VII. BANANA EXPORTS AND TRADE REGIMES
Human Rights Watch believes that there is an inherent link between labor rights and trade. When countries or regions engage in trade, they have a fundamental obligation to ensure that the goods being traded are not produced in violation of internationally recognized labor rights, including freedom of association and the prohibition of the worst forms of child labor. As the two largest importers of Ecuadorian bananas, importing in 2000 roughly one million metric tons and 680,000 metric tons of Ecuadorian bananas, respectively,361 the United States and the European Union should be able to guarantee that trade provisions governing the import of Ecuadorian bananas include provisions that ensure respect for the labor rights of banana workers in Ecuador. Nevertheless, because of the current structure of U.S. and E.U. tariff arrangements for the importation of Ecuadorian bananas, such conditionality is likely precluded by the terms of the World Trade Organization (WTO), of which the United States, E.U. countries, and Ecuador are members.
In the United States, Ecuadorian bananas enter unconditionally duty free under column one of the Harmonized Tariff Schedule (HTS), published by the United States International Trade Commission. The HTS provides the applicable tariff rates for all goods entering the United States, and, in particular, in column one establishes the general tariff rate for countries that have normal trade relations (NTR) with the United States.362 Ecuadorian goods covered by the United States Generalized System of Preferences (U.S. GSP) or the Andean Trade Preferences Act (ATPA), to which Ecuador is party, may enter the United States duty free only if the exporting country has taken or is taking "steps to afford internationally recognized worker rights . . . to workers in the country."363 But there is no such requirement for goods, like bananas, entering the United States unconditionally duty free under the Harmonized Tariff Schedule.
From 1993 through June 2001, the European Union's importation scheme for bananas was characterized by complicated tariff-rate quotas-tariffs that vary according to the volume of bananas imported-as well as complex licensing schemes, and, at times, various country-specific quotas. These provisions were successfully challenged before the WTO. In July 2001, after several WTO rulings that the European Union's system did not comply with WTO norms, the European Union began a process to transfer to a pure tariff system for the importation of bananas by 2006. Ecuador's tariff access to the E.U. market for bananas, like the U.S. market, is not influenced by Ecuador's protection of internationally recognized labor rights, as fresh bananas are not covered by the European Union's GSP legislation;364 the European Union has not negotiated an independent trade agreement with Ecuador; and Ecuador does not qualify for the European Union's tariff benefits for "least developed countries."365
As stated, Human Rights Watch believes that linking tariff benefits and workers' rights is critical to the promotion of internationally recognized labor rights. However, governments' WTO obligations may prevent such linkage. Under the WTO, a member country may provide more favorable treatment to another's products under regional free-trade agreements, like the ATPA, or under special trade regimes for developing countries, like GSP.366 But, under articles I and XII of the General Agreement on Tariffs and Trade (GATT), a country must treat a product from one WTO member country neither more nor less favorably than that same product from another WTO member country in most other cases.367 Since U.S. and E.U. tariff rates governing the importation of Ecuadorian bananas are established neither by trade agreements nor by trade regimes for developing countries, the United States and the European Union are likely precluded from revoking duty-free treatment or providing less favorable treatment for Ecuadorian bananas based on labor rights abuses in that country's banana sector. Unless article XX of the GATT, the WTO provision allowing a country to restrict importation of a product to protect public morals or human health, is interpreted to permit import restriction based on the export country's failure to protect internationally recognized workers' rights, the United States and the European Union have little leverage with which to demand that Ecuadorian bananas eaten by their consumers are not produced by workers whose labor rights are violated.368
European Union Banana Importation Regimes
In 1993, the European Union introduced the Common Market Organization for Bananas, attempting to unify an assortment of bilateral trade agreements among individual E.U. member states and their African, Caribbean, and Pacific (ACP) former colonies.369 The agreements provided preferential quotas for all supplier ACP countries and, in addition, special licensing treatment and individual country quotas for the twelve traditional ACP banana suppliers-Belize, Cameroon, Cape Verde, Ivory Coast, Dominica, Grenada, Jamaica, Somalia, St. Lucia, St. Vincent, the Grenadines, and Suriname.370 All ACP countries enjoyed duty-free treatment up to their quota limits.371 Non-ACP countries, including Ecuador, enjoyed the less beneficial "Most Favored Nation" (MFN) tariff.372 This preferential treatment protected ACP banana producers, typically small family farms with difficult terrain, which would have had difficulty competing with flat and fertile Latin American plantations with highly integrated marketing and production.373
