The European Union has failed to bring its import tariffs for bananas in line with international trade rules, a World Trade Organization compliance panel ruled on December10, possibly opening the door to millions of dollars in commercial sanctions brought by Ecuador.

The confidential decision - distributed Monday to the parties and confirmed by Ecuadorean and European officials - is an important development in the decade-old WTO dispute pitting Latin American countries and the United States against the EU.

After reviewing the report, an Ecuadorean official at the WTO said: "It was a total victory. We are very happy with the result."

Michael Mann, spokesman for the EU farm commissioner, Marian Fisher Boel, confirmed the loss but criticized the WTO panel for taking a "purely formalistic" approach that ignored data showing an increase in European imports of bananas from Latin America as a whole.

The WTO has consistently ruled against how Brussels sets tariffs for bananas, forcing it to overhaul a system that grants preferential conditions for producers from African and Caribbean countries, mainly former British and French colonies.

The EU claimed that a new banana tariff established last year - €176, or $258, a ton - brought its import rules in line with WTO rulings. But Ecuador, the world's largest banana producer, said the new tariff actually took away some of its market share in Europe, hurting more than one million Ecuadoreans dependent on the banana industry.

The verdict is expected to be publicly released in March, at which point the EU can lodge a final appeal.

Latin American bananas currently have around 60 percent of the EU banana market, while African and Caribbean producers have 20 percent, according to EU officials. Bananas grown in the EU - mostly on Spanish and French islands - account for another 20 percent.

The banana-tariff case was first brought to the WTO in 1996, but has since spawned a series of disputes as trade lawyers wrangled over procedural intricacies and legislation that had previously never been tested.

The United States, in 1999, and Ecuador a year later both won the right to impose trade sanctions on European goods after the WTO found the EU's rules to be illegal.

A deal in 2001 gave the EU five years to comply with WTO rulings.

International Herald Tribune