LATIN American nations are firing a fresh salvo in what's being dubbed the "banana war."
On Feb. 10, the 106-nation General Agreement on Tariffs and Trade agreed to to investigate whether the European Community (EC) is violating free trade rules with a plan to limit imports of Latin American bananas. The move was welcomed by regional leaders at a "banana summit" in Guayaquil, Ecuador, held the same day.
The presidents of Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, and Panama, as well as delegates from Mexico and Venezuela, met to consider possible reprisals and steps to fight the proposed EC quotas and tariffs on banana imports.
In December, the EC decided to impose a 20 percent tariff on the first 2 million tons of bananas provided by Latin American nations each year and a 170 percent tariff on any additional amount.
The aim of the plan, to take effect July 1, is to protect European nations and their African and Caribbean banana-producing former colonies from lower-cost producers in Latin America.
South and Central American banana producers have reacted angrily to the tariff proposal.
Last month in Ecuador, the world's largest banana producer, farmers burned the French flag and dumped truckloads of bananas in the streets in front of European embassies to protest the EC decision. Honduran President Rafael Leonardo Callejas this week called the EC import limits a "great commercial injustice" with "gravely damaging effects."
The Union of Banana Exporting Countries - a growers coalition formed in 1974 - estimates that about 174,000 jobs could be lost because of the EC import limits. While most Latin American nations are diversifying from traditional crops such as bananas, they remain a major crop and source of employment.
President Callejas estimates that in Honduras, where bananas are consistently the No. 1 or No. 2 agricultural export, sales would drop 30 percent if the EC limits go into effect.
Critics of the import limits argue that EC consumers will pay higher prices, and the economic damage to these developing nations could drive farmers to production of illegal narcotics. But without favorable access to Europe, the Caribbean and African banana-producing nations say they cannot compete with the lower-cost producers in Latin America.
Even as Central and Latin American nations were meeting, the EC plan appeared to be in trouble at home. Germany, Belgium, and the Netherlands balked at the plan during a European farm ministers meeting on Feb. 10. Germany, the biggest banana consumer (with no banana-producing colonies to protect), rails against losing access to cheaper produce. Another round of EC talks is scheduled for today.
The top banana corporations in Latin America - Chiquita, Dole, and Del Monte - are not thrilled with the turn of events either. They will not take a public position for fear of alienating one side or the other. But as Harold Shenker, executive vice president of Del Monte Fresh Produce, which is owned by a Mexican consortium, put it: "The biggest problem by far is not being able to do strategic planning. We don't know what our fruit and transportation needs will be. A decision one way or another is better
than what we have now."