EC-ACP Cotonou Waiver Finally Granted

On the sidelines of the WTO Ministerial Conference, WTO Members on 14 November finally granted a waiver to EC allowing it to give preferential market access for the African, Caribbean and Pacific (ACP) Group of Countries, the last waiver under the Lome Convention which will be replaced by Free Trade Agreements between the EC and ACP countries in 2008 under the Cotonou Agreement (see BRIDGES Weekly, 9 October 2001).
The waiver also covers EC-ACP banana trade with the additional provision that third parties, such as Latin and Central American banana exporting countries, have the right to request arbitration prior to future EC banana tariffs going into effect on 1 January 2006. In addition, the approved waiver will be suspended if the EC fails to perpetuate the current market access for non-ACP banana imports. "The ACP can accept this price for the waiver and zero-tariff treatment on bananas," an ACP spokesperson stated.

In addition, a second waiver on the compatibility of the transitional EC banana regime beginning 1 January 2002 [as agreed in the bilateral Understandings between the EC and Ecuador and the US, respectively, in order to settle the ongoing banana dispute (see BRIDGES Weekly, 9 October 2001) has only been granted until the end of 2005. Thereafter, a tariff only import regime will be implemented. (click here for the texts of the waivers).

The early expiry date of the second waiver, as well as the EC's commitment to phase out its import quotas on bananas and replace them with tariffs by 2006, were the key factors that finally won over a number of Latin American banana-exporting countries, such as Colombia, Costa Rica, Ecuador, Honduras and Panama. These countries had originally objected to the waiver until the EC demonstrated good faith efforts in implementing its revised banana regime, which allocates a separate banana tariff quota of 750,000 tons exclusively for ACP countries.

The two waiver agreements are said to have removed a major logjam in the Doha negotiations as the 78 ACP countries (56 of which are Members of the WTO) had previously threatened to oppose any new trade negotiations -- especially on Singapore issues, environment and labour - - unless the EC waiver request was approved at the Ministerial Conference. In contrast, the Philippines -- initially supported by Thailand, Ecuador, Costa Rica, Honduras, Panama and others -- had objected to discussing the waiver, saying the issue was totally unrelated to the wider Doha agenda. However, even thought the issue is technically and formally delinked from the Ministerial package, the failure of WTO Members to reach an agreement at last week's meeting of the WTO Council for Trade in Goods (CTG) in Geneva had effectively pushed the waiver issue to the Conference.

However, it was unclear to the very last moment whether the Philippines and Thailand would block the Cotonou waiver request due to objections raised by the countries over the EC's preferential treatment of canned tuna imports from the ACP within the Cotonou framework. However, according to Filipino official Edsel Custodio, these countries had never threatened to disapprove the waiver although "the EU gave the impression that we had" - referring to corresponding rumours prior to the reached agreement.

"Deal Struck On EU Waivers As Latin Americans Drop Banana Demands," INSIDE US TRADE, 14 November 2001; "Global Trade Deal Near After All- Night Talks In Doha," FT, 14 November 2001; "ACP Countries Issue A Common Position On Doha Ministerial," SUNS, 6 November 2001; "ACP Countries Push For Approval Of EU Banana Waivers At Doha," INSIDE US TRADE, 12 November 2001; ICTSD Internal Files.