2. Article XIII issues

19. Ecuador argued that the revisions of the EC's system were not sufficient to conform with the obligations of Article XIII, and in some respects aggravated the contraventions of Article XIII in the previous system. Indeed, even the size of the respective TRQ baskets was unchanged: 857,700 tonnes of duty-free access for traditional ACP bananas, and 2,553,000 tonnes of preferential tariff access for other bananas. The revised system retained the use of two TRQ regimes, and maintained the same overall quota level for each group as in the previous system, resulting in more favourable treatment of bananas from traditional ACP countries than from Ecuador or other countries. The panel and the AB had held that the EC's establishment of two banana import regimes, or use of different terminology, did not justify a separate evaluation of those regimes in terms of Article XIII. Ecuador considered that there was no exemption from the obligations of Article XIII for measures that favoured products of a group of countries where the same favouritism was not permitted for a single country, as was evident, for example, in the evaluation of the BFA by the panel and the AB.
20. Ecuador submitted that the questions with respect to the allocation of the TRQs were, firstly, whether the European Communities had complied with Article XIII, and the findings and recommendations in that regard, by according to traditional ACP countries, as a group, a share of the TRQ that was equal to the sum of the individual country shares for ACP bananas; and secondly whether the allocation assigned to Ecuador, relative to the share allotted to the ACP and to the import regime of the EC generally, conformed with Article XIII. Ecuador contended that in both respects the European Communities had failed to conform with Article XIII and the pertinent findings and recommendations of the panel.
21. Ecuador asserted, moreover, that the original panel had found that Article XIII did not permit the European Communities to allocate country shares to some non-substantial suppliers, while not doing so to others. ⁵⁶ Ecuador noted that the particular country shares allotted to each traditional ACP supplier were based on the "best-ever" performance of each country prior to 1991, with a supplement even beyond that for some of the traditional ACP suppliers. However, actual imports from the traditional ACP countries as a group had been in the range of 200,000 tonnes less than the 857,700 tonnes in total allotments. In line with past rulings, ⁵⁷ the panel had found that the chapeau in Article XIII:2 constituted a "general rule" to which the provisions of Article XIII:2(d) were subordinate. ⁵⁸ The panel had also found that the European Communities could leave in place the TRQs for traditional ACP bananas because it was of the view that the Lomé waiver applied to Article XIII violations as well as to violations of Article I. ⁵⁹ This panel finding had been overruled by the AB. ⁶⁰
22. Ecuador argued that a discriminatory quota in favour of one country could not be cured by combining that quota share with another excessive country quota share. Indeed, were it otherwise, Article XIII would become meaningless. WTO members could then freely discriminate simply by allocating quotas by blocks of two or more country quotas, instead of individual quotas. There was nothing in the findings of the panel or AB, or in the plain language of Article XIII, to suggest that such discrimination by blocks of countries was admissible. By eliminating the sub-allotments, Ecuador submitted, it was more likely that more of the quota would be filled, since more efficient traditional ACP suppliers would face little limit and would have an incentive for investment. The TRQ for traditional ACP bananas was isolated from competition from other sources such as Ecuador, both under the previous system and in the amended system, another advantage for traditional ACP bananas which was not accorded to other bananas.
23. The European Communities submitted that according to the findings of the panel and the AB with regard to Article XIII of GATT, ⁶¹ tariff quota shares could not be allocated only to some non-substantial suppliers of a product. In examining the old EC banana regime, the AB had considered that (partial) allocation was an advantage which had not been extended to all non-substantial suppliers. Thus, the European Communities was not permitted under Article XIII:2(d) of GATT 1994 to allocate a specific tariff quota share only to non-traditional ACP banana suppliers. Therefore, the European Communities would have to allocate tariff quota shares to all non-substantial suppliers which the European Communities considered was difficult in practice. It would introduce undesirable rigidity in the administration of the tariff quota, as some tariff quota shares for non-substantial suppliers would have to be very small indeed. On the basis of these considerations, the European Communities had decided to introduce a general (undistributed) "others" category without allocation of country-specific tariff quota shares.
