CORPORATE FOCUS: The New Banana Republic
Stay up to date with the latest headlines via email.
"Banana Republic" used to refer to poor, developing countries that relied on a single cash crop -- typically bananas -- and were ruled by corrupt governments. Now the term seems singularly appropriate to the United States, even though the U.S. relies neither on bananas nor any other single cash crop.Operating at the behest of banana magnate Carl Lindner -- the CEO of Chiquita -- the United States for years has complained about the European Union's policy of importing its bananas from former colonies in the Eastern Caribbean (tiny countries like Dominica).To guarantee continued support for the Eastern Caribbean banana producers, the European Union gives them preferential treatment through a quota system. "Dollar bananas" from Central American countries -- controlled by U.S. marketing companies -- are cheaper than those from the Eastern Caribbean, which has inferior land.The United States pursued its campaign against the EU system at the World Trade Organization (WTO). The United States won the claim, because in fact the EU policy does violate WTO norms: it is illegal under WTO rules to place a quota on imports from one region.Under the WTO rules, as manipulated by the United States, it is largely irrelevant that the purpose of the EU's preference for the Eastern Caribbean is for beneficent reasons -- to provide some minimal remedial support for its extremely poor former colonies. It doesn't matter than some 200,000 farmers plus many others stand to lose their livelihoods -- in countries where 30 to 50 percent unemployment is the norm -- if the EU abandons its banana system.Under the WTO rules, it is irrelevant if the Eastern Caribbean bananas are produced in a relatively more socially just way -- on many small farms, mostly headed by women -- as opposed to the giant Chiquita plantations in Central America, where unions are routinely smashed and workers underpaid and exposed to serious pesticide and other chemical hazards.The International Confederation of Free Trade Unions explains: "Central American bananas are produced on large 'industrial' scale plantations employing large numbers of relatively poorly paid workers. Few workers have been able to win recognition for their unions in the face of the deep hostility of the companies, governments, the military and in some countries para-military gangsters."After a long series of back-and-forth negotiations and further pro-U.S. rulings from the WTO, the United States has now announced $520 million in sanctions against Europe in connection with the banana case. Under WTO rules, the United States has the right to impose countervailing sanctions against European imports in industries totally unrelated to the dispute. The United States has chosen to impose 100 percent tariffs on a range of European luxury imports -- ranging from Italian pecorino cheese to Scottish cashmere sweaters -- hoping that these industries will become internal lobbyists in the EU for a change in Europe's banana policy.Of course, despite the degree of importance the U.S. government places on its banana interests, the United States differs in one remarkable way from the Banana Republics of old -- it does not produce any bananas.Why then, one may reasonably ask, is the United States launching what is commonly labeled a "trade war" against Europe? The answer: Carl Lindner, and his money. Chiquita CEO Carl Lindner has poured money into the political system.Lindner and wife Edyth donated more than half a million dollars in 1998 in political contributions. That's standard for the banana titan, who contributes generously to both major parties.Lindner's mega-contributions to former Senate Majority Leader, former presidential candidate, current Viagra pitchman and aspiring First Husband Bob Dole helped Dole see the importance of the banana issue to the U.S. economy. He pushed various legislative proposals designed to force changes in the EU banana preference system, and deserves some credit for the Clinton administration's decision to take up the case.Greased by campaign money, the Clinton administration has chosen to identify the national interest with Carl Lindner and Chiquita. The U.S. Trade Representative humorously asserts that "the U.S. economic stake in this case is clear" -- even though virtually no U.S. jobs are at stake, and even though it is widely understood that displacing the Eastern Caribbean banana farmers will push many of them into the illegal drug trade.It is hard to imagine a more outlandish case to illustrate the flaws in the WTO-governed global trading system or in U.S. campaign finance rules.Unfortunately, there are serious consequences to the U.S. buffoonery, and it is innocent parties in the Eastern Caribbean who will pay the price for the Clinton administration decision to convert the United States into a Banana Republic.Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor.