On the Money the Banana Wars

By JOHN ROTHCHILD

Memo from the it's-just-as-nutty-over-there-as-it-is-over-here department: in their trade talks the Europeans have agreed on a free flow of a lot of stuff, including wheat, lawyers and intellectual property, but not bananas. After endless meetings, a banana split hangs over Europe.

This banana split is one small example of how diplomats and economists can promote free trade and all the GATT principles they want, but the basic issues can be talked to death and never get resolved. Like free love, free trade breaks down whenever there are people involved who want to protect their interests -- in this case, bananas.

The Germans laid the groundwork for this controversy by starting World War II, which led to food rationing, which led to a European craving for bananas. The English, whose food is barely edible even in peacetime, encouraged banana farming in their Caribbean colonies to guarantee themselves a continuous and secure supply of something fun to eat. The French followed suit.

Remembering how the islands kept them in fresh fruit during hard times, the English decided to protect their loyal suppliers with tariffs and quotas levied against the giant banana producers on the South American mainland. This quota system was adopted by the European Economic Community in a close vote in 1993, with several banana-eating countries strongly opposed, most notably the Germans.

So on the free-market side of the banana split you've got the Germans, who want all they can eat (in this case, 19 lbs. per person per year) at low prices; the trio of giant producers, Chiquita, Dole and Del Monte, which together account for 60% of the world output and want open borders and a fair fight, and may the best banana win; and the various banana republics where Dole, Chiquita and Del Monte operate.

Favoring tariffs, quotas and the unfree market are an assortment of African states and Caribbean islands in cahoots with their banana-loving former colonizers, all of whom have weighed in on the side of preserving the small banana farm, which is the sole source of support for many laid-back islanders. Normally well-behaved people on both sides of the issue have been insulting each other's bananas through at least two different rounds of GATT talks, calling the rival bananas "skinny," "tasteless," "rotten" and "easily bruised." Both GATT panels have ruled that the banana quota system is a restraint of trade, but that hasn't stopped the friends of the quotas. They have been working frantically behind the scenes, offering South American countries various financial inducements to get them to switch positions. Meanwhile, Chiquita filed a formal protest against the European quotas in conjunction with the U.S. banana producers in Hawaii, even though the banana output in Hawaii doesn't amount to a hill of peels. The French threatened to scuttle the public-works plank of the GATT agreement unless Germany accepted the banana plank. The Germans refused, insisting on their right to import bananas at will, guaranteed by the 1957 Treaty of Rome. Back in the islands, the Prime Minister of the island of Dominica, Dame Eugenia Charles, has warned that if her people can't make a living on bananas, they might take up cocaine.

As if it doesn't have enough trouble on its hands, the Clinton Administration has to decide soon whether to join with Chiquita in opposing the banana quotas in defense of open trade and a Europe free for bananas. But this begs a tough question: If we're for free bananas, what about free peanuts? Currently we've got a quota on those to protect small peanut farmers and ex-Presidents.