WT/DS27/RW/USA
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Organization
WT/DS27/RW/USA
19 May 2008
(08-2182)
Original: EnglishEnglish
EUROPEAN COMMUNITIES – REGIME FOR THE IMPORTATION, SALE AND DISTRIBUTION OF BANANAS
Recourse to Article21.5 of the DSU by the United States
Report of the Panel
WT/DS27/RW/USA
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TABLE OF CONTENTS
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I.INTRODUCTION...... 1
II.FACTUAL ASPECTS...... 4
A.Background...... 4
1.Object of the current dispute...... 4
2.Basic chronology...... 4
B.Product description...... 10
C.European Communities' legal framework for bananas imports...... 11
1.European Communities' bananas import regime...... 11
2.European Communities' current bananas import regime...... 14
3.Impact of the different European Communities enlargements in its bananas import regime 18
D.European Communities' bananas market...... 19
1.European Communities' bananas production...... 19
2.European Communities' bananas consumption...... 19
3.European Communities' bananas imports...... 20
4.European Communities' banana imports under Council Regulation 1964/2005...... 21
5.United States' banana production...... 22
E.Panel and Appellate Body findings in previous proceedings...... 23
1.Measures subject to the original proceedings...... 23
2.Panel and Appellate Body main findings in the original proceedings...... 23
3.Panel findings in the first compliance proceedings...... 28
4.Award of the Arbitrators in the proceedings requested by the European Communities under Article 22.6 of the DSU 30
5.Panel findings in the second compliance proceedings requested by Ecuador...... 31
F.Measures challenged by the United States in this dispute...... 31
III.PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS...... 31
IV.ARGUMENTS OF THE PARTIES...... 33
A.United States...... 33
1.First written submission of the United States...... 33
(a)Introduction...... 33
(b)Procedural history...... 34
(i)Understanding on Bananas...... 35
(ii)GATT ArticleI waiver and arbitrations...... 35
(iii)ArticleXIII Waiver...... 36
(c)The European Communities' revised measures...... 37
(d)Legal arguments...... 37
(i)The European Communities' revised measures are inconsistent with ArticleI of the GATT1994 38
Termination of GATT ArticleI Waiver...... 38
(ii)The European Communities' revised measures are inconsistent with ArticleXIII of the GATT1994 39
The European Communities' import regime for bananas is inconsistent with GATT ArticleXIII:1 40
The European Communities' import regime for bananas is inconsistent with GATT ArticleXIII:2 40
(e)Conclusion...... 41
2.Second written submission of the United States...... 41
(a)The European Communities' preliminary objections should be rejected...... 41
(i)The United States was not required to request consultations with the EC...... 41
(ii)The EC-US Understanding on Bananas does not preclude this proceeding...... 43
(iii)The United States' complaint falls within the scope of Article21.5...... 44
(b)The European Communities' arguments about "standing" and nullification or impairment have been rejected before and should be rejected once again 45
(i)The United States has standing to challenge the EC's banana regime...... 45
(ii)The United States is not required to demonstrate nullification or impairment of benefits to advance claims of an EC breach of GATT Articles I and XIII 45
(c)The European Communities' ArticleI waiver has expired, and it therefore maintains its banana measures in breach of GATT ArticleI 46
(d)The European Communities maintains its exclusive tariff rate quota for ACP bananas in violation of GATT ArticleXIII 47
(i)The European Communities' tariff rate quota is a quantitative restriction within the meaning of ArticleXIII 47
(ii)ArticleXIII applies even where the entire EC banana market is not controlled by quotas 48
(iii)The European Communities maintains its ACP tariff rate quota in breach of GATT ArticleXIII 49
(e)Conclusion...... 50
3.Oral statement of the United States...... 50
(a)The European Communities' bananas import regime is a measure taken to comply...... 50
(b)The European Communities' regime is in breach of GATT 1994 Articles XIII and I...... 53
(i)The European Communities' regime is in breach of GATT 1994 ArticleXIII...... 53
(ii)The European Communities' regime is in breach of ArticleI, and the ArticleI waiver has ceased to apply 54