24. In order to respect the ruling of the AB, the European Communities continued, according to which breaches of Article XIII of GATT were not covered by the Lomé waiver, and in particular its finding in paragraph 188, the European Communities had refrained from allocating shares to any specific traditional ACP banana supplying country. The European Communities did not understand how the absence of a distribution of the quantity between traditional ACP suppliers could negatively affect Ecuador's export interests, since imports of traditional ACP bananas were in any case not counted against the (bound and autonomous) tariff quotas, on the one hand, while full competition outside the tariff quotas was already established by the Uruguay Round, on the other hand. The only differential treatment between Ecuadorian bananas and ACP traditional bananas was the tariff applied (duty-free vs. bound rate) but this was consistent with the Lomé waiver.
25. The European Communities submitted that a number of fundamental principles of GATT/WTO had to be observed when addressing this matter. They included the following: the Lomé waiver was a decision of the CONTRACTING PARTIES which was foreseen by the Marrakesh Agreement, Article IX.3, and was obligatory upon all the WTO Members. According to a general principle of public international law applied in the WTO by the AB, " � an interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility �". ⁶² Therefore, this Panel was not free to interpret Article XIII of GATT in such a way as to render the Lomé waiver " a redundancy or an inutility". To put it otherwise, it must be possible to apply the Lomé waiver in the context of the existing WTO rights and obligations.
26. According to the same principle, no interpretation of Article XIII of GATT could enlarge its scope to such an extent that Article I of GATT would be reduced, in casu, to "redundancy or inutility". Both these provisions were concerned with the MFN principle. However, they had their separate scope and purpose that could not be superposed or confused. The AB affirmed in the LAN case ⁶³ that "the security and predictability of 'the reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade' is an object and purpose of the WTO Agreement, generally, as well as of GATT 1994". The Newsprint panel report ⁶⁴ was a practical application of this important principle which in the EC opinion was relevant for the solution of the present case. As the AB in the "India patent" case had indicated, "� both panels and the AB (�) must not add to or diminish rights and obligations provided in the WTO Agreement. This conclusion is dictated by two separate and very specific provisions of the DSU. (�) These provisions speak for themselves. Unquestionably, both panels and the AB are bound by them". ⁶⁵ Any claim or suggestion by the complainant, the European Communities submitted, had to be dealt with by the Panel with this fundamental principle in mind.
27. The European Communities submitted that it could not possibly be in Ecuador's best interest that imports of duty-free traditional ACP bananas be counted against imports at in-quota rates from other sources, including from Ecuador, since this would necessarily reduce the share of imported non-ACP bananas. The European Communities stressed that imports of traditional ACP bananas were not counted against any MFN tariff quota. They were imported duty-free outside the existing (bound and autonomous) MFN tariff quotas. If it were not for the conditions attached to the Lomé waiver, as interpreted by the panel and the AB in the original dispute, the European Communities would not have indicated any specific volume for such imports. It therefore considered that Article XIII of GATT did not apply to duty-free imports of traditional ACP bananas which were not counted against a tariff quota but to which a cap to the tariff preference was applied.
28. The European Communities considered that Article XIII:5 of GATT 1994 would not be applicable in the absence of the AB interpretation of the Lomé waiver limiting duty-free imports of traditional ACP bananas in the European Communities to a volume of 857,700 tonnes. This volume found therefore its basis exclusively in the conditions attached to the Lomé waiver, not in the EC's tariff bindings, nor in Article XIII which was meant, in the final analysis, to protect those bindings. Thus, the volume limitation for duty-free imports of traditional ACP bananas was inseparably attached to the Lomé waiver and was both required and permitted by the waiver. Referring to its obligations under Article 1 of Protocol 5, as confirmed by the AB, ⁶⁶ the European Communities submitted that it had an obligation to allow imports of traditional ACP bananas into the European Communities under an import arrangement that was separate from the import arrangement applying to bananas from other sources, because any other solution would negatively affect the bound tariff quota and thus reduce the share of non-ACP banana imports, breaching the principle set out in the AB report on LAN. ⁶⁷ While it was true that, in accordance with the findings of the AB in the earlier dispute, the waiver only waived obligations