Academic journal article Duke Journal of Comparative & International Law

The Application of Portugal V. Council: The Banana Cases

Academic journal article Duke Journal of Comparative & International Law

The Application of Portugal V. Council: The Banana Cases

Article excerpt

I. ABSTRACT

The Courts of the European Community (EC) considered in four recent cases the scope of the European Court of Justice (E.C.J.) judgment in Portugal v. Council that the World Trade Organization (WTO) Agreement cannot be used by EC Member States as a basis for challenging the legality of EC measures. That is to say, the WTO Agreement does not have `direct effect' in the EC legal order. The four cases discussed in this Article all addressed whether individuals could rely on WTO rules to impugn the EC's attempts to implement the Dispute Settlement Body (DSB) reports in European Communities--Regime for the Importation, Sale and Distribution of Bananas (EC-Bananas). The EC Courts responded in these cases by applying Portugal v. Council. The Courts denied the applicants the right to challenge the relevant EC measures, even where those measures had been ruled inconsistent with WTO rules by a panel convened under Article 21.5 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). This Article suggests that the EC Courts correctly concluded that although WTO members are under a soft international obligation to fully implement WTO DSB reports, the express wording and structure of the DSU means that this obligation cannot be given direct effect in the EC legal order.

II. INTRODUCTION

This Article discusses four recent decisions of the EC Courts, which will be collectively referred to as the Banana Cases: the European Court of First Instance (C.F.I.) rulings in Cordis v. Commission, (1) Bocchi Food Trade International v. Commission, (2) and T Port v. Commission (3) (the Quota Damages Cases), and the judgment of the E.C.J. in OGT Fruchthandelsgesellschaft (OGT). (4) The Banana Cases all arose from the EC's legislative efforts to implement the panel and Appellate Body reports adopted by the WTO DSB in EC-Bananas. (5)

This Article focuses on the sections of the decisions which consider the interaction between EC law and the WTO Agreement, (6) giving particular attention to the effect of adopted WTO panel and Appellate Body reports in the Community legal order. As a precursor to this discussion, it is necessary to explain briefly Portugal v. Council, (7) on which the reasoning in the Banana Cases was based.

III. CASES

A. Portugal v. Council

In Portugal v. Council, Portugal challenged the decision of the Council of the European Union to conclude (8) Memoranda of Understanding with India and Pakistan on market access for textile products. (9) These Memoranda were negotiated and concluded following the end of the Uruguay Round of negotiations, in the context of continuing WTO textile market access discussions. Among other complaints, (10) Portugal challenged the Memoranda as being inconsistent with the 1994 General Agreement on Tariffs and Trade (GATT 1994), (11) the Agreement on Textiles and Clothing, (12) and the Agreement on Import Licensing Procedures. (13)

The detailed reasoning of the case will be considered below. Most significantly, the E.C.J. held that Portugal could not rely on the provisions of the WTO Agreement, because they were not among the rules that could be used to challenge the legality of EC measures. (14) That is to say, the Agreement was held not to have direct effect within the EC legal order. Unlike the EC measures considered in the Banana Cases, those associated with the Memoranda of Understanding were not the subject of proceedings under the DSU.

B. The Quota Damages Cases

1. The Original EC Rules and the WTO Challenge. The three Quota Damages Cases arose from amendments made to the EC rules governing the allocation of banana import quotas in the aftermath of EC-Bananas. (15) Council Regulation 404/93, (16) which established the framework for the common organization of the EC banana market, originally drew a distinction between bananas produced in the EC, bananas from third countries other than African, Caribbean and Pacific (ACP) states, (17) "traditional" ACP bananas, and "non-traditional" ACP bananas. …

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