(c)The Panel should reject the European Communities' preliminary objections regarding the Understanding and nullification or impairment 55
(i)The EC-US Understanding was not a "mutually agreed solution" and even if it were it would not preclude this proceeding 56
(ii)The Panel must reject the European Communities' arguments regarding nullification or impairment 57
4.Closing statement of the United States...... 58
B.European Communities...... 58
1.First written submission of the European Communities...... 58
(a)Preliminary objections...... 58
(i)The United States did not request consultations...... 58
(ii)The United States is barred from challenging the Cotonou Preference...... 59
(iii)The complaint of the United States falls outside the scope of Article21.5 of the DSU59
(b)GATT ArticleI: The Doha Waiver covers the Cotonou Preference until the end of 2007 60
(c)There is no violation of GATT ArticleXIII...... 60
(d)Absence of nullification or impairment of a benefit accruing to the United States...... 61
2.Second written submission of the European Communities...... 62
(a)Preliminary objections...... 62
(i)The United States did not request consultations...... 62
(ii)The Understanding bars the United States from challenging the Cotonou Preference.....62
(iii)The United States' complaint falls outside the scope of Article21.5 of the DSU.....64
(b)The Cotonou Preference does not violate the GATT...... 65
(i)The Doha Waiver covers the Cotonou Preference until the end of 2007...... 65
(ii)There is no violation of GATT ArticleXIII...... 66
(c)Absence of "nullification or impairment"...... 67
3.Oral statement of the European Communities...... 67
(a)Preliminary issues...... 67
(b)The United States' claims under ArticleI...... 69
(c)The United States' claims under ArticleXIII...... 70
(d)The United States does not suffer any "nullification or impairment"...... 71
4.Closing statement of the European Communities...... 72
V.ARGUMENTS OF THE THIRD PARTIES...... 74
A.Belize, Cameroon, Côte d'Ivoire, Dominica, Dominican Republic, Jamaica, SaintLucia, Saint Vincent and the Grenadines, and Suriname 74
1.Written submission of the ACP third parties...... 74
(a)The United States cannot challenge the new EC banana import regime pursuant to Article21.5 of the DSU 74
(b)There is no violation of GATT ArticleI because the Doha Waiver still applies.....75
(c)There is no violation of GATT ArticleXIII...... 76
B.Belize...... 77
1.Oral statement of Belize...... 77
C.Cameroon...... 78
1.Oral statement of Cameroon...... 78
(a)This dispute is of primary importance for the ACP countries...... 78
(b)United States trade is not affected by the Community's new regime for the importation of bananas 79
(c)The United States is attacking a preference granted to developing countries even though it is not suffering any negative consequences from it and it had accepted the principle of the preference 79
(d)The United States cannot question a preference which it accepted in the Memorandum of Understanding 79
(e)The United States cannot challenge the Community import regime for bananas pursuant to Article21.5 of the DSU 80
(f)The United States completely ignores the way the market has developed...... 80
(g)Conclusion...... 82
D.Côte d'Ivoire...... 82
1.Oral statement of Côte d'Ivoire...... 82
E.Dominican Republic...... 85
1.Oral statement of the Dominican Republic...... 85
F.Jamaica...... 86
1.Oral statement of Jamaica...... 86
G.Saint Lucia...... 87
1.Oral statement of Saint Lucia...... 87
H.Saint Vincent and the Grenadines...... 91
1.Oral statement of Saint Vincent and the Grenadines...... 91
I.Suriname...... 92
1.Oral statement of Suriname...... 92
(a)Preliminary issue: the United States failed to request consultations...... 92
(b)The Bananas III dispute has been settled through the Understanding on Bananas...... 93
(c)The new EC banana import regime is not a measure taken to comply with the recommendations and rulings in the original Banana III dispute 95
J.Brazil...... 96
1.Oral statement of Brazil...... 96
(a)The Understanding...... 96
(b)Whether the European Communities' 2006 import regime is a "measure taken to comply"..97
(c)Final remarks...... 98
(d)Conclusion...... 98
K.Colombia...... 98
1.Written submission of Colombia...... 98
(a)The preferential tariff treatment accorded to ACP bananas is not justified under the ArticleI Doha Waiver 98
(i)The ArticleI Doha Waiver has ceased to apply to bananas as of 1 January 2006, and the EC was no longer entitled to "rectify the matter" 98
