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Commentary: This Banana War Is No Laughing Matter

News: Analysis & Commentary

Commentary: This Banana War Is No Laughing Matter

Is this U.S. trade policy--or a comic opera entitled Revenge of the Banana Republics? Hard to tell these days, as the U.S. and the European Union rattle sabres at each other over a tropical fruit. It might well be amusing--if there weren't a serious issue at stake.

In this real-life burlesque, the Clinton Administration is threatening to slap 100% tariffs on Scottish cashmere sweaters and Italian cheeses, as well as European biscuits and bed linens. The penalties are in retaliation for EU policies that favor imports from former European colonies in Africa and the Caribbean. Among the characters in this drama: Carl Lindner, president of Cleveland-based Chiquita Brands and a major financial backer of President Clinton's. The EU claims that President Clinton is paying off a political debt. The U.S. says the EU through quotas is protecting Fyffes, the Irish banana importer, and Europe's farm sector.

Caught in the middle is the Geneva-based World Trade Organization. The banana brouhaha is taxing the 138-member WTO's fledgling dispute-settlement process just as the WTO is establishing legal precedents to govern far larger trade cases."ESSENTIAL." So while the banana case itself may seem trivial, there is a real principle at stake. As President Clinton noted at a Mar. 5 news conference: "We cannot maintain an open trading system, which I am convinced is essential for global prosperity, unless we have rules that are abided by."

It's crucial that the WTO rules get respect because bigger trade issues are looming. They include the EU's bans on U.S. beef that has been produced with growth hormones and on some older U.S. aircraft engines outfitted with new mufflers. Also on the table are European standards for a new generation of cellular phones, as well as labeling and licensing requirements to warn consumers about genetic alteration of food.

Wherever the WTO comes down on those issues, its members have a right to expect compliance. The U.S. dutifully took the banana case to the court six years ago and won three clear rulings against the EU, the latest from the WTO in 1997. But the EU has been slow to comply. It was given until this January to conform to the decision, pay damages, or face retaliation. Instead, the EU rejiggered its rules only slightly and sought further delay.

The EU and the U.S. now await a ruling on the banana brawl on Apr. 12. If the EU loses, it should drop its quotas. And even if the U.S. loses, it should insist that in future cases, the same WTO trial judge should rule on whether subsequent reforms satisfy the judgment.

The WTO is at a crossroads. It can evolve into an effective arbiter of fair trade, or fail--as did its predecessor, the General Agreement on Tariffs & Trades. As the world's two trading giants, the EU and the U.S. must keep that from happening by reaching a compromise. With so little at stake in actual trade in bananas, complying with a WTO ruling on this matter shouldn't be so hard.By Paul Magnusson

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