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P.L. Thomas (PLT)
In January 2006, the European Commission implemented a new regulation for the import of bananas into the European Union. This imposed a higher tariff on bananas imported form Latin America, while allowing a duty-free annual import quota of 775,000 tons for bananas from certain African, Caribbean and Pacific countries.
The banana tariff, which increased at that time to €176 ($273) from €75 ($116) per ton, resulted in an increase in cost of around €1.84 ($2.86) for each box of bananas imported form Latin America.
The US said this was unfairly tilted against American companies, as although it does not export bananas to the EU, three of the largest distributors with facilities in Latin America are US corporations.
The US therefore requested the review last July, saying the EU failed to bring its banana regime into compliance with its WTO obligations.
The WTO Panel concluded that the current regime "contains measurers inconsistent with various provisions of the GATT [General Agreement on Tariffs and Trade]" and that is has "nullified or impaired benefits accruing to the United States under that Agreement".
Although the WTO makes no new recommendations, Reuters news agency has interpreted this to mean the US could be entitled to ask for sanctions from Brussels.
WTO decision
In a statement published at the time the case was brought to the WTO, US trade representative Susan Schwab said the EU implemented a discriminatory tariff rate quota for banana imports, which meant it was breaching its WTO obligations.
According to Schwab, the EU should have brought its banana regime into compliance with its WTO obligations by January 1999, following a 1996 proceeding initiated by Ecuador, Guatemala, Honduras, Mexico and the United States.
The WTO has now said that the preferential treatment granted by the European Commission was inconsistent with GATT articles and member states had failed to implement the rulings of the Dispute Settlement Body (DSB).
It said it found relevant the statement made by the panel in the original proceedings, which said: "Even if the United States did not have a potential export interest, its internal market for bananas could be affected by the EC regime, and that regime's effect on world supplies and prices."
US companies
Chiquita Brands International, a leading US banana firm, is one of the US companies that would have been affected by the EU's preferential treatment.
The company has previously reported a string of price rises for the fruit after its profits were hit by higher European banana import tariffs. For example, in 2006, it said it incurred tariff costs of around $110m.
Other US companies that would have faced higher costs because of the EU regime are Del Monte Foods and Dole Food.