(ii)Assuming, arguendo, that the EC had the opportunity to "rectify the matter", the tariff level of €176/tonne does not comply with the Tariff Level Standard. 99
The European Communities has not discharged its burden of showing compliance with the elements required under the Waiver Annex 99
The European Communities' quantity- or volumes-based analysis is contrary to the Tariff Level Standard 99
The applied tariff of €176/tonne does not result in at least maintaining total market access for MFN banana suppliers 100
(b)The Preferential Tariff Rate Quota accorded to ACP bananas is inconsistent with ArticleXIII of the GATT 1994 101
(c)Conclusion...... 101
2.Oral statement of Colombia...... 101
L.Ecuador...... 104
1.Oral statement of Ecuador...... 104
M.Japan...... 106
1.Written submission of Japan...... 106
(a)The Understanding does not preclude the United States from challenging the European Communities' tariff only regime even if the Understanding is a "mutually agreed solution" 106
(b)The complaint of the United States is considered to fall under the scope of Article21.5 of the DSU 107
(c)Issues relating to nullification or impairment of a benefit accruing to the United States...107
(i)The United States has "standing" to challenge the European Communities' 2006 regime..107
(ii)Whether there is any nullification or impairment of a benefit accruing to the United States108
The United States is not required to affirmatively demonstrate that there is a "nullification or impairment of a benefit" in advancing its claim on GATT Articles 108
Whether there is no "nullification or impairment of a benefit" for the purpose of Article3.8 when the "level of nullification or impairment of a benefit" for the purpose of Article22 is "zero" 108
Whether this Panel should find in the course of its proceeding that the "level of nullification or impairment of a benefit" for the purpose of Article22 is zero or not 109
2.Oral statement of Japan...... 109
(a)Does the EC-US Understanding bar the United States from challenging the Cotonu Preference? 109
(b)Is the current EC banana regime the "measure taken to comply"?...... 110
(c)Does any nullification or impairment of benefits exist for the United States in this dispute?111
N.Mexico...... 112
1.Oral statement of Mexico...... 112
(a)Importance of the preliminary claims...... 112
(b)Issues of systemic interest...... 113
(c)Comments on the substantive claims...... 114
(d)Conclusion...... 115
O.Nicaragua and Panama...... 115
1.Combined written submission of Nicaragua and Panama...... 115
(a)Introduction...... 115
(b)The European Communities' preliminary objections have no basis in law or fact...... 115
(c)The European Communities' ACP tariff preference is inconsistent with GATT ArticleI:1 and is not covered by its ArticleI waiver 116
(d)The European Communities' ACP tariff quota is inconsistent with GATT ArticleXIII:1 andXIII:2 117
(e)The United States is not required to demonstrate nullification or impairment...... 117
(f)Conclusion...... 118
2.Combined oral statement by Nicaragua and Panama...... 118
(a)Nicaragua's role in this dispute...... 118
(b)Panama's role in this dispute...... 119
(c)The WTO inconsistencies...... 119
(i)The European Communities' failed objections...... 119
(ii)The European Communities' breach of GATT ArticleI...... 120
(iii)The European Communities' breach of GATT ArticleXIII...... 120
VI.INTERIM REVIEW...... 121
A.Product description...... 121
B.EuropeanCommunities' Council Regulation (EC) No. 1528/2007 of 20 December 2007 121
C.Award of the Arbitrators in the proceedings requested by the EuropeanCommunities under Article 22.6 of the DSU 124
D.Description of the measures challenged by the UnitedStates...... 125
E.Terms and main elements of the BananasUnderstanding...... 125
F.Adoption of the BananasUnderstanding subsequent to recommendations and suggestions by the DSB 125
1.Related first compliance proceeding brought by Ecuador...... 125
2.Further adjustment of language...... 126
G.Bananas Understanding: Arguments by the EuropeanCommunities concerning good faith 126
H.Preliminary objection of the EuropeanCommunities concerning whether the complaint by the UnitedStates falls within the scope of Article21.5 of the DSU 126
1.Arguments made by Japan...... 126
2.Whether the current bananas import regime is closely related to the original recommendations and rulings adopted by the DSB in 1997 127
3.Whether the current bananas import regime constitutes a measure taken by the EuropeanCommunities in the direction of, or for the purpose of achieving, compliance 127
