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Banana 'war' threatens to wreck world trade system



Next thing we'll be hearing about the domino effect - if U$ "wins" this
struggle, it will "win" another, and another -- and another !!

Cheers

MichaelP


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Sunday INDEPENDENT Feb 28, 1999

Banana 'war' threatens to wreck world trade system

By Phil Davison, Latin America Correspondent

BARRING a last-minute compromise, the US will "go to war" with Britain and
the rest of Europe this week over something that may seem ridiculous to
the uninitiated - bananas.

Neither side produces them in any great numbers. They are hardly strategic
weapons. Few US or European jobs are involved in the fruit. But it is a
war which could threaten global trade at a moment when the world financial
system is creaking. If there is no agreement on bananas, beef could be
next, then cars - then forget the globalisation of world trade and it's
protectionism revisited, according to many analysts.

Some victims of the banana war will be workers in European export
industries, but the hardest-hit will be poor banana farmers from the
Caribbean islands.

On Wednesday, Bill Clinton proposes to launch trade sanctions aimed at
discouraging Europe from supporting the vital banana industries in its
former colonies. Washington plans to impose crippling 100 per cent tariffs
on more than half-a-billion dollars' worth of European goods, from
Scottish cashmere sweaters to French handbags.

That could mean major layoffs in Europe, including 1,000 textile jobs on
the Scottish borders. But failure to reach a deal could be life or death
to entire Caribbean nations, notably the eastern Windward Islands that
rely almost solely on banana exports. Without their banana income, farmers
and other locals may be tempted to step up marijuana production - or
become involved in smuggling Colombian cocaine.

How has it come to this? After the launch of the Common Market, Europe, in
a gesture to its former colonies, decided to give preferential prices and
quotas to Caribbean bananas. It was also healthy for the European
companies that controlled banana exports from the region. But in the early
1990s, as trade globalisation became the norm, the giant US banana
corporations questioned the European concessions. Chiquita Brands claimed
it faced losses of over $1bn (#625m).

At the behest of the company, based in Cincinnati, Ohio, but conducting
its banana production via cheap labour in Central and South America, the
US invoked Section 301 of its trade law in protest against the European
position. In 1997, the World Trade Organisation (WTO) backed the US.
Europe withdrew some of its pro-Caribbean concessions, but for the US it
wasn't enough. Hence the threat to impose 100 per cent tariffs on European
goods on Wednesday.

Caribbean leaders, who accuse the three big US bananas corporations -
Chiquita Brands, Dole and Del Monte - of pure greed, say an end to
concessions from Europe could virtually destroy their countries.

"The whole policy is driven by politics in the US," the EU Trade
Commissioner, Sir Leon Brittan, recently told the BBC. "It is driven by
the fact that Chiquita is a company that gives money to the political
parties."

The US banana corporations hardly need a greater share of exports to
Europe. They already control two-thirds of the world market. They pay
their workers in Ecuador, Guatemala, Honduras, El Salvador, Nicaragua and
Costa Rica about a quarter the rate in the Caribbean.

"The banana war is an issue of life and death for Belize," said a
spokesman for the Chamber of Commerce in the former British colony. "If
the US wins we could see it systematically move against one industry after
another. Next may be citrus, then rice, followed by sugar. We believe this
new world order should and can be accommodating to all, even small
countries who seem to have fallen off the geopolitical map."

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