of the European Communities under Article I:1 and not under Article XIII of GATT 1994, this waiver had to be given its full scope and meaning (see paragraph 4.25 above). The European Communities submitted that it would not be entitled to count preferential imports that were not included in a tariff binding against imports under the bound tariff quota. This question was extensively dealt with in the 1984 panel on Newsprint ⁶⁸ which was relevant to the claim submitted by Ecuador in this case. ⁶⁹ The European Communities quoted the Newsprint panel as saying "[...] It is in the nature of a duty-free tariff quota to allow specified quantities of imports into a country duty-free which would otherwise be dutiable, which is not the case for EFTA imports by virtue of the free-trade agreements. Imports which are already duty-free, due to a preferential agreement, cannot by their very nature participate in an M.F.N. duty-free quota" (emphasis added).
29. While the MFN tariff quotas for bananas were not duty-free, the European Communities continued, but allowed imports at reduced rates of duty, the logic of the above findings was even more compelling in that situation. If preferential duty-free imports were counted against an MFN tariff quota at reduced rates, this would completely undermine the value of the MFN tariff quota and thus the balance of rights and obligations negotiated in tariff negotiations between WTO Members. "[T]he security and predictability of the reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade", as the AB had indicated, would be put at serious risk.
30. On the other hand, duty-free imports of non-traditional ACP bananas were counted against the MFN quota. However, the EC's tariff binding for bananas specifically referred to imports of such non-traditional ACP bananas, for which a quota share of 90,000 tonnes had been allocated under the binding (see also paragraph 4.17 above). The situation of non-traditional ACP bananas which were specifically referred to in the EC�s tariff binding, the European Communities submitted, was thus entirely different from that of traditional ACP bananas which were never the subject of any tariff negotiations under GATT or the WTO. The AB had recognised ⁷⁰ that the European Communities was required, in accordance with Article 1 of Protocol 5, to grant traditional ACP bananas a tariff treatment that was preferential even in comparison to the import regime for non-traditional ACP bananas. ⁷¹ A "tariff quota share" in this context could only mean a defined import volume at a preferential tariff level. The value of a tariff preference resided in the preferential margin, much more than in the volume. The preferential margin of traditional ACP bananas was presently at 737 Euro per tonne, since these bananas were imported in competition with bananas imported out of quota, while the preferential margin for non-traditional ACP bananas was 200 Euro if imported out of quota and only 75 Euro if imported under the MFN tariff quota. Including traditional ACP bananas in the MFN tariff quota would thus mean (independently of the volume limitation) that the margin of preference would be reduced by 662 Euro per tonne (737 Euro � 75 Euro = 662 Euro).
31. In the opinion of the European Communities, there was no basis in the original panel or AB reports for such a drastic reduction of the margin of preference for traditional ACP bananas. The volume limit was thus a cap to this very substantial preference, but not an advantage to be shared under Article XIII of GATT with other (MFN) suppliers. Article XIII was a special MFN clause with regard to the distribution of (tariff) quotas, not a provision that governed volume limitations imposed on preferential suppliers. It was the preference that constituted the economic advantage for traditional ACP banana imports, whereas the volume limitation was a disadvantage. The volume limitation was thus inseparably linked to the tariff preference, but did not by itself constitute the preference.
32. If Ecuador's approach were correct, the European Communities continued, the European Communities would have to distribute the 857,700 tonnes in part to substantial suppliers, including Ecuador. However, Ecuador would not have access to the preferential zero duty rate. Thus, since this volume was beyond the bound tariff quota of 2.2 million tonnes, the base rate of presently Euro 737 would apply to any quantities imported from Ecuador under such an additional "tariff quota". Of the 857,700 tonnes of the so-called "tariff quota", Ecuador would receive a share of 26.17 per cent (224,460 tonnes). This would be absurd since Ecuador was entitled to import into the EC's unlimited quantities of bananas at 737 Euro per tonne. The traditional ACP supplying countries would have access to 9.43 per cent of the same volume which was less than a tenth of the volume of imports from those countries that the European Communities was required by the Lomé Convention to allow at a duty-free level. In the view of the European Communities, it was self-evident that Ecuador would have no interest whatsoever to import under this "tariff quota", because it could much more easily import outside the quota at the same base rate, while importing under this "tariff quota" would imply additional customs procedures in order to count the import against the quota.
