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29 January 1999
EC, US accept Ruggiero compromise on banana dispute

The European Communities and the United States, at the meeting of the Dispute Settlement Body (DSB) on 29 January, essentially followed a compromise proposal by WTO Director-General Renato Ruggiero on their dispute over trade in bananas. This broke a week-long impasse over DSB procedures, which many delegations had said threatened the whole WTO dispute-settlement system itself.

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Mr. Ruggiero hailed the result as "a triumph for the WTO and the rule of law in international trade". He said that while all problems have not been resolved, "we are now in a position to find the necessary solution inside the WTO rules".

Under the Director-General's proposal, made on 25 January, both parties would enter into consultations immediately to find a mutually-agreed solution to their dispute over trade in bananas. They also would follow the WTO dispute-settlement procedures under which the US request for suspension of concessions against the EC would be authorized by the DSB only after the decision of an arbitrator on the level of suspension of concessions. The arbitrator in this case would be the original panel that had examined the EC's banana regime.

The Chairman, Ambassador Kamel Morjane (Tunisia), proposed a similar solution at the resumed DSB meeting on 29 January.

Both the EC and the United States said they were not satisfied completely with the proposal. Nonetheless, the EC requested arbitration of the level of suspension of concessions. As a result, no action was taken on the US request.

The EC and the United States paid tribute to the Director-General, the DSB Chairman and other delegations for their efforts to find a solution.

India praised the two parties for their statesmanship in arriving at a solution that prevented a breakdown of the system.

Dominica said that members should not forget, underneath the legal wranglings of the past few days, the plight of small populations dependent on export of bananas for their livelihood.

The DSB meeting was supposed to start on Monday, 25 January. The United States had inscribed on the agenda a request for authorization to suspend the application to the EC of tariff concessions covering trade in the amount of US$520 million. It said that this amount represented loss in US exports due to what it said was the EC's failure to implement the DSB recommendations on bananas. The United States stressed that under the rules, the DSB is required to grant such a request.

Dominica, C˘te d'Ivoire and St. Lucia initially opposed the inclusion of what they described as an "illegal" US request on the DSB agenda, with the EC expressing support for their position. This effectively blocked the DSB from convening its meeting until Thursday, 28 January and resulted in long discussions over DSB procedures.