ec - banana iii.pptx
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DESCRIPTIONPPT dealing with the Banana Wars and the implication of the same
EC - BANANA III: case analysis
Submitted by: Deboshree Banerji
IMPORTANCE OF EC – BANANA III
Enhanced Third Party Rights Necessary party not required Weakness of suspension of
concession or other obligation became apparent
Usage of carrousel retaliation
Agriculture (Art 19); GATS (Art II)(Art IV) (Art XIV) (Art
XVII); GATT 1994 (Art I) (Art II) (Art III) (Art
X) (Art XI) (Art XIII); Import Licensing (Art 1) and (Art 3); TRIMS (Art 2) and (Art 5).
SIGNIFICANCE FOR INDIA
ECONIMICALLY: India is largest banana producing country in the world. Access to EU opens a wider and a more lucrative market to India.
WTO PERSPECTIVE: India acted as a third party in the Banana III and therefore the effects of Third Party Rights were reinstated to India as well.
ECONOMICS: BANANA MARKET
WORLD SALE OF BANANAS
CHIQUITADOLE FOODSDEL MONTE PRODUCEOTHERS
ECONOMICS: BANANA MARKET (contd.)
EU BANANA TRADE REGIME Under Lomé Convention preferential trade
and quotas with former European Colonies : Traditional ACP countries such as Cameroon,
Somalia, Côte d'Ivoire etc. Special protection for DOM (département
d'outre-mer ) French Caribbean, Madeira, Canary Islands etc.
Price support payments under CAP since 1993. Imports from other countries (Dollar Area)
were subject to Tariffs and Licensing Restrictions.
EU BANANA TRADE REGIME (contd.)
This import trade regime was found to be illegal by the WTO in 1997.
The main criticism were setting aside of a quantity reserved solely for ACP imports and the system of allocation of licenses which did not completely eliminate discrimination vis-à-vis third country operators.
DOLLAR NATIONS UNITED STATES
1991: Costa Rica expressed concern in the GATT Council meeting that an impending EU banana import regime would discriminate against Central American countries; the concern was shared by Ecuador, Honduras, Mexico and Guatemala.
1992: Colombia, Costa Rica, Guatemala, Nicaragua and Venezuela requested consultations with the European Union. The consultations had failed to bring any satisfactory results. These countries had requested the GATT Director-General to use his good offices to settle the dispute. These five countries accepted the DG’s suggestion that, in order to make progress, the formal good offices be suspended until January 1993 and to leave the door open for informal negotiations that would make it possible to find a solution within the Uruguay Round Commitments.
EU Council of Ministers Decision to establish a common banana regime that would enter into force in July 1993 the Good Offices effort failed. This new regime was introduced by Regulation 404/93 as a common market organization. It has been supplemented and amended by several further regulations, the most important being Regulation 1442/93 which mainly implements the scheme set out in Regulation 404/93.
According to the five Latin American countries, the new regime would violate the 20 per cent maximum tariff binding on bananas granted by the EU in the 1961 Dillon Round, as well as various other GATT provisions. At the request of the five countries, a panel was established.
DIVISION OF BANANA DISPUTE EC – Regime for Importation, Sale and Distribution of
Bananas AGREEMENTS CITED:
A) GATT: 1. ARTICLE I (GENERAL MOST FAVOURED NATION TREATMENT)2. ARTICLE III (NATIONAL TREATMENT ON INTERNAL
TAXATIONAND REGULATION)3. ARTICLE X (PUBLICATION AND ADMINISTRATION OF TRADE
REGULATION)4. ARTICLE XII (RESTRICTION TO SAFEGUARD BALANCE OF
B) GATS1. ARTICLE I (MOST FAVOURED TREATMENT)2. ARTICLE III (NATIONAL TREATMENT)
C) LICENSING AGREEMENTS: ARTCLE 1.3 D) LOMÉ WAIVERS
MEASURE AT ISSUE: THE EC’S REGIME FOR THE IMPORTATION, DISTRIBUTION AND SALE OF BANANAS, INTRODUCED ON 1 JULY 1993 AND ESTABLISHED BY EEC COUNCIL REG 404/93.
