result, no agreed conclusions could be reached.

The arbitrator's report (on the Ecuadorian request for suspension of concessions) was circulated to Members on 24 March 2000. The arbitrators found that the level of nullification and impairment suffered by Ecuador amounted to US$201.6 million per year. The arbitrators found that Ecuador may request authorization by the DSB to suspend concessions or other obligations under GATT 1994 (not including investment goods or primary goods used as inputs in manufacturing and processing industries); under GATS with respect to "wholesale trade services" (CPC 622) in the principal distribution services; and, to the extent that suspension requested under GATT 1994 and GATS was insufficient to reach the level of nullification and impairment determined by the arbitrators, under TRIPS in the following sectors of that Agreement: Section 1 (copyright and related rights); Article 14 on protection of performers, producers of phonograms and broadcasting organisations), Section 3 (geographical indications), Section 4 (industrial designs). The arbitrators also noted that, pursuant to Article 22.3 of the DSU, Ecuador should first seek to suspend concessions or other obligations with respect to the same sectors as those in which the panel reconvened at the request of Ecuador pursuant to Article 21.5 of the DSU had found violations, i.e. GATT 1994 and the sector of distribution services under GATS. On 8 May 2000, Ecuador requested, pursuant to Article 22.7 of the DSU, that the DSB authorize the suspension of concessions to the EC equivalent to the level of nullification and impairment, i.e. US$201.6 million. On 18 May 2000, the DSB authorized Ecuador to suspend concessions to the European Communities as requested.

At the DSB meeting of 27 July 2000, the European Communities stated with respect to implementation of the recommendations of the DSB that it had begun examining the possibility of managing the proposed tariff rate quotas on a first come, first served basis because negotiations with interested parties on tariff rate quota allocation on the basis of traditional trade flows had reached an impasse. The European Communities also said that its examination would include a tariff only system and its implications. At the DSB meeting of 23 October 2000, the EC stated that it was finalizing its internal decision-making process with a view to implementing the new banana regime. To this effect, the EC considered that, during a transitional period of time, its new banana regime should be regulated by the establishment of tariff-rate quotas and managed on the basis of a "first-come, first-served" (FCFS) system. Before the end of transitional period of time, the EC would initiate Article XXVIII negotiations with a view to establishing a tariff-only system. On 1 March 2001, the EC reported to the DSB that on 29 January 2001, the Council of the European Union adopted Regulation (EC) No 216/2001 amending Regulation (EEC) No 404/93 on the common organisation of the market in bananas. The modifications made in Council Regulation 216/2001 provide for three tariff quotas open to all imports irrespective of their origin: (1) a first tariff quota of 2.200.000 tonnes at a rate of 75€/tonnes, bound under the WTO; (2) a second autonomous quota of 353.000 tonnes at a rate of 75€/tonnes; (3) a third autonomous quota of 850.000 tonnes at a rate of 300€/tonnes. Imports from ACP countries will enter duty-free. In view of contractual obligations towards these countries and the need to guarantee proper conditions of competition, they will benefit from a tariff preference limited to a maximum of 300€/tonnes. The tariff quotas are a transitional measure leading ultimately to a tariff-only regime. According to the EC, substantial progress has been achieved with respect to the implementing measures necessary to manage the three tariff rate quotas on the basis of the First-come, First-served method.

On 3 May 2001, the EC reported to the DSB that intensive discussions with the US and Ecuador, as well as the other banana supplying countries, including the other co-complainants, have led to the common identification of the means by which the long-standing dispute over the EC's bananas import regime will be resolved. In accordance with Article 16(1) of Regulation No (EC) 404/93 (as amended by Council Regulation No (EC) 216/2001), the EC will introduce a Tariff Only regime for imports of bananas no later than 1 January 2006. GATT Article XXVIII negotiations will be initiated in good time to that effect. In the interim period, starting on 1 July 2001, the EC will implement an import regime based on three tariff rate quotas, to be allocated on the basis of historical licensing.

On 22 June 2001, the EC notified an "Understanding on Bananas between the EC and the US" of 11 April 2001, and an "Understanding on Bananas between the EC and Ecuador" of 30 April 2001. Pursuant to these Understandings with the US and Ecuador, the EC will implement an import regime on the basis of historical licensing as follows:

1. effective 1 July 2001, the EC will implement an import regime on the basis of historical licensing as set out in annex to each of the Understandings;

2. effective as soon as possible thereafter, subject to Council and European Parliament approval and to adoption of an Article XIII waiver, the EC will implement an import regime on the basis of historical licensing as set out in annex to each of the Understandings.

