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COMMITTEE ON COMMODITY PROBLEMS |
INTERGOVERNMENTAL GROUP ON BANANAS AND ON TROPICAL FRUITS |
First Session |
Gold Coast, Australia, 4-8 May 1999 |
REVIEW OF POLICY DEVELOPMENTS AFFECTING BANANA TRADE |
1. This document summarises the main changes in policies affecting the world banana market since the last session of the Intergovernmental Group on Bananas in May 1997. The information contained herewith reflects that available to the Secretariat through the end of January 1999.
2. Imports of bananas into the EC have been governed since 1 July 1993 by Council Regulation (EEC) 404/931 which replaced the various national banana import regimes previously in place in the EC Member States. Although this regulation has been modified several times since its inception, this document describes only those changes that have taken place since the last session of the Group.
3. In May 1997 a panel established by the Dispute Settlement Body (DSB) of the World Trade Organization (WTO), upon request of the United States, Ecuador, Guatemala, Honduras, Mexico and Panama, found that some aspects of the above-mentioned EC banana import regime and its licensing procedures for the importation of bananas were in violation of GATT 1994, the Agreement on Import Licenses Procedures, and the General Agreement on Trade in Services. An appeal was launched but most of the findings from the panel were upheld. The DSB adopted the reports of the panel and the Appellate Body in September 1997.
4. As a result of this ruling, the EC undertook a review of its banana import regime aimed at bringing it into line with WTO regulations. On 20 July 1998 the EC adopted Council Regulation (EC) No 1637/98 amending Regulation 404/93, and subsequently on 28 October 1998 adopted Commission Regulation (EC) 2362/98, which laid down the detailed rules for the implementation of the modified banana import regime. These revisions to the regime entered into force on 1 January 1999. The set of changes included in this regulation were aimed, according the EC, at safeguarding the advantages traditionally enjoyed on the EC market by 12 (traditional) ACP suppliers2; and at meeting the EC's obligations to the WTO.
5. Under the revised system, the "basic" tariff quota was maintained at 2.2 million tonnes, and at the same rates of duty - ECU 75 per tonne for bananas originating in non-ACP countries and zero duty for non-traditional ACP bananas. An additional "autonomous" tariff quota of 353 000 tonnes3 was also set at a rate of ECU 75 per tonne for imports from non-ACP suppliers and duty free for non-traditional ACP imports. The tariff level for above-quota imports from non-ACP countries remained at the same level4, but that for non-traditional-ACP bananas was changed so as to allow for an ECU 200 preference5, compared to the previous ECU 100 preference.
6. The maximum quantity for traditional ACP imports was also maintained at the same level of 857 700 tonnes, and at zero duty. However, unlike the previous system, country-specific allocations were no longer assigned within this category. In other words, countries supplying traditional ACP bananas must compete among themselves to supply the EC, with no quantitative restrictions to the volumes of traditional ACP bananas they can supply the EC other than the collective 857 700 tonnes limit.
7. Under the previous system, and within the umbrella of the Framework Agreement, individual country shares (totalling 49.4 percent) of the overall tariff quota (i.e. "basic" plus "autonomous") were allocated to Colombia, Costa Rica, Nicaragua and Venezuela, and their individual quotas could be totally or partially transferred between countries. Under the new system, the transferability of quotas between countries has been abolished and individual country shares of the 2 553 0006 tonnes tariff quota are allocated only to countries "having a substantial interest"7 in the supply of bananas to the Community as follows:
Ecuador 26.17%
Costa Rica 25.61%
Colombia 23.03%
Panama 15.76%
8. The (9.43 percent) balance of the tariff quota is available for banana imports from other third (non-ACP) countries, and for non-traditional ACP bananas (i.e. bananas originating in ACP countries other than the 12 traditional suppliers, or banana imports from these 12 countries in excess of their 857 700 tonnes quota). No country-specific or group-specific allocations are given for this portion of the tariff quota, compared to the previous system under which a 90 000 tonnes sub-quota was reserved for non-traditional ACP bananas, and was largely allocated to individual countries.
9. Compared to the previous system under which import licences were allocated among operators on the basis of several criteria (including three categories of operators, three activity functions, export certificate requirements for some countries, etc.), the management of the overall tariff quota under the new system is based on historical trade flows. "Traditional8" operators have access to 92 percent of the tariff quota and of the traditional ACP quantities, while "newcomers"9 have the right to the remaining 8 percent10.
