ECUADOR WANTS USG TO JOIN WTO BANANA DISPUTE

UNCLAS QUITO 000377 SIPDIS SENSITIVE SIPDIS USTR FOR MARK MOWREY GENEVA PASS USTR E.O. 12958: N/A TAGS: ETRD EAGR ECON EC SUBJECT: ECUADOR WANTS USG TO JOIN WTO BANANA DISPUTE REF: 06 Quito 2513 ¶1. (SBU) Ecuador will request the formation of a WTO dispute settlement panel to hear Ecuador's complaint against the current EU banana regime. Ecuador would like to see the U.S. join the case as a full partner, since it believes that U.S. participation is necessary to secure EU compliance with a WTO decision. End summary. ¶2. (SBU) Under Secretary for International Economic Policy Fernando Yepez told EconCouns on February 14 that the GOE has decided to request the formation of a WTO dispute settlement panel to consider Ecuador's complaint against the current EU banana regime. Ecuador requested consultations with the EU in November (reftel),and after inconclusive consultations in December and January the GOE believes that it needs to move forward with the dispute settlement process to maintain pressure on the EU to lower its tariff on Latin bananas. Yepez said that the Ministers of Agriculture, Industry, and Foreign Affairs approved the decision to move forward with the WTO case on February 13 and he had just requested that the GOE's U.S.-based attorney prepare Ecuador's submission. ¶3. (SBU) Yepez noted that time is not on Ecuador's side. He said that he understands that the EU is likely to conclude a free trade agreement (FTA) in 2008 with the ACP (African, Caribbean, and Pacific) countries that would grant the ACP countries preferential access to the EU in the context of an FTA. An EU-ACP FTA, he said, would undercut Ecuador's main arguments against the current EU banana regime. Therefore Ecuador is anxious to maintain pressure on the EU to lower its tariffs on Latin bananas before the EU-ACP trade agreement enters into force. ¶4. (SBU) The GOE hopes to request the formation of a dispute settlement panel at the February 20 meeting of the Dispute Settlement Body (DSB). However, Yepez said, he believes that agenda for the February 20 meeting may already be closed. If so, Ecuador may request an extraordinary DSB meeting or may have to wait until the March DSB meeting. ¶5. (SBU) Yepez urged the United States to join with Ecuador as a full partner in the case, rather than continue as a third party. He noted that only original parties to the initial WTO banana case can be full parties to the current case. Of the initial group (U.S., Ecuador, Mexico, Honduras, and Panama) that could join Ecuador, he said, the U.S. is the one country with sufficient weight to force the EU to take notice. He added that if the case reaches the retaliation phase, U.S. participation as a full party would be particularly important since the size of the U.S. market would be critical leverage in securing compliance from the EU. JEWELL