US embassy cable - 05QUITO2765

UNCLAS QUITO 002765 
 
SIPDIS 
 
DEPT. PASS TO USTR BENNETT HARMON 
 
E.O. 12958: N/A 
TAGS: ETRD, EAGR, PREL, EC, WTO 
SUBJECT: GOE LETTERS TO SECRETARY RICE AND USTR PORTMAN 
REGARDING ECUADOR-EU BANANA TARIFF DISPUTE 
 
We received, December 7, two original letters signed by the 
Ministers of Foreign Relations, Foreign Trade and 
Agriculture, addressed to Secretary of State Rice and USTR 
Portman.  Copies have been faxed to WHA/AND and USTR and the 
originals are being forwarded by mail.  The text of both 
letters is the same, and states as follows: 
 
Brussels, 30 November 2005 
 
On Tuesday 29 of November 2005, the Competitiveness Council 
finally reached an agreement on the Commission's proposal on 
bananas.  Ecuador believes that the proposal of 176 Euros/T 
tariff for Latin American bananas and a TRQ of 775.000 T at 0 
duty for ACP suppliers, does not fulfils (sic) the European 
Union's obligation of "at least maintaining total market 
access for MFN suppliers." 
 
As a result, upon entry into force of a new tariff regime for 
imports of bananas, the GATT article l.1 waiver shall cease 
to apply.  Consequently by December 31st 2005 both the GATT 
article XIII and article l.1 waivers are no longer in force, 
obliging the EU to apply a single tariff to all imports. 
 
Furthermore, in 2001 Ecuador, the United States and the 
European Union signed two Understandings to settle the 
long-standing banana dispute.  Those Understandings establish 
that no latter than 1 January 2006 a tariff only regime had 
to be introduced, which by definition should not consider 
special treatments such as the proposed TRQ for the ACP 
suppliers. 
 
The Commission's proposal then violates the Understandings. 
Such violation cannot be covered simply by a new GATT article 
XIII waiver but requires a specific agreement of the Parties 
to the Understandings. 
 
Ecuador will make use of all the legal instruments available 
within the WTO to preserve its rights, as it has done 
successfully in the past.  Nevertheless, Ecuador hopes that 
the EU will be willing to engage into negotiations in order 
to reach a mutually satisfactory solution. 
 
We avail ourselves of this opportunity to renew to you the 
assurances of our highest considerations. 
 
signed by: 
 
Francisco Carrion-Mena, Minister of Foreign Relations 
Jorge Illingworth, Minister of Foreign Trade 
Pablo Rizzo, Minister of Agriculture 
JEWELL