WORLD TRADE WT/MIN(98)/ST/31
18May1998
ORGANIZATION(98-2000)
Original: Spanish MINISTERIAL CONFERENCE
Second Session
Geneva, 18-19 May1998
ECUADOR
Statement Circulated byH.E. Mr.Benigno Sotomayor Jaime,
Minister forForeign Trade
This Ministerial Conference oftheWTO coincides with thecommemoration ofthe
50thAnniversaryoftheGATT.AmongitsfoundermemberswerethecountriesthatsetuptheEuropean
Communities andheldthefirstround oftariff reductions, andeachround oftrade negotiations within
theGATT waslinked totheexpansion oftheCommunities. Thelastround established theWTO and
Ecuador alsocelebrated thisevent inMarrakesh, butImustemphasize thatoneblack spotintheUruguay
Round wastheFramework Agreement onBananas which theEUincluded among itsspecific
commitments,thusperpetuatingasystemthatwasseriouslydiscriminatorytoLatinAmericandeveloping
countries anddisregarding therecommendations oftwoGATT Panels.
Asthebiggest global exporter ofbananas andthemainsupplier oftheEuropean single market,
15daysafterhaving become oneofthenewMembers oftheWTO Ecuador requested consultations
withtheEuropean Commission onitscommon market organization forbananas. APanel wassetup
before which Ecuador acted jointly andseverally withtheUnited States, Guatemala, Honduras and
Mexico. InSeptember 1997, theWTO Dispute Settlement Body adopted thePanel'sconclusions and
recommendations, which wereratified bytheAppellate Body, andtheEuropean Communities were
requested tobring theirregime intoconformity withtheGATT 1994.
Inthethree andahalfyears oftheWTO 'sexistence, during which thedispute settlement
mechanism hasbecome thefactor thathasgiven theWTO greater credibility, thiswasthefirstoccasion
onwhich theEuropean Communities hadtoabide byaruling bytheDispute Settlement Body.
Therefore, fullandprompt compliance onthepartoftheEUwasofprime importance forthesystem 's
status.
Itishowever, asubject ofconcern totheGovernment ofEcuador thattheEuropean
Commission 'sproposal contains certain aspects thatavoid fullapplication oftherecommendations of
theDispute Settlement Body. These elements arethefollowing:
1. Import licensing regime
There isalacuna intheproposal because thereports bythePanel andtheAppellate Body state
thatthese licences should begiven tooperators belonging tocategories AandCinthecurrent regime,
whohavebeen deprived of30percentofthelicences, which havebeen transferred toACP and
Community operators although theyhavenever marketed Latin American bananas, and28percent
toripeners, whose activity isnotimporting orbuying direct fromproducers. There arewell-founded
fearsthatthenewregime willonceagain givelicences toACPandCommunity operators andtoripeners,
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thuscontinuing toviolate Articles IIandXVII oftheGATS, themost-favoured nation andnational
treatment clauses respectively.
Inorder tocomply withtheWTO, thelicences should beawarded tothecurrent AandC
operators according tothefigures forthepastthree years, inrecognition ofthelarge sums expended
onacquiring thelicences confiscated, which according tothePanel andtheAppellate Body should
bereturned atnocost.
2. Bound tariff
Theproposal breaches thetariff bound intheWTO, which hasbeenapplied since 1995 and
forthefourth consecutive yearin1998, bydividing upthetariff quota arbitrarily, asthiswasnot
recommended bytheWTO, neither isitarequirement ofthecommitments under theLomé Convention
norhasitbeenrequested bytheMember States oftheEU. Moreover, thisnewtariff ofECU 300,
whichviolatestheboundtariffofECU75,createslessfavourableconditionsforLatinAmericanbananas,
violating Article XIIIoftheGATT andArticles IIandXVII oftheGATS, because thisnewduty
corresponds tohalfoftheamounts paidbyLatin American suppliers toACPandCommunity operators
forthepurchase ofthelicences confiscated. Inaddition, according totheproposal, therevenue generated
bythisnewtariff, willbedirectly usedtosubsidize ACP producers, establishing anunlawful and
inequitable taxthatisprejudicial tothirdworld farmers suchasthose inLatin America whoseeno
reason whytheyshould subsidize farmers inother countries.
3. Tariff quota
Theproposal divides thetariff quota forthirdcountries intothree, including ACPcountries,
although therecommendations ofthePanel andtheAppellate Body callforasingle quota under which
Latin American bananas payatariff ofECU 75andACP bananas zero.
4. Country quotas forsubstantial suppliers
Theproposal states that,ifthere isnoagreement withsubstantial suppliers, theEuropean
Commission willfixthequotas unilaterally. Itshould beemphasized thattheCommission hasnolegal
basisforunilateralattributionofthequotasbecausealltherepresentativeperiodsitcoulduseareunlawful
astheyviolate Article XIIIoftheGATT, asthetwoPanels oftheGATT andtheWTO Panel concluded.
5. Duration ofthenewregime
There isnoindication oftheduration except thattheexemption granting azerotariff forACP
countries expires on29January 2000 and, what isworse, theproposal indicates thatuntil
31December 2005 theCommission should simply submit areport onitsoperation.
Lastly, theGovernment ofEcuador emphasizes thatthecredibility oftheWTO ismore the
responsibility ofmajor trading partners suchastheEuropean Union thanofsmall developing countries
suchasEcuador, forwhich theDispute Settlement Understanding isdeserving ofspecial consideration
thatcannot bedisregarded. Thus, theconsistency withtheWTO rules which theEuropean Union 's
banana regime willhavetodisplay issomething thatwillimplicate andstrengthen thecredibility of
themultilateral trading system.
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