Challenge to banana quotas

Date: 19/10/1995

By Michael Mann

GERMANY, Belgium and the Netherlands will ask the European Court of Justice next week to declare that the Commission overstepped its powers by concluding a special import agreement with four Latin American banana-producing nations.

Germany, the EU's largest consumer of bananas, will argue that the Commission did not have a mandate from the Council of Ministers when it agreed the so-called “framework agreement” with Nicaragua, Venezuela, Costa Rica and Colombia in March 1994, which raised the 'dollar banana' import quota from 2 million to 2.2 million tonnes.

The Court's opinion will not be delivered until well into next year, according to officials in Luxembourg.

If Germany is successful, the Commission might be forced to make sweeping changes to domestic legislation because the agreement has already been formally annexed to the 1994 GATT accord.

Judgements on the applicability of international agreements in EU law are normally made before such arrangements come into force. In this particular case, the framework agreement is already well into its second year.

The case is being contested by the Commission and Council, supported by Spain, France and the UK, the strongest defenders of the EU's banana-import regime.

Since its introduction in July 1993, the regime has come under repeated attack from operators in countries led by Germany, determined to overturn a system which gives duty-free entry to the EU market for up to 857,000 tonnes of 'traditional' imports from African, Caribbean and Pacific (ACP) countries.

For imports of 'non-traditional' and Latin American bananas up to the limit of 2.2 million tonnes, a tariff of 100 ecu per tonne is applied. Imports above this figure attract a tariff of 750 ecu per tonne for bananas from ACP countries and 850 ecu per tonne for dollar bananas.

The German-led bloc continues to campaign for an increase in the dollar banana quota for produce from Latin American countries, claiming that consumer prices have risen by up to 60&percent; in the past two years because of restrictions on cheaper Latin American bananas.

Germans are by far the EU's biggest banana consumers, eating over 25 kilos per person per year, twice the EU average.

German traders claim that imports have fallen by 50&percent; since the regime came into force because other countries now have access to Latin American supplies while maintaining exclusive arrangements with ACP producers.

The 24/25 October meeting of EU agriculture ministers is due to discuss a Commission proposal to increase the dollar banana quota from its current level of 2.2 to 2.533 million tonnes to take account of the enlargement of the EU to include Sweden, Finland and Austria.

Germany and its allies want it to rise to at least 3 million tonnes.

There appears to be little prospect of an agreement in the short term, because opinion in the member states is split virtually straight down the middle between the German bloc and the former colonial powers.

Even the Commission is firmly divided on the question, although last week it finally adopted a much-delayed report on the system which suggested piecemeal alterations to improve its operation.

The recent decision of the US to begin the procedure leading to a challenge to the regime's legality at the World Trade Organisation may however be the spur which concentrates ministers' minds.

The Germans lost a case in the European Court last year, but this new challenge marks a change in approach.

Individual operators have also recorded successes in regional courts in Germany, although the Federal Court has since overruled what it adjudged to be over-generous awards of trade licences.

The Commission also faces a separate challenge from Belgium over its decision to reapportion licences to traditional suppliers in order to make up for shortfalls in the Caribbean resulting from damage caused by Hurricane Debbie.