News media around the world lauded the armistice in the six year “Banana War” that was signed on 11 April 2005 by the United States and the European Union. But much of the reporting about this event glossed over the complex geo-political and economic relationships that fueled this conflict and ignored lingering issues that are bound to cause internal strife for a number of the more marginal warring parties.
The United States and its Latin American banana-exporting allies launched the first salvo in this war in 1999 when they filed a trade complaint with the World Trade Organization (WTO). They sought a ruling that trade preferences granted by the EU (pursuant to special agreements under The Lomé Conventions) to banana imports from its former African, Caribbean and Pacific colonies (ACP states) discriminated against Latin American growers and US multinational corporations like Dole and Chiquita Brands. In addition, they sought a WTO declaration that retaliatory US sanctions against the EU would be legitimate.
A war over Bananas? Yes. Because it’s a commodity as vital to the economies of some countries in the Caribbean as oil is to the economies of some countries in the Middle East!
These trade preferences – which had been in effect since June 1993 – placed economically prohibitive restrictions on the amount of bananas allowed into the EU from any country that was not an ACP state. And, even though it codified their colonial dependency, the ACP states welcomed the EU banana quota system as a life raft to keep their economies afloat.
Nevertheless, media reports casting this as a fight which pitted the US and its de facto colonies in Latin American against the EU and its ACP states were premised, well, on banana peels. Because, the adversarial relationships among the parties involved in this war were far more dynamic and amorphous.
For starters, the US filed complaint against the entire EU only because of the EU’s unified trade policy. In fact, within the EU camp, the US had a sympathetic ally in Germany who was embroiled in a factional fight against France, Spain and Britain because it harbored no paternal obligations to the ACP states and felt unfairly penalized by the new EU preference regime. Indeed, Germany complained that it was having to pay higher prices for bananas from the ACP states that were inferior in quality to the much cheaper bananas they had grown accustomed to importing from Latin America.
But this was hardly the only factional conflict. In Latin America – soon after the EU preferences took effect – Costa Rica, Venezuela, Colombia and Nicaragua entered a “Framework Agreement” with the EU which granted them partial increases in their quotas for banana exports to the EU. Naturally, this angered their erstwhile regional allies (Guatemala, Ecuador, Panama and Mexico) who accused the signatories to this agreement of selling-out.
(Incidentally, struggles within Costa Rica itself – between environmentalists who wanted to scale back banana production and the multinational banana traders who weighed in on the quota increases – only made its internal strife much more severe.)
Conflict also prevailed at the corporate level pitting US based Chiquita and Dole against their European rivals because the EU preferences enabled the EU based multinationals to take banana market share from Chiquita and Dole – whose banana plantations are spread throughout Latin America).
(Ironically, this conflict even produced fissures within the Clinton Administration as it sought to champion the cause of its rich multinationals while maintaining diplomatic comity with Europe. The more unsettling conflict, however, was over this administration’s betrayal of its professed Democratic mission to champion the cause of the poor against exploitation by amoral corporations.)
And, finally, there was a South / South conflict that had Latin American growers and ACP growers fretting over which of their economic colonial masters would succeed in guaranteeing markets for their produce.
These internal tensions were real and only became more exacerbated when the WTO ruled (in 1999) that the EU banana trade preferences violated international trade rules and that US retaliatory sanctions would be legitimate. Because, in addition to awarding millions of dollars in damages, that ruling permitted the US to target a variety of European products on which it imposed a 100% tariff “until the EU ensures that its banana regime is fully compliant with the WTO ruling”.
Therefore, for the past six years while the ACP states enjoyed the fruits of their banana preferences, banana growers in Latin America and small businesses in America and Europe have struggled to survive. Because, even though precipitated by a dispute over bananas, the tariff hit list drawn up by the Clinton Administration adversely impacted many other exports to the US market including British linens, Danish hams, Scottish cashmere sweaters, Italian cheese, French handbags and German coffee makers.
But with last week’s announcement of a cessation of declared hostilities, some of the combatants will likely experience a significant reversal of fortune (or misfortune as the case might be). Generally, the terms of the settlement call for the US to suspend the tariffs on EU exports by 1 July of this year. And, conversely, they require the EU to phase out its banana preference regime so that it is entirely abolished by 1 July of next year (which for some ACP states is like granting a one year stay of execution).
Caribbean banana growers sorting their indispensable national product for export to their colonial market…
Indeed, under these terms, the former British colonies (namely: Belize, Jamaica, Suriname, Dominica, St. Lucia, St. Vincent and Grenada) face imminent internal strife. Because, in these countries – especially the Windward Islands – banana production is a main source of earnings and employment. For example:
“The four islands that comprise the Windward Islands have a combine population of just under 500,000 people. On the island of St. Lucia, 60,000 people depend on the banana industry to earn their daily living. This is over one-third of the population. In Dominica 33 percent of the labor force and 70 percent of the population of St. Vincent is directly or indirectly involved in the production of bananas. Overall, 30 percent of the land in the Windward Islands is under banana cultivation.”
Unfortunately, despite cautionary notices to diversify, these countries remain dependent almost entirely on banana exports. Therefore, the loss of EU preferences EU will lead inexorably to destabilizing unemployment, poverty and, probably, the kind of political instability currently plaguing Haiti.
Nevertheless, as internal strife permeates the ACP states, the US victory in this war may seem more and more pyrrhic. After all, if banana growers in these countries have no markets for their crops, they may resort to alternat
ive development schemes like growing substitute crops that remain very much in demand in the US – despite the WTO and American law. (And, they need only look to the cocoa growers in South America or, indeed, marijuana growers in Jamaica for inspiration and guidance.) In addition, many of the newly unemployed in the former British colonies may well take to the Caribbean Sea to seek refuge in America – like desperate Haitians have been doing for years.
And so blows the winds of war…
News and Politics
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