Latin American banana-exporting countries objected to this special treatment, however. Colombia, Costa Rica, Nicaragua, and Venezuela negotiated a Framework Agreement on Bananas (BFA) with the European Union, which entered into force in 1995 and provided each nation with a country-specific import quota.374 In exchange, the four countries agreed not to bring a case against the European Union before the WTO until 2002.375 Nevertheless, Ecuador, Guatemala, Honduras, Mexico, and the United States, not part of the BFA, filed a complaint before the WTO in 1996, alleging that the E.U. regime for importing bananas violated the GATT. A panel report issued by the WTO on September 9, 1997 agreed and ordered the import regime amended.376 In October 1997, the WTO's appellate body affirmed the panel's conclusions.377
In an attempt to comply with the WTO ruling, the European Union revised its banana importation regime in January 1999.378 The new system continued to rely on tariff-rate quotas and complex licensing schemes but allocated over 90 percent of non-APC country quotas to the "substantial suppliers" of E.U. bananas, with Ecuador receiving 26.2 percent, Costa Rica 25.6 percent, Colombia 23.0 percent, and Panama 15.8 percent.379 This new scheme, however, was also found to violate the WTO, and in April 1999, the WTO authorized the United States to impose trade sanctions of U.S. $191 million against the European Union, which the United States did.380 In March 2000, Ecuador also sought and obtained authorization to impose sanctions but abstained from using them.381
After protracted negotiations, on April 11, 2001, the United States and the European Union agreed on a new E.U. banana importation regime, and the United States agreed to suspend sanctions and work to secure WTO authorization for the agreement.382 Through a two-stage process involving shifting tariff-rate quotas and licensing allocations based on companies' histories of supplying the European Union and their import/export practices,383 the new importation scheme is designed to phase in a tariff-only system by 2006.384 Until 2006, however, traditional ACP countries will continue to have their own tariff-rate quota and licensing preferences, but all individual country quotas are abolished.385 After initially objecting to this plan, Ecuador reached an agreement with the European Union, which, though not altering the structure of the new trade regime, addressed Ecuador's primary concerns by designing a system for allocating import licenses to protect Ecuadorian small and medium producers' license access.386 In return, Ecuador forfeited its right to impose sanctions on the European Union and abandoned its efforts to prevent the European Union from obtaining a WTO waiver to allow temporary preferential treatment of ACP countries.387 Under the tariff-only system, scheduled to begin in 2006, Ecuador will compete freely against other banana-producing countries for access to the E.U. market, as it does now for U.S. market access.
361 Human Rights Watch telephone interview, Robert Miller, USDA. In 2000, these totals constituted approximately 24 percent and 17 percent of Ecuador's banana exports, respectively.
362 United States International Trade Commission (USITC), "Harmonized Tariff Schedule of the United States (2001)," USITC Publication 3378 (2001), chapter 8-3; USITC, "Andean Trade Preferences Act: Impact on the United States," USITC Publication 3234 (September 1999), pp. 69, 75. NTR is the norm in the United States' bilateral trade relationships, and the U.S. has extended NTR status to all WTO members as well as most other nations. International Trade Data System. (August 17, 2001). Normal Trade Relations. [Online]. Available: http://www.itds.tread.gov/mfn.htm [September 10, 2001].
363 19 U.S.C. § 2462(b)(2)(G); 19 U.S.C. § 3202(c)(7). "Internationally recognized worker rights," in this context, are defined to include the right of association; the right to organize and bargain collectively; a prohibition on the use of any form of forced or compulsory labor; a minimum age for the employment of children; and acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health. 19 U.S.C. § 2467(4). In addition, goods covered by U.S. GSP may enter the United States duty free only if the exporting country has also "implemented its commitments to eliminate the worst forms of child labor." 19 U.S.C. § 2462(b)(2)(H).
364 As in the United States, fresh bananas are not covered by the European Union's GSP regime, though plantains, fresh and dried, and dried bananas are covered. Under this regime, GSP benefits may be withdrawn in cases of slavery, forced labor, "serious and systematic violation of the [right of] freedom of association, the right to collective bargaining or the principle of non-discrimination in respect of employment and occupation, or use of child labour, as defied in the relevant ILO Conventions," or if exported products were made with prison labor. Council Regulation (EC) No. 2501/2001, December 10, 2001, Articles 4, 26; Annex IV.
