The Packer / December 25, 1995
By Larry Luxner
MIAMI -- Washington's efforts to derail the European Union's complicated banana trade regime at the expense of small Caribbean banana-producing nations "smacks of extra-territorialism" and threatens to tear apart the region's economy, warned several speakers at a recent business conference in Miami.
Edison James, prime minister of Dominica, is demanding that the United States drop its Section 301 investigation into the EU's banana trade preference program, and end its support for a World Trade Organization challenge filed in November 1994 by Chiquita Brands International and the Hawaii Banana Growers Association.
James, speaking before a packed audience at the 19th annual Miami Conference on the Caribbean and Latin America, warned that his small nation -- which along with Grenada, St. Lucia and St. Vincent comprise the Windward Islands -- might even be forced to grow illegal drug crops if trade preferences that existed long before the formation of Europe's single common market came to an end.
"The only market for the Caribbean is Europe and we will fight to hold onto this market," the prime minister warned. "If this is what free trade means, then we in the Caribbean need to think again. The stakes are too high."
For the past several months, Cincinnati-based Chiquita has been pressuring the U.S. Trade Representative's Office to take action against the European Union for continuing those benefits under the Lome Convention. The company's argument that favorable prices and quotas for Caribbean-produced bananas discriminate against Chiquita, which doesn't grow bananas in those countries. The Cincinnati company's chief ally in Congress happens to be Rep. Bob Dole (R-Kans.), a friend of Chiquita President Carl Lindner.
"Our economic and social stability depends on the special banana regime. Sadly, that regime is under threat, and that threat is being led by the United States," said James.
Neither company spokeswoman Magnes Welsh nor Manuel Rodriguez, who oversees Chiquita's Latin American operations, could be reached for comment. But the company's position on the issue is already well-known: it says trade preferences for Caribbean banana growers clearly discriminate against U.S. companies like itself which want a fair share of that market, and that the dispute is between the United States and the EU -- not an attack on the Caribbean itself.
James, who was chief of the Dominica Banana Growers Association before his inauguration as prime minister six months ago, said nothing could be farther from the truth.
"It's a totally false premise that the EU regime is designed to discriminate. Its real purpose is to support the Caribbean's vulnerable economies," said James. "It fulfills a binding commitment to producing nations that they should be no worse off under the regime than they were under the national arrangements. Seeking to remove those elements will have the immediate effect of transferring trade to the three U.S. companies which together have 40% of the market."
James added that eliminating the trade preferences "will severely damage the economies of the Caribbean, and totally destroy the Windward Islands. We cannot see how it would be in U.S. interests to bring about such turmoil."
Before 1993, Dominica and six other English-speaking Caribbean nations had duty-free access to the British banana market, in much the same way Spain, Portugal and Greece protected their own domestic industries. Under the Lome IV convention, signed in 1989, a common European banana regime was to replace individual national quotas. But putting that into practice hasn't been easy.
"The banana issue is the most complex problem I've ever come across in my life," quipped Peter Pooley, director-general of the European Commission. "Until 1992, we had seven different regimes for bananas. Under the Greek regime, for instance, no bananas could be imported until every Greek banana had been eaten. In other countries, there were various degrees of protection. With a single market, the EU was faced with bringing all these regimes together. Some 220 pieces of main legislation had to be passed through the European Parliament, but the banana regime was literally passed at the last single moment. It was also the very last matter to be settled on the very last night of the Uruguay Round."
Currently, the Windward Islands has 27,000 banana farms employing 57,000 people, or about 25% of the entire labor force. Bananas account for half of all exports and 90% of the total agribusiness industry on Dominica and St. Lucia. Said Edwin Laurent, Eastern Caribbean ambassador to the EU: "It keeps people on the land and prevents flight to cities."
Laurent, who also spoke at the Miami conference, warned that a collapse of the banana industry would lead to social unrest, increased unemployment and more emigration to the United States. He added that since the United States doesn't export bananas, it should stay out of the issue and stop trying to punish countries like Colombia and Costa Rica, which do sell bananas to the Europeans.
"We pose no threat whatsoever to U.S. commerce," he said. "It is unacceptable to try to bully these countries into abandoning the regime just because one company doesn't like it. It is our companies, not the United States, which will suffer. To say it's a dispute between the Caribbean and the EU misses the point."