The EC banana regime and judicial control

Journal of World Trade

Volumn 34, Issue 5, 2000, Pages 1-87

  Komuro, Norio ^a  

^a KOBE UNIVERSITY   (Japan)

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[No Author keywords available]

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EID: 23044522645     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: 10.54648/276188     Document Type: Article

References (252)

1. Among the many bibliographies on the banana dispute, see, inter alia: Richard Lyons, European Union Banana Controversy, 9 Florida Journal of International Law 1 (1994), 165-188;
2. U. Everling, Will Europe Slip on Bananas? The Banana Judgement of the Court of Justice and National Courts, Common Market Law Review (CMLR), 33 [1996], 401-437;
3. Mariane Dony, L'Affaire des Bananes, Cahiers de Droit Européen, Nos. 3-4 (1995), 461-496;
4. Jack J. Chen, Going Bananas: How the WTO Can Heal the Split in the Global Banana Trade Dispute, 63 Fordham Law Review (1995), 1283-1335;
5. Zsolt K. Bessko, Going over EEC Preferences?, 28 Case Western Reserve Journal of International Law 2 (1996), 265-312;
6. Gerrit Schohe, The WTO Panel Report on the EU's Banana Regime, European Food Law Review (1997), 245-263;
7. Kees Jan Kuilwijk, The European Court of Justice and the GATT Dilemma, Nexed Editions Academic Publishers, The Netherlands (1996), 181-209;
8. Kees Jan Kuilwijk, idem, The EC Banana Saga, in Kees Jan Kuilwijk and Robert Wright (eds), European Trade and Industry in the 21st Century, Nexed Editions Academic Publishers, The Netherlands (1996), 159-189;
9. Piet Eeckhout, The European Internal Market and International Trade - A Legal Analysis, Clarendon Press, Oxford (1994), 225-246;
10. Joseph A. McMahon, The EC Banana Regime, the WTO Rulings and the ACP: Fighting for Economic Survival?, 32 J.W.T. 4 (1998), 101-114;
11. Joseph A. McMahon, idem, Going Bananas? - Dispute Resolution in Agriculture, in James Cameron and Karen Campbell (eds), Dispute Resolution in the World Trade Organization (1998), 128-147;
12. Aubrey Silberston and Mahmud Nawaz, Summary and Comment: EU-Bananas, in James Cameron and Karen Campbell (eds), Dispute Resolution in the World Trade Organization (1998), 361-376;
13. Geert A. Zonnekeyn, The Banana Dispute in the WTO: The DSU Conundrum, International Trade Law & Regulation (1999), 83-88;
14. Geert A. Zonnekeyn, The Legal Status of WTO Panel Reports in the EC Legal Order, Journal of International Economic Law (JIEL) (1999), 713-722;
15. Axel Desmedt, ECJ Restricts Effect of WTO Agreements in the EC Legal Order, 3 JIEL 1 (2000), 191-192;
16. John H. Jackson, Emerging Problems of the WTO Constitution: Dispute Settlement and Decision Making in the Jurisprudence of the WTO, in Philip Ruttley, Iain MacVay and Ahmad Masa'deh (eds), Liberalisation and Protectionism in the World Trading System, Cameron May (1999), 25-38;
17. John H. Jackson, idem, The Evolution of the WTO Dispute Settlement Mechanism and the Prospects for the Millennium Round, in Philip Ruttley, Iain MacVay and Ahmad Masa'deh (eds), idem (1999), 260-269;
18. Raj Bhala, The Precedent Setters: De Facto Stare Decisis in WTO Adjudication, Florida State University College of Law, 9 Journal of Transnational Law & Policy 1 (1999), 1-151;
19. Christoph Arhold, Memorandum - Procedural Overview of Important Banana Cases before European and German Courts, mimeo, Draft of 8 April 1999;
20. Mauricio Salas and John H. Jackson, Procedural Overview of the WTO EC-Banana Dispute, 3 JIEL 1 (2000), 145-166.
21. In 1988, Europe absorbed almost 37 percent of worldwide banana exports. See Richard Lyons, as note 1, above, 167; William Dullforce, EC Tries to Straighten Out Banana Problems, Financial Times, 18 October 1988, 38. In 1994, the EC-12 imported about 2.8 million tonnes. The EC was, therefore, the world's second largest importer of bananas, after the United States (3.7 million tonnes) and before Japan (0.9 million tonnes).
22. See Bananas III panel report, WT/DS27/R/USA, para. III.3 and Attachment.
23. The French banana market was mainly reserved to production from domestic territory (Guadeloupe and Martinique) and two ACP countries (Côte d'Ivoire and Cameroon). Such market protection system had been in existence since 1932. See T-571/93, Lefebvre and others v. Commission, [1995] ECR II-2379, 2383, point 12. Bananas of Cameroon (so-called "la gros-Michel" that is big and straight in shape) were commercialized especially in the North and the East, those of Côte d'Ivoire (so-called "la poyo" that takes the curved form) and those of Canary Islands (so-called "la sinensis") in the South, those of Martinique and Guadeloupe in Paris and the West (Prosper Montagné, Nouveau Larousse Gastronomique, Librairie Larousse, Paris (1960), 117-119). The following ECJ judgments on the French banana regime merit attention. In Case 48/74, Charmasson v. Minister for Economic Affairs and Finance (Paris), Judgment of the ECJ of 10 December 1974, [1974] ECR 1383-1397, the ECJ held that national market regime such as the French market is "only permissible provisionally until the end of the transitional period to the extent necessary to ensure its functioning, without however impeding the adaptations which are involved in the establishment of the common agricultural policy". However, the EC Member States continued to pursue their own national banana policies until the common organization was set up in 1993. In Case 247/87, Star Fruit Company SA v. Commission, [1989] ECR 291, a Belgian banana trader sued under ex-Article 175 of the EC Treaty to have the ECJ declare that the Commission failed to commence proceedings against France pursuant to ex-Article 169. France prohibited the direct and indirect importation of bananas from several ACP countries. The ECJ declared the application inadmissible. In Case 206/87, Lefebvre Frère et Soeur SA v. Commission, [1989] ECR 275, a French fruit firm brought a direct action for annulment of the Commission's decision based on ex-Article 115 of the EC Treaty. The decision was addressed to France and authorized France to prohibit indirect import of Latin American bananas via other Member States. The ECJ dismissed the application as inadmissible, stating that the disputed decision may not be challenged by the applicant under the second paragraph of Article 173 of the EC Treaty. See also T-571/93, Lefebvre and others v. Commission, [1995] ECR II-2379.
24. In addition to import restrictions, Italy applied a consumption tax on bananas, wherever grown. Because the Italian banana production (in Sicilia) was completely negligible, it applied to imported bananas including other Member States' bananas (e.g. French overseas departments' bananas). In contrast, table fruit typically produced in Italy (e.g. apples, pears, peaches, plums, apricots, oranges and mandarins) was not subject to the consumption tax. In Case 184/85, Commission v. Italy, [1989] ECR 2013, the ECJ held that the Italian consumption tax constitutes the protective internal tax prohibited by ex-Article 95 para. 2 of the EC Treaty. In the view of the ECJ, bananas and table fruit typically produced in Italy are not similar within the meaning of Article 95 para.1, but are nevertheless "in competition, even partial, indirect or potential competition, with each other". Therefore, the consumption tax has "the effect of affording indirect protection" to domestic products competing with products imported from other Member States in breach of Article 95 para. 2, according to the ECJ.
25. Spain maintained a de facto prohibition on imports of third-country bananas.
26. To protect national production, and after joining the EC, Greece prohibited the importation of bananas, whether shipped from other Member States or from the ACP countries. Greece justified the prohibition on imports, relying on the Act of Accession of Greece to the EC. The Act to some extent allowed Greece to protect national market organizations. Commission sued Greece in two direct actions under ex-Article 169 of the EC Treaty. In Joined Cases 194 and 241/85, Commission v. Greece, [1988] ECR 1037, the ECJ held that Greek prohibition of imports from other Member States and from ACP countries constitutes an infringement of ex-Article 30 of the EC Treaty and Article 3.1 of the Lomé Convention, respectively. While ex-Article 30 prohibits a Member State from imposing quantitative restrictions or measures having equivalent effect on imports from other Member States, Article 3.1 prohibits the Community from applying quantitative restrictions or measures having equivalent effect on imports of products originating in ACP countries. Bernard Rudden and Diarmuid Rossa Phelen, Basic Community Cases, Second Edition, Oxford University Press (1997), 311-374, at 324, comments: "The Commission successfully sued a Member State (under the previous national regime) to enforce not merely the EC Treaty but also the Lomé Convention. Case C-280/93 (Germany v. Council) shows that a Member State (under the EC common banana regime) cannot successfully sue the EC in order to enforce observance of the GATT."
27. I.e., Spain's bananas in the Canary Islands, France's bananas in Martinique and Guadeloupe, Portugal's bananas in Madeira, the Azores and the Algarve, and Greece's bananas in Crete and Lakonia.
28. The preferential treatment was offered by Italy to bananas from Somalia, and by the United Kingdom and France to bananas from their former colonies.
29. Kees Jan Kuilwijk, The EC Banana Saga, as note 1, above, at 162, summarizes as follows: "TC (Third-country) - bananas are much cheaper and of higher quality than ACP-bananas which in turn are cheaper and of higher quality than EC-bananas. These differences ... are caused not only by variations in climatic conditions in the countries and regions of production, but also by differences in the size of holdings."
30. The EC banana production, for example, was "politically, economically and socially sensitive production situated in regions on the very outer edges of the Community and the maintenance of which requires adequate protection". See Explanatory memorandum attached to the Commission's proposal for a Council Regulation on the common organization of the market in bananas, COM (92) 359 final, 7 August 1992, 5.
