WTO In Brief

BANANA FIGHT RESURFACES, WITH NEW PANEL TO EXAMINE EU'S COMPLIANCE

The latest chapter in the decade-long battle over banana trade unfolded earlier this month, when a WTO dispute panel was named to review an Ecuadorian complaint that the EU has yet to comply with previous WTO rulings and that its tariffs on the fruit remain too high.

Although the 'compliance panel' was established at a March meeting of the Dispute Settlement Body, Ecuador and the EU proved unable to agree on its composition. As per standard WTO practice in such cases, Director-General Pascal Lamy on 15 June named the three panelists whose task it will be to assess whether Brussels has indeed brought its banana regime into compliance with its WTO obligations.

Since the mid-1990s, Latin American banana producers, joined by the US, have won a series of challenges against the EU's trade preference scheme for bananas from members of the African, Caribbean, and Pacific (ACP) group of states. In 2001, they struck a compromise, under which Brussels was allowed to maintain its preferences for ACP exports until the end of 2005, in return for replacing its system of duties, quotas, and import licences with a 'tariff-only regime' in January 2006. As per the 'understanding', this new regime would result in "at least maintaining total market access" for the most-favoured nation (MFN) banana suppliers that did not benefit from preferences (see BRIDGES Monthly Review, December 2006-January 2007 and BRIDGES Weekly, 22 November 2006).

After proving unable to reach a mutually acceptable figure with Latin American banana exporters, Brussels in early 2006 unilaterally set an overall banana tariff of 176 euros per tonne, along with a duty-free quota of 775,000 tonnes for ACP bananas.

At issue now is whether those changes went far enough to eliminate discrimination against MFN banana suppliers. Ecuador claims that, despite the EU's revised import policies, its share of the EU banana market fell by more than two percentage points between 2005 and 2006, a point that Brussels refutes, arguing that banana imports from Ecuador actually increased in 2006.

Seventeen nations, the majority of which are ACP countries and Latin American MFN suppliers, have reserved third-party rights with the panel.

Ecuador's panel request (WT/DS27/80) is available at http://docsonline.wto.org.

ICTSD reporting; "WTO agrees to hear Ecuador's banana gripe," TAX-NEWS.COM, 23 March 2007; "WTO panel to rule on EU-Ecuador banana import spat," EUBUSINESS.COM, 20 March 2007.

TRADE AND DEVELOPMENT COMMITTEE LOOKS AT AID FOR TRADE

The WTO's work on aid for trade is moving slowly forward, independently of the imperiled Doha Round negotiations. The Committee on Trade and Development (CTD) met twice last week to look at upcoming attempts to mobilise donor support and discuss how assistance programmes could be most effectively implemented.

Delegates discussed a new Egyptian paper (WT/COMTD/AFT/W/3) on priorities for making aid for trade effective. Aid for trade should be a tool for developing and least-developed countries to build capacity, competitiveness, and institutions, Egypt stressed, adding that it should also help them cope with the cost of trade liberalisation.

Egypt said that effective aid for trade was a "mutual responsibility" of donors and recipients, and that a key objective was to create a monitoring and evaluation mechanism to make sure that spending was having the expected results. It said that would-be beneficiaries would benefit from the support of donors when identifying their needs and priorities, and called on Members to develop burden-free systems for countries to request assistance for trade-related projects.

Other priorities that Egypt pointed to included the importance of national-level coordination between the public and private sectors in structuring aid for trade efforts; the need to integrate trade into national development and poverty reduction strategies; and the creation of national aid for trade committees. With regard to assessment, Egypt called for a detailed reporting system that would allow donors and recipients to describe whether objectives were met - which would in turn inform future programmes.

Sources report that delegates at a 19 June meeting welcomed Egypt's contribution to the debate, and urged countries to share their experiences on trade-related assistance.

Several international organisations, including the World Bank, the UN Food and Agriculture Organisation, the World Health Organisation, and the World Organisation for Animal Health (OIE), made presentations on their work to help developing countries meet sanitary and phyto-sanitary (SPS) standards, which can block exports even when duties are otherwise low.

On 21 June, WTO officials briefed an informal CTD meeting on three regional events scheduled for September and October in Peru, the Philippines, and Tanzania that will aim to mobilise donor support and bring together senior government officials, the private sector, and academics to discuss aid for trade priorities and the need for effective monitoring.

ICTSD reporting.

US DELAYS CREATION OF WTO PANEL IN FARM SUBSIDY DISPUTE WITH CANADA

The US last week postponed the creation of a WTO dispute panel to examine Canada's allegations that it has, in recent years, paid out farm subsidies in excess of its legal spending limits.

It blocked Canada's request for the creation of a panel at a 20 June meeting of the Dispute Settlement Body. WTO rules prevent it from doing so again should Ottawa repeat its request next month.

At issue are US subsidies to support a range of crops, principally corn, wheat, soybeans, pulses, and sugar. Canada claims that in 1999, 2000, 2001, 2002, 2004, and 2005, Washington provided heavily trade-distorting 'amber box' support to farmers that exceeded its binding WTO limit of USD 19.1 billion annually. Furthermore, it claims that some export credit guarantees provided by the US government have the effect of illegally subsidising the export of products including corn and soybean.

Ottawa initiated the case in January, and requested the creation of a panel on 8 June when consultations proved unable to resolve the disagreement (see BRIDGES Weekly, 13 June 2007).

US officials maintain that subsidy spending never violated the country's WTO commitments. At the meeting, they pointed out that some of the challenged payment programmes had already been cancelled.

By filing the complaint, Canada is seeking to ratchet up pressure on Washington to cut trade-distorting farm subsidies, both as part of the Doha Round negotiations and as Congress writes new legislation this year mapping out future agricultural spending.

Canada's case closely mirrors Brazil's successful WTO suit against US support for cotton growers in 2005. Many trade lawyers anticipate a wave of similar litigation to ensue if the faltering Doha talks collapse without establishing new rules for farm spending.

ICTSD reporting.