The EC Banana Regime - a Testcase for the Relationship between WTO, Regional and National Law

Scientific Essay 1998 9 Pages

Law - European and International Law, Intellectual Properties


I. The EC common market organization for bananas

The creation of the internal market within the European Community (EC) made it necessary to integrate the differing national arrangements that were still existing by 1993 with regard to a variety of goods. One of these Community-wide regimes adopted is the EC banana regime. It is one of the most disputed regimes so far[1]

An import tax of 20 was in force in the open, free market economies of the Benelux, Ireland and Denmark before the EC banana regime came into force. Only in Germany was no import tax levied because of the Banana Protocol of 25 March 1957. Bananas from ACP countries could be imported into all EC countries as a matter of principal tax free pursuant to Art. 168 of the Lomé Convention IV.

After 5 years of negotiation[2] the common market organization for bananas came into force on 1 July 1993. The legal basis is the Council Regulation (EEC) 404/93[3], a brief summary of which follows. Its regime discriminates against banana producers who are not based in the EC or in countries of the African, Caribbean or Pacific area (ACP), and against companies that distribute bananas that originate in those countries. At present imports of bananas from twelve previously determined traditional ACP countries enter the Community duty free, up to a maximum quantity fixed for each country in the regulation. Non-traditional ACP and third-country imports are subject to a tariff quota which lies well below the quantity these countries exported to the EC before the new banana regime was introduced with an import tax of 100 ECU per tonne. Furthermore, out of quota shipments are subject to a prohibitive duty, which renders importation uneconomical, that is 750 ECU per tonne for imports from ACP states and 850 ECU per tonne for third country bananas. Licensing requirements are applied to imports of traditional as well as non-traditional ACP- and third countries. As a result of these regulations, operators who traditionally marketed third country bananas have a competitive disadvantage over those who marketed Community bananas.[4] Licenses for importation of bananas from non-traditional ACP and third countries are issued to three market sharing groups. Accordingly the earlier importers of these bananas only receive a quota of 66.5%. Although they are now able to trade in EC bananas they lack either the marketing outlets or they have to purchase licenses from the other market sharers in order to maintain their volume of trade. Since 1993, Council Regulation (EEC) 404/93 has been repeatedly amended and supplemented.[5] The basic framework, however, and its discriminatory content, still persists and has led to numerous disputes at the national, European and international level.

II. WTO Panels relating to the EC banana regime

Shortly before the common market organization for bananas was enacted in July 1993, a GATT Panel had already found that banana regimes of several member states violate GATT law. Less than one year later, another panel reached the same conclusion with regard to the new banana regime which had been established Community wide.[6] However the findings of either panel were adopted unanimously by all GATT CONTRACTING PARTIES as was necessary under the rules of GATT 1947. Most of the complaining contracting parties of the second banana panel negotiated the „Framework Agreement on Banana Imports“[7] with the EC. They agreed thereby not to pursue the adoption of the panel report, while the EC made concessions with regard to the size of the basic tariff quota and other specifications. As this agreement discriminated against other GATT contracting parties and the discrimination inherent in the common market organization persisted as well, Ecuador, Guatemala, Honduras, Mexico and the United States requested the establishment of new panels, which delivered their opinion in May 1997. The panel decisions[8], which confirmed several infringements of WTO law, were appealed by the EC and the recently installed Standing Appellate Body had to decide on the issue. In its report of September 1997[9] it held that various aspects of the EC's import regime for bananas are inconsistent with its obligations under Art. I:1, II, III:4, X:3(a), XIII:1 GATT 1994 and Art. 1.3 of the WTO Licensing Agreement and also found breaches of several GATS rules.[10] Thereby the lately introduced quotas contravene for example the principal of only levying import duties.


[1] See e.g. Cascante and Sander, Der Streit um die EG-Bananenmarktordnung. The EC banana organization dispute (Berlin 1999); Sander, Rechtsprobleme der EG-Bananenmarktordnung (Marburg 1997); Everling, Will Europe Slip on Bananas? The Bananas Judgment of the Court of Justice and National Courts, (1996) Common Market Law Revue, 401-437 and further Weustenfeld , Die Bananenmarktordnung der EG und der Handel mit Drittstaaten (Frankfurt am Main et. al. 1997).

[2] S ee van de Vliet, Trade Reform – Banana Wars, (1993) World Link, 34 et seq.

[3] Official Journal of the EC 1993, No. l47/1.

[4] About the economic consequences of the EC banana regime Hrubesch and Möbius, Mögliche Nachteile der EG-Bananenmarktordnung für Deutschland. Expert opinion by order of the German federal ministry for economics (Berlin 1993) and Foreign Agricultural Service, Washington D.C., Horticultural and tropical fruits div., Impact of the new EC Banana Import Regime on selected markets, (September 1993) Horticultural Products Review.

[5] See the appendix in Cascante and Sander, Der Streit um die EG-Bananenmarktordnung. The EC banana organization dispute (1999), 188 et. seq.

[6] Panel Report of 18 January 1994, EEC – Import Regime for Bananas, GATT Document DS38/R, (1995) XXXIV International Legal Materials (ILM) 180-234.

[7] Text in (1995) XXXIV ILM 1-2.

[8] Panel Report of 22 May 1997, EC – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R/ECU, WT/DS27/R/GTM and HDN, WT/DS27/R/MEX and WT/DS27/R/USA.

[9] Appellate Body Report of 9 September 1997, EC – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R.

[10] C.f. for details Cascante and Sander, Der Streit um die EG-Bananenmarktordnung (1999), 72-90.


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WTO EuGH Internationales Wirtschaftsrecht international economic law




Title: The EC Banana Regime - a Testcase for the Relationship between WTO, Regional and National Law