31. Latin America lato sensu, as contrasted with Anglo America, covers the entire American landmass south of the United States, i.e. Mexico, Central America and South America. Its scope stricto sensu is, however, limited to ex-colonies of Spain, Portugal, and France, which use languages derived from Latin. Latin American bananas supplying countries were nine ex-colonies of Spain: Guatemala, Nicaragua, Colombia, Venezuela, Costa Rica, Honduras, Panama, Ecuador and Mexico. Complainants in the GATT/WTO panel proceedings were the United States and eight Latin American countries, i.e. Colombia, Costa Rica, Nicaragua, Venezuela, Guatemala, Ecuador, Honduras and Mexico.
32. Protocol on the Tariff Quota for Imports of Bananas annexed to the Implementing Convention on the Association of the Overseas Countries and Territories of the Community provided for in Article 136 of the EEC Treaty.
33. Article 136 provided that for an initial period of five years after the entry into force of the EC Treaty (i.e. until 31 December 1962), the details of and procedure for the association of the dependent countries and territories with the Community shall be determined by an Implementing Convention annexed to the Treaty.
34. The annual duty-free import quota enjoyed by Germany under the Banana Protocol was determined as follows: - 90 percent of imports into Germany for 1956, less imports from the Overseas Countries and Territories (OCT) of the EC Member States, until the end of 1965; - 80 percent of the imports for 1956, from 1966 until the end of 1969; - 75 percent of the imports for 1956, after the application of the common customs tariff from 1970. The annual quotas were increased by 50 percent of the difference between the total imports during each preceding year and the imports for 1956. The figure for the imports for 1956, which was to serve as the basis for calculating quotas, was 290,000 metric tonnes, under para. 5 of the Banana Protocol.
35. ACP bananas remained uncompetitive in the German market, which was constantly supplied by "dollar zone" bananas. This was not changed following the promise made in a protocol of the first Lomé Convention in 1975 that no ACP State was to be placed "as regards access to the market and market advantages, in a less favorable situation than in the past or at present". Under Article 2 of the Protocol, the parties were required to confer to determine the measures designed to improve the production and marketing conditions of ACP bananas to make them more competitive in the EC. See Joseph A. McMahon, The EC Banana Regime, the WTO Rulings and the ACP, as note 1, above, 102-103.
36. In addition, the EC banana market was segmented by anticompetitive practices by individuals. In Case 27-76, United Brands Company and United Brands Continentaal B.V. v. Commission, [1978] ECR 207, the ECJ accused United Brands of seeking to create "a rigid partitioning of national markets" at price levels by preventing arbitrage among the ripeners-distributors in different Member States. The ripeners-distributors were prohibited from reselling green bananas. See also 76/353/EEC, Commission Decision of 17 December 1975 relating to a procedure under Article 86 of the EEC Treaty (IV/26699 - Chiquita), O.J. L95/1, 1976.
37. Latin American bananas imported into Germany did not enter the French or UK markets. Thus, domestic EC bananas and ACP bananas were shielded from competition with Latin American bananas. In T-571/93, Lefebvre and others v. Commission, [1995] ECR II-2379, a trader brought a direct action for annulment of the Commission decision based on ex-Article 115 of the EC Treaty. The Commission between 8 May 1987 and 30 June 1993 adopted ten decisions authorizing the French Republic to prohibit indirect imports of bananas that are originating in the dollar area and ACP countries and released into free circulation in other Member States. The ECJ (at 2402, point 56) dismissed the application, stating: "Given that the assessment of a complex economic situation is involved, the Commission has a wide discretion in the present case. In the light of the explanations which it has provided, and the fact that the applicants have not submitted any observations challenging those explanations, the Court considers that the applicants have not established that, in adopting the contested decision, the Commission exceeded the bounds of its discretion."
38. See Piet Eeckhout, as note 1, above, 243.
39. Piet Eeckhout, as note 1, above, 244-245, refers to two unpublished Commission decisions, which in December 1992 authorized prohibition of indirect imports from non-ACP third countries (i.e. Latin American countries) into France and the United Kingdom. Given the realization of the EC internal market after 31 December 1992, as provided for in Article 8a of the EC Treaty, the continued application of ex-Article 115 in the banana sector was "of an exceptional nature". However, the Commission decisions prohibited controls at intra-Community borders without determining which other measures were possible. See Commission Decision C(92) 3382 final of 28 December 1992; and Commission Decision C(92) 3381 final of 28 December 1992.
40. European Economic Community - Member States' Import Regimes for Bananas, DS32/R, 3 June 1993.
41. I.e., Article XI:2(c)(i) for import restrictions of agricultural products necessary to the enforcement of certain governmental measures; Article XXIV; and grandfathered measures. The panel rejected the EC arguments that the measures were justified by grandfathering since the measures in question, dating from the 1930s, were not mandatory in nature, which is a necessary condition.
42. In addition, the tariff preference for ACP bananas could not be justified by invocation of Article XXIV on regional trade agreements (RTAs), since the Lomé Convention was not an RTA.
43. O.J. No. L47, 25.2.1993, p. 1. The Regulation was already adopted by the Council on 13 February 1993, three days after the establishment of the Bananas I panel.
44. The Regulation consisted of five titles: Title I on common quality and marketing standards; Title II on producers' organizations and concentration mechanisms; Title III on assistance for Community producers; Title IV on trade with third countries; and Title V on general provisions. The EC banana import regime in Title IV contained six Articles: Article 15 on categories of imported bananas; Article 16 on the forecast supply balance; Article 17 on the import licence system; Article 18 on tariff quota; Article 19 on licence allocation; and Article 20 on implementing rules.
45. Joseph A. McMahon, The EC Banana Regime, the WTO Rulings and the ACP, as note 1, above, at 101, states "the export dependence on the EC market for the exports of bananas by St. Lucia, Dominica and St. Vincent has been calculated to be 91 percent, 89 percent and 63 percent respectively. Despite over 20 years of co-operation under the Banana Protocols to the Lomé Conventions, ACP banana producers remain uncompetitive on the EC market when compared to Latin American or dollar zone producers".
46. Of the total consumption in the EC-12 (3.47 million tonnes) in 1994, almost 61percent (2.1 million tonnes) originated in Latin America, whilst ACP and EC bananas represented a share of around 21 percent (0.727 million tonnes) and 18 percent (0.645 million tonnes), respectively. See the WTO panel report in Bananas III, paras III.2-III.3, Attachment "Imports of bananas to the EC".
47. These country-specific quantitative limits total 857,700 tonnes.
48. The tariff quota for non-traditional ACP bananas and third-country bananas was progressively increased from the originally fixed 2 million tonnes to 2.1 million tonnes in 1994, 2.2 million tonnes in 1995 and 2.553 million tonnes in 1996. Taking the tariff quota in 1995, 2.2 million tonnes consist of 90,000 tonnes for non-traditional ACP bananas and 2.11 million tonnes for third-country bananas.
49. Written observation of the Council before the Court of Justice of the EC concerning the application for interim relief pursuant to Articles 185 and 186 of the EEC Treaty, 14 June 1993, in Case No. C-276/93R, Chiquita Banana Company B.V. and Others v. Council, 15.
50. European Economic Community - Import Regime for Bananas, DS38/R (not adopted).
51. Norio Komuro, The WTO Dispute Settlement Mechanism - Coverage and Procedures of the WTO Understanding, 29 J.W.T. 4, 26-33.
52. "In other words, the GATT was a toothless tiger", according to Gerrit Schohe, The WTO Panel Report on the EU's Banana Regime (1997), as note 1, above, 246.
53. "In fact, many contracting parties of the GATT was dissatisfied with the GATT and its inability to resolve certain trade debates", according to Jack J. Chen, Going Bananas: How the WTO Can Heal the Split in the Global Banana Trade Dispute (1995), as note 1, above, 1285.
54. This explains why Guatemala became a complainant in the third Banana panel.
55. In addition, the BFA increased the size of the tariff quota for third-country and non-traditional bananas from 2 million tonnes to 2.1 million tonnes in 1994 and 2.2 million tonnes in 1995. The in-quota duty for third-country bananas was reduced from 100 ECU per tonne to 75 ECU per tonne. The BFA export licences rule was provided for.
56. The remaining 4.09 percent (90,000 tonnes) was allocated to non-traditional ACP bananas.
57. I.e., on 1 July 1995 to ECU 822 per tonne and on 1 July 1996 to ECU 793 per tonne.
58. I.e., from 100 ECU per tonne to 75 ECU per tonne from 1 July 1995.
59. The countries in which United Brands was a major banana producer in the 1970s were Colombia, Costa Rica, Honduras and Panama. Commission Decision of 17 December 1975 relating to a procedure under Article 86 of the EEC Treaty (IV/26699 - Chiquita), O.J. L 95/1, 1976.
60. Complainants in the GATT/WTO panel proceedings were as follows: GATT/WTO Panels Complaining Parties Bananas I Colombia, Costa Rica, Nicaragua, Venezuela and Guatemala Bananas II Colombia, Costa Rica, Nicaragua, Venezuela and Guatemala Bananas III Guatemala, Ecuador, Honduras, Mexico and the United States Complainants in Bananas III did not include the four countries accepting the Framework Agreement (Colombia, Costa Rica, Nicaragua and Venezuela).
61. Bananas III, para. 7.1.
62. Japan intervened as a third party and supported the EC, stating: "a tariff quota system was clearly distinct from an import quota (quantitative restriction) system in which an import licence was a prior condition for importation. Thus ... obtaining an allocation of a tariff quota was not a prior condition for importation within the meaning of paragraph 1 of Article 1 of the Licensing Agreement. Accordingly, Japan was of the view that tariff quota systems were not covered by the Licensing Agreement." See Bananas III, V.126.
63. I.e., Commission Regulation 1442/93 of 10 June 1993 laying down detailed rules for the application of the arrangements for importing bananas into the Community (O.J. L 142/12, 1993); Commission Regulation 478/95 on additional rules for the application of Council Regulation 404/93 as regards the tariff quota arrangements for imports of bananas into the Community and amending Regulation 1442/93 (O.J. L 49/13, 1995).
64. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Complaint by the United States, WT/DS27/R/USA, 22 May 1997; Complaint by Mexico, WT/DS27/R/MEX; Complaint by Ecuador, WT/DS27/R/ECU; Complaint by Guatemala and Honduras, WT/DS27/R/GTM, WT/DS27/R/HND. Panellists were Stuart Harbinson (Chairman, Hong Kong), Kym Anderson (Australia) and Christian Häberli (Switzerland).
65. Because the US operators engaged in wholesale trade services of Latin American bananas into the EC market, the EC did not contest the US standing to bring claims on trade in services under the GATS.
66. The United States produces bananas in Hawaii and Puerto Rico. According to the statistics of FAO, the US annual production and exports were 54,500 tonnes (in 1995) and 40,000 tonnes (in 1994), respectively. See Bananas III, para.III.2.
67. Neither Article 3.3 of the DSU (concerning the importance of the prompt settlement of disputes) nor Article 3.7 (cautioning Members to exercise judgment as to whether bringing a case would be "fruitful") establish a prerequisite for a complaining party to have a legal interest before requesting a panel, according to the panel.
68. Working Party Report on Brazilian Internal Taxes, 30 June 1949, GATT/BISD II, 181, 185, para. 16;
69. United States - Section 337 of the Tariff Act of 1930, BISD 36S/345, paras 5.11-5.13 (adopted 7 November 1989);
70. Italian Discrimination Against Imported Agricultural Machinery, BISD 7S/60, para. 12 (adopted 23 October 1958).
71. DSU Article 4.11.
72. DSU Article 10.2.
73. The complainants admitted that the inconsistency of the tariff preferences for traditional ACP bananas with Article I.I was waived by the Lomé waiver. Under the Lomé waiver, only the inconsistency of tariff preferences that are required by specified provisions of the Lomé Convention could be waived. Accordingly, the inconsistency of tariff preferences for traditional ACP bananas that were required by Protocol 5 of the Lomé Convention were indisputably waived.
74. The panel found it unnecessary to find a precise import share for determination of whether a WTO Member has a substantial interest in supplying a product. A determination of substantial interest might vary based on the structure of the market, according to the panel. See Bananas III, para. 7.84.
75. In addition, the panel stated that the allocation of country-specific quotas to certain ACP countries without a substantial interest discriminates against non-BFA third countries. The panel, however, held that such inconsistency with Article XIII was waived by the Lomé waiver. This panel finding on a waiver was reversed by the Appellate Body.
76. However, the panel found that third-country and non-traditional ACP bananas were not treated less favourably than EC bananas in the terms of Article III.4. Bananas III, para. 7.219, the Guatemala-Honduras report.
77. I.e., (i) operators who included or directly represented banana producers affected by the tropical storm and (ii) importers who were unable to supply the Community market with EC or ACP bananas.
78. In interpreting the phrase "neutrality in application", the panel used the reasoning developed for "uniform" application of trade rules under GATT Article X.
79. Although the GATS permits a WTO Member to maintain a measure inconsistent with the MFN obligations by listing the measure in the Annex on Article II Exemptions, the EC has not listed any inconsistent measures relating to wholesale trade services in the Annex. The panel, therefore, stated that the EC is fully bound by its MFN obligations in relation to wholesale trade services. See Bananas III, para. 7.298.
80. Likewise, because the EC entered "none" in its schedule relating to limitations on national treatment, the panel concluded that the EC undertook a full commitment on national treatment in the sector of wholesale trade services with respect to supply through commercial presence. See Bananas III, para. 7.308.
81. Article XXVIII(n) of GATS provides: "A juridical person is (i) 'owned' by persons of a Member if more than 50 percent of the equity interest in it is beneficially owned by persons of that Member; (ii) 'controlled' by persons of a Member if such persons have the power to name a majority of its directors or otherwise to legally direct its actions".
82. Importers of bananas into the EC are classified as follows: Company Nationality/Ownership Operator category Chiquita Brands United States Importers of non-BFA third-country bananas Dole Foods United States Noboa Ecuador Del Monte Mexico Uniban Colombia Importers of BFA country bananas Banacol Colombia Geest United Kingdom Importers of EC or ACP bananas Fyffes Ireland Pomona France Compagnie Fruitière France CDB/Durand France Gipam France Coplaca Spain Bargoso Spain SA Others EC Jamaica Producers Jamaica Importers of ACP bananas Winban/Wibdeco Windward Islands Source: Bananas III panel report, para. IV.678.
83. The 28 percent reservation was intended to strengthen the bargaining position of ripeners in the supply chain towards primary importers.
84. Even if, under operator category rules, primary importers classified in importers of third-country and non-traditional ACP bananas (Category A operator) are allocated 66.5 percent of the licences, "under activity function rules, the entitlements of operators who are primary importers are reduced to 57 percent of the bananas marketed during a preceding three-year period unless such operators also engage in customs clearance or ripening activities". While primary importers who are Category B operators are subject to the same weighting coefficients as Category A operators, these Category B operators have, on the basis of their marketing of EC and traditional ACP bananas during a preceding three-year period, access to 30 percent of the licences allowing imports of third-country and non-traditional ACP bananas at in-quota tariff rates regardless of whether they have previously traded in the latter market segment. Therefore, the purchasers of licenses will be more often primary importers who are Category A operators than primary importers who are Category B operators" (Bananas III panel report, para. 7.365). See also flow charts submitted by Ecuador, Guatemala, Honduras and the United States, inter alia, "Arrangement 3: Third-Country and Non-Traditional ACP Bananas". This Arrangement shows that 66.5 percent allocation for Category A is divided into three portions: (i) 57 percent for primary importers; (ii) 15 percent for secondary importers; and (iii) 25 percent for ripeners.
85. The panel made no finding with regard to the inconsistency of the activity function-based licence allocation rule with MFN obligations. See Mexico report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, European Communities, Complaint by Mexico, WT/DS27/R/MEX, 22 May 1997, para. 7.372.
86. European Communities - Regime for the Importation, Sale and Distribution of Bananas, European Communities, Appellant/Appellee; Ecuador, Guatemala, Honduras, Mexico and the United States, Appellants/Appellees, AB-1997-3, WT/DS27/AB/R, 9 September 1997. The Appellate Body was composed of James Bacchus (Presiding Member, United States), Christopher Beeby (New Zealand) and Said El-Naggar (Egypt).
87. E.g. the panel's finding on the inconsistency of the EC tariff quota system with GATT Article XIII. See Raj Bahla, as note 1, above, 116-126, stating: "One of the many de facto precedents on substantive WTO law that EC - Bananas may prove to spawn concerns the administration of tariff quotas under GATT Article XIII:1-2".
88. The panel found that the application of operator category-based licence allocation rule to third-country and non-traditional ACP bananas, but not to traditional ACP bananas, is inconsistent with the requirement of "uniform" administration of trade rules as provided for in GATT Article X.3(a) The panel considered that Article X.3(a) excludes two different sets of import licensing procedures. The Appellate Body reversed this panel finding. Yet, the Appellate Body confirmed that both GATT Article X.3(a) and Article 1.3 of the Licensing Agreement applied to the EC licensing procedures but stated that the latter had to be applied first as the more specified and detailed agreement.
89. Raj Bahla, as note 1, above, 62.
90. McMahon, Going Bananas?, as note 1, above, at 141, states: "Dispute settlement should not be limited to those countries which have an actual trade interest, and provision must be made for those countries who could become potential exporters, especially developing countries. Moreover, all members of the WTO must share a common interest in ensuring that the rules of international trade are not only respected but also correctly implemented."
91. WT/DS27/12.
92. DSU Article 21.3(c).
93. Arbitration under DSU Article 21.3(c), WT/DS27/15, 7 January 1998.
94. Requests were made by the EC and Ecuador on 14 and 18 December 1998, respectively.
95. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Recourse to Article 21.5 by the European Communities, WT/DS27/RW/EEC, 12 April 1999.
96. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Recourse to Article 21.5 by Ecuador, WT/DS27/RW/ECU, 12 April 1999. The report was adopted by the DSB on 6 May 1999.
97. The tariff quota of 2,200,000 tonnes bound in the EC Schedule and an additional autonomous (i.e. not bound) tariff quota of 353,000 tonnes were confirmed by Regulation 1637/98. These were at the same levels as in the prior regime.
98. The EC argued that the limit in question is an upper limit on a tariff preference and is not a tariff quota. However, the panel stated that a tariff quota is, by definition, a quantitative limit on the availability of a specific tariff rate.
99. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Recourse to Article 21.5 by Ecuador, as note 71, above.
100. The chapeau to Article XIII.2 provides: "In applying import restrictions to any product, contracting parties shall aim at a distribution of trade in such product approaching as closely as possible the shares which the various contracting parties might be expected to obtain in the absence of such restrictions."
101. The panel stated: "In respect of such duty-free treatment, the European Communities could consider with the ACP States whether the Lomé Convention can be read to 'require' such treatment within the meaning of the Lomé waiver. We recall that some important preferences found by the original panel and Appellate Body reports to be required by the Lomé Convention cannot be implemented consistently with WTO rules (the most important being the quantitative protections foreseen in Protocol 5). If such a view of the Lomé Convention is challenged, a waiver covering such duty-free treatment could be sought. The MFN tariff quota could also be combined with a tariff quota for ACP imports, whether traditional or not, provided an appropriate waiver of Article XIII is obtained. We note that waivers for duty-free treatment for developing country exports have been granted on several occasions by Members."
102. See Status Report by the EC in September 1999 (WT/DS27/51/Add, 18 September 1999) and March 2000 (WT/DS27/51/Add.7, 28 March 2000). The September 1999 Report states: "Since that time discussions with interested Members have continued and intensified. It appears that most parties would prefer that a tariff rate quota system be maintained, at least in the short term. However, notwithstanding the indications in the report of Ecuador, there continues to be wide divergence of views on both the acceptability of the possible mechanisms of such a system and on which solutions would be WTO consistent."