10. As opposed to the previous system under which import licences were distributed according to several marketing functions (which included non-importers), import rights under the new system are conferred to importers on the basis of utilised import licences and/or equivalent proof. Also, import rights are usable for all origins within the various sub-quotas (i.e. Ecuador, Colombia, Costa Rica, Panama, others, and ACP traditional), and without the special export certificates formerly required for imports from some countries.
11. Import rights may be transferred between traditional operators, from traditional operators to newcomer operators and between newcomer operators. Transfer rights from newcomers to traditional operators are not permitted.
12. Under the new system, "hurricane" licences are allowed only on a non-discriminatory basis among operators. Under the previous system hurricane licences were granted only to operators who included or directly represented an ACP producer adversely affected by a tropical storm and were, as result, unable to supply the EC market.
13. The latest revisions to the EC banana import regime described above were considered by some as not having fulfilled the ruling of the DSB of the WTO. Discussions between the parties involved were being undertaken by end-January 1999 to seek a solution to the dispute.
14. Decree number 1656 of 1997 set the export subsidy (CERT) for bananas at 3 percent of the FOB value, for banana exports to all destinations. The CERT is to be gradually phased out between 1999 and 2003. From 2003, a new organisation aimed at improving productivity and the competitiveness of the Colombian export sector, and financed from funds formerly allocated to the CERT, will support producers through specific programmes to increase productivity and improve export competitiveness.
15. In line with the provisions of the Framework Agreement with the EC, Colombia had established a programme which charged an export certificate fee on 70 percent11 of its banana exports to the EC. The funds collected from this fee went into an escrow account and were subsequently distributed to banana growers according to their export volumes, regardless of their destination. In other words, this mechanism transferred some of the economic rents generated by the EC banana regime and its higher prices to all banana growers in the country. As a result of a ruling by the European Court of Justice on March 1998, the special export certificates issued by the Colombian Government, which were required by the EC for the importation of 70 percent of Colombian banana volumes imported into the Community, were declared discriminatory (to the extent that the Framework Agreement exempted Category B operators from the export license system) and thus illegal in the EC. Consequently, this programme, which was projected to have generated close to US $31 million for the banana growers in Colombia in 1998, was terminated.
16. In July 1997 the Ecuadorian Congress passed a law to stimulate and control the production and marketing of bananas. The main features of this law included the empowerment of the Executive branch, through the ministries of foreign trade and agriculture, to periodically review and establish the minimum prices to be paid to producers at ship-side, and the minimum reference FOB prices to be declared by exporters. This legislation also provides for sanctions for those not complying with the established minimum support price, and forbids the establishment of new banana plantings. This law entered into effect on 6 August 1997.
17. In line with the above, an inter-ministerial agreement of January 1998 established a new set of minimum support and FOB reference prices for a box of bananas. A new minimum producer price for a 22XU12 box was set at US$4.25 for the high season, and US$3.35 for the low season. The corresponding FOB reference price was set at US$5.95 for the high season and US$5.05 for the low season.
1 The main features of this regulation prior to 1 January 1999 were detailed in document CCP: BA 96/6.
2 i.e. Belize, Cameroon, Cape Verde, Côte d'Ivoire, Dominica, Grenada, Madagascar, Jamaica, Somalia, St Lucia, St. Vincent and the Grenadines and Suriname.
3 This additional tariff quota may be increased if demand in the Community increases.
4 ECU 737 per tonne for 1998/99.
5 Or ECU 537 per tonne for 1998/99.
6 2 200 000 tonnes "basic" quota plus 353 000 tonnes "autonomous" quota.
7 Having had at least a 10 percent market share during the reference period.
8 To qualify as traditional operator, an economic agent must have imported at least 100 tonnes of bananas (or 20 tonnes in the case of bananas with a length of 10 cm or less) from third country and/or ACP-country for marketing in the Community during the reference period.
9 To qualify as a newcomer an operator must have been engaged in importing fresh fruits and vegetables with a declared customs value of at least ECU 400 000 during one of the three years preceding the year in respect of which registration is sought.
10 The years 1994, 1995 and1996 are used as a reference period to determine the import rights of individual operators for 1999.