7:03 AM May 24, 1993

GATT PANEL RULES AGAINST EC ON BANANAS

Geneva 24 May (Chakravarthi Raghavan) -- A GATT panel has reportedly ruled against the European Community's current banana regime, according to GATT sources.

The panel, set up under procedures applicable to disputes between developing countries and industrialized trading partners, functioned under a 60-day rule by which its report should have been circulated to the CPs by 12 May, but was delayed for "technical reasons" of translation and reproduction, GATT officials had explained last week.

The report of the panel was made available last weekend to the two disputing parties (Costa Rica and other Latin American exporters who complained) and the European Community. It is expected to be circulated among the GATT Contracting Parties later this week.

Under the current EC regime, which is to be replaced from 1 July by the new EC-wide banana regime, some of the EC states like allow liberal duty free imports, and others like France and Britain have quotas and restrict the banana imports from other EC countries having liberal imports.

The new regime, providing for continued preferential imports from the ACP countries, a tariff quota regime for imports from non-ACP countries and a prohibitive penal tariffs for imports above the tariff quota, has also been challenged by the Latin American producers. But the reference to a panel has been blocked by the EC on technical grounds, but will automatically go to a panel at the next meeting of the GATT Council in June. The countries with quotas distribute them in a way as to favour their own production (France of production in its overseas territories), preferential imports from the ACP countries and others from the non-ACP countries, the socalled dollar-zone bananas.

The three-man GATT panel, headed by Indian economist I.G.Patel, is reported to have held that the discriminatory quota regime violates the most-favoured-nation treatment clause (Art. I) of the GATT and is not covered by the exceptions in that article relating to the preferences granted by the metropolitan powers to their former colonies nor by the GATT provisions relating to customs unions and free trade areas.

As such, the panel has reportedly recommended, the EC should either bring its import regimes into line with its GATT obligations or seek a GATT waiver to provide preferential treatment to the ACP countries.

GATT diplomats from third countries said they would want to see the entire panel report and study its implications, but suggested that it would have some far-reaching implications.

The European Community's Rome treaty and several of its layers of association and cooperation agreements have never received the formal approval of the General Agreement. All these have been notified to GATT and working parties have studied them, with their reports reflecting the varying views.

Functioning under the consensus rule, the GATT CPs have been merely able to take note of such reports, but have neither been able to approve or disapprove the agreements. The EC has all these years merrily proceeded on the basis that in GATT what is not expressly disapproved is approved.