The Commission will seek to obtain the implementation of such an import regime as soon as possible. Pursuant to its Understanding with the EC, the US,

* upon implementation of the new import regime described under (1) above, would provisionally suspend its imposition of the increased duties;

* upon implementation of the new import regime described under (2) above, would terminate its imposition of the increased duties;

* may reimpose the increased duties if the import regime described under (2) does not enter into force by 1 January 2002; and

* would lift its reserve concerning the waiver of Article I of the GATT 1994 that the EC has requested for preferential access to the EC of goods originating in ACP states signatory to the Cotonou Agreement; and will actively work towards promoting the acceptance of an EC request for a waiver of Article XIII of the GATT 1994 needed for the management of quota C under the import regime described under (2) above until 31 December 2005.

Pursuant to its Understanding with the EC, Ecuador

* took note that the European Commission will examine the trade in organic bananas and report accordingly by 31 December 2004;

* upon implementation of the new import regime, Ecuador's right to suspend concessions or other obligations of a level not exceeding US$201.6 million per year vis-à-vis the EC would be terminated;

* Ecuador would lift its reserve concerning the waiver of Article I of the GATT 1994 that the EC has requested for preferential access to the EC of goods originating in ACP states signatory to the Cotonou Agreement; and would actively work towards promoting the acceptance of an EC request for a waiver of Article XIII of the GATT 1994 needed for the management of quota C under the import regime described in paragraph C(2) until 31 December 2005.

The EC notified the Understandings as mutually satisfactory solutions within the meaning of Article 3.6 DSU. Both Ecuador and the US communicated that the Understandings did not constitute mutually satisfactory solutions within the meaning of Article 3.6 DSU and that it would be premature to take the item off the DSB agenda. At the DSB meeting on 25 September 2001, Ecuador made an oral statement whereby it criticised the Commission proposal aimed at reforming the EC common organisation for bananas in order to honour the above Understandings.

On 4 October 2001, the EC circulated a status report on the implementation where it indicated that it was continuing to work actively on the legal instruments required for the management of the three tariff quotas after 1 January 2002. In addition, the EC's report indicated that no progress had been made since the previous DSB meeting regarding the waiver request submitted by the EC and the ACP States. The EC further indicated that in the event that no progress was made at the meeting of the Council of Trade in Goods scheduled for 5 October 2001, the EC and the ACP States would be forced to reassess the situation in all respects. At the DSB meeting on 15 October 2001, the EC recalled that the procedure for the examination of the waiver request had been unblocked at the meeting of the Council for Trade in Goods on 5 October 2001, and expressed its readiness to work and discuss with all interested parties in the course of this examination. Ecuador said that if the waiver was limited to what was required during the transitional import regime then it could be granted quickly. Guatemala said that it would carefully follow the outcome of EC's actions and requested that the item should remain on the DSB agenda. Honduras noted that the EC had an obligation to describe the measures to be put in place after 2005. It also reiterated its concerns that the rights of developing countries were not being respected. Panama supported the statement by Honduras and urged the EC to take into account the concerns of Latin American banana exporters. The US expressed satisfaction that the examination procedure of the waiver request had started and hoped that the process would be expeditious. Saint Lucia said that the statement by Honduras that the EC disregarded the rights of some developing countries was inaccurate. It welcomed the start of the examination procedure and hoped that any current differences would soon be resolved. At the DSB meeting on 5 November 2001, the EC informed that the Working Party to examine the waiver requests submitted by the EC and ACP had made some progress. Ecuador said that tariff preferences to be applied by the EC would reproduce the same inconsistencies in the banana import regime. Honduras indicated that it was necessary to ensure that the scope of the waiver did not go beyond what was required for the implementation of the new regime. Panama said that even if the waiver was granted, the dispute would not be settled.

At the DSB meeting on 18 December 2001, the EC welcomed the granting of the two waivers by the Ministerial Conference, which were the prerequisite for the implementation of phase II of the Understandings reached with the United States and Ecuador. The EC noted that the Regulation implementing phase II would be adopted on 19 December 2001, with effect on 1 January 2002. Ecuador, Honduras, Panama and Colombia noted the progress made and sought information from the EC concerning the granting of import licences by one EC Member State in a manner that was inconsistent with the Understandings. On 21 January 2002, the EC announced that Regulation (EC) NO. 2587/2001 had been adopted by the Council on 19 December 2001 and indicated that through this Regulation the EC had implemented phase 2 of the Understandings with the US and Ecuador.

