 |
Going Bananas
by Sarah Sexton and Banana Link(The Ecologist, vol. 27, No. 3, May/June 1997)
The Washington Times has described an ongoing agricultural trade dispute between the European Union and the United States as "one of the angriest and most complex trade wars on the international scene". The subject of the dispute? Bananas.
France gets its supply from its overseas territories (Martinique and Guadeloupe), and from Cameroon and Ivory Coast. Spain is supplied by the Canary Islands.
As the European Union took form in the 1950s and the 1960s, Britain, France and Spain sought preferential trade arrangements for many of their former colonies. In the case of bananas, these arrangements were enshrined in the Lomé Convention (the Lomé Convention is a negotiated multilateral Treaty signed between the European union and 70 ACP countries. The agreement's main benefit is duty free access of certain products from ACP countries into Europe and covers a range of commodities: coffee, bananas, cotton, cocoa, tea and wood products) and still persist today in various forms. Access for "dollar bananas" from Latin American countries to the EU has been restricted through quotas and tariffs. Germany, however, has no banana-growing ex-colonies and has supported cheap exports from Latin American countries. It had no tariff duty at all on bananas until July 1993 when a common European import regime for bananas was implemented.
Banana Companies
The largest producer and marketer of bananas is the US company, Chiquita, formerly United Fruit (as well known for paying bribes in Central American countries and its links to a coup in Guatemala as for its fruit). Chiquita is owned by Keith Lindner and sells about a third of the world's supply of bananas from which it obtains some 60 per cent of its profits. Chiquita's prepared foods division, mostly meats and packaged goods, accounts for about half of its sales but less than ten per cent of profits.
Close on Chiquita's heels is the US company Dole, formerly Castle & Cooke, now owned by David Murdock. Dole is the world' s largest producer and marketer of fresh fruit and vegetables. Both Dole and Chiquita own vast banana plantations in Central America; together they effectively act as price-setters.
The third largest banana transnational company is Del Monte, which was taken over in June 1996 by Grupo IAT, a company which owns Chile' s third-largest fruit exporter. (Del Monte' s canned food division went to Del Monte Royal Holdings, a southafrican company).
An Irish-based company, Fyffes, is the UK and Ireland's main banana distributor. Together with WIBDECO, a company set up by the Windward Islands' governments, Fyffes bought up British company Geest in 1995.
The multinationals are closely associated with exports from Latin America, especially Central America, where they are directly involved in the production of around 60 per cent of what they export. Plantations in Latin America may extend over 5,000 hectares and production costs are very low-a result of low wages, limited workers' rights and poor working conditions.
Since the early 1990s, transnational companies have tended to free themselves of direct ownership of banana plantations in favour of guaranteed supply contracts with medium- and large-scale producers (who own the land) in the countries where they operate. This trend, not confined just to the banana sector, allows Northernbased companies to shift the responsibility for labour and environmental conditions in the plantations on to local shoulders. They can state that these conditions are not within their control and that national legislation should ensure minimum standards are respected. Trade unions and other NGOs in Latin America regularly report, however, that wages, labour conditions and environmental management practices are generally speaking as bad, if not worse, on nationally-owned plantations as in their multinationally-owned neighbours. Adequate labour and environmental legislation often exists, but is rarely enforced until directly challenged in court.
Trade Challenges
In 1994, the US announced that it would investigate the various EU tariffs and quota restrictions on bananas from Latin American countries under Section 301 of its trade legislation. Governments have traditionally started trade wars to protect domestic jobs and key industries, but as an EU agriculture spokesperson complained, "the United States doesn't even export bananas". The banana fight involves multinationals' commercial interests and overseas markets far more than it does jobs at home - only 7,000 of Chiquita's 45,000 employees, for instance, are in the United States. US agricultural interests, however, are worried that caving in on bananas would send a signal to other countries that they too can protect their agricultural markets with impunity. In September 1994, 12 senators wrote to US Trade Representative Mickey Kantor warning of a dangerous precedent if the EU banana regime went unchallenged. The Windward Island Banana Growers Association, which represents growers in the Caribbean, predicted that any weakening of the European restrictions would leave them unable to compete.
On 8 May 1996, five American complainant countries launched a formal dispute settlement procedure against the European Union's banana import regime at the World Trade Organization (WTO) in Geneva. Led by the US itself, with Chiquita Brands International spearheading the complaint, the Guatemalan, Honduran and Mexican governments had persuaded Ecuador, the biggest single exporter to the EU, to join them on 1 February 1996. This alliance is targeting what the complainants argue is a discriminatory EU licensing system.
The complaints revolve around the charge that this system contravenes GATT and the new General Agreement on Trade in Services (GATS) signed in Marrakech in 1994. But the detailed, numerous and complex legal charges presented by the five against the EU are raising more fundamental questions about international trade rules and the rules of the game for resolving inevitable disputes.
In April 1997, the WTO' s dispute panel ruled that the EU's tariff quota regime does negotiate and allocate quotas in a discriminatory way, violates the EU's commitments under GATS, and that the licensing procedures are at fault. The EU is expected to appeal the ruling on questions of law and interpretation. If the WTO verdict is maintained, however, which most observers deem likely, the European Union will need to modify its banana import regime. This regime at present favours small Caribbean producer countries, whose bananas are sold at a much higher price on the European market than the dollar bananas.
The Caribbean Banana Exporters Association, which represents growers in Belize, Jamaica, Surinam and the Windward Islands, expressed alarm at the WTO panel's report, saying it could have devastating consequences for their countries' economies. In Brussels, the EU emphasized that, if successful, the US strategy:
"would lead directly to the destruction of the Caribbean banana industry and provoke severe hardship and political instability in a region already struggling against deprivation".
Banana Action
Parallel to the conflict at the international level, a new transnational non-governmental partnership of producer and consumer organizations has emerged over the last few years to address the major social and environmental issues involved in the international banana trade and to hasten a transition towards a more sustainable banana economy. It brings together the interests of plantation workers. family farmers and European non-governmental organizations (NGOs) from over 25 countries in Latin America, the Caribbean, Asia, Africa and Europe.
The European Banana Action Network (EUROBAN) which groups together some 30 organizations in 13 countries. has been pressing for "fair trade", involving a higher producer price as well as respect for minimum labour and environmental standards. An International Fair Trade Banana Register has been established for producers who wish to apply. The Coordinadora de Sindicatos Bananeros de America Latina, a new regional structure that brings together independent banana plantation workers' unions in eight countries, is calling for all banana trade agreements to incorporate minimum labour and environmental conditions. At the same time, the Windward Islands Farmers' Association, which groups together family farmer organizations from five Caribbean islands, is promoting a transition towards a more diversified, less banana dependent economy, whilst actively supporting the demands for "fair trade" bananas in European markets.
Bananas have become a symbolic test-case for the future of international trade in agricultural commodities. The inter-governmental dispute and the emergence of a countervailing partnership have ensured that the stage is set for a rapid evolution in the complex interrelationships between the different governmental, corporate and nongovernmental actors involved in the banana trade. Whether this evolution leads towards greater economic, social and environmental sustainability remains to be seen.
|