COLOMBIA, VENEZUELA 'WITHDRAW' FROM BANANA DISPUTE

6:31 AM Feb 11, 1994

COLOMBIA, VENEZUELA 'WITHDRAW' FROM BANANA DISPUTE
Geneva Feb 11 (Chakravarthi Raghavan) -- Two Latin American banana exporting countries, Colombia and Venezuela, are reported to have notified the GATT banana dispute settlement panel that they are no longer pursuing the complaint, but subject to the EC maintaining its 'conditional' offer in the Uruguay Round.

The separate Colombian and Venezuelan notifications to the Chairman of the Panel, Amb. Kesavapani of Singapore, is reported to have come even as the GATT secretariat was issuing copies of the panel report to the contracting parties and expected to be in their hands by Friday evening.

The panel's draft report and ruling had been circulated to the parties to the dispute in mid-January and, in accordance with the procedures, the report was due to be sent to the CPs on Friday.

The panel's ruling that the EC regime violated its GATT obligations had been 'leaked' to the press as soon as it reached the two sides and the only interest in the report now is in its detailed findings and arguments.

The EC had presented a 'conditional' offer on bananas on 14 December, conditional on the Latin American complainants withdrawing their complaint before the panel.

While the single market banana regime had provided for a two million tonne tariff quota at an import tariff of 100 ECUs per tonne, the conditional offer raised it to 2.5 million tonnes from 1995, further apportioning this into country-quotas and subjecting imports above the tariff quota to a 850 ECU per tonne duty.

The EC has a bound tariff schedule of 20 percent on bananas, and by making them specific duties, the complainants say that the incidence of duty is actually 25 percent now (because of exchange rates).

Besides Colombia and Venezuela, there are three other complainants: Costa Rica, Guatemala and Nicaragua.

Costa Rica and Nicaragua too have reportedly agreed to the EC's conditional offer. But as of Friday morning they had not withdrawn their complaint. Guatemala has been holding out against withdrawal.

Two other non-GATT exporters, Ecuador and Panama have also been objecting to the EC's Uruguay Round offer. Ecuador, the main exporter would lose in the EC's tariff quota, further divided into country quotas.

The EC had originally wanted the complainants to withdraw their complaint before the panel circulated its draft report to the parties to the dispute. Later, the EC made the offer conditional on withdrawal of the complaint before the panel report was circulated to the CPs and, over the last few days is reported to have said that it would wait till the Uruguay Round 15 Feb deadline for filing the schedules and that, it will be sympathetic to the major Latin exporters, GATT parties, if they withdraw their complaints, despite the Guatemala's position.

Complainants can withdraw their complaints or advise the GATT Council they do not wish to proceed with it, even after the report is before the Council -- as was the case of Mexico in the complaint against the US over tuna import restrictions, where a panel ruled against the US, but Mexico has not brought up before the Council the adoption.

Until a panel report is adopted, it is not technically GATT law.

According to the latest reports, the EC is reported to be willing to incorporate its 'conditional offer' into its Uruguay Round schedule if all others, except Guatemala withdraw.

While the EC can block adoption of this panel ruling, as it did an earlier panel ruling, the publication of the report and its legal reasonings, reinforcing that of the earlier ones, would create problems in future disputes for the EC, particularly after the Uruguay Round agreements and the WTO come into being (when such rulings can no longer be blocked). In terms of bananas and agricultural products, the EC could escape the consequences because of the peace clause in the agriculture accord.

But unless the EC takes the 'waiver route', suggested in this and earlier panels, the entire web of EC trade agreements and preferential arrangements with partners and discriminatory rules of origin would be in jeopardy.

The EC Commission and its members are also deeply divided on these questions.

While the EC is presenting to the public that it is defending the interests of the poor ACP countries, the fact seems to be that in fact it is using the ACP to protect the domestic producers (Canary Islands, Martinique and Guadeloupe) who account for 19 percent of the market.

A waiver request to enable continuance of Lome preferences to the ACP countries will easily sail through the GATT, but not other EC agreements (whether with east Europe or elsewhere). This is the dilemma faced by the EC.