Tariffs and Quotas of Product

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444 Cases
E ot nearly a decade, the EU and the United
I States were engaged in a heated trade dispute
over bananas. The EU had introduced tariffs and
quotas that discriminated in favor o[ bananas
grown in former European colonies and dependencies
located in the Caribbean and Africa. The new
rules were favorable to the European-based banana
companies, whose production was heavily located
in these preferced regions. However, the new rules
were disadvantageous to the U.S.-based companies,
such as Chiquita and Dole, that owned banana
plantations in Latin America.
Dole responded to the crisis by shifting more banana
production to West Africa. Over the next few
years, Dole's market share in European bananas
actually increased. Chiquita, however, asked the
!.S government to bring a complaint against the
EU under GATT. The United Stares wolrwo subseguent
suils, but the EU used its veto power under
CATI to avoid compliance. However, these veto
rights were rescinded under the WTO.
The WTO then ruled on the case again in favor of
the United States, calling Europe's quota system blatandy
discriminatory. This time the United States
was allowed to employ sanctions against the EU if
it failed to comply. The EU proceed{d to make whar
most observers believed to be cosmetic, ineffectual
changes to its banana importation rules. In retaliation,
the United States announced that it would ler,y 100
percent tariffs on 17 categortes of European goods,
including printed cards, cashmere clothing, .oril i",re\
ry, and chandeliers.
_ EU officials objected, claiming that the United
States was not authorized to determine whether
the EU's actions were insufficient and thus was required
to take the case back to the WTO. The U.S.
government believed this was a delaying tactic that
the EU could employ again and agiin."The WTO
supported the U.S. position and approved the retaliatory
actions.
In Europe, the U.S. sanctions were called ,,silly,'
and a "return...
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