103. This request for retaliation was made under the third Section 301 procedure. (i) The First Section 301 Procedure (USTR docket number 301-94) Upon request by Chiquita and the Hawaii Banana industry Association, the USTR in October 1994 initiated an investigation on the EC banana regime. The USTR, however, terminated the investigation in September 1995 to self-initiate the new investigation. (ii) The Second Section 301 Procedure (docket 301-100) The new investigation to trigger the WTO panel proceedings resulted in the DSB recommendations finding the WTO-inconsistency of the EC banana regime. Because the EC committed to implement the WTO recommendations within the implementation period (i.e. by 1 January 1999), the USTR terminated Section 301 investigation without taking action (63 FR 8248, 18 February 1998). Section 301(a)(2) provides: "The Trade Representative is not required to take (retaliatory) action in any case in which ... (B) the Trade Representative finds that - (i) the foreign country is taking satisfactory measures to grant the rights of the United States under a trade agreement". The USTR considered that the EC's commitment to implement the WTO reports constitute the satisfactory measures excluding the immediate retaliation. In terminating the second investigation, the USTR, therefore, stressed its intention to monitor the EC's implementation of the DSB recommendations. (iii) The Third Section 301 Procedure (docket 301-100) The EC's implementing measures did not satisfy the United States. This led the United States on 15 December 1998 to threaten retaliation by announcing a list of targeted EC products. At the DSB meeting on 12 January 1999 the United States informed of its intention of retaliation. This last Section 301 procedure reached the April 1999 DSB authorization for the US retaliation.
104. This request pursuant to the DSU Article 22.2 was placed on the agenda for the DSB meeting of 25 January. Prior to the 25 January meeting, Japan and the WTO Director-General acted as mediators. Japan submitted a joint letter, with the consent of 10 members including India, Indonesia and Korea, that the US request for the retaliation should not be dealt with until a report of the original panel reconvened at the EC's request is adopted. The Director-General proposed a compromise that the DSB refer the issue to arbitration based on DSU Article 22.6, without authorizing the retaliation requested by the United States.
105. Likewise, Canada in the panel on Australia - Measures Affecting the Importation of Salmon took an approach similar to that of the United States in the banana dispute. In the Salmon case, Australia's prohibition of imports of salmon from Canada based on a quarantine regulation was found by the panel and Appellate Body to be inconsistent with certain provisions of the Sanitary and Phytosanitary Agreement. Because the deadline for implementing the DSB recommendations expired on 6 July 1999, Canada on 15 July 1999, i.e. within 30 days from the deadline, requested DSB authorization for retaliation. The EC also considered Canada's request to be "a unilateral determination of the failure to comply by Australia", stating that "Canada appeared at that time to follow the (illegal) US approach to this matter". See the panel report on the US Section 301, para. 4.908. At the DSB meeting (WT/DSB/M/66, pp. 4-5), Canada explained the reason for a request for retaliation within the 30-day framework as follows: "[I]n the context of the DSU review, both Australia and Canada had taken the same position on the interpretation of Articles 21.5 and 22: i.e. where there was a disagreement about implementation, a multilateral determination of inconsistency should precede the authorization to suspend concessions. Canada had tabled a detailed proposal to amend the DSU provisions with a view to ensuring such sequence. Since no agreement had yet been reached on this issue, Canada had to pursue its rights in accordance with the existing provisions of the DSU. At this stage, it was not possible for Canada to proceed with the Article 21.5 panel proceedings only, because such proceedings would be concluded after the expiration of the 30-day period provided for in Article 22, within which Canada had the right to request suspension of concessions by negative consensus." On 28 July 1999, Canada requested, pursuant to DSU Article 21.5, that the original panel examine whether the implementation measures by Australia are WTO-consistent.
106. Request for an Authoritative Interpretation pursuant to Article IX.2 of the Marrakesh Agreement establishing the World Trade Organization, Communication from the European Communities, WT/GC/W/133, 25 January 1999.
107. Prior to the DSB meeting dated 25 January 1999 in which the US request for retaliation was to be discussed, Japan submitted a joint letter, with the consent of 10 members including India, Indonesia and Korea, that the US request for retaliation should not be dealt with until a report of the original panel reconvened under Article 21.5 is adopted. In addition, the Director-General proposed a compromise that the DSB, upon request by the EC, refer the issue to arbitration on the level of retaliation pursuant to DSU Article 22.6, without addressing the retaliation requested by the United States. However, the DSB could not address the United States request for retaliation at its meeting of 25 January because three ACP countries (St. Lucia, Dominica and Côte d'Ivoire) opposed the DSB's adopting the US request for retaliation as an agenda item. Later, at the DSB meeting on 29 January 1999, the compromise based on the Director-General's proposal was submitted by the Chairman of the DSB who overruled the blocking of the agenda.
108. WT/DS27/46. Request by the EC for Arbitration under DSU Article 22.6.
109. Japan prepared a proposal to resolve the contradictory drafting of the DSU on timing of a request for retaliation. Japan in November 1999 submitted the proposal for the Ministerial Conference held in Seattle from 30 November to 3 December 1999, entitled "Proposed Amendment of the Dispute Settlement Understanding". The proposal was co-sponsored by 30 WTO Members, including the EC and its Member States, and was, therefore, expected to provide a basis for consensus in the Conference. Japan proposed to insert Article 21bis entitled "determination of compliance", which replaces Article 21.5 with the detailed procedural rules. Under Article 21bis, in case of a dispute over compliance, the complaining party may request the establishment of a "compliance panel", but shall not request authorization of retaliation "until the compliance panel has circulated its report to the Members". The compliance panel report shall be adopted by the DSB and is not subject to appeal. If the compliance panel report finds non-compliance, the losing party shall not be entitled to any further period of time for implementation. Once the compliance panel report is circulated, the complaining party may request authorization from the DSB to take retaliation. The DSB shall grant authorization to such request only after the adoption of the report of the compliance panel, according to the proposal. It remains to be seen whether the DSU is amended in accordance with Japan's proposal, which was not discussed due to the collapse of the Seattle Conference in December 1999.
110. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Recourse to Arbitration by the European Communities under Article 22.6 of the DSU, WT/DS27/ARB, 9 April 1999, 10, note 11.
111. Recourse by the United States under DSU Article 22.7. WT/DS27/47. The United States stated: "According to Article 22.6 of the DSU and the timetable for the Arbitrators' decision is to be issued by 2 March 1999. The United States therefore requests that the DSB authorize it to suspend concessions consistent with the Arbitrators' decision."
112. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Arbitration under Article 22.6 of the DSU, Communication from the Arbitrators, WT/DS27/48, 2 March 1999.
113. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Recourse to Arbitration by the European Communities under Article 22.6 of the DSU, WT/DS27/ARD, 9 April 1999, para. 9.1.
114. This hypothesis cannot be denied. Article 21.5 stipulates that an issue on WTO-consistency of implementing measures is decided "through recourse to these dispute settlement procedures, including wherever possible resort to the original panel". According to Article 22.6, the arbitration "shall be carried out by the original panel, if members are available, or by an Arbitrator appointed by the Director-General".
115. The EC argued that if the Arbitrators consider the WTO-consistency issue under Article 22, Article 21.5 would be deprived of its raison d'être. The Arbitrators rejected the EC argument for several reasons. WT/DS27/ ARB, paras 4.10-4.15.
116. WT/DS27/ARB, para. 6.12.
117. This is consistent with the rules of origin for goods, according to the Arbitrators. As every banana is considered to be originating from "the country where it was grown", the country of origin of inputs is irrelevant. In addition, if the US inputs in Latin American bananas are taken into account in calculating the level of nullification suffered by the United States, in cases where Latin American countries at the same time request retaliation, the problem of double-counting of nullification would arise (WT/DS27/ARB, paras 6.15-6.16). The Arbitrators added that not only goods or service inputs in Latin American bananas cultivation but also "services that add value to bananas after harvesting up to the f.o.b. stage" are excluded from the calculation (WT/DS27/ ARB, para. 6.18).
118. The origin of a service supplier is defined on the basis of its ownership and control. WT/DS27/ARB, para. 6.26.
119. WT/DS27/ARB, para. 6.25.
120. Since the level of retaliation is the gross value of US imports from the EC, the comparable basis for calculating nullification was the impact on the value of relevant EC imports from the United States rather than US firms' costs and profits, as used in the US submission, according to the Arbitrators (WT/DS27/ARB, para. 7.1).
121. The United States proposed the following four counterfactuals: "(i) a tariff-only regime, without tariff quotas, but including an ACP tariff preference (with effects calculated for a range of tariff rates from 75 Euro per tonne to the out-of-quota bound rate); (ii) a tariff-quota system with license allocations based on the first-come, first-served method; (iii) the complete allocation of a tariff-quota system (with traditional ACP quotas reduced to actual past trade performance) with country-specific allocations to all substantial and non-substantial ACP and non-ACP suppliers; and (iv) the base US counterfactual, which, as noted above, assumed a continuation of a 857,700 tonne quantity for ACP imports and an expansion of the MFN tariff quota to 3.7 million tonnes." As a result, the United States calculated the level of nullification as follows: "(i) Tariff-only regime at 75 Euro per tonne: USS 326.9 million; (ii) First-come, first-served licensing system: USS 619.8 million; (iii) Fully allocated tariff quota: USS 558.6 million; and (iv) Base US counterfactual: US$ 362.4 million." The EC argued that "none of these counterfactuals would involve higher profits for U.S. suppliers than the current revised regime". See WT/ DS27/ARB, paras 7.4-7.6.
122. The Arbitrators do not clearly differentiate between the amount of losses in the supply of goods versus services. However, given the minimal exports of US bananas to the EC, it can be presumed that losses in service supply were of particular importance to the calculation of the level of nullification. Gerrit Schohe, as note 1, above, 253-254, noted: "Only the GATS may enable the (United States) to take trade sanctions against the EC. Without a substantial banana production of its own, the United States might find it more difficult to base trade sanctions."
