Is the U.S. Going Bananas?
Philadelphia Inquirer, March 18, 1999
The world’s two largest trading partners—the United States and the European Union (EU)—are edging toward the brink of a trade war over bananas.
The confrontation is escalating. The U.S. has threatened retaliatory tariffs of 100% on such seemingly unrelated items as cashmere sweaters and Pecorino cheese (but only the soft kind). From the outside, it’s starting to look a little ridiculous.
What’s going on here? Trade disputes usually involve something that affects an important domestic industry, or jobs. One might expect—although it hasn’t happened—that the U.S. government would go to the mat to defend some of the hundreds of thousands of manufacturing workers who have lost their jobs to our swelling trade deficit over the past year.
Instead, we find the Clinton administration threatening to ignite a trade war unless Europe rescinds its preferential treatment for a fraction of its banana market that is currently supplied by Caribbean and African producers.
If you are looking for logic in this story, there is some. Meet Carl Lindner, the top banana at Chiquita. Chiquita, Dole, and Del Monte together control more than 60 percent of exports of the world’s most popular fruit. But that doesn’t mean they don’t want more.
The Lindner family is worth well more than a billion dollars, and is smart enough to know that money can buy trade policy in our "money talks—everyone else walks" political system. They contributed about $1.5 million dollars to political candidates and parties in the last election cycle. And they want more of that European banana market, the largest in the world.
For decades European countries have been importing bananas, mostly from their former colonies, under special arrangements that enabled these producers to sell in a market that is dominated by the American-based giants. Without these arrangements, the 23,000 Caribbean producers, for example—mostly small farmers—would not be able to compete with the lower cost production of the big plantations.
This is partly because the big multinationals have better land (historically, often acquired by means of political violence and corruption) and more productive machinery and methods. But the big producers’ edge has also been built on massive use of some of the world’s most toxic pesticides. The results have been deadly, not only for the natural environment, but also for the tens of thousands of banana workers exposed to the poisonous chemicals. "We would know when the plantations were doing heavy spraying because we would get two to five serious cases a week," said a doctor who treated banana workers for pesticide poisoning in Costa Rica.
By reserving a share of their market—less than 20%-- for the mostly smaller producers, the European Union is allowing a less ecologically destructive form of banana production to continue. And a number of the small countries in the Windward Islands in the Caribbean—Dominica, St. Lucia, and St. Vincent—get the majority of their export earnings from bananas. While the current arrangement with the EU is not a long-term option for sustainable development, its cancellation would cause economic havoc in this region.
But the U.S. government has been trying since 1993 to get the EU to further open its banana markets (the big three already have more than 40% of even the European market). Its big victory came in 1997 when the World Trade Organization ruled against the EU. The Europeans then altered their system of preferences, but not enough to satisfy the Chiquita Administration. Hence the current showdown.
One could hardly ask for a clearer illustration of what the four-year-old World Trade Organization—and indeed our government’s whole trade and investment agenda—is really about. On their playing field, sustainable agriculture, environmental safety, and even the economic and political stability of an entire region are no match for the weight of one big corporate campaign contributor.
Other cases decided by the WTO show a similar pattern of "putting people (and the environment) last." It has ruled that the Europeans’ ban on hormone-fed beef was a violation of free trade rules, even though these health regulations applied equally to domestically and foreign produced beef. And in a case that went against our own law protecting endangered species, the WTO ruled that we could not reject imported shrimp that is caught in nets that kill endangered sea turtles.
A number of commentators here have noted that the banana war—and especially the U.S. resort to unilateral sanctions-- could undermine the credibility of the World Trade Organization.
Well, no harm there. The whole institution has a lot more credibility than it deserves, considering the narrow set of interests that it serves.