Banana Wars

I'm going to be blogging a little less than normal this week. I'm working on the next chapter of my dissertation and so time for other things (apart from study and work) will be limited. But because I have the issue firmly at the front of my mind, I thought I'd do a quick blog on the 'Banana Wars' and the legal issues it raised in the EU legal order.

Earlier this month it was announced that the Banana Wars were coming to an end. A deal was reached to reduce the import tariffs on bananas from Latin America, while protecting the traditional 'duty free' entry from those African and Caribbean nations with historic links to EU Member States like the UK and France (i.e. former colonies).

The dispute over banana tariffs had resulted in significant tension between the EU and the US, whose companies have important stakes in Latin American production. It has also led to retaliation on the part of the US with higher tariffs imposed on a range of EU products (from pecorino cheese to coffee makers). It had also been the subject of legal dispute between the largest nations in the EU, with Germany in particular resorting to action in the European Court of Justice to try to annul EU legislation on banana imports on the grounds that the measures breached the Union's international law obligations.

The EU legal order has traditionally been seen as 'open' to international law. International agreements signed by the EU in its own right, or in areas where the EU has assumed the powers previously held by Member States (in trade for example) become part of EU law. That means you or I can go to our local court and argue on the basis that a national law or piece of EU law is in breach of the EU's international obligations. The international obligation has to meet a series of conditions before it is judged to have what is called 'direct effect' (that it can be relied on by individuals like us in a court case) but these conditions are pretty much identical to those in place for legislation passed directly by the EU itself.

But there is one major exception and that is what brings us back to the 'Banana Wars'. In a a famous case in the 1990s, Case C-280/93, Germany v. Council, the Court confirmed that international trade law, first GATT and then in later cases WTO law, could not be used as a basis to challenge the legality of EU legal measures. This principle had already been adopted to prevent individuals from taking the EU to court for breach of GATT rules - the Court has ruled on numerous occasions that GATT and WTO law cannot be directly effective. But in Germany v Council it extended this restriction to actions brought by Member States themselves. This set the cat among the legal pigeons and generated page after page of argument and counter argument (much of which I've had the 'joy' of reading over these past few weeks.)

The basic position is that if an EU regulation is in breach of WTO rules there is no legal route (except in a couple of very specific scenarios) for individuals or governments to challenge that breach within the EU. This is to give the EU executive room for manoeuvre in the inevitable horse-trading and discussions within the WTO. Instead of a legal solution within the EU itself, a political/diplomatic solution must be sought. The Court of Justice does not want to tie the EU Commission's hands in any deal-making: if the Court declared that an EU measure was illegal, that would effectively bring negotiations to a premature end.

Although, of course, premature might a bit of an understatement. In the case of the Banana Wars the negotiations have dragged on for many, many years. And other EU producers have been hit as a result of the retaliation. A price has been paid by many for the EU's determination to protect banana producers in the former colonies. So is this approach of the Court the right one? On balance I think yes. A solution has now been reached, which satisfies both sides. The deal specifically compensates producers in Africa and the Caribbean. And that is not something that would have happened if the Court had stepped in all those years ago and forced the EU's negotiating hand.