U.S., Ecuador Prevail in EU-Bananas Dispute at WTO

November 26, 2008

The WTO’s Appellate Body has rejected the European Union’s appeal to overturn a May 19, 2008 decision by the Dispute Settlement Panel (DSP) affecting its banana import regime, ending the longest running dispute in the organization’s history.

The EU’s banana import regime was initially found to be in violation of various U.S. obligations under the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS) by the DSP in September 1997. As a result of the EU’s failure to come into compliance with the DSP’s ruling, the WTO allowed the U.S. to suspend trade concessions to the EU in the amount of U.S.$191.4 million per year.

In 2001, the EU and the U.S. entered into an Understanding on Bananas that was to culminate with the EU introducing a tariff only import regime for bananas by January 1, 2006. However, the regime introduced by the EU maintained a discriminatory tariff rate quota that allowed duty-free imports of bananas from only certain countries.

As a result, the U.S. and other countries brought additional proceedings at the WTO challenging the EU’s regime in June 2007. The May 19, 2008 decision by the DSP found in favor of the U.S. and other complainants. The EU appealed based on procedural grounds, but the appellate body upheld the DSP’s findings. 

The EU now must bring its banana import regime into compliance with WTO regulations. If the EU fails to do so, the WTO may authorize the suspension of certain trade concessions to the EU by complainant countries.