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Executive Summary
There are three reasons why Ecuador should request a 21.5 panel. First, banana is a vital industry for Ecuador, so that it cannot leave the solution in the hands of others. Second, Ecuador does not have a real ¡§free rider¡¨ opportunity in the banana dispute, since the US¡¦s interests deviate from Ecuador¡¦s best interests. Therefore Ecuador cannot solely rely on the US to fight with EU. Third, Ecuador has played an assertive role in the banana dispute in the past. To be consistent and to maintain credibility, Ecuador has to file as long as EU import regime for bananas has not been compliant with WTO rulings.
If Ecuador does request a 21.5 panel, EU will fight back. At the same time, the US and other Latin American banana exporting countries would join Ecuador aiming at dismantling barriers to trade. By filing, the compliance issue would be put onto WTO¡¦s agenda and EU would be pressured to seek for a solution within certain time frame.
Filing the 21.5 panel would tighten the tension of the bilateral relationship between Ecuador and the EU. As the US government is pressurized by powerful multinationals, such as Chiquita, it would probably place retaliatory duties on European imports, which would lead to job loss in European exporting industry. At the same time, Caribbean economy could collapse if the EU¡¦s preferential treatment is whipped away without giving enough time for Caribbean to adjust. The wider importance of the banana trade dispute is that with the basis of EU trade now shaped by the rulings of the WTO and the consolidation of trade l ...