123. The concept of cross-retaliation, though opposed by a number of countries during the Uruguay Round negotiations, was incorporated in the DSU at the request of the United States. The United States resorted to cross-retaliation in two cases: the Brazilian Computer case; and Brazil's Pharmaceutical Products case. See Norio Komuro, The WTO Dispute Settlement Mechanism, 29 J.W.T. 4, p. 74, note 220.
124. WT/DS27/ARB, paras 3.8-3.10.
125. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Recourse by the United States to Article 22.7 of the DSU, WT/DS27/49, 9 April 1999.
126. Needless to say, the request followed the Article 21.5 reconvened panel report on WTO-inconsistency of the implementing measures.
127. As a result, the request for retaliation by Ecuador was deferred by the DSB until the determination, through the arbitration, of the level of retaliation.
128. They completed their work in the original panel, two Article 21.5 reconvened panels (recourse by the EC and Ecuador) and two Article 22.6 arbitrations (recourse by the United States and Ecuador).
129. WT/DS27/52, 9 November 1999.
130. This is the principal sector of "distribution services", one of eleven service sectors for retaliation purposes.
131. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Recourse to Arbitration by the European Communities under Article 22.6 of the DSU, Decision by the Arbitrators, WT/DS27/ARB/ECU, 24 March 2000.
132. I.e., goods destined for final consumption by end-consumers in Ecuador, which divide into non-durable consumer goods and durable consumer goods; WT/DS27/ARB/ECU, paras 97-99.
133. Products of Denmark and the Netherlands were excluded by Ecuador from the scope of retaliation.
134. The Arbitrators state: "We would expect that a request by Ecuador under subparagraph (a) of Article 22.3 for suspension of concessions under the GATT with respect to the product categories just mentioned would be at least of the amount identified in paragraph 99 above (US$ 60.8 million per year)." See WT/DS27/ARB/ECU, para. 173, note 59.
135. A WTO Member cannot retaliate in sub-sectors in respect of which it has not entered into specific commitments.
136. Cross-retaliation should only take place if retaliation against EC goods and services is insufficient to reach the level of retaliation, i.e. $201.6 million.
137. The Arbitrators also stressed that retaliation by lifting intellectual property rights must only concern goods for sale in Ecuador.
138. As the panel and the Appellate Body made voluntary suggestions for implementing the recommendations under DSU Article 19, the Arbitrators made suggestions on how to implement their decisions, in particular how to suspend obligations under the TRIPs Agreement. The crux is how to determine EC Member States' nationals who would be subject to suspension of obligations. Those nationals are defined in the main pre-existing intellectual property conventions, including the Paris Convention, the Berne Convention, the Rome Convention etc., according to Article 1.3 of the TRIPs Agreement. In respect of the protection of performers/producers of sound recordings and broadcasting organizations, persons entitled to the protection are defined in the Rome Convention. However, the problem is that right-holders "do not necessarily all have the nationality of one of those 13 Member States in question, even if the phonogram concerned has been produced in one of those Member States". The Arbitrators, therefore, warned Ecuador not to "adversely affect right holders who cannot be regarded as nationals of those 13 EC Member States". WT/DS27/ARB/ECU, paras 141-144.
139. WT/DS27/ARB/ECU, para. 127. The Arbitrators state: "None of provisions [in Article 22] requires the complaining party to establish that suspension with respect to another sector or under another agreement is in fact and at present practicable and effective, or will become so at some point in the future. Nor are we, as Arbitrators ... required to establish that the suspension of certain TRIPs obligations is effective and practicable for Ecuador in this case."
140. However, losses in profits incurred by banana producers or companies supplying distribution services were not used for the calculation. WT/DS27/ARB/ECU, paras 159-160, note 52.
141. WT/DS27/54.
142. WT/DS27/ARD, as note 85, above, para. 6.3.
143. The arbitration in the Hormones case confirmed the arbitration in the Banana case. See EC - Measures concerning Meat and Meat Products (Hormones), Original Complaint by the United States, Recourse to Arbitration by the EC under Article 22.6 of the DSU, Decision by the Arbitrators, WT/DS26/ARB, 12 July 1999, paras 39-40.
144. United States - Imposition of Import Duties on Automobiles from Japan under Sections 301 and 304 of the Trade Act of 1974, complaint by Japan (WT/DS6). Pursuant to Section 301, the USTR on 10 May 1995 determined that acts, policies and practices of Japan that restrict or deny suppliers of US auto parts access to the auto replacement and accessories market in Japan are "unreasonable and discriminatory and burden or restrict commerce". The USTR then requested public comment on a proposed determination that the appropriate action in response would be to impose 100 percent tariff on luxury motor vehicles from Japan (60 FR 26745). Japan argued that the US import surcharges violate GATT Articles I and II. Effective 28 June 1995, having reached a satisfactory resolution of the issues under investigation, the USTR determined that it would terminate the Section 301 investigation and monitor compliance with the bilateral agreement (60 FR 35253). On 19 July 1995, Japan and the United States notified the WTO of the settlement of the dispute.
145. United States - Tariff Increases on Products from the European Communities, complaint by the European Communities (WT/DS39). In requesting consultations in April 1996, the EC argued that the US retaliatory measures under the Presidential Proclamation No. 5759 of 24 December 1987 (i.e. retaliation against the hormones Directive) resulted in tariff increases on products from the EC and are, therefore, inconsistent with GATT Articles I, II and XXIII, as well as DSU Articles 3, 22 and 23. The EC on 19 June 1996 requested the establishment of a panel. In its request, the EC claimed that the United States failed to "ensure the conformity of its laws, regulations and administrative procedures with its obligations" under the WTO, with respect to the application of Section 301 of the 1974 Trade Act in this case (WTO Agreement Article XVI:4). The United States on 15 July 1996 withdrew the measure. This led the EC not to pursue its panel request.
146. The United States publicly announced as follows by a letter of 14 October 1998, from Erskine Bowles, White House Chief of Staff, to the Honorable Newt Gingrich, Richard Gephardt, Trent Lott and Tom Daschle of the United States Congress and by notices in the Federal Register of 22 October 1998 and 10 November 1998 (Volume 63, No. 204 and 217 respectively): "[T]he US will: - on 15 December 1998, make unilateral determinations ... that the measures which the EC has taken to implement the DSB recommendations fail to implement those recommendations; and - as early as 1 February 1999, but in no case later than 3 March 1999, unilaterally implement the trade sanctions announced on 15 December 1998." See United States - Sections 301-310 of the Trade Act of 1974, Request for Consultations by the EC, WT/DS152/1, 30 November 1998.
147. The EC stated that although the complaint was "prompted by the experience of the Communities with the measures the United States took under Sections 301-310 in the dispute on the European banana regime", it was not directed against "any particular application" of Sections 301-310, which were subject to the separate panel proceedings. WT/DS152/R, para. 4.9.
148. Section 301 of the US 1974 Trade Act empowers the USTR to investigate and take retaliatory action against unreasonable, unfair or discriminatory practices by a trading partner, or violations of international agreements by a trading partner. Retaliatory action is either mandatory or discretionary depending on the circumstances. Retaliation is mandatory if the act, policy or practice of a foreign government is either in violation of the WTO or other trade agreements, or "is unjustifiable and burdens or restricts U.S. commerce". Retaliation is also mandatory if US rights "under any trade agreement" are denied by a foreign country. On the other hand, retaliation is discretionary if the act, policy or practice of a foreign country "is unreasonable or discriminatory and burdens or restricts U.S. commerce". According to Section 301 (d)(3)(B) introduced following the Uruguay Round, "unreasonable" practices are defined as those that, while not necessarily in violation of trade agreements, are otherwise unfair and inequitable. The issue before the panel on Section 301 centred on whether the US mandatory retaliation in case of violation of the WTO is consistent with the WTO. The US discretionary retaliation was outside the purview of the panel jurisdiction. As rightly pointed out by Thomas Omestad (Addicted to Sanctions, U.S. News & World Report, 15 June 1998, 30), no other country on earth opted for sanctions as often as the United States and US sanctions apply to about 70 countries. However, almost all sanctions imposed by the United States were done as matters of legislation not as a result of a Section 301 case and almost always for foreign policy reasons (terrorism, etc.). For the US sanctions in general, see Raj Bhala, MRS. WATU and International Trade Sanctions, 33 The International Lawyer 1 (1999), 1-26;
149. Peter Buck Feller, U.S. Customs and International Trade Guide, Lexis Publishing, New York, Vol. 1, Release No. 51, January 2000,
150. Chapter 15 "Import Restrictions Related to National Security or Foreign Policy";
151. Daniel M. Price and John P. Hannah, The Constitutionality of United States State and Local Sanctions, 39 Harvard International Law Journal 2 (1998), 443-500.
152. In addition, Article 23.2 (b) requires Members to follow the DSU procedures (Article 21) to determine the reasonable period of time for implementation of the DSB recommendations.
153. United States - Sections 301-310 of the Trade Act of 1974, WT/DS152/R, 22 December 1999. Panellists were David Hawes (Chairman, Australia), Terje Johannessen and Joseph Weiler. Upon request by the EC, the Director-General determined the composition of the panel, pursuant to DSU Article 8.7.
154. The panel stated that, although it is not its task to examine the WTO-consistency of USTR practice, it found the relevant evidence to be insufficient to overturn the US claim and the panel's conclusion. See WT/ DS152R, paras 7.127-7.130. (1) There are the following three cases where the USTR made determination of the inconsistency based on the DSB recommendations: (i) In Bananas III, the USTR refrained from unilaterally determining that the EC
155. The panel continues: "It was based on the US interpretation given to Articles 21.5 and 22, an interpretation shared by other Members and now subject to negotiation. It seems to this panel that the US attitude in this respect was due in large measure to the contradictory drafting of Articles 21.5 and 22 and may, as a result, be defensible as an act taken in order to safeguard its right to obtain DSB authorization to suspend concessions by negative consensus." See WT/DS152/R, para. 7.168.