365 Council Regulation (EEC) No 416/2001, February 28, 2001, Annex IV.
366 WTO. (No date). Relevant WTO provisions: descriptions. [Online]. Available: http:///www.wto.org [September 10, 2001].
367 General Agreement on Tariffs and Trade, July 1986, Articles I:1, XIII: 1.
368 Ibid., Article XX (a), (b).
369 Council Regulation (EEC), No. 404/93, February 13, 1993.
370 Raj Bhala, "The Bananas War," 31 McGeorge Law Review 3 (2000), in Raj Bhala, International Trade Law: Theory and Practice (Danvers, Massachusetts: Matthew Bender & Company, Inc., 2000), p. 1466. The system distinguishes among the traditional ACP countries, listed above; non-traditional ACP countries, such as the Dominican Republic, Ghana, and Kenya; and non-ACP countries, which encompass all other countries, including those in Latin America.
371 Ibid., pp. 1465, 1469-70.
372 Roland Herrmann, Marc Kramb, Christina Monnich. (December 2000). Tariff Rate Quotas and the Economic Impacts of Agricultural Trade Liberalization in the WTO. [Online]. Available: http://www.uni-giessen.de/zeu/DiscPap1.pdf [July 31, 2001], p. 15.
373 See, e.g., House of Commons. (January 14, 1998). Select Committee on European Legislation: Sixteenth Report. [Online]. Available: http://www.parliament.the-stationery-off [July 31, 2001].
374 Costa Rica received 23.4 percent, Colombia 21.0 percent, Nicaragua 3.0 percent, and Venezuela 2.0 percent of the quota for third-country banana suppliers. Herrmann, Kramb, Monnich. (December 2000). Tariff Rate Quotas and the Economic Impacts of Agricultural Trade Liberalization in the WTO. [Online]. . . . , p. 17.
375 Bhala, "The Bananas War ," . . . , pp. 1464, 1469.
376 European Communities-Regime for the Importation, Sale and Distribution of Bananas: Ecuador's Complaint: Report of the Panel, WTO Doc. WT/DS27/R/ECU, May 22, 1997.
377 European Communities-Regime for the Importation, Sale and Distribution of Bananas: Report of the Appellate Body, WTO Doc. WT/DS27/AB/R, September 9, 1997, pp. 162-63. The WTO found that among the violated provisions were GATT Article XIII:1, which states that a country may not restrict the importation of a product from one member without similarly restricting importation of that product from all other members, and the Most Favored Nation clause, Article I:1, which requires that any "advantage, favour, privilege or immunity" granted to one country with respect to a certain product be granted to all member countries with respect to that product. Ibid.; GATT, Articles XIII:1, I:1.
378 "US Government and European Commission Reach Agreement to Resolve Long-Standing Banana Dispute," European Union News Release, April 11, 2001.
379 Herrmann, Kramb, Monnich. (December 2000). Tariff Rate Quotas and the Economic Impacts of Agricultural Trade Liberalization in the WTO. [Online]. . . . , p. 17; World Bank, Project SICA, Agricultural Information, System Ministry of Agriculture and Livestock-Ecuador. (No date). Regime on Principal Markets: The Banana Regime of the European Union in Force as of January 1, 1999. [Online]. Available: http://www.sica.gov.ec/ingles/cadenas/banano/docs/reglam1637.htm [August 1, 2001].
380 "US Government and European Commission Reach Agreement . . . ," European Union News Release.
381 Eliza Patterson, "The US-E.U. Agreement to Resolve the Banana Dispute," ASIL Insight: US-E.U. Banana Dispute Agreement, April 2001.
382 "US Government and European Commission Reach Agreement . . . ," European Union News Release. The United States lifted sanctions on July 1, 2001. "USTR Removes Duties on E.U. Goods Imposed in Banana Dispute," Market News International, July 2, 2001.
383 "Understanding on Bananas," European Union Press Release, April 30, 2001.
384 Patterson, "The US-E.U. Agreement . . . ," ASIL Insight: US-E.U. Banana Dispute Agreement.
385 "Understanding on Bananas," European Union Press Release.
386 Ibid.; "Commission Approves Banana Regs. After Settling with Ecuador," Inside U.S. Trade, May 4, 2001, p. 19. Dole, Ecuador's second largest exporter, had also objected to the licensing scheme because license allocation, until December 2003, is to be based on E.U. market share between 1994 and 1996, a period during which Dole's importation of Ecuadorian bananas in the European Union was significantly lower than in later years.
387 "Understanding on Bananas," European Union Press Release.