(a)Termination of US suspension of concessions...... 127
(b)Clarification of language...... 127
(c)Licensing system...... 128
I.The relevant language of ArticleXIII:1 of the GATT1994 for this dispute..128
J.The UnitedStates' claim under ArticleXIII:2 of the GATT1994: Panel's analysis 128
K.General conclusions...... 128
1.Panel's Conclusions...... 128
2.Implementation of recommendations and rulings of the DSB...... 129
L.Nullification or impairment of benefits...... 129
M.Recommendation...... 129
N.Additional revisions and corrections...... 130
VII.FINDINGS...... 130
A.Attempts at harmonizing the timetables...... 130
B.Order of the Panel's analysis...... 132
C.Preliminary objection of the europeancommunities concerning the alleged lack of Standing and argument regarding the Alleged Lack of Nullification or Impairment of Benefits to the United States 133
1.The European Communities' arguments...... 133
2.The United States' response...... 134
3.Panel's analysis...... 136
(a)Verification of the United States' standing to commence these proceedings...... 136
(b)Verification of the nullification or impairment of trade benefits accruing to the United States 137
4.Conclusion...... 137
D.Preliminary objection of the europeancommunities concerning whether the United States is barred from challenging the European Communities' Bananas Import Regime as a result of the Bananas Understanding signed in April 2001 137
1.Arguments of the parties...... 137
(a)The EuropeanCommunities' arguments...... 137
(b)The United States' response...... 143
2.Panel's analysis...... 146
(a)The nature and scope of this preliminary issue under Article21.5 of the DSU.....147
(b)Is the United States barred by the BananasUnderstanding from bringing this compliance challenge? 148
(i)Panel's approach...... 148
(ii)The terms and main elements of the BananasUnderstanding...... 151
(iii)The BananasUnderstanding provides only for a means for resolving and settling the dispute 154
(iv)The adoption of the BananasUnderstanding subsequent to recommendations and suggestions by the DSB 155
(v)Parties' conflicting communications to the WTO concerning the BananasUnderstanding 157
(vi)Remaining key arguments raised under this preliminary issue...... 159
Did the United Statesaccept, through the BananasUnderstanding, the existence of the ACP preference beyond 2005? 160
Arguments by the EuropeanCommunities concerning good faith...... 161
(vii)Conclusion...... 163
E.Preliminary objection of the europeancommunities concerning whether the complaint by the UnitedStates falls within the scope of Article21.5 of the DSU 163
1.Summary of Parties' arguments...... 163
(a)The EuropeanCommunities' arguments...... 163
(i)Alleged measures taken to comply identified by the EuropeanCommunities...... 165
(ii)The current ECbananas import regime is not a measure taken to comply...... 166
The EC–BananasIII dispute ended before 2006...... 166
No linkage to the DSB recommendations and rulings of 1997...... 168
(b)The UnitedStates' response...... 174
(i)The current ECbananas regime is a measure taken to comply...... 175
(ii)The response of the UnitedStates to the ECarguments that the link with the original recommendations and rulings was broken 183
(iii)The response of the UnitedStates to the ECarguments that the dispute was settled before 2006 188
(iv)A compliance proceeding can extend to measures closely related to measures taken to comply 192
2.The Panel's analysis...... 193
(a)The Panel's approach...... 193
(i)Burden of proof...... 193
(ii)The specific issue before this Panel...... 193
(b)Whether the current ECbananas import regime is a measure taken to comply.....194
(i)The limited scope of compliance proceedings pursuant to Article21.5 of the DSU.194
(ii)The Panel's role in assessing whether the current ECbananas import regime is a measure taken to comply 195
(iii)The current ECbananas import regime...... 196
(iv)Criteria for assessing whether the current ECbananas import regime is a measure taken to comply 198
(v)Whether the current ECbananas import regime is closely related to the original recommendations and rulings adopted by the DSB in 1997, including to the measure being reviewed and found inconsistent in the original panel and appellateproceedings 201
(vi)Whether the current ECbananas import regime constitutes a measure taken by the EuropeanCommunities in the direction of,or for the purpose of achieving, compliance 207