On 30 November 2005, Honduras, Nicaragua and Panama requested consultations with the European Communities under Article 21.5 of the DSU concerning the measures recently adopted by the European Communities to address the requirements provided for by the Waiver adopted in Doha Ministerial in November 2001 with regard to banana trade ("Doha Waiver"). The measures at issue are relevant provisions of the recently passed EC Council Regulation governing the import regime for banana. The measures at issues were adopted following two Arbitrations under the Doha Waiver, both of which ruled against previous proposals by the European Communities to address the same matter. According to the requests, the EC Council Regulation is WTO-inconsistent in the following respects:

* The 176€/mt MFN rate is inconsistent with the Doha Waiver in all its parts, the Arbitration Awards of 1 August and 27 October 2005, GATT Article XXVIII, and the Appellate Body report and the Panel report as modified by the Appellate Body Report in EC-Bananas III; and

* The zero-duty ACP tariff quota of 775,000 mt and over-quota ACP tariff of 176€/mt are inconsistent with the Doha Waiver in all its parts, the Arbitration Awards of 1 August and 27 October 2005, GATT Articles I and XIII, and the Appellate Body report and the Panel report as modified by the Appellate Body Report in EC-Bananas III.

On 16 November 2006, Ecuador requested consultations under Article 21.5 of the DSU and Article XXIII of the GATT 1994. On 28 November 2006, Ecuador submitted a revised request for consultations under Article 21.5 of the DSU and Article XXII of the GATT 1994. On 29 November 2006, Colombia requested to join the consultations. On 30 November 2006, Belize, Côte d'Ivoire, Dominica, the Dominican Republic, Saint Lucia, St. Vincent and the Grenadines, and Suriname requested to join the consultations. On 4 December 2006, Cameroon requested to join the consultations. On 6 December 2006, Jamaica requested to join the consultations. On 11 December 2006, Panama and the United States requested to join the consultations. Subsequently, the European Communities informed the DSB that they had accepted the requests of Belize, Cameroon, Colombia, Côte d'Ivoire, Dominica, the Dominican Republic, Jamaica, Panama, Saint Lucia, St. Vincent and the Grenadines, Suriname and the United States to join the consultations. On 23 February 2007, Ecuador requested the establishment of an Article 21.5 panel. At its meeting on 20 February 2007, the DSB deferred the establishment of an Article 21.5 panel. At its meeting on 20 March 2007, the DSB agreed to refer to the original Panel, if possible, the question of whether the new EC banana regime was in conformity with the DSB's recommendations and rulings.

On 29 June 2007, the United States requested the establishment of an Article 21.5 panel as it considered that the EC has failed to bring its import regime for bananas into compliance with its WTO obligations and the regime remains inconsistent today. At its meeting on 12 July 2007, the DSB referred the matter to the original panel, if possible.

For details of the Article 21.5 panels, see above.

Recourse to Article 21.5 of the DSU by the United States
Brief DateBrief Description
11/26/2007Comments by the United States to the Answers to the Panel's Questions to the Parties and Third Parties (pdf)
11/21/2007Response by the United States to the Panel's Questions to the Parties and Third Parties (pdf)
11/13/2007Response by the United States to the Panel's Questions to the Parties and Third Parties (pdf)
11/07/2007Closing Oral Statement of the United States at the Panel Meeting (pdf)
11/06/2007Opening Oral Statement of the United States at the Panel Meeting (pdf)
10/03/2007Executive Summary of the Second Written Submission of the United States (pdf)
09/10/2007Executive Summary of the First Written Submission of the United States (pdf)
09/27/2007Second Written Submission of the United States (pdf)
09/03/2007First Written Submission of the United States (pdf)
Recourse to Article 21.5 of the DSU by the United States: Appeal Proceedings
Brief DateBrief Description
10/16/2008U.S. Oral Statement (pdf)
09/22/2008U.S. Third Participant Submission (pdf)
Recourse to Article 21.5 of the DSU by Ecuador
Brief Date
Brief Description
10/04/2007Response by the United States to the Panel's Questions to the Third Parties (pdf)
09/19/2007Executive Summary of the Third-Party Oral Statement of the United States at the Panel Meeting (pdf)
09/19/2007
Third-Party Oral Statement of the United States at the Panel Meeting (pdf)
Recourse to Article 21.5 of the DSU by Ecuador: Appeal Proceedings
Brief Date
Brief Description
10/16/2008U.S. Oral Statement (pdf)
09/22/2008U.S. Third Participant Submission (pdf)