Bananas and Prosperity

Talk about biting the hand that feeds you! The United States and the European Union are not just gnashing at each other over banana imports. They are chewing away at global trade - the invisible hand that has done so much to nourish their extraordinary prosperity during the past half century.

The banana war is itself a wasteful feud. It can be ended by reasonable compromise. More on that in a moment. But three huge issues lie beyond the relatively small matter of whether the EU is freezing out banana imports from US firms in Central America's "banana republics" in favor of Europe's former colonies:

1. The world's two largest economic powers are on the brink of a tit-for-tat trade war that can easily spread and damage not just the big guys but many innocent bystanders.

2. Such a battle could quickly undermine the still-fledgling World Trade Organization, set up as a referee for just this kind of dispute.

3. It would also savage prospects for a new round of negotiations to further cut global trade barriers and extend "level playing field" rules.

As already noted, the unprecedented growth of world trade in the past 50 years is responsible for a large portion of growth - read prosperity - in both the developed and the developing world. Lately it has become fashionable for some economists to raise doubts about globalism and to question the possibility of fairness in international trade. Empirical evidence trashes those doubts. It would be hard to persuade billions of people to prefer a world stripped of the everyday benefits of freer trade.

In order to preserve momentum toward more of such benefits the US and EU must do what lesser nations are anxiously urging: compromise. That means Washington backing off from its retaliatory tactic of bargaining-by-bullying. It almost certainly means the EU being asked by WTO arbitrators to accept a substantially larger portion of bananas from Central America.

Such a shift would help Central American plantations recover from devastating hurricane damage (see below). But it would also call for the US and EU to push the World Bank and IMF to provide economic diversification assistance to Caribbean and African banana growers. If any goad is needed, Caribbean nations are providing it by threatening to withhold cooperation with US drug interdiction.

Obviously, a compromise on bananas would render US retaliation against European sheep cheese and Concorde jet landings moot. But there must be no resting on laurels. The two parties still have to agree on jet engine noise level standards. And they must find a compromise on the EU's rejection of US hormone beefed-up beef and genetically modified foods.

More on those contentious matters in a future editorial. For now, just concentrate on splitting the bananas.