Bananas, Beef and Biotechnology
Granville, Brigitte, The World Today
Tocqueville questioned America's ability to conduct a successful foreign policy because of the tendency of a democracy to `obey its feelings rather than its calculations and to abandon a long matured plan to satisfy a momentary passion.' Have the Americans and Europeans developed such a passion for bananas?
AT FIRST GLANCE THE DISPUTE SEEMS COMIC, and makes one wonder if the world has not been hit by a banana bug on the eve of the millennium. A world trade war has started about a fruit that neither of the two trading blocs produces accounting for only $525 million of trade while total world trade is estimated at $400 billion annually.
Unfortunately bananas are becoming the trade mark of the Clinton administration and the new Euroland. The case threatens the global commercial policy that Europe and the US have conducted for the last forty years, endangering not only bilateral trade relations but the whole global trading system.
Trade policy is usually determined by conflicts of interest within nations, rather than between them. Unfortunately the relative power of different interest groups within states, rather than some measure of overall national interest, is the main deciding factor in government policies toward international trade. This dispute is no exception. Narrow domestic commercial interests are strong on both sides.
The US claims that the regime which favours fruit from former British and French colonies in Africa, the Caribbean and the Pacific, discriminates against American distributors of cheaper Latin American brands, such as Chiquita based in Cincinnati, Ohio .
A weak US administration which has just survived impeachment, seems keen to honour its political debt to Carl Linder, the powerful head of Chiquita whose lavish contributions have earned high-level political influence. The newly elected Congress wants to show voters that the EU and others are being held to their World Trade Organisations (WTO) obligations.
SAVE OUR JOBS
When the US administration is weak, even a small slowdown in growth with an increase in unemployment, could swing the country towards protectionism. America's trade and current account deficits will probably hit $300 billion this year. Therefore any reduction in growth could trigger strong protectionist pressure from industries of central importance to Europe.
The US steel industry leads the way exploiting the lack of leadership in trade liberalisation. It had Japan and Brazil fighting off charges of dumping and Russia agreeing to 'voluntarily' cut steel exports to the US.
Other industries could follow: machine tools, semiconductors, shipbuilding, textiles, apparel and some agricultural sectors. Many of these items are imported from Europe, so this could seriously threaten US-Europe relations especially since Europe is so seriously hit by unemployment.
Europe seems to be playing the noblesse oblige card for its former colonies by making its shoppers pay higher prices for post colonial bananas. It has used protectionist methods, condemned by the WTO, ostensibly to protect the interests of small Caribbean producers. In reality the regime has largely benefited banana traders. And Europe does not want to be bullied by the US.
European retaliation is on the way for the banana war, and a trade dispute over aircraft landing rights is now threatening to ban Europe's Concorde landing in the US. But worst is to come.
This year the trade dispute is a three B agenda: Bananas, Beef and Biotechnology. Bananas are only the taster for a further battle in May over the EU ban on hormone treated beef, against which the WTO has already ruled. The EU has said that it will not lift its ban. Indeed one can only wonder how Europe and the US will deal with a product which they both produce with pride.
SO FAR, SO GOOD
With the banana war, the US and Europe may destroy the WTO. Successful so far, it has dealt with one hundred and sixty-three disputes since 1995. …