33. Ecuador recalled that the establishment of two banana import regimes or use of different terminology did not justify separate evaluation of those regimes in terms of Article XIII. Referring to the EC's invocation of the Newsprint case attempting to persuade the Panel that the entire 857,700 tonne quota should be viewed as merely a cap on the preferences for ACP suppliers, Ecuador submitted that the 857,700 tonne quota was not simply a capped tariff preference, as the European Communities had sheltered this traditional ACP quota from all competition, given that the over-quota tariff was prohibitive. Ecuador and other suppliers thus could not compete for this allocation. In this respect, the traditional ACP quota was very different from the quantitative "competitive need" limits set by the generalized system of preferences. Though such limits were a tariff rate quota, they were not an allocation in the sense of Article XIII, because other suppliers could compete with the beneficiaries, subject only to the difference in duty. The European Communities could do the same thing in this case, since then the European Communities would only be granting a tariff preference, not an allocation contrary to Article XIII.
34. Ecuador agreed with the European Communities that "Article XIII is a special MFN clause with regard to the distribution of (tariff) quotas, not a provision that governs volume limitations imposed on preferential tariffs" (see above, paragraph 4.31). Volume caps on preferential tariffs were, in the opinion of Ecuador, an Article I matter, covered by the Lomé waiver, as long as they were limited to a tariff preference. As the original panel had stated in paragraph 7.80 of its report, constructing tariff preferences in such a way that the "tariff quota construction" became an additional advantage was an Article XIII matter, which was not covered by the Lomé waiver. To the extent that the European Communities argued that its ACP "tariff quota construction" had nothing to do with Article XIII, Ecuador referred to the new Article 18(9) of Regulation 404 which was inserted by Regulation 1637. ⁷²
35. The EC response was also not convincing, Ecuador submitted, in regard to Ecuador's complaint with respect to the continuing infringement of the fundamental non-discrimination obligations of Article XIII, i.e. the prohibition in paragraph 1 against restricting products from one Member unless like products of other members were "similarly restricted," and the general rule of paragraph 2 that any allocation system must approximate as closely as possible the allocations that would be expected to prevail in the absence of restrictions. Ecuador noted that the European Communities, Colombia and Costa Rica had all objected to Ecuador's request that the Panel recommend that the European Communities drop the use of country allocations, on the basis that this request would deprive the European Communities of its "right" to allocate under Article XIII:2(d) and would deprive Colombia (and Costa Rica) of an alleged right to a country quota negotiated in the Uruguay Round. Ecuador stressed that it did not seek to deny any WTO Member its rights under the WTO in this dispute. The European Communities was indeed free to allocate by country, as long as it followed the requirements of Article XIII:1, the chapeau of Article XIII:2, and the provisions of Article XIII:2(d). However, as the original panel had ruled, neither the Uruguay Round schedules nor the allocation provisions of Article XIII:2(d) permitted violation of the requirements of Articles XIII:1 and XIII:2.
36. The provisions of Article XIII did not require the European Communities to allocate quotas, and Ecuador believed that the absence of country allocation would produce the most equitable result, given the manifold restrictions that had distorted the EC market for many years. But if the European Communities instead chose to allocate, then it must use a combination of recent representative period and special factors that resulted in a distribution approximating as closely as possible the shares that might be expected to prevail in the absence of restrictions, and that entailed similar restrictions on bananas from all sources. Ecuador did not believe that those requirements of Article XIII were met by the two systems chosen by the European Communities and by the use of a 1994-1996 period without adjustments for special factors.