EC- Regime for Importation, Sale and Distribution of Bananas- Recourse to Article 21.5 of the DSU by Ecuador. AGREEMENT:
GATT1. ARTICLE I (GENERAL MOST FAVOURED NATION TREATMENT)2. ARTICLE XIII (NON-DISCRIMINATORY ADMINISTRATION OF
GATS1. ARTICLE II (MOST FAVOURED NATION TREATMENT)2. ARTICLE XVI (MARKET ACCESS)
MEASURE AT ISSUE: EC REG. 1637/ 98 which was adopted to amend REGULATION no 404/93- the measure at issue in the original dispute- together with EC REGULATION no 2362/98, which laid down implementing rules for the amended regulation. the regulation pertained to imports of banana into the EC and access to the EC markets for three categories of bananas.
EC- Regime for Importation, Sale and Distribution of Bananas- Recourse to Article 21.5 of the DSU by Ecuador; and EC- Regime for the Importation, Sale and Distribution of Bananas – Recourse to Article 21.5 of the DSU by the US
AGREEMENTS CITED: GATT :▪ Article I (General Most Favoured Nation Treatment), ▪ Article II (Schedules of Concession)▪ Article XIII (Non – Discriminatory Administration of
Quantitative Restrictions). DSU: Article 21.5
MEASURE AT ISSUE: The European Communities' bananas import regime, contained in EC Regulation No. 1964/2005 of 24 November 2005. The regime consisted of a duty-free quota of 775,000 mt for bananas from ACP countries
and a tariff rate of €176/mt for all other imported bananas.
BY COMPLAINANTS tariff issues; allocation issues; and import licensing issues.
BY RESPONDENTS the presence of two separate banana access regimes; GATT schedules and Articles I and XIII in the context of the
Agreement on Agriculture; the non-applicability of the Agreement on Import Licensing
Procedures to tariff quotas; the non-applicability of Articles III:4 and X of GATT to border
measures; and the EC argued the Panel should find that the banana regime
was covered by the Lomé waiver.
COMPLAINANT The Complaining parties submitted
that the tariff quota tariff structures arising out of Regulation 404/93 were challengeable in that those structures imposed differential rates as between third-country bananas, on the one hand, and non-traditional ACP bananas, on the other.
. This section contains the major arguments of the EC and the Complaining parties surrounding the Lomé waiver. Further arguments concerning the Lomé waiver also appear in the following sections: allocation issues; and mport licensing issues.
RESPONDENT Non-traditional ACP bananas
benefited from a preferential treatment which was covered, just as the ACP traditional allocation, by the Lomé waiver, consisting in duty-free importation for the quantities indicated in the tariff quota.
The non-traditional ACP bananas benefited from a preferential treatment of ECU 100 per tonne reduction from the bound rate for imports outside the tariff quota. This preferential treatment was equally covered by the Lomé waiver.
RESPONDENT The EC argued that
the Lomé waiver was of great importance in permitting the Community to give preferential treatment pursuant to the provisions of the Convention, and the Banana Protocol in particular.
COMPLAINANT Lomé waiver was not a defence for
the measures that were the subject of this dispute that were inconsistent with Article I of GATT.
Lomé Convention left the EC with broad discretion permitting it to comply with its WTO obligations as it sought to develop common rules for bananas.
The EC had misidentified the provisions of the Lomé Convention that were covered by the waiver and ignored the long-standing GATT interpretive framework requiring the strict construction of waivers.
TARIFF AND APPEALLATE BODY REPORT
EC's preferential tariff treatment of non-traditional ACP bananas is inconsistent with its obligations under Article I:1, those obligations have been waived by the Lomé waiver.
GENERAL ALLOCATION ISSUES
COMPLAINANTS EC had allocated shares to its market among
supplying countries (in respect of both ACP and BFA) in a manner inconsistent with GATT Article XIII:2.
The banana regime's differential volume restrictions by source fell within the prohibition of Article XIII:1
The system conferred market advantages to some foreign sources over others, it was a violation of Article I:1
GENERAL ALLOCATION ISSUES
RESPONDENT separate regimes; and that the application of Article XIII
was not appropriate given the nature of the tariff bindings for agricultural products such as bananas and the specificity of the Agreement on Agriculture with respect to those bindings.
ALLOCATION AND Lomé WAIVER
RESPONDENTS Lomé waiver covered any measure
taken by the EC in order to fulfil its legal obligations as indicated under the Convention with regards to any product originating in ACP countries
ALLOCATION AND Lomé WAIVER (contd.)
COMPLAINANT Great reluctance to waive Article XIII
obligations Issue of country-specific allocations
to be conclusively addressed under Article XIII
The Article I:1’s strict interpretive framework of waiver interpretation, the Lomé waiver could not be said to require discriminatory volume arrangements.
