Thursday May 18, 12:29 pm Eastern Time
Ecuador gets WTO nod on EU sanctions
By Robert Evans

GENEVA, May 18 (Reuters) - World Trade Organisation (WTO) member 
countries on Thursday gave Ecuador the green light to impose sanctions 
worth $201.6 million on imports from the European Union in a row over 
Brussels' banana regime.

But the Latin American country, the world's top banana exporter, told 
the WTO's Dispute Settlement Body (DSB) that it would rather negotiate 
compensation from the EU for trade it was losing in the 15-nation bloc
because of the regime.

The United States, itself levying WTO-approved duties worth $191 
million on EU goods over bananas for more than a year, said it was 
time for the Union to come into line with trade rules and adopt a new 
system for importing and marketing the fruit.

However, an official from the Caribbean island of St Lucia, which is 
among smaller former colonial states the EU says its regime is meant 
to help, warned that WTO members squabbling over the case could kill 
``the goose that lays the golden egg'' -- the vast EU market for 
bananas.

U.S. banana companies and Latin American want the EU's banana regime, 
which has historically offered preferential access to former colonies, 
to come into line with WTO rules.

Ecuador told the DSB that in the absence of a settlement it would 
impose sanctions on the EU not just through special tariffs on goods 
but also by suspending application of other WTO accords.

COPYRIGHT PROTECTION TO BE WITHDRAWN

This would involve slapping duties on commercial services, and 
withdrawing copyright protection for sound recordings, industrial 
designs and the use of geographic names on products like alcoholic 
beverages.

Ecuador says it is unable to retaliate only against EU goods as this 
would hit its own consumers by pushing up the price of key items and 
also because imports from the 15 are currently only worth $61 million 
a year.

Earlier this week, it filed a list of all consumer items it bought 
from the EU and said some of these would be hit, with the exception 
of imports from Denmark and the Netherlands.

These two countries had not approved the latest version of the banana 
regime, which went into force in January last year and has itself been 
found in breach of WTO rules by two dispute panels.

The banana problem has bedevilled the five-year-old WTO and its 
predecessor, the GATT, for over a decade.

GATT and WTO panel rulings against the EU have been used by critics 
of the trade body to bolster their arguments that it serves the 
interests of big global companies rather than poor states and 
consumers.

The Washington case against the regime -- a complicated system of 
quotas, tariffs and marketing arrangements -- was brought at the 
request of the U.S.-based giants Chiquita Brands International Inc 
(NYSE:CQB - news) and Dole Food Co Inc (NYSE:DOL - news).

But apart from Ecuador, which filed a separate case against Brussels, 
the U.S. complaint has had strong backing from Mexico and smaller 
developing countries in Central America -- Honduras, Guatemala and 
Panama -- who say the regime hits their economies.

In his Thursday submission to the DSB, on which all of the WTO's 136 
member states can sit, Ecuador's ambassador Robert Betancourt gave no 
clear sign of how the sanctions would be applied -- if continuing 
contacts with the EU failed to find another solution.

In response, EU envoy Roderick Abbott said it would be extremely 
difficult to establish a clear value of any sanctions taken against 
services or items otherwise covered under the WTO's intellectual 
property accords, or TRIPS.

If Ecuador took such measures, Brussels would monitor their effect 
carefully and, he indicated, could bring a counter-complaint to the 
WTO if it appeared they were costing the EU more than the approved 
$201.6 million.