INTRODUCTION

On 25 September 1997, the Dispute Settlement Body (DSB) adopted the Appellate Body report on European Communities - Regime for the Importation, Sale and Distribution of Bananas (WT/DS27/AB/R) and the panel reports, as modified by the Appellate Body (AB) report, recommending that the European Communities bring the measures found to be inconsistent with the GATT 1994 and the GATS into conformity with the obligations of the European Communities under those agreements. On 7 January 1998, the Arbitrator, appointed in accordance with Article 21.3(c) of the DSU concluded that the reasonable period of time to implement the recommendations and rulings of the DSB in this case would expire on 1 January 1999.

On 20 July 1998, the Council of the European Union adopted Regulation (EC) No. 1637/98 amending Regulation (EEC) No. 404/93 on the common organization of the market in bananas. On 18 August 1998, Ecuador, Guatemala, Honduras, Mexico and the United States acting jointly and severally, requested consultations (WT/DS27/18) with the European Communities (“EC”) in relation to the implementation of the DSB recommendations in this matter. Consultations were held on 17 September 1998. These consultations did not result in a mutually satisfactory solution of the matter.

On 28 October 1998, the Commission of the European Communities adopted Regulation (EC) No. 2362/98 laying down detailed rules for the implementation of Council Regulation (EEC) No. 404/93 regarding imports of bananas into the Community. Regulation 1637/98 as well as Regulation 2362/98 were implemented as from 1 January 1999. On 13 November 1998, Ecuador requested further consultations in this matter which took place on 23 November 1998 (WT/DS27/30 and Add.1). Mexico also requested consultations and was joined as a co-complainant.

On 14 December 1998, the European Communities requested the establishment of a panel under Article 21.5 of the DSU with the mandate to find that the implementing measures of the European Communities must be presumed to conform to WTO rules unless their conformity had been duly challenged under the appropriate DSU procedures (WT/DS27/40). The DSB, at its meeting on 12 January 1999, decided, in accordance with Article 21.5 of the DSU, to refer to the original panel the matter raised by the European Communities.