It's Bigger Than Bananas
For some reason, the word "banana" sounds funny: Woody Allen named one of his movies Bananas. But going bananas over the trade in bananas, as the U.S. and the European Union are doing, is a serious matter. The global economy is in a fragile state, protectionist fires are burning in Congress, and the last thing anyone needs is a trade war.
To listen to the howls of EU Trade Commissioner Sir Leon Brittan, one would think the U.S. had torpedoed the entire free-trade system by imposing tariffs on European luxury goods in retaliation for what it sees as discrimination against bananas distributed by U.S. companies. How could Washington be so petty over $520 million worth of trade, in a flow of goods and services across the Atlantic totaling $400 billion? Isn't it all about Chiquita making donations to the Democrats?
Not at all. U.S. patience with Europe snapped because the EU deliberately refused to comply with two rulings by the World Trade Organization to stop discriminating against U.S. banana distributors. The EU used loopholes in the WTO's dispute-settlement procedures to delay implementing the decision. Sir Leon wanted the U.S. to wait until a third WTO ruling was made in April, and even then there was no guarantee the EU would abide by it. The simple truth is that the EU has not been acting in good faith and is undermining the credibility of the WTO. The first U.S. complaint was in 1995. It shouldn't take four years to adjudicate bananas.
There's more. The EU refuses to permit the sale of hormone-fed U.S. beef, even though European scientists have said it is safe. And the EU is proposing new aircraft noise regulations that would discriminate against the U.S. aircraft industry, even though Airbus Industrie sides with Washington.
There is a dangerous subtext to this growing conflict. Sir Leon called the U.S. a "rogue nation." Jacques Chirac recently described America as "hegemonic." Even as European companies seek closer ties to the U.S., Continental politicians are defining Europe in opposition to America. The euro, for example, is portrayed as a rival to the dollar, not just a new currency.
A unified Europe must shoulder global responsibilities commensurate with a new global attitude. Right now, the U.S. is the sole economic locomotive for growth. Its huge trade deficit absorbs the exports of Asia and Latin America. Europe, in contrast, is running a $100 billion trade surplus. In these circumstances, it is unseemly for the EU to defy WTO rulings with a wink and a nod.
Nations have genuine differences over trade, especially the health and safety of food, but they must be solved in a credible, efficient, and transparent way. It may be that the WTO should streamline its enforcement mechanisms. But in its short lifetime, it has proved its value time and again. End the banana war before something really serious happens.