REALLOCATION OF SHORTFALLS
regarding shortfalls in BFA signatories' allocations were also inconsistent with the obligations in Article XIII
preferential treatment of BFA-signatory countries
over-allocation of tariff quotas was also applicable to BFA countries
The EC rejected the allegations
provided in the tariff quota, of transferring quotas or parts of a quota to each country party to the BFA to another BFA country
APPELLATE BODY REPORT
Bananas are "like" products, for purposes of Article I, III, X and XIII of GATT.
The tariff quota reallocation rules of the BFA, are inconsistent with the requirements of Article XIII:1.
The Lomé waiver waives that inconsistency with Article XIII:1 to the extent necessary to permit the EC to allocate shares of its banana tariff quota
IMPORT LICENSING ISSUE
EC regulations imposed on imports from Latin America, was highly complex
Unnecessary burden, discrimination, trade – restriction and trade – distortion, and implicated provisions of the GATT and licensing procedures and TRIMs.
The non-applicability of the Agreement on Import Licensing Procedures to tariff quotas; and
The non-applicability of Articles III:4 and X of GATT 1994 to border measures
Category B operator criteria, was discriminatory under, inter alia, Articles I and III of GATT and also provisions of TRIMS
Separate regime applicability of the
Lomé waiver to specific aspects of the Complaining parties' allegations.
APPELLATE BODY REPORT The Licensing Agreement applies to licensing
procedures for tariff quotas The allocation to Category B operators
inconsistent with the requirements of Article III:4 of GATT.
The Lomé waiver does not waive the EC's obligations under Article I:1 of GATT
EC import licensing procedures are subject to the requirements of Article X of GATT
requirement to match EC import licences with BFA export certificates is inconsistent with the requirements of Article I:1 of GATT
GATS ISSUE: relationship between the GATS and the multilateral agreements on trade in goods
There was no intention to create an overlap between the GATT and the GATS
The GATS was concerned with trade in services not with the fact that in order to sell goods on the EC market someone had to transport them.
The Complaining parties submitted that the EC's discriminatory measures regulated the availability of goods to foreign service suppliers and had a real and direct effect on competitive conditions.
GATS ISSUE: Standard of discrimination under the MFN and national treatment obligations
Article I:2 of GATS: swept in any measure that affected the business of providing services through one of the four "modes" covered by GATS.
Article XXVIII(b) includes the production, distribution, marketing, sale and delivery of a service"
Illustrative list was far-reaching and included all aspects of the provision of a service.
measures had to be addressed to the natural or legal person in its capacity of service supplier or in its activity of supplying services.
GATS ISSUES: WHOLESALE TRADE SERVICES
Article XVII:1 of GATS, Schedule
unqualified national treatment commitment for the provision of wholesale trade services
bananas could be marketed at different stages in the supply chain
it was important to adhere to a clear and well-circumscribed concept of wholesale services that was of general validity.
GATS ISSUE: HURRICANE LICENSES
EC Commission had made available a total of 281,605 tonnes of supplemental "hurricane" licensing entitlements exclusively to Category B operators and producers
bananas entered over the established third-country tariff quota
hurricane licences granted only to firms that historically traded in EC and ACP
hurricane licences were licences to import additional quantities of bananas (from anywhere) for those who were part of the preferential system in favour of the Lomé countries and who had suffered demonstrable damage from hurricanes which made it impossible for them to fill their normal, guaranteed quantities under the Lomé preference.
GATS ISSUE: EXPORT CERTIFICATE
special export certificate procedures violated Articles II and XVII of GATS
the benefit of the quota rent from export certificates only to the suppliers of services of BFA countries and not to all service suppliers of the other Members
assumptions of complainant were unwarranted or were insufficiently established
export certificates related to trade in goods, therefore, rules in respect of export certificates did not come under the GATS
APPELLATE BODY REPORT No legal basis for an a priori exclusion of
measures within the EC banana import licensing regime from the scope of the GATS
EC's obligations under Article II of GATS and commitments under Article XVII of GATS cover the treatment of suppliers of wholesale trade services within the jurisdiction of the EC.
allocation of hurricane licences exclusively to operators who include or directly represent EC producers creates less favourable conditions of competition
MUTUALLY AGREED SOLUTION
On 8 November 2012, the parties notified the DSB of a mutually agreed solution pursuant to Article 3.6 of the DSU.