Ecuador charges US and EU with exploiting banana issue

GENEVA: Ecuador, the South American country which is the world's largest banana exporter, accused the United States and the European Union on 2 February of using the banana dispute to pursue their own trade policy agendas which have little to do with bananas.

The Ecuadorian charge came in a press release (issued by its embassy in Brussels) coinciding with the presentation by Ecuador to the reconvened WTO banana panel in Geneva on why the new EU banana regime is not in compliance with the recommendation of the WTO, on the basis of the ruling by the panel, as modified by the Appellate Body.

Ecuador was a co-complainant (with the US, Guatemala, Honduras and Mexico) at the WTO over the EC banana regime.

But while the US chose to bypass the Dispute Settlement Understanding's (DSU) Art. 21.5 route (to get a reconvened panel to rule on whether the new measures carried out comply with the ruling and recommendations), and has sought the automatic authorization of the WTO under Art. 22.6 to impose sanctions against the EC and seek talks with it to get the new banana regime changed, Ecuador (as also the EC itself) took the Art. 21.5 route to get a ruling. The reconvened panel is now in the process of hearing the parties (the EC and Ecuador), and is due to hear third parties later this month.

In the press release (presumably reflecting what Ecuador, apart from the substance of its case, also told the reconvened panel on 2 February), Amb. Roberto Betancourt of Ecuador expressed his government's "disquiet" at the recent developments between the US and the EU over bananas.

"We are dismayed that the US and the EU seem to be using the banana dispute to pursue trade policy agendas which have little to do with bananas," Betancourt said.

"As the world's largest banana exporter, we have the major interest in ensuring that the EU's banana import system conforms fully with the WTO rules. That is why we have asked the original panel to rule on the new system introduced on 1 January this year".

"As a developing country," he said, "Ecuador does not have the power in international trade that is wielded by the USA and the EU. However, we must ensure that our interests are fully taken into account. Ecuador initiated this procedure under Art. 21.5 of the WTO's DSU in the expectation that a further ruling of the panel will lead the EU finally to amend its banana regime in line with their WTO obligations.

"Flagrant non-compliance"

"The current EU regime continues a pattern of flagrant non-compliance by the EU. For Ecuador, a developing country that is highly dependent on banana exports and is a highly efficient producer of bananas, the regime is commercially harmful and completely inconsistent with the market-oriented philosophy of the WTO and other policies which the EU urges Ecuador and other developing countries to adopt in other contexts.

"The banana issue is too important to us to leave the solution in the hands of the USA and the EU; and we intend, as responsible WTO partners, to play a full part in developing a solution to this very difficult dispute. Both the US and EU need to recognize that other countries are heavily impacted by the prolonged bilateral 'to