37. The European Communities submitted that in accordance with the panel and AB reports, the European Communities applied the same method of allocation of import licences for all categories of bananas, irrespective of the source of supply to the extent that import licences were necessary in order to count the imports against a tariff quota or to administer the volume limitation for traditional ACP bananas. In this respect, the distribution rules were identical in all cases, since only substantial suppliers had been attributed country-specific shares under the MFN tariff quotas. Since no ACP country was a substantive supplier on the EC's market, no country-specific shares were allocated to any ACP country in respect of the volume limitation for traditional ACP banana imports. The European Communities noted, as concerns BFA allocations, that Nicaragua's shares were reallocated to Colombia in full in 1995 and in part in 1996, and Venezuela's share was partially transferred to Colombia in 1995. The European Communities confirmed Costa Rica's statement that it did not benefit from any transfers of shares under the BFA.
38. Ecuador submitted that the amended system did not correct, and even intensified, the non-conformity with Article XIII in the preferential treatment of BFA countries. The shares of Columbia and Costa Rica had been permanently increased by the amount of the reallocation of the shortfall that they were granted inconsistently with Article XIII under the previous system. Ecuador was further of the view that the revised system was inconsistent with the obligations of Article XIII to ensure that a TRQ allocation system approximated as closely as possible the distribution of shares that could be expected in the absence of restrictions. In addition to providing individual country allocations for the 12 ACP suppliers of traditional ACP bananas within the 857,700 tonne quota, the old EC system granted country allocations to four individual ACP countries and an "Other ACP" category for a total of 90,000 tonnes of bananas within the TRQ. The share assigned by the European Communities to Ecuador in the new system was less than warranted by any objective standard, including the trend of Ecuador's exports and, even more markedly, Ecuador's much larger share of the world market outside the EC's market. Ecuadorian bananas were subject to restrictions that were not similarly imposed on like bananas from other sources, contrary to the requirements of Article XIII:1. The European Communities had allotted individual country shares pursuant to the BFA to two substantial suppliers (Colombia and Costa Rica) and two non-substantial suppliers (Nicaragua and Venezuela), who also had shared in a system of preferential reallocation of shortfalls among themselves. Other countries, such as Ecuador, did not have a specific country allocation in the old system, and fell within an "others" category of the 2,553,000 tonne quota.
39. Ecuador submitted that Article XIII established two general rules, i.e. Article XIII:1 required that imports from one Member not be restricted unless imports of the like products from other sources were "similarly restricted." ⁷³ Further, the original panel noted that if Members applied quotas to a product, then, in the terms of the chapeau to Article XIII:2, "Members shall aim at a distribution of trade in such product approaching as closely as possible the shares which the various Members might be expected to obtain in the absence of such restrictions." ⁷⁴ This interpretation was confirmed by the AB. ⁷⁵ While Article XIII:2(d) allowed the use of country allocations, the panel noted that that authorization was subject to observance of the general rule of the chapeau. ⁷⁶ That finding was likewise confirmed by the AB. ⁷⁷
40. According to Ecuador, the amended system still had to conform to these requirements. The EC regulations listed the shares of Ecuador and other substantial supplying countries as a proportion of the 2.553 million tonne tariff rate quota. ⁷⁸ As a proportion of the entire quota of 3.41 million tonnes, however, the allocations would be different. ⁷⁹ Ecuador claimed that its share had been limited relative to that of other countries as a result of this system and compared to the share that Ecuador could have expected to achieve in the absence of restraints. In other words, a country allocation or, in the case of the traditional ACP countries, a block allocation, benefited countries whose competitiveness was decreasing relative to others, by isolating part of the market from competition from other suppliers. Country allocations further restricted large and efficient suppliers' opportunities, such as Ecuador, to compete, both with producers in the restricted market and with other exporting countries that might be less efficient
41. Ecuador asserted that the non-conformity of the amended system with Article XIII as regards Ecuador could be shown objectively in terms of the evolution of Ecuador's share of the EC's market and, even more markedly, in Ecuador's share of world markets (see Chart 1 in Annex II). According to Ecuador, Chart 1 demonstrated that Ecuador's share of the EC's market had grown and far exceeded the share assigned to Ecuador in the present system. However, the object of Article XIII was not to freeze shares of the past, especially if those past periods had been distorted by restrictions. Charts 2 and 3 in Annex II, Ecuador submitted, were even more instructive in considering what share Ecuador might be expected to have in the absence of restrictions. Chart 2 indicated that Ecuador had a substantially larger share of the world market than of the EC's market. Chart 3 measured Ecuador's market share of the world outside of the EC's market. In a product such as bananas, Ecuador believed it was appropriate to consider relatively unrestricted markets elsewhere as much more indicative of what Ecuador might anticipate in the EC's market, if the restrictions were removed. Ecuador concluded that the share assigned to Ecuador was less than what Ecuador could expect in the absence of restrictions, in view of the provisions of Article XIII:1.