156. See David Palmeter, A Few - Very Few - Kind Words for Section 301, in Philip Ruttley et al. (eds), The WTO and International Trade Regulation, London, Cameron May (1998), 123-129, stating at 128-129: "[W]hat has not been considered by WTO panels and the Appellate Body is the compatibility of this GATT case law with Article XVI.4 of the Marrakech Agreement. GATT had not counterpart provision. Interpreted in light of pacta sunt servanda principle encompassed in Article 26 of the Vienna Convention on the Law of Treaties, Article XVI.4 could lead to a reconsideration of the GATT law on this issue, particularly in circumstances in which the Members with the discretionary power could be seen to be seeking to employ the threat advantages of WTO illegality." Palmeter also says at 124: "Under GATT Section 301 was, and to many, still is, notorious. It is the vehicle by which the United States is perceived, with an extremely high degree of accuracy, to pursue whatever threat advantage it possessed. Section 301, it is safe to say, embodies few principles of justice, Rawlsian or otherwise."
157. United States - Measures affecting the Importation, Internal Sale and Use of Tobacco, Adoption on 4 October 1994, DS44/R, para. 118.
158. United States - Import Measures on Certain Products from the European Communities, Complaint by the EC, WT/DS165/1.
159. WT/DS165/8, 11 May 1999.
160. WT/DS165/R17, 17 July 2000.
161. 64 FR 19209, 19 April 1999.
162. Bath preparations (HTS 33073050); handbags (42022215); articles of a kind normally carried in the pocket or handbag (42023210); uncoated felt paper and paperboard in rolls or sheets (48055000); folding cartons, boxes and cases of non-corrugated paper or paperboard (48192000); lithographs on paper or paperboard (49119120); bed linen (63022190); lead-acid storage batteries (85072080); electrothermic coffee or tea makers for domestic purposes (except Italy) (85167100).
163. The EC strongly opposed carousel retaliation and attempted at the Seattle Ministerial Conference during the DSU review process to prohibit any rotation of retaliation lists. This was one major reason the review failed to make progress.
164. Public Law 106-200. See also House Rpt 106-606; HR 434. The provision was championed by a coalition of agriculture industries, including meat, poultry, banana and other groups, which is developing an aggressive strategy to ensure that the measure remains in the GDI-Africa trade Bill. The House and Senate on 2 May 2000 finally reached a tentative agreement on main provisions of the CBI-Africa Bill, including the carousel provision. The Senate on 11 May 2000 passed the Bill by a 77-19 vote. The legislation seeks to expand trade with nations of sub-Saharan Africa and the Caribbean. The Bill was a compromise (conference report) between the House and Senate and includes several add-on provisions, such as "carousel" retaliation and child labour.
165. Memorandum for the JMC, White & Case LLP, 29 March 2000.
166. Fed. Reg. Vol. 65, No. 105, 34786. Comments were invited with respect to: whether the products currently subject to 100 percent duties should continue to be subject to such duties; whether the current rate of duty is high enough to have the intended effect of being prohibitive; whether newly listed products that are not currently subject to 100 percent duties should be subject to 100 percent duties; and whether a 100 percent rate of duty would be high enough to have the intended effect of being prohibitive. Newly listed products in the Bananas case included nine subheading-level HTS products: pecorino cheese, sweet biscuits, waffles and wafers, candles, non-adhesive plates, printed cards, sweaters, chandeliers.
167. WT/DS26/ARB, paras 22-23.
168. See http://europa.eu.int/comm/dg01/dg1_t.htm, "EU-US Dispute on Bananas; Brussels, 10 November 1999; Commission proposes to modify the EU's Banana Regime".
169. The proposal adds: "The distribution of this quota would be characterised by a striking price system. 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 bid."
170. The Commission's proposal was criticised by the European Parliament's Agriculture Committee in July 2000. The Committee considered that the proposal would destroy the banana producers in the ACP countries and the EC through the first-come, first-served licence basis. In addition, the Committee firmly opposed the tariffonly solution. The members of the Committee indicated that the large multinationals would win the race for import licences (See European Parliament News Report, 11 July 2000).
171. In the meantime, the General Affairs Council responded to the Commission's proposal: "The Council noted the Commission's report and asked it to examine the possibility of managing the market using a quota system based on first come first served. It asked the Commission to report back after it had investigated the possible solutions, including the tariff solution and its implications. The Council will decide when it has seen that report. The Council reiterated its wish to achieve a settlement to this dispute as swiftly as possible in compliance with WTO rules, with the interests of Community producers and with the Union's commitments vis-à-vis the ACP countries, in particular the weakest among them." (See EU General Council of Ministers Conclusions, 10085/00, Presse 249, 10 July 2000.)
172. The EC filed its Lomé waiver in the Council for Trade in Goods on 5 April 1999.
173. Amelia Porges, The Marrakesh Agreement Establishing the World Trade Organization, in Terence P. Stewart (ed.), World Trade Organization, American Bar Association, Selection of International Law and Practice, Washington (1996), 94.
174. Article IX.3 provides: "In exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member by this Agreement or any of the Multilateral Trade Agreements, provided that any such decision shall be taken by three fourths of the Members unless otherwise provided for in this paragraph. (a) . . . (b) A request for a waiver concerning the Multilateral Trade Agreements in Annexes 1A or 1B or 1C and their annexes shall be submitted initially to the Council for Trade in Goods, the Council for Trade in Services or the Council for TRIPs, respectively, for consideration during a time period which shall not exceed 90 days. At the end of the time period, the relevant Council shall submit a report to the Ministerial Conference."
175. Article IX.4.
176. Opinion of Mark Nguyen, White & Case LLP.
177. The transitional measures to cover the period between the expiration on 29 February 2000 and 1 August 2000 were adopted by the EC Ecofin Council of Ministers' conclusions on 28 February 2000. Most of the revised Fourth ACP-EC Convention will be extended until 1 August 2000 at the same time. The trade provisions of the new partnership agreement will apply as transitional measures. The dismantling of the current trade preferences was agreed in return for the establishment of regional trade areas wherein the EC will set up WTO-consistent relations. The new trade agreements will be negotiated between 2002 and 2008 for the replacement of the current unilateral trade preferences. They will be non-discriminatory as regards the least developed countries.
178. In addition to original consultations prior to the establishment of the panel, various consultations were made. Following the September 1997 Appellate Body report in Bananas III, Panama on 24 October 1997 requested consultations with the EC (WT/DS105/1; WT/DS105/1/Add.1, 9 January 1998; WT/DS105/1/ Add.2, 30 April 1998). Furthermore, in parallel with the Article 21.5 proceeding, the four complainants except Ecuador in Bananas III (Guatemala, Honduras, Mexico and the United States) and Panama, jointly and severally, initiated new consultation procedures on 20 January 1999 (WT/DS158/1, 25 January 1999). This consultation was in respect of the EC modified banana regime based on its implementing measures. The objective of the consultation was to discuss in detail with the EC the various aspects of the EC's modified banana regime, including their effect on the market, their WTO-inconsistency, and ways for amending the regime. As provided for in DSU Article 3.7, "a solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred", according to them. Given the legal structure of the WTO dispute settlement mechanism, structure woven of two threads: adjudicative; and negotiated dispute resolution, it is not surprising that the banana dispute is dealt with under the DSU by conflicting, but correlative approaches: adjudicative and negotiated approaches. See Norio Komuro, The WTO Dispute Settlement Mechanism, 29 J.W.T. 4 (1995), 5-95.
179. In the Hormones case, unlike in the Banana case, because the EC did not take implementing measures to comply with the DSB recommendations, the Article 21.5 panel was not reconvened. Article 22.6 Arbitrators calculated the level of nullification arising from the EC ban on beef imports from the United States and assessed the level of US retaliation, which is equivalent to the level of nullification.
180. See, however, also Raj Bahla, Opinion: Banana Case Threatens Rule of Law, The Journal of Commerce, 4 January 1999, stating: "If there is to be a strong legal infrastructure on which global trade is built, then the legal obligation created by a WTO panel or Appellate Body report must be clear. The current dispute tells us it is not ... The US-EU row jeopardizes continued global economic integration among developed and developing countries under the auspices of the WTO. It undermines the international rule of law."
181. John H. Jackson, The World Trading System, The MIT Press, Cambridge/London, Second Edition (1997), 14.1, stating "Trade Constitution". In EC law, constitutionalism is defined as the process by which the EC Treaties evolved from a set of legal arrangements binding upon sovereign States, into a vertically integrated legal regime conferring judicially enforceable rights and obligations on all legal persons and entities, public and private, within the sphere of application of EC law - enforceable even against the Member States and national law.
182. See J.H.H. Weiler, The European Courts of Justice: Beyond "Beyond Doctrine" or the Legitimacy Crisis of European Constitutionalism, in A.M. Slaughter, A. Stone Sweet and J.H.H. Weiler (eds), The European Court and National Courts - Doctrine and Jurisprudence, Hart Publishing, Oxford, 1998.
183. For details on constitutionalism, see G.E. Evans, Lawmaking under the Trade Constitution: A Study in Legislating by the World Trade Organization, Studies in Transnational Economic Law, Kluwer Law International, London, 2000;
184. B.F. Fitzgerald, Trade-Based Constitutionalisms: The Framework for Universalizing Substantive International Law? (1996-97) 5 University of Miami Yearbook of International Law 111-163;
185. J.H. Jackson, Global Economics and International Economic Law, (1998) 1 JIEL 1-23;
186. E.-U. Petersmann, National Constitutions and International Economic Law: Studies in Transnational Economic Law, 8 Kluwer Law and Taxation Publishers, Deventer, 1993;
187. E.-U. Petersmann, The GATT/WTO Dispute Settlement System: International Law, International Organizations, and Dispute Settlement, Kluwer Law International, London, 1997;
188. E.-U. Petersmann (ed.), International Trade Law and the GATT/WTO Dispute Settlement System: Studies in Transnational Economic Law, Kluwer Law International, London, 1997;
189. Jean-Claude Piris, L'Union européenne a-t-elle une constitution? Lui en faut-il une?, 35 Revue Trimestrielle de Droit Européen 4 (1999), 599-635.
