They must be bananas

Date: 28/01/1999

WINSTON Churchill once told an American president that “to jaw-jaw is always better than to war-war”. The ludicrous escalation of the banana dispute between the EU and the US over the past week provides a classic illustration of the wisdom of one of the former British prime minister's better aphorisms.

Amid all the talk of trade wars, it is easy to forget that the whole spat is about a mere h450-million worth of sanctions out of an annual commercial flow between the world's two dominant trading powers which tops h2,500 billion. Unfortunately, there are no angels to side with.

The EU's banana import regime is most definitely discriminatory, even though it was devised with the best intentions of looking after poor independent growers in Dominica, St Lucia and St Vincent. Four GATT dispute-settlement panels have ruled against the Union and, even though the regime has now been rejigged, there is no guarantee that this will not happen again in April.

Washington, which has complained long and hard about this roadblock to free trade, is once again polishing off two pieces of unilateral trade artillery and - at the very least - giving the appearance of acting in the interests of Democratic Party donor, Chiquita Brands International. Again, the backdrop to this should not be forgotten: US-run multinational banana-growers already account for 65&percent; of the EU market while Caribbean producers have just 9&percent;.

Is this dispute really so important that it is worth filling the newspaper headlines every day with talk of trade wars at a time when a round of currency devaluations in Asia, Russia and Latin America have revived the ugly threat of protectionism? What kind of signal does it send when the two architects of the WTO appear to be intent on undermining the spirit of the organisation?

It is amazing that, at a time of heightened international trade tension, the US president should give an executive order to resurrect the much-feared Section 301 of the 1988 Omnibus Trade Act. 'Super 301', as it is known, was once described by former US Trade Representative Carla Hills as a “crowbar” to prise open markets unfairly closed to American products. The current holder of that job, Charlene Barshefsky, is salivating at the prospect of being able to use Super 301 and Title VII of the same act to “open markets, enforce agreements and promote US trade interests around the world”.

Listening to this rhetoric, France could be forgiven for wondering whatever happened to 'Europe's 301' - the beefed-up New Commercial Policy Instrument promised by Trade Commissioner Sir Leon Brittan as a price for accepting the Uruguay Round settlement in December 1993. The WTO is only as strong as the political commitment of its two most important founders and members. It is time for Brittan and Barshefsky to get around a table and bring an end to this ruinous dispute.