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VI. TRADE DISPUTES AND CONSULTATIONS
(1) Dispute Settlement under GATT 1947
(i) Complaints against Costa Rica
1. Costa Ricahasnever beensubject toacomplaint under anyGATT 1947 dispute settlement
procedure.
(ii) Complaints byCosta Rica
(a) EEC member States 'import régimes forbananas
2. InFebruary 1993, following unsuccessful consultations anduseoftheDirector-General 'sgood
offices, apanel wasestablished ontherequest ofCosta Rica, Colombia, Guatemala, Nicaragua and
Venezuela1,inaccordance withtheprovisions ofthe1966 Decision onProcedures under Article XXIII2,
toexamine import measures maintained onfreshbananas byindividual member States oftheEuropean
Communities.3
3. ThePanel reached thefollowing conclusions:
(i) Thequantitative restrictions maintained byFrance, Italy, Portugal, Spain andtheUnited
Kingdom were inconsistent withArticle XI:1 (general elimination ofquantitative
restrictions) andwerenotjustified byArticle XI:2(c)(i) (governmental restrictions on
marketing ofdomestic products), Article XXIV (territorial application, frontier traffic,
customs unions andfree-trade areas) orthe"existing legislation" clauses intheprotocols
ofaccession ofthese member States totheGATT;
(ii) thetariff preference granted tobanana imports from African, Caribbean andPacific
(ACP) States wasinconsistent withArticle I(m.f.n. treatment). Alegaljustification
forthepreference could notemerge fromanapplication ofArticle XXIV tothetype
ofagreement described bytheEECinthepanel'sproceedings, butonlyfromanaction
(waiver) oftheCONTRACTING PARTIES under Article XXV (Joint Action bythe
Contracting Parties).
1In1991, these countries were responsible foraround 11percentofworld production ofbananas. Brazil,
Philippines andMexico, asthesecond, thirdandseventh largest producers representing jointly around 22percent
ofworld production, alsomade submissions tothePanel.
2Therules ofthisDecision required thePanel tofinish itswork andpresent itsfindings within 60days
(BISD 14S/18).
3National restrictions applied bycertain member States onimports from Latin America were considered as
"residual" (trade measures applied prior tothecreation oftheEEC, ormember States 'accession, andmaintained
thereafter duetolackofacommon import policy forbananas). Belgium, Denmark, Ireland, Luxembourg and
theNetherlands, which imported bananas mainly fromLatin America, applied abound m.f.n. tariff of20percent
withnoquantitative restrictions. Allmember States applied azeroratetoACP bananas. Germany applied a
tariff-free quota based onthelevel ofestimated domestic consumption. France, Greece, Italy, Portugal andthe
United Kingdom applied various quotas andlicensing requirements, while Spain maintained adefacto prohibition
onbanana imports. These import régimes were tobereplaced on1July1993 byacommon market organization
ofthebanana sector, including anewimport régime (Council Regulation (EEC) No.404/93).Costa Rica WT/TPR/S/1
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4. ThePanel recommended thattheimport restrictions should bebrought intoconformity with
theEC'sobligations under theGeneral Agreement. Thesameshould apply totheACPtariffpreference
unless, inaccordance with theprovisions ofArticle XXV, authorization wasgiven bythe
CONTRACTING PARTIES tomaintain thescheme.4
5. Thereport, brought totheCouncil inJune1993anddiscussed insubsequent meetings in1993
and1994, hasnotyetbeenadopted.
(b) EEC Import Régime onBananas
6. InJune1993,asecondpanelwasestablishedontherequestofCostaRica,Colombia,Guatemala,
Nicaragua andVenezuela, inaccordance withthe1989 Decision concerning Improvements tothe
GATT Dispute Settlement Rules andProcedures (BISD 36S/61), toexamine theEUimport régime
forbananas introduced on1July1993.5
7. ThePanel concluded thatthetariff quota wasnotinconsistent withArticles XI(elimination
ofquantitative restrictions) andXIII(non-discriminatory application ofQRs); thesecurity requirements
andother formalities connected withtheimportation ofbananas werenotinconsistent withArticle VIII
(onimport andexport feesandformalities); andthattheEUhadnotacted inconsistently withits
obligation under Article XVI:1 todiscuss, upon request, thepossibility oflimiting thesubsidization
of(domestically produced) bananas. However, thePanel alsoconcluded thatthespecific duties levied
bytheEUwere inconsistent withitsbound concessions under Article II;thatthepreferential rates
toACP States were inconsistent withArticle Iandcould neither bejustified byArticle XXIV nor
Article XX(h) (restrictions pursuant toobligations under commodity agreements) andthattheallocation
ofimport licences providing access tothetariff quota wasinconsistent withArticles III(national
treatment) andI,andcould neither bejustified byArticle XXIV norbyArticle XX(h). ThePanel
therefore recommended thattheEUbring itstariffs andtheallocation oftariff quota licences into
conformity withitsGATT obligations.6
4GATT Focus, July 1993. The EUand theACP States obtained awaiver, granted bythe
CONTRACTING PARTIES attheir 50thSession (December 1994), until 29February 2000, theexpiry date
ofthefourth Lomé Convention (C/M/276, C/W/820 Rev.2, L/7539 andCorr.1 andSR.50/1).
