7:32 AM Jan 11, 1994

LATIN EXPORTERS WEIGHING EC'S 'BANANA OFFERS'

Geneva 11 Jan (Chakravarthi Raghavan) -- The Latin American banana exporting countries, members and non-members of the GATT, are due to discuss this week at a regional ministerial meeting (that some expect would become a summit), the European Community's "conditional offer" on bananas in the Uruguay Round.

An important condition of the EC is that the exporting countries, members of the GATT, withdraw their complaint and advise the GATT panel, now looking at the EC's Single Market regime that came into force on 1 July last, that they have settled the dispute and the panel not pronounce itself.

The EC Commission President has reportedly written to the heads of the Latin American exporting countries urging them to accept the EC "offer" and withdraw the GATT complaint.

The GATT panel, chaired by Singapore's Amb. Kesava Pani and named last July, has completed its work, save presenting its report, first to the two sides and 30 days later to the GATT CPs.

There is some speculation that the panel, and the GATT secretariat, at the informal request of some of the parties is holding up for a few days the submission of the report.

While the Uruguay Round negotiations were concluded on 15 December, bilateral market access negotiations involving the majors and others are in fact continuing. Participants are to file their schedules of market access and agricultural commitments by 15 February and will have another month for "verification" -- which would provide an opportunity for the participants to improve their offers.

In terms of its commitments under the agricultural accord of the Final Act, the EC on 14 December had put forward a conditional offer to the Latin American banana exporting countries.

Under the current banana import regime, in force since 1 July, there is a two-million tonne global tariff quota at 100 ECU per tonne tariff on imports of bananas.

In its Uruguay Round market access offer (for a managed banana import regime) tabled on 14 December, the EC has offered a 2.2 million tonne tariff quota from 1995 at 100 ECU tariff, but has "sweetened" this offer for the Latin producer/exporters in a number of ways:

The 2.2 million tonne tariff quota is proposed to be split into country quotas - 95.5 percent is further divided individual quotas (more or less based on the current market shares) for the seven Latin American exporters -- Costa Rica 23.4 percent share, Colombia 22 percent, Ecuador 20.2 percent and Panama 10.7 percent, Honduras 8.8 percent, Nicaragua 1.9 percent and Guatemala 1.5 percent. The balance of 4.5 percent or 90,000 tonnes whichever is lower is for Venezuela and the ACP countries in 'non-traditional quantities'.

If one of the banana exporting countries with a quota share is unable to deliver the quota allocated, the shortfall will be reallocated among the others according to the same proportion. All those with quotas will also benefit proportionately from any EC decision for autonomous increase in the quotas.

While the quota management will continue to be governed by the EC regulation (which now provides for importers getting licences but on basis of their commitments to source and sell EC's own production), supplying countries would be able to control up to 70 percent of their quota through special export certificates issued without discrimination.

This effectively would mean that the "rents" out of the quota system can be "captured" by the governments of the countries concerned (by auctioning the quotas for e.g.), and not benefit either the exporting enterprises (US and EC TNCs) or the importers.

An important condition is that the exporting countries, members of the GATT, who have raised a dispute over the EC's Single Market regime that became effective on 1 July 1993, should withdraw their complaint before the panel is able to pronounce itself.

The Latin American exports at their meeting this week are due to consider both the EC's "offers" as well as its demand for withdrawal of the dispute.

Colombia, Costa Rica, Guatemala, Nicaragua and Venezuela (GATT members among the Latin banana exporters to the EC are the complainants before the panel which has completed its hearings and is due any day to submit its report -- first to the two sides, and thirty days later to the Contracting Parties.

Two of the GATT complainants, Colombia and Nicaragua, appear to be agreeable to the EC demand, with Costa Rica originally opposed now reported to be leaning to acceptance. Venezuela, a much smaller supplier but likely to be "frozen" at current market share until 2002, is reported to have not made up its mind.

But unless all complainants withdraw and notify the panel quickly, the report will be presented and whether or not it is allowed to be accepted, its views might queer the pitch for the EC and its agricultural policy as well as the banana regime.

Hence the EC desire to settle the issue through its "Uruguay Round offer" and preventing the presentation of the panel report.

A GATT panel had ruled in 1993 against the previous banana import regime, both on grounds of the quantitative import restrictions maintained by several EC member states as well as the different tariffs on imports from the Latin American and ACP sources.

But that report has not been adopted by the GATT Council and thus not yet "GATT law" -- with the EC and the ACP countries opposing the adoption -- the regime against which the complaint was brought no longer prevails.

The new single market regime has provided for a two million tonne tariff quota at 100 ECU tariff, and a prohibitive penal tariff on imports exceeding this.

The Latin American exporting countries had raised a fresh complaint against the new regime and that panel has completed the hearings and is now due to present its report.

In accordance with the GATT practice, the panel will first make available to the complaints and the EC, its report of conclusions and recommendations, and 30 days afterwards it would be circulated to the GATT contracting parties.

While the panel would be dealing with the new regime, some of the issues on which the earlier panel had pronounced itself figure before this panel too. While the previous panel's views are not binding on the new panel (which has not been adopted), a GATT panel is unlikely to go against earlier views and reasoning.

The panel has been due, "any day now" as one GATT source put it, to send out to the two sides its report. But there are reports that this is being held up atleast over the next week or two to enable the two sides to reach a settlement if they wanted to. Once the panel's views are made known to the parties, any compromise from the EC point of view would not be useful.

If the EC reaches an accord with the Latins and its schedule is not challenged it will be legitimised in terms of the Uruguay Round agricultural accord (any commitments in schedules filed, once accepted, cannot be challenged afterwards -- and no developing country seems likely to object and thus block the accords at this stage), the EC's web of preferential trading arrangements with ACP, east European and Mediterranean etc -- would all come under a cloud and challengeable under the WTO and its Dispute Settlement mechanisms.

Though it is not very clear in terms of the 'peace clause' in the agriculture agreement, any Uruguay Round participant who refuses to accept the EC schedule as being contrary to the accord, might be free to raise a dispute in the future, in terms of the other GATT 1994 provisions.