Peeling away the banana battle

Journalists and cartoonists are having a great time with the banana war between the United States and the European Union.

The trade tug-of-war is a natural for jokes about a "banana split" and "going bananas."

But behind the fuss looms a bigger issue: Clinton Administration goals for trade policy in the short time it has left.

President Clinton indicated in his State of the Union message that he wanted another round of world trade talks.

But there's a suspicion among trade experts that an administration so involved with specific trade battles will stall before it gets to the big picture, an initiative similar to the 1994 Uruguay Pact.

Talks on the banana dispute should revive this week, spurred by the US decision to slap sanctions on more than $500 million of European exports.

Harald Malmgren, a veteran trade consultant in Washington, sees the banana squabble as "a war of distributors."

Neither the US nor Europe grow bananas. But two American companies, Chiquita Brands and Dole, sell bananas grown in Latin America and want to broaden their market to Europe.

The EU, however, restricts their sales, despite at least three decisions of World Trade Organization (WTO) tribunals calling such restraints improper.

The EU wants to protect its distributors of fruit grown in mostly former European colonies in Africa, the Caribbean, and the Pacific.

Behind the trade stances, though, lie political agendas.

"It is unusual for any US government to pursue with such passion the interests of one or two companies," says Mr. Malmgren. "It is most likely the result of the financial support these companies provide for the Democratic Party."

At the same time, though, the banana war carries symbolic value in Washington.

"The administration feels its credibility in Congress is at stake," says Greg Mostel of the Economic Strategy Institute, a Washington think tank.

For Clinton to persuade Congress to give his administration the power to negotiate future trade deals, it must prove it can implement existing deals. Trade officials got a "bipartisan blistering" from Senators at a hearing two weeks ago, Mr. Mostel says.

Similarly, Washington sees the credibility of the Geneva-based WTO at stake.

The Uruguay round set up a WTO mechanism to resolve disputes in a timely fashion.

But the EU peeled away any pretense of timeliness and has delayed and delayed in the banana dispute.

Many exporters of farm goods, not only those in the US, are fed up with the way the EU shelters its own farmers.

Nonetheless, says Malmgren, "to fight over bananas to this political point is disproportionate." He says the administration, including US trade representative Charlene Barshefsky, has entangled itself in trade fights without a grand plan for trade liberalization.

Some of these disputes should be "left to technicians," he says. "They are not something to go to war over."

At the end of November, WTO trade ministers meet in Seattle, in part to continue projects set up by the Uruguay round. In 1999, WTO is supposed to tackle trade barriers in agriculture; in 2000, service industries.

Other topics ahead include anti-trust laws and more deregulation of direct foreign investment - purchases of plant, equipment, and offices in foreign nations by multinational companies, an issue that some developing nations find annoying.

The US may seek another round of trade negotiations at this annual gathering. But these rounds last for years, and a new one would extend far beyond Clinton's time in office. The Uruguay round took eight years.

For political reasons, Clinton might not press Congress terribly hard for so-called "fast-track" negotiating authority.

The success of the Democrats in the fall election hung considerably on the support of organized labor. The AFL-CIO and its affiliates raised a lot of money and bussed people to the polls. The union effort helped Democrats, particularly in the big cities of the East and Midwest.

Since labor opposes further major trade liberalization, it may not happen soon.

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