Great Banana trade Dispute

In September the world trade organization ruled that EU banana regime import was inconsistent with WTO for certain reasons. Such as EU Tariff allocation , particularly to the ACP ( African, Caribbean , Pacific , ) countries , was contrary to the non discrimination rule ( General Agreement on Tariffs & Trade ) as well EU’s licensing procedures, which involve the purchase of EU and/or ACP bananas in order to obtain rights to import some Latin American (or other third countries’) bananas, were contrary to the MFN (most-favored-nation) rule and the national treatment rule , at last through the impact of this licensing system on the service suppliers of the complaining countries, the licensing procedures were also contrary to the MFN rule and the national treatment rule– General Agreement on Trade in Services.

In January 1999, the EU introduced a new banana import regime but the WTO ruled in April 1999 that this new regime was also incompatible with the EU’s WTO obligations.

In April 2001, the three governments reached an agreement whereby Ecuador and the US would suspend their sanctions so long as the EU changed its banana import regime from the existing tariff-rate quota system to a tariff-only system by 1 January 2006. Under this new tariff-only system, banana imports would not be subject to quotas; there would be a single tariff for all banana imports, except for ACP bananas which would continue to benefit from a preferential tariff arrangement.