190. John H. Jackson and Alan O. Sykes, Implementing the Uruguay Round, Clarendon Press, Oxford (1997), 465, compares between "the WTO dispute settlement process and its national consequences". They point out that "[t]he WTO Dispute Settlement Understanding creates for the first time in the GATT system an environment in which a member nation accused of violating its obligations cannot thwart the dispute settlement process. It ensures not only that aggrieved nations can secure dispute panels, but that recalcitrant violators will be subject to WTO-approved sanctions". However, they conclude: "The effectiveness of this [WTO dispute settlement] process will turn on a number of the same variables that influence whether the WTO texts themselves will be faithfully implemented ... In most instances, ... WTO dispute findings have less status in domestic law than the WTO agreements (which may themselves have little status), because the dispute findings are not treaties accepted by the national process for the creation of binding international obligations. Hence, the prospect arises that disputes may drag on for years."
191. U. Everling, as note 1, above, 401-437, 1996.
192. Opinion, Case C-280/93, Germany v. Council, [1994] ECR 1-4973, point 79.
193. B. Borrell and M.C. Yang, EC Bananarama 1992: The Sequel, 1992.
194. There have been banana disputes raised by other EC Member State governments and traders before the ECJ. They did not, however, involve the GATT/WTO issue. In Belgium and Germany v. Commission, Joined Cases C-9/95, C-23/95 and C-156/95, [1997] ECR 1-645, the ECJ dismissed the direct action, brought by Belgium and Germany, for annulment of Commission regulations allocating the hurricane licence in case of tropical storm Debbie. In Belgium v. Commission, Joined Cases C-71/95, C-155/95 and C-271/95, [1997] ECR I-687, the direct action, brought by Belgium, for annulment of regulations concerning imports of bananas into the three new EC Members was also dismissed by the ECJ. See also: C-73/97P, Appeal by French Republic against the judgment of the CFI in Case T-70/94, Comafrica and Dole Fresh Fruit Europe v. Commission, [1996] ECR II-1741; C-369/95, Somalfruit SpA, Camar SpA and Ministero delle Finanze, Ministero del Commercio con l'Estero, Judgment of 27 November 1997, not yet published, etc. There have been banana disputes which, although involving the GATT issue, did not concern the EC banana regime. In C-469/93, Amministrazione delle finanze dello Stato v. Chiquita Italia SpA, [1995] ECR 1-4533, the ECJ dealt with a question of whether an EC Member State internal tax (but not of the EC banana regime) is legal in light of the GATT or the ACP-EEC Convention. The internal tax in question, i.e. the Italian tax on the consumption of bananas, which applies to EC bananas, was already held in 1987 by the ECJ to constitute the protective internal tax prohibited under ex-Article 95 second paragraph (Case 184/85, Commission v. Italy, [1987] ECR 2013). The ECJ in its judgment of 14 September 1995 concluded that, in the absence of direct effect of GATT provisions, individuals cannot invoke GATT Article III prohibiting the discriminatory/protective internal tax to contest the legality of the internal tax in question. The ECJ, however, held that, because the Fourth ACP-EEC Convention may contain such provisions having direct effect, the Convention precludes "increases in internal taxation on bananas originating in the ACP States, such as the Italian consumption tax". See also Bernard Rudden and Diarmuid Rossa Phelan, Basic Community Cases, Second Edition, Oxford University Press, 311-374 [1997].
195. Case C-280/93, [1994] ECR I-4973. See Inger Österdahl, Bananas and Treaty-Making Powers: Current Issues in the External Trade Law of the European Union, 6 Minnesota Journal of Global Trade 473-532 [1997], at 531-532 stating: "In France v. Commission (on the U.S.-EC agreement on competition) ..., the ECJ sided with the Member States rather than with the EC ... The Banana case shows, however, that even if the Community tends to lose in a conflict between the Community and the EC Member States, the ECJ does not hesitate to protect the interests of the Community if they come into conflict with other interests in a global context. This is especially true if what is at stake is the EC's protectionist common agricultural policy confronted with the international free-trade challenges of the GATT. Instead of being cautious, one could argue that the ECJ went too far in its integrationist zeal in the Banana case."
196. According to the Court of Justice, this principle is "only a specific expression of the general principle of equality which is one of the fundamental principles of Community law" and applies to economic operators who were neither producers nor consumers.
197. U. Everling, as note 1, above, 422. See also Ernst-Ulrich Petersmann, Proposals for a New Constitution for the European Union, [1995] 32 CMLR, 1123-1175, 1159.
198. Piet Eeckhout, The Domestic Legal Status of the WTO Agreement: Interconnecting Legal Systems, 34 CMLR (1997), 24-25.
199. Case 70/87, Fediol v. Commission [1989] ECR 1781.
200. Case C-69/89, Nakajima v. Council [1991] ECR I-2069.
201. Case T-162/94, NMB France Sarl, NMB-Minebea-GmbH, NMB UK Ltd. and NMB Italia Srl v. Commission of the EC, Judgment of the CFI, 5 June 1996, [1996] ECR II-0427.
202. [1995] ECR I-4577.
203. [1998] ECR I-0973.
204. Cases of admissibility of action for annulment by individuals are also of particular importance. For example, in Léon Van Parijs NV and Others v. Council (Orders of the ECJ of 21 June 1993, [1993] ECR I-3335), the ECJ, by Orders of 21 June 1993, rejected actions for annulment by German, Dutch, Belgian and Italian importers against provisions of the EC banana Regulation. It held that the actions were inadmissible, since these importers were not directly and individually concerned in the sense of ex-Article 173 (230) of the EC Treaty.
205. Case T-254/97, CFI, 28 September 1999.
206. See Judgment of the CFI of 13 December 1995, Joined Cases T-481/93 and T-484/93, Vereniging van Exporteurs in Levende Varkens and Others and Nederlandse Bond van Waaghouders van Levend Vee and Others v. Commission, [1995] ECR II-2941.
207. Judgment of 11 December 1996, Case T-521/93, [1996] ECR II-1707.
208. Case C-183/95, Judgment of 17 July 1997, [1997] ECR I-4315. In this case, the Commission forbade Member States to import fish products from Japan by a decision. On the basis of the decision, the Dutch authorities did not authorize the importation of Japanese products by an importer, Affish Co. Ltd. Affish challenged the national measures in the national court. Affish raised a question whether the Commission decision is inconsistent with the WTO Sanitary and Phytosanitary Agreement.
209. He continued as follows: "Indeed the WTO Agreement still provides for a possibility to resort to compensation and suspend concessions or other obligations to resolve the disputes. The quasi adjudicative character of the Dispute Settlement Body is alleviated by the fact that not only the ministerial conference but also the General Council can adopt interpretations of the WTO Agreement, as provided in Article IX of the WTO Agreement. In addition, GATS Article XXI permits each Member State to modify or withdraw their commitments in service sector and to indicate special commitments for market access in a schedule. The DSU provides for a possibility of mutually acceptable compensation. Likewise, the WTO Safeguard Agreement, although reducing to a certain extent a possibility for Member States to take safeguard measures, still permits Member States to take such measures including provisional measures under certain conditions." The Advocate General continued to state that concerned provisions of the WTO Sanitary and Phytosanitary Agreement are not sufficiently precise and concrete to be directly effective.
210. Joined Cases C-364/95 and C-365/95, Judgment of 10 March 1998, T. Port GmbH & Co. v. Hauptzollant Hamburg-Jonas, [1998] ECR I-1023.
211. Case C-53/96, Hermès International v. FHT Marketing Choice E.V., [1998] ECR I-3603. See Geert A. Zonnekeyn, Mixed Feelings about the Hermès Judgment, 5 International Trade Law & Regulation 1, 20-25 (January 1999);
212. Panel Discussion, Is The WTO Dispute Settlement Mechanism Responsive to the Needs of the Traders?, 32 J.W.T. 2, 147-165 (April 1998);
213. Thomas Cottier and Krista Nadakavukaren Schefer, The Relationship between World Trade Organization Law, National and Regional Law, 1 J.I.E.L. 83-122 [1998];
214. Armin von Bogdandy, Comment on Case C-53/96, 36 CMLR 3, 663-672 [1999].
215. C-149/96, Judgment of 23 November 1999, not yet published, available on the ECJ's web site http:// www.curia.eu.int. See Axel Desmedt, as note 1, above.
216. The Judgment is as follows: "37. Although the main purpose of the mechanism for resolving disputes is in principle, according to Article 3(7) of the Understanding on Rules and Procedures Governing the Settlement of Disputes (Annex 2 to the WTO), to secure the withdrawal of the measures in question if they are found to be inconsistent with the WTO rules, that understanding provides that where the immediate withdrawal of the measures is impracticable compensation may be granted on an interim basis pending the withdrawal of the inconsistent measure.
217. According to Article 22(1) of that Understanding, compensation is a temporary measure available in the event that the recommendations and rulings of the dispute settlement body provided for in Article 2(1) of that Understanding are not implemented within a reasonable period of time, and Article 22(1) shows a preference for full implementation of a recommendation to bring a measure into conformity with the WTO agreements in question.
218. However, Article 22(2) provides that if the member concerned fails to fulfil its obligation to implement the said recommendations and rulings within a reasonable period of time, it is, if so requested, and on the expiration of a reasonable period at the latest, to enter into negotiations with any party having invoked the dispute settlement procedures, with a view to finding mutually acceptable compensation.
219. Consequently, to require the judicial organs to refrain from applying the rules of domestic law which are inconsistent with the WTO agreements would have the consequence of depriving the legislative or executive organs of the contracting parties of the possibility afforded by Article 22 of that memorandum of entering into negotiated arrangements even on a temporary basis.