42. Ecuador further argued that the revised EC system contravened not only the general rule of Article XIII:2, but also specific provisions of Article XIII:2(d) which required that the allocation among substantial suppliers had to be based upon the proportions supplied "during a previous representative period, due account being taken of any special factors which may have affected or may be affecting the trade in the product." Referring to EC's claim that the allocations accorded to suppliers (other than traditional ACP suppliers) under the revised EC system were determined in accordance with average shares of the EC's market in the 1994 to 1996 period, ⁸⁰ Ecuador noted that the original panel had found that this period was distorted by the non-consistent aspects of the BFA, as well as other distortions related to the EC's licensing system.
43. In the opinion of Ecuador, it was not clear whether any country-share allocation system could be devised based on a representative period and special factors that would meet the requirements of Article XIII:2. The original panel confirmed what had been held by prior panels, that periods distorted by trade restrictions could not be considered representative. ⁸¹ Ecuador submitted that neither the period during which the previous banana import regime was in force (1 July 1993�31 December 1998), nor the period prior to that could be seen as "representative" since none of those periods were free of distortions. Ecuador further argued that since relative productive efficiency and capacity varied over time, the older the period chosen, the less likely it was to be representative, bearing in mind that the objective of Article XIII - and the requirement of the chapeau in Article XIII:2 - was to achieve an allocation that came as close as possible to that which would prevail in the absence of restrictions. The intent of Article XIII was not, in the opinion of Ecuador, to create everlasting entitlements based on past trading patterns.
44. Ecuador submitted that the result of the EC's system was that ACP countries, as a group, were assigned to a quota to which they had exclusive access. Other countries did not get an allocation by group. The ACP allocation was also far higher, being based on a cumulated pre-1991 best-ever formula, than could be justified by any formula or rule of Article XIII. If the 1994-1996 base period applied to Ecuador and other third countries were applied to the traditional ACP suppliers, the latter would receive a much lower share, while those of Ecuador and other third countries would rise.
45. The European Communities submitted that the "historical performance" scheme had to be based on some period in the recent past. While it was the least trade-disruptive option, it admittedly had the disadvantage of "freezing" the situation to a certain extent. However, on balance, the European Communities Ministers for Agriculture decided that a higher degree of certainty and predictability to importers than the "first-come, first-served" scheme was to be preferred at this stage and, contrary to the "auctioning" scheme, it was appropriate to leave the quota rent with the operators, thus avoiding an important financial impact on operators at a moment when already a major change in the rules was imposed upon them. The allocation of shares of the quota to those countries with a substantial interest in supplying the EC market was based on the reference period 1994-96 as were the quantities effectively imported by each importer on average during the recent three-year period. Data for 1997 was available but it was provisional at the time of preparing Regulation 2362. This period was the most favourable period for Ecuador since on the basis of the available data at the time, it represented Ecuador's best years. The allocations were calculated on the basis of the average of the actual import years and with a proportional distribution of unidentified sources. Therefore, Ecuador received a higher quota than it would have received based on actual 1994-96 figures only (26.17 per cent as compared to 25.38 per cent) (see also paragraph 4.52). The European Communities believed that the "historical performance" (or traditional/newcomers) scheme could only be legitimate if it was devised taking into account the conditions listed in Article 3.5(j) of the Licensing Agreement , ⁸² namely licences had to be issued to applicants in the past and their distribution must be based on their full utilization during a recent representative period. ⁸³ In the opinion of the European Communities, the new EC licensing system created by Regulation 2362 was entirely in line with Article 3.5 of the Licensing Agreement.

