EU-US Dispute on Banana | 5 July 2000 | European Commission
Brussels - Following eight months of intensive discussions and despite the Commission's strenuous efforts to resolve the banana dispute, it has not proved possible to reach a compromise with third countries at this stage. Since the negotiations on maintaining a tariff quota regime on the basis of managing import licences on a historical basis have reached an impasse, and taking into consideration the discussions within Council and Parliament, the Commission has today proposed the following strategy : It will continue to study a transitional system of tariff quotas, but at this stage on a "first come, first served (1)" basis for the three tariff quotas (a tariff preference of 275 euro/t for the ACP countries would apply. The Commission retains its proposal for an automatic transition, on 1 January 2006, to a system based on tariffs only. In addition, the Commission asks the Council to give its authority to begin negotiations under Article XXVIII of the GATT with the relevant suppliers in order to implement a flat tariff system, in case no solution can be found on the tariff quota basis.
Following the ruling in 1997 by the Dispute Settlement Body of the World Trade Organisation (WTO), the Commission put forward a proposal on 10 November 1999 to amend the present banana import arrangements. It advocated a two-stage approach. During a transitional period a system of tariff quotas would apply, accompanied by a tariff preference for the ACP countries. At the end of that period, a flat tariff would replace the tariff quota system. The flat tariff would be implemented following negotiations under GATT Article XXVIII. The flat tariff system should be introduced not later than 1 January 2006.
Various possible methods for managing the tariff quotas were mentioned in the Commission's proposal of 10 November 1999: the method based on historical references, the "first come, first served" method and an auction system. Given the general preference shown for licence allocation based on historical references, the consultations held during the last month concentrated initially on this method. However, after eight months of intensive efforts, no agreement has been possible, and the discussions on this basis are at an impasse. The licence auctioning method outlined in the Commission's proposal of November 1999 ("striking price auctioning (2)") has not met with favour among the various parties concerned.
The most promising alternative for the management of a tariff quota therefore appears to be management on a "first come, first served" basis. It is therefore proposed that the Commission examine expeditiously the possibility of managing the proposed transitional tariff rate quota system on the basis of allocating import licences on a "first come, first served" basis taking into account new suggestions from the third countries regarding this system and the application of this mechanism to imports from ACP countries also. In the light of that examination there are two possible scenarios:
1. "First come, first served" turns out to be technically and administratively feasible. In that case transitional tariff quota system should be put into place for the transitional period until the entry into force, at latest on 1 January 2006, of a tariff only system.
2. The Commission concludes that it is not possible to find an acceptable method of allocating licences for bananas within a TRQ system. If this proves to be the case, the Commission is requesting the Council to give its mandate to negotiations under Article XXVIII of the GATT with the relevant suppliers in order to implement a tariff-only system, so that then negotiations can begin without further discussion in the Council if appropriate.
(1) Access to TRQ (Tariff Rate Quota) at reduced duties are determined at the time of the customs declaration
(2) The lowest level of bidding at which the quota can be filled would be applied to all operators for the quantities for which they have put forward a bidEU-US Dispute on Banana:
