US Wins 'Bananas War,' but Britain Makes Appeal

Britain is girding for battle to save the Caribbean banana.

But promises by Agriculture Minister Jack Cunningham to "do all I can" to fight a World Trade Organization (WTO) ruling that the European Union (EU) must end special favors to the fruit's Caribbean producers may prove difficult to honor.

His task is being made no easier by the EU's decision last month to accept the WTO ruling, despite objections from some EU members, including Britain.

What economic analysts are calling the "banana wars" arise from a clash over new rules scheduled to take effect in January 1999. The rules would end four-year-old special quota arrangements under which the EU imports bananas from the Caribbean.

The governments of small Caribbean states such as St. Lucia, St. Vincent, and Dominica, say an end to the quotas would mean misery for their people. Banana exports represent between 40 and 50 percent of the three islands' total exports.

Dominican Prime Minister Edison James says, "Unless the WTO ruling is overturned, it will devastate our countries. Social and economic unrest will become inevitable."

But to Latin American producers, such as Ecuador, one of the world's biggest banana exporters, the situation looks very different. Alfredo Pinoargote, Ecuador's EU ambassador, claims Caribbean producers are inefficient. "Latin American farmers use mechanized production methods and harvest bananas at around $160 a ton," he says. "In the Caribbean, where small farms predominate and picking by hand is common, the cost can be $500 a ton."

Politics are also mixed up in the banana wars. The US multinational Chiquita is heavily involved in the Latin American banana trade. The Clinton administration backed demands last year by Chiquita to end special treatment for Caribbean producers. The WTO went along.

On bananas, Europeans are divided in their tastes: Britain, France, and southern European states tend to favor the smaller, curved fruit from the Caribbean. Germans and Scandinavians prefer the so-called "dollar banana" from Latin America, which is larger, yellower, and less sweet.

A European Commission official says, "Thanks largely to heavy consumption by Germans, Chiquita and Del Monte already have a big slice of the European market. People who prefer dollar bananas, but cannot obtain them, complain at having to pay a premium price for fruit from the Caribbean."

In his fight on behalf of the curved banana, Agriculture Minister Cunningham says he plans to convene a regional forum in February or March to discuss the economic and social problems facing Caribbean nations.

To succeed, however, Britain and its supporters will have to persuade the EU to find a way to keep Caribbean bananas flowing.

One possibility is for the EU to pay compensation to Latin American governments in lieu of an expansion of their European banana trade.

But during a recent visit to Britain, Ecuador's President Fabian Alarcon said the EU had "an international obligation" to implement WTO rules. "We would not accept any kind of compensation," he declared. "Bananas are our life."