5Council Regulation (EEC)No. 404/93. Therégime established different treatment fornon-EU sources of
fresh bananas. Imports from "traditional" ACP States entered dutyfreeuptoaquantity of857,700 tonnes.
Upto2milliontonnes,importsfrom"non-traditional"ACPsuppliers(includingquantitiesexceedingthetraditional
suppliers 'quota) entered dutyfree, andimports from non-ACP countries were subject toatariff ofECU100
pertonne. Imports above tariff quota levels were charged atariff ofECU750 pertonne (ACP States) or
ECU850 pertonne (third countries). Imports from third countries were contingent onthegranting ofanimport
licenceandmakingasecuritydeposit.Licencesforthirdcountryand/ornon-traditionalACPfruitweredistributed
tothree broad categories ofoperators established intheEU. Inaddition, theEUmaintained abound tariff of
20percentadvalorem.
6GATT Focus, June 1994.WT/TPR/S/1
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8. InMarch 1994, aFramework Agreement onBananas (Chapters IVandV),duetocome into
forceon1October 1994, wasconcluded between theEUandfourcomplainants, including Costa Rica,
providing preferential treatment fortheirexports totheEUmarket.7ThePanel report wasbrought
totheCouncil thesame month (March 1994).8Onthisoccasion Costa Ricaexpressed concern about
thecontinued EUrestrictions onLatin American banana exports, called forsomeflexibility forresolving
thedispute, andreserved itsrighttorevert tothismatter. InMay1994, agroup ofLatin American
andCaribbean banana-producing countries9jointly reiterated thattheEUbanana import régime had
beenfound inconsistent withtheGATT anddrew attention tothefactthattheacceptance bysome
countries ofanofferbytheEUintheUruguay Round didnotmake therégime anylessdiscriminatory.10
9. Thepanel report hasnotsofarbeenadopted. Costa Rica, Colombia andtheEUimplemented
theFramework Agreement on1January 1995.11InJanuary 1995, theUnited States initiated a
"Section 301" investigation ofthebanana export practices ofColombia andCosta Rica.
(iii) Third party interests
10. CostaRicareserveditsrightstobeheardbyandmakewrittensubmissionstoapanel,established
inFebruary 1991, toexamine aU.S.prohibition ofimport ofyellowfin tunaanditsproducts from
MexicoundertheUnitedStatesMarineMammalProtectionAct(MMP A).CostaRica,an"intermediary
nation" andtunaexporter totheUnited States, wasaffected bythismeasure.12ThePanel found that
theU.S.MMP AandthebanwerecontrarytoGATTArticleXI:1(prohibitionofquantitativerestrictions)
andwere notjustified byArticle XX(general exceptions), andrequested theUnited States tobring
them intoconformity withitsobligations under theGeneral Agreement.13
7Other participants totheAgreement were Colombia, Nicaragua andVenezuela. Following theEU'soffer
forasettlement,inearly1994,ColombiaandVenezuelawithdrewfromthedispute(DS38/10,DS38/11,DS38/12).
8C/M/271.
9GATT 1947 contracting parties Guatemala, Honduras, Mexico, andobservers Ecuador andPanama.
10GATT Focus, June 1994.
11TheUnited States, whose banana marketing companies (Chiquita Brands International Inc.andtheHawaii
BananaIndustryAssociation)claimedthattheycouldbeadverselyaffectedbytheframew orkagreemen t,expressed
concernoveritsimplementationwhich,itwassaid,permittedsignatoryproducercountriestoimposediscriminatory
export quotas andlicences onU.S. companies. InOctober 1994, theUnited States initiated aprocedure under
Section 301oftheTrade Act,1974 against theEUbanana import régime; apreliminary decision thattherégime
adversely affected U.S. economic interests wasmade inJanuary 1995.
12Costa Ricaexports 65percentofitstunatotheUnited States. Under theMMPA, "intermediary nations"
were initially defined asthose which purchased tunacaught intheEastern Tropical Pacific Ocean from countries
which donotcomply withU.S. dolphin protection standards. Thedefinition of"intermediary nation" was
subsequently extended inOctober 1992 toanynation thatexports yellowfin tunaoryellowfin tunaproducts to
theUnited States, andanynation thatimports yellowfin tunaoryellowfin tunaproducts thataresubject toa
direct prohibition onimport intotheUnited States.
13MoreinformationonthisdisputesettlementcaseisfoundinDS21/R,3September1991andGATT(1993b).Costa Rica WT/TPR/S/1
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11. Theadoption ofthePanel report, although debated intheCouncil inFebruary, March and
April 1992, waspostponed attherequest oftheUnited States andMexico, which wereholding bilateral
consultations onthematter.14Theextension on31January 1992 oftheU.S.secondary embargo on
"intermediary nations" tosome 20countries andthedelay bytheUnited States andMexico infinding
asolutionthroughconsultationobligedtheEUandtheNetherlands(onbehalfoftheNetherlandsAntilles)
torequest, inJune1992, apanel todealwiththesecondary embargo, which nowaffected anumber
ofitsmember States.
