Andrew Harper,

1
EU Banana Regime

• Andrew Harper,
• Scott Hoefke,
• and Jon Hoffman
• ITRN 603
• March 2, 2009

2
History of the Banana Regime
3
In the Beginning The Original Banana Split

• Original roots of the Banana controversy
• Colonialism
• Treaty of Rome 1957
• Preferential Treatment
• Tariffs and quotas imposed on
• non-member countries

4
Lomé Conventions

• Lomé I, 1975
• Agreement between EEC and ACP
• Institutionalized Political Cooperation
• Types of Commodities
• Lomé 2, 1980
• Lomé 3, 1985
• Lomé 4, 1989
• Continued strengthening of ties between EEC and
  ACP
• ACP countries and no less favorable position
  status

5
Further EU Decisions

• 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

6
The First GATT Panel

• 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

7
Bananas at the WTO

• 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

8
Implementation of the WTO Ruling

• The period ended with no substantive change.
• US and Ecuador took retaliatory measures.
• EU responded and put the issue on the upcoming
  Doha Round.

9
Bananas in Doha

• 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.

10
Doha Results

• Doha Waiver authorized two rounds of special
  arbitration.
• Both Arbitration Awards went against the EC.
• Issued August 1, 2005
• Issued October 27, 2005

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Challenges after the Doha Waiver

• 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
  EUs compliance based on Ecuadors charges
• In both cases, the WTO ruled against the EU

12
The State of the Banana
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Political Issues and Background

• 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.

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Political Issues Continued

• 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.

15
Current Issues

• 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.

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Current Issues Continued

• 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.

17
Recent Developments

• The EU has offered Latin Americas top banana
  suppliers to initially cut duties on bananas to
  148 euros per ton from 176 euros now to try and
  end the worlds 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.

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The Future of the Banana Regime
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Proposal

• EU implement recommendations made by WTO
• Limited sanctions against the EU
• Further define the term Banana Regime

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The Future

• Resolution will affect other cases
• DS165
• DS54, DS55, DS59, DS64
• GMF
• On going
• EU will have to implement new banana regime
• Doha

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World Implications

• 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)

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Sources

• 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/wto20and20companies20barfield.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/wo
  rldnextweek/2007-07-12/Bananawars.aspx
• Grynberg, Roman, WTO at the Margins, Cambridge
  University Press, 2006. p 451. http//books.google
  .com/books?id0rTW-eyoOFQCpgPA451lpgPA451dqt
  reatyofrome1957bananassourceblotsVbPKqA-rR
  asigr46meINWIjL2usvMOW8hjYDnBxkhleneiYlqoSdK
  UF4-ctwe66_T7DwsaXoibook_resultresnum1ctre
  sult

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Sources Continued

• ed. Josling, Timothy E. and Taylor, Timothy G.
  Banana Wars The Anatomy of a Trade Dispute 
  CABI Publishing, 2003 http//www.netlibrary.com/Re
  ader/
• 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

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Questions?