The EuropeanCommunities' first attempt to comply with the original DSB recommendations and rulings, and its review under dispute settlement proceedings 207
Subsequent developments...... 210
Specific arguments by the EuropeanCommunities to refute the proposition that its current bananas import regime is a measure taken to comply 218
Termination of the suspension of concessions by the UnitedStates...... 218
Withdrawal from the DSB agenda...... 222
The relevance of the Doha Waivers...... 228
The relevance of the BananasUnderstanding...... 230
The original DSB recommendations and rulings do not prescribe the introduction of a tariffonly regime 232
The timing of the US compliance challenge...... 234
Whether a particularly close link exists between the current and the 20022005 ECbananas import regimes 238
The nature and effects of the current and the 20022005 ECbananas import regimes 239
Legal and factual background of the two regimes...... 241
(c)Conclusion...... 243
F.Preliminary objection of the europeancommunities concerning the lack of formal consultations 244
G.The United States' claim under ArticleI of the GATT 1994...... 247
1.The United States' claim...... 247
2.The European Communities' response...... 248
3.ArticleI:1 of the GATT 1994...... 249
4.Panel's analysis...... 250
(a)Is the ACP preference inconsistent with ArticleI:1 of the GATT 1994?...... 250
(i)Whether the preference granted by the European Communities constitutes an advantage of the type covered by ArticleI of the GATT 1994 250
(ii)Whether the relevant products in this dispute are like products...... 251
(iii)Whether the preference granted by the European Communities is immediately and unconditionally extended 252
(iv)Preliminary conclusion regarding the United States' claim under ArticleI:1 of GATT 1994 252
(b)Is the preference covered by a waiver?...... 252
(i)Terms and conditions of the Doha Waiver and the Bananas Annex...... 252
(ii)Uncontested facts...... 253
(iii)Main issue contested between the parties...... 255
(iv)Conditions envisaged in the Bananas Annex...... 256
(v)Is the European Communities' current bananas regime "the new EC tariff regime"?.....257
(vi)Is the maintenance of total market access for MFN banana suppliers a relevant consideration for extending the duration of the Doha Waiver with regard to bananas? 258
(vii)Conclusion regarding the Doha Waiver...... 261
5.Conclusion...... 261
H.The United States' claim under ArticleXIII of the GATT 1994...... 261
1.Summary of parties' arguments...... 261
(a)The United States' claim...... 261
(b)The EuropeanCommunities' response...... 263
2.Order of analysis...... 264
3.The applicability of ArticleXIII of the GATT1994 to the European Communities' bananas import regime 264
(a)The EuropeanCommunities' arguments...... 264
(b)The United States' arguments...... 267
(c)Panel's analysis...... 269
(i)Relevance of ArticleXIII of the GATT1994 to tariff quotas in agriculture..269
(ii)Analysis of ArticleXIII:5 of the GATT1994...... 270
(iii)Interrelation of ArticlesI and XIII of the GATT1994...... 271
4.The United States' claim under ArticleXIII:1 of the GATT1994.....274
(a)The United States' arguments...... 274
(b)The EuropeanCommunities' response...... 274
(c)Panel's analysis...... 277
(i)The relevant language of ArticleXIII:1 of the GATT1994 for this dispute..277
(ii)The applicability of ArticleXIII:1 of the GATT1994...... 277
Whether all bananas are like products...... 278
Whether any prohibition or restriction is applied by the EuropeanCommunities on the importation of bananas of the territory of MFN banana suppliers, including the United States 278
(iii)Whether the importation of bananas from ACP countries is similarly restricted...... 280
5.The United States' claim under ArticleXIII:2 of the GATT1994.....283
(a)The United States' arguments...... 283
(b)The EuropeanCommunities' arguments...... 284
(c)Panel's analysis...... 285
(i)Chapeau of ArticleXIII:2 of the GATT1994...... 285
(ii)Subparagraph(d) of ArticleXIII:2 of the GATT1994...... 286
6.The existence of an applicable waiver...... 288
7.Conclusion...... 289
I.Final remarks...... 289
VIII.Conclusions...... 290
A.General conclusions...... 290
B.Nullification or impairment of benefits...... 290
C.Recommendation...... 292
WT/DS27/RW/USA
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LIST OF ANNEXES
Annex A
Contents / PageAnnex A-1Request for the Establishment of a Panel (WT/DS27/83) / A-2
Annex A-2Working procedures for the Panel, dated 22August 2007 / A-5
Annex B