12. Costa Rica, made athird-party submission tothesecond Panel onU.S.restrictions onimports
oftuna. Onthisoccasion Costa Rica, asafounding member oftheInter-American Tropical Tuna
Commission (IATTC), expressed concern overtheincreasing useofunilateral trademeasures tofulfil
praiseworthy environmental objectives. Itquestioned theircompatibility withGATT Articles IIIand
XI:1andconsidered themnotjustifiable under Article XX.Theuseoftraderestrictions forimposing
domestic environmental goals onthirdcountries, regardless oftheirlevelofdevelopment, could lead
tonewprotectionist policies andobstacles tosustainable development. Costa Ricaalsorecalled that
according toarecent U.S.publication noneofthedolphin population associated withyellowfin tuna
fishing wasthreatened15;there wasnowayofattaining asustained leveloftunaharvesting without
using the(U.S. prohibited) purse seinemethod; and,dolphin mortality hadbeendecreasing significantly
inrecent years. Costa Ricawasoftheviewthat,inthiscase, theUnited States haddisregarded the
optionofnegotiatinganinternationalco-operationagreement,and,thus,hadnotexhaustedallpossibilities
forachieving itsgoalofdolphin protection.
13. ThePanelfoundthattheU.S.restrictionsdidnotmeettherequirementsoftheNoteadArticleIII
(requiring national treatment toapply tolaws andregulations enforced atthetime orpoint of
importation), werecontrary toArticle XI:1(prohibition ofQRs)andwerenotcovered bytheexceptions
inArticle XX(b),(d)or(g)oftheGeneral Agreement (human, animal orplant lifeorhealth;
compliance withlawsorregulations notinconsistent withtheGATT; conservation ofexhaustible natural
resources).ThecontractingpartieswererecommendedtorequesttheUnitedStatestobringitslegislation
intoconformity withitsGATT obligations.16
14. Although discussed attheJuly,October andNovember 1994Council meetings, thepanel report
hasnotyetbeenadopted.
14DS21/R, C/M/254, C/M/255, C/M/256 andGATT (1993a).
15United States National Research Council, "Dolphins andTuna Fishing".
16GATT Focus, August-September 1994.WT/TPR/S/1
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(2) Dispute Settlement under theMultifibre Arrangement
15. In1989, 1991 and1993 Costa Ricaresolved itsdifferences withtheUnited States under
Article 3:5oftheMFA, bymeans ofbilateral consultations.17These disputes concerned U.S.plans
toadopt unilateral measures against imports ofapparel from Costa Rica.18
16. Atemporary restraint against imports ofunderwear fromCosta Rica, imposed byCanada under
Article 3:6inSeptember 1993, wassuperseded byanInterim Agreement.19
(3) Disputes outside GATT
17. TheCentral American Common Market (CACM) provides fortrade consultation anddispute
settlement among itsmembers inthecontext ofPresidential Summits, Ministerial, Vice-ministerial
andhighofficials'meetings.SincethecreationoftheCACM,problemsarisingfromtheimplementation
ofeconomic integration policies, including regional trade policy instruments, havebeendealt with
inthese fora.
18. Jointcommissions (Comisión Mixta )oversee theimplementation oftheprovisions ofbilateral
agreements withColombia, theDominican Republic, Panama andVenezuela. Since March 1992,
bilateral tradeproblems withChile havebeendiscussed andsettled byaJointCouncil ontheEconomy
andTrade (Consejo Conjunto sobre Economía yComercio ).Dispute settlement onissues relating to
the1994 agreement withMexico arecovered byaspecial chapter oftheagreement.
19. Inthecontext ofatrade andinvestment agreement withtheUnited States (Acuerdo Relativo
alConsejo sobre elComercio ylaInversión ,29November 1990), bilateral disputes areresolved in
aCouncil. Sofarthishasmetfourtimes todeal, interalia,withproblems relating totrade barriers
onagricultural products andlabelling requirements.
17Article 3:5oftheMFA provides, interalia,fortheintroduction ofimport restrictions ifnoagreement in
form ofexport restraint oranyother alternative solution isreached withtheexporting country within sixty days
from thedateonwhich therequest ismade bytheimporting country.
18These comprised: trousers, slacks andshorts (formen, women, girlsandboys); skirts; men'sandboys'
wool suits; cotton gloves andmittens; andwool trousers formen andboys (COM.TEX/SB/1455,
COM.TEX/SB/1467, COM.TEX/SB/1487, COM.TEX/SB/1677, COM.TEX/SB/1872).
19COM.TEX/SB/1893, COM.TEX/SB/1894, COM.TEX/SB/1900.Costa Rica WT/TPR/S/1
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