The European Commission presented today a revised proposal of 187 € / tonne for most favoured nation (MFN) suppliers of bananas. The new tariff is intended to replace as of 1 January 2006 the present regime based on tariff quotas for MFN – mostly Latin American – supplying countries. The Commission’s proposal also maintains an equivalent level of preference for ACP bananas through a tariff quota for 775,000 tonnes at zero duty. The proposed MFN tariff is designed to maintain total market access for MFN suppliers, in line with the results of the WTO arbitration, which had been established after a request of Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, Panama and Venezuela. The Commission will now engage in consultations with its Latin American partners according to the procedure set out in the Annex to the WTO waiver on the EU-ACP Partnership Agreement (Cotonou waiver) for the introduction of the tariff only regime as from 1 January 2006.
Mariann Fischer Boel, EU Commissioner for Agriculture and Rural Development, said “We are confident that our revised proposal is fully in conformity with the ruling of the WTO arbitrators. It was always our intention that the level of protection would not change under our new import regime. We have calculated the proposed tariff in a neutral and transparent manner. Following the WTO arbitration award on 1 August 2005, we have revised our proposal and we now look forward to consulting constructively with our Latin American trading partners. We are fully committed to putting into place a tariff only system for MFN imports by 1 January 2006, in accordance with the agreement on bananas approved by consensus in Doha in 2001.”
Peter Mandelson, EU Commissioner for Trade, said: “The Commission’s new proposal confirms Europe’s commitment to ending this longstanding dispute. We have been careful to ensure that preferential access for our ACP partners is maintained. We hope that we are one step closer to resolving this issue and we count on a constructive approach from our trading partners.”
The EU agreed with Ecuador and the United States in 2001 to move from a complex import system based on a combination of tariffs and quotas for MFN bananas to a regime solely based on a tariff by 1 January 2006.
In accordance with these understandings, the EU proposed in January 2005 an import duty of 230 €/tonne to replace the existing bound duty of 680 €/tonne with a quota of 2,200,000 tonnes subject to an in-quota rate of 75 €/tonne. The EU proposal was based on a calculation aimed at maintaining total market access for suppliers benefiting from Most Favoured Nation (MFN) treatment.
The WTO arbitrators, while acknowledging the EU’s use of the price gap methodology for the calculation of a tariff equivalent, criticised some aspects of its application in this case.
The Commission believes the new proposal addresses all the criticisms raised by the WTO arbitrators. In the absence of a mutually agreed solution with all concerned parties, a second round of arbitration may be requested in order to allow the arbitrator to ascertain whether the EC has “rectified the matter.”