220. It follows that the WTO agreements, interpreted in the light of their subject-matter and purpose, do not determine the appropriate legal means of ensuring that they are applied in good faith in the legal order of the contracting parties.
221. As regards, more particularly, the application of the WTO agreements in the Community legal order, it must be noted that, according to its preamble, the agreement establishing the WTO, including the annexes, is still founded, like GATT 1947, on the principle of negotiations with a view to 'entering into reciprocal and mutually advantageous arrangements and is thus distinguished, from the viewpoint of the Community, from the agreements concluded between the Community and non-member countries which introduce a certain asymmetry of obligations, or create special relations of integration with the Community, such as the agreement which the Court was required to interpret in Kupferberg."
222. Christoph Arhold, as note 1, above.
223. Joined Cases C-465 and 466/93, [1995] ECR I-3799.
224. Case C-465/93.
225. An interim relief is considered needed to give protection to the individual who claims his rights under EC law are being violated pending the outcome of a preliminary ruling by the ECJ. See Eleanor Sharpston, Interim Relief in the National Courts, in Julian Lonbay and Andrea Biondi (eds), Remedies for Breach of EC Law, John Wiley & Sons, Chichester, 47-66 [1996].
226. The ECJ further stated: "Article 189 of the Treaty is to be interpreted as not precluding national courts from granting interim relief to settle or regulate the disputed legal positions or relationships with reference to a national administrative measure based on a Community regulation which is the subject of a reference for a preliminary ruling on its validity."
227. Case C-466/93.
228. Case C-68/95, T. Port GmbH & Co. KG v. Bundesanstalt für Landwirtschaft und Ernährung, ECJ's Judgment of 26 November 1996, [1996] ECR I-6065.
229. Order of 26 November 1997, Case T-39/97, T. Port v. Commission, ECR [1997] II-2125.
230. Joined Cases T-364/95 and T-365/95, T. Port v. Hauptzollamt Hamburg-Jonas, ECJ's Judgment of 10 March 1998, [1998] ECR I-1023; 3 C.M.L.R. 543 (1998).
231. See Comments by Albertina Albors-Llorens, 35 CMLRev. 227-245 (1998).
232. Control of Community acts through national jurisdiction was criticized by German scholars. Albrecht Weber, Die Bananenmarktordnung under Aufsicht des BverfG?, 6 Europäische Zeitschrift für Wirtschaftsrecht 165 (1997), states that such "ultra vires" control is incompatible with the Community law, since it endangers the unity of Community law.
233. See also Ernst-Ulrich Petersmann, Darf die EG das Völkerrehct ignorieren?, 11 Europäische Zeitschrift für Wirtschaftsrecht 325, 326 (1997).
234. Joined Cases T-364/95 and T-365/95, [1998] ECR I-1023.
235. Paras 62-65.
236. Case 1 E 798/95. Administrative Court (Verwaltungsgericht) of Frankfurt am Main, including preliminary procedure before the Federal Constitutional Court (Bundesverfassungsgericht) (according to Article 100, paragraph 1 of the German Basic Law).
237. Gerrit Schohe (1997), as note 1, above, 246, stating: "Because the backroom huckstering of EU politics was revealed to be almost immune from judicial review by the Community Courts, those harmed by the banana regime appealed to two tribunals outside the EU to reintroduce the rule of law in the EU's political bazaar: Firstly, the German Constitutional Court ... was asked whether, in the banana case and generally, the EU had violated fundamental rights to such an extent that the ensuing EU acts should not be applied in Germany. Secondly, Ecuador, Guatemala, Honduras, Mexico and the United States, within the framework of the World Trade Organization ..., requested consultations with the EU."
238. Thomas Cottier, Dispute Settlement in the World Trade Organization: Characteristics and Structural Implications for the European Union, 35 CMLR, 366 [1998], stating: "Non-compliance with WTO law therefore bears the cost that Community law, if inconsistent with GATT and WTO obligations, is being held ultra vires and unconstitutional on grounds of systematic lack of adequate protection of fundamental property rights. In other words, the cost of non-compliance put at risk the principle of primacy of Community law over national law. This is a phenomenon of particularly importance to the EC."
239. Mark L. Movesesian, Sovereignty, Compliance, and the World Trade Organization: Lessons from the History of Supreme Court Review, 20 Michigan Journal of International Law 4, 775-818 (1999), 815.
240. Section 102 of the Uruguay Round Agreements Act of the United States (19 U.S.C. 3512 (a) (1)) provides: "No provision of any of the Uruguay Round Agreements, nor the application of any such provision to any person or circumstance, that is inconsistent with any law of the United States shall have effect." Challenges to government conduct on the ground that the conduct violates WTO obligations are also prohibited by Section 102. For the absence of direct effect under United States law, see David W. Leebron, Implementation of the Uruguay Round Results in the United States, John H. Jackson and Alan Sykes, Implementing the Uruguay Round, as note 151, above, 175, 218, 222.
241. A. Ott, The Friction between GATT/WTO Law and EC Law: Some Critical Remarks on the Case Law of the ECJ, in Heere (ed.) International Law and the Hague's 750th Anniversary, T.M.C. Asser Press, The Hague, 1999, 323-332.
242. The panel examined the consistency of the EC safeguard measures with the most-favoured-nation principle. The panel, however, considered it more appropriate to examine the matter in the context of Article XIII which deals with the non-discriminatory administration of quantitative restrictions rather than Article I:1. Finally, the panel found the EC measures not to be in conformity with Article XIII:2(a), :2(d) and :3(b) first sentence. See EEC Restrictions on Imports of Apples from Chile, Report of the Panel adopted on 10 November 1980, BISD, 27th Supplement, 1981, 98-117; GATT, L/5407.
243. Case 112/80, Dürbeck v. Hauptzollamt Frankfurt am Main, Judgment of 5 May 1981, [1981] ECR 1095. Dürbeck, an importer and wholesaler of fruit and vegetables, imported by air into Germany Chilean dessert apples and applied to the German authorities for the release into free circulation of those goods. The competent customs office rejected that application on the ground of the protective measures adopted by the Community in Commission Regulations in regard to imports of dessert apples originating in Chile. Dürbeck argued that the EC protective measures in issue are contrary to the commitments entered into by the Community under GATT. The ECJ rejected Dürbeck's arguments, stating: "According to the uncontested information on this matter supplied by the Commission during the oral procedure the special GATT group charged with examining the conformity of Community measures with the general agreement found that in adopting the protective measures in issue the Commission did not infringe either article I or article II of that agreement. The group in question criticized the Community only for making 1976 the third reference year instead of 1975 when adopting the aforesaid measures. Criticism of that kind cannot be regarded as a factor such as to make the measures in question void."
244. ADP/136, 28 April 1995. The Japanese government raised the so-called asymmetry issue before the GATT Panel on Audio Tapes in Cassettes, alleging that the asymmetrical cost adjustments are inconsistent with Article 2.6 of the Tokyo Round Antidumping Code. Article 2.6 provided: "In order to effect a fair comparison ..., [the export price and the normal value] shall be compared at the same level of trade, normally at the ex-factory level, and in respect of sales made at as nearly as possible the same time. Due allowance [for cost adjustment] shall be made in each case, on its merits, for the differences in conditions and terms of sale, for the differences in taxation, and for the other differences affecting price comparability." The panel finally concluded: "The EC, by failing to make due allowance ... for differences for indirect selling expenses [and with respect to certain profits], which differences could affect price comparability, had acted inconsistently with its obligations under Article 2.6 of the Agreement." The GATT panel report had an effect on the EC legislation concerning the asymmetry issue. After opposing and blocking the panel report, the EC authorities on 2 December 1996 adopted the amendments to the basic Antidumping Regulation (Regulation No. 384/96 of 22 December 1995) to avoid a similar panel report. However, if a panel again deals with cost adjustment under the WTO regime, it would basically follow the Audio Tapes panel in interpreting the cost adjustment clause in the WTO Antidumping Agreement.
245. Case 254/84, Nippon Seiko v. Council, [1987] ECR 1923. See Norio Komuro, EC Antidumping Measures vis-à-vis Japan, European Commission, The European Union in a Changing World (Third ECSA-World Conference, Bruxelles Conference, 9-20 September 1996) (1998), 107-120.
246. The EC banana regime remains largely for assistance to former colonies. However, it is still protectionist. As pointed out by the panel and Appellate Body (see Table 3, below), it discriminates in favour of EC bananas and EC-owned operators in breach of national treatment in GATT and GATS. See Kees Jan Kuilwijk, The EC Banana Saga, in Kees Jan Kuilwijk and Robert Wright (eds), European Trade and Industry in the 21st Century, note 1, above, at 193, stating; "The banana saga shows that the Community still protects its industry whenever it feels that this is politically necessary."
247. The GATT since its inception has dealt in a practical manner with the vestiges of colonial powers including special rules for countries who are former possessions/territories joining the GATT, special tariff preferences, etc.
248. Comment dated 1 June 2000 by Terrene P. Stewart.
249. John H. Jackson, Emerging Problems of the WTO Constitution: Dispute Settlement and Decision Making in the Jurisprudence of the WTO (1999), as note 1, above, at 31-32, stating: "With the fast-paced change of a globalising economy, the WTO will necessarily have to cope with new factors, new policies, and new subject matters. If it fails to do that, it will sooner or later, faster or more gradually, be marginalized. This could be very detrimental to the broader multilateral approach to international ecomic relations, pushing nations to solve their problems through regional arrangements, bilateral arrangements, and even unilateral actions."
250. European Communities - Regime for the Importation, Sale and Distribution of Bananas, Recourse to Article 21.5 by Ecuador, as note 71, above, para. 6.26.
251. The Plurilateral Trade Agreements are included in so far as the relevant parties to the dispute are parties to these agreements.
252. I.e., Part III on enforcement of intellectual property rights; and Part IV on acquisition and maintenance of intellectual property rights and related inter partes procedures.