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Unit 10: GATT, WTO and Indian Economy

before the banana trade in that part of the world attains the normality that is envisaged Notes
under the WTO regime. Until such time, a tariff quota system will not only continue but
will be weighted in favour of bananas from the ACP countries.
Pre-Doha Position
The case raised the following issues and questions till the period before the Doha
Ministerial:
Though the arbitrators found that the level of nullification and impairment suffered by
Ecuador amounted to US$201 million per annum, the ‘victory’ for Ecuador may be
bittersweet in view of the lengthy period of the case. The victory can also be termed
bittersweet because the gains can be calculated only from the date of adoption of reports
in the DSB. Incidentally if the net private capital inflows for Ecuador in 1997 were $829
million, it was minus $91 million for Cote d’Ivoire in the same year.

Moreover, in the case of Ecuador, the DSB asked the country to seek recourse to others
sectors of the same Agreement or other WTO Agreements for putting into effect the
suspension of concessions. The policy makers should perhaps begin to think of putting in
place rules that would enable direct transfer of funds equivalent to the nullification and
impairment in the case of developing countries.
Article 22 of the DSP on ‘Compensation and Suspension of Concessions’ makes mention of
compensation but that it “is voluntary and, if granted, shall be consistent with covered
agreements”. The compensation clause can become mandatory in the case of developing
and particularly ‘small’ countries. The awarding of costs to developing countries can also
be considered, with the costs taking the form of training to law-makers. The legal expenses
in hiring outside experts and firms can become substantial over long periods of dispute
hearings.
The dispute took more than eight years in the making due, in part, to Ecuador’s request
that the same Original Panel hear the subsequent dissatisfaction with the EC measures.
There is always the potential for further prolonging of the case if a third party decides to
use Article 10.4 on ‘Separate Dispute by Third Parties’ which states that “if a third party
considers that a measure already the subject of panel proceedings, nullifies and impairs
benefits accruing to it under any covered agreement, that member may have recourse to
normal dispute settlement procedures under this undertaking. Such a dispute shall be
referred to the original panel wherever possible and thus leading to the possibility for
interminable prolonging of a dispute”.
Lastly, though it is acknowledged that substantial monetary impact, especially on small
and developing countries, is evident in such cases; perhaps the time has come to include an
article on frivolous disputes and appeals in the Dispute Settlement Procedures.
Post-Doha Situation

The Doha Decisions of November 14 are on two accounts:
(a) European Communities – the ACP-EC Partnership Agreement.
(b) European Communities – Transitional Regime for the EC Autonomous Tariff Rate
Quotas on Imports of Bananas.
The decisions can be broadly summed up as follows:
(a) Article I of the WTO Agreement, the MFN treatment, has been waived for the imports
of bananas into the EC from countries covered under the Cotonou Agreement.
Contd...

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