US-EC announce banana dispute accord

by Chakravarthi Raghavan

Geneva, 12 Apr 2001 - - The United States and the European Commission have announced their agreement on the new EC banana regime to resolve their long-running dispute. As a corollary, the United States will suspend from 1 July 2001, the trade sanctions it has imposed on imports of the European Union.

Under the agreement, the EC has agreed to move to a tariff-only system for imports of bananas from 2006, with a transition regime till 2006.

During the transition, the EC will allow imports of bananas through import licenses distributed on the basis of past trade, the two announced.

The new system is to take effect on 1 July 2001.

In the long-running dispute, two EC banana regimes were declared WTO illegal, and following the EC failure to implement the rulings, the US got authorisation from and imposed trade sanctions against EU imports.

Under the accord, the EU will institute a system of licensing, based on historic reference periods from 1 July 2001.

The European Commission, the executive arm of the EU, will also initiate the necessary procedures to propose to its Council of Ministers an adjustment of the quantities in various quotas - in order to expand the access for Latin American bananas and to secure a market share for a specific quantity of bananas of ACP origin, the joint agreement said.

The EC transition regime with quotas for Latin American and ACP origin bananas may however, require a WTO waiver.

The agreement announced said that the United States has pledged to work actively to secure acceptance of the EU’s request for the necessary authorization for its new regime.

Once these have been completed, the US trade sanctions, to be suspended from 1 July 2001, will be definitively listed.

For the tariff-only system to take effect from 1.1.2006, the EC is to start negotiations under the WTO rules - in time to be able to introduce the tariff-only system from 1 January 2006.

The compromise accord has to be placed by the EU Commission before the EU Council of Ministers and the EU Parliament.

Welcoming the agreement, the EU Trade Commissioner Mr. Pascal Lamy, the EU Agriculture Commissioner Mr. Franz Fischler, the US Trade Representative Mr.  Robert Zoellick and the US Secretary of Agriculture, Mr. Don Evans said in a joint statement:

“Today’s step marks a significant breakthrough. It demonstrates the commitment of the Bush Administration and the European Commission to work together closely and effectively on trade issues. The banana dispute of the past nine years have been disruptive for all the parties involved - traders, Latin American, African, Caribbean producers, and consumers. We are confident that today’s agreement will end the past friction and move us towards a better basis for the banana trade.”

Under the agreement both parties have recognized that they have a shared objective in reaching a WTO-compliant system to ensure fair and satisfactory access to the European market for bananas from all origins and all operators, and to protect the vulnerable ACP producers. Both parties also agreed that the time had come to end a dispute, which had led to prolonged conflict in the world trading system. - SUNS4875

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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