To continue with Issues related to the GATS

⁵⁶ Panel report at paragraphs 7.90-7.118.

⁵⁷ See working party report on "Quantitative Restrictions", adopted on 2, 4, and 5 March 1955, BISD 3S/170, 176, paragraph 24, cited at Bananas III panel report at paragraph 7.68, footnote 365.

⁵⁸ Panel report at paragraph 7.70.

⁵⁹ Panel report at paragraph 110.

⁶⁰ AB report at paragraph 188.

⁶¹ Paragraph 7.90 of the panel report and paragraph 161 of the AB report.

⁶² AB report on United States � Standards for Reformulated and Conventional Gasoline, adopted 20 May 1996, AB-1996-1, page 23.

⁶³ European Communities - Customs Classification of Certain Computer Equipment, AB-1998-2, paragraph 82.

⁶⁴ Adopted 20 November 1984, BISD 31S/114, 130, notably paragraphs 50 to 52.

⁶⁵ Paragraphs 46 and 47 (emphasis added).

⁶⁶ Paragraph 178.

⁶⁷ European Communities - Customs Classification of Certain Computer Equipment, AB-1998-2, paragraph 82.

⁶⁸ Adopted 20 November 1984, BISD 31S/114, 130, notably paragraphs 50 to 52.

⁶⁹ In the Newsprint case, the complainant (Canada) argued that the respondent (EC) had not respected its tariff commitment for newsprint, because it had bound a duty-free MFN tariff quota of 1.5 million tonnes but in 1984 had only allowed a volume of 500,000 tonnes to be imported duty-free in the European Communities. The European Communities responded that the MFN tariff rate quota had in the past been shared between Canada and some Northern European countries (Finland, Norway, Sweden) which had in the meantime been granted duty-free access in the context of the EC-EFTA free trade agreements. For this reason, the imports from these countries were no longer counted against the MFN tariff quota. Under these circumstances, the European Communities had reduced duty-free access under the MFN tariff quota to 500,000 tonnes which corresponded to the share of non-EFTA imports under that quota. During the proceedings of the Newsprint panel, the European Communities argued that if the panel held that this action was inconsistent with the EC's GATT obligations, then the European Communities would have no option but to count the duty-free imports from EFTA countries against the imports under the MFN tariff quota.

⁷⁰ Paragraph 173 of the report of the AB in the original dispute, doc. WT/DS27/AB/R of 9 September 1997.

⁷¹ Paragraph 178 of the AB report, doc. WT/DS27/AB/R of 9 September 1997.

⁷² "Third State, traditional ACP and non-traditional ACP bananas re-exported from the Community shall not be counted against the corresponding tariff quotas" (emphasis added).

⁷³ Panel report at paragraph 7.69; AB report at paragraph 160.

⁷⁴ Panel report at paragraph 7.68.

⁷⁵ AB report at paragraph 161.

⁷⁶ Panel report at paragraph 7.70.

⁷⁷ AB report at paragraph 161.

⁷⁸ Ecuador: 26.17 per cent ; Costa Rica: 25.61 per cent; Colombia: 23.03 per cent; Panama: 15.76 per cent; Other: 9.43 per cent. Regulation 2362.

⁷⁹ Traditional ACP: 25.15 per cent; Ecuador: 19.59 per cent ; Costa Rica: 19.17 per cent; Colombia: 17.24 per cent; Panama: 11.8 per cent; Other: 7.1 per cent.

⁸⁰ Preambular Clause (2) of Regulation 2362.

⁸¹ Panel report at paragraph 7.94, footnote 365 quoting the panel report on EEC Restrictions on Imports of Dessert Apples � Complaint by Chile, adopted 10 November 1980, BISD 275/98, 113, paragraph 4.8.

⁸² " � consideration should be given as to whether licences issued to applicants in the past have been fully utilized during a recent representative period."

⁸³ Ecuador's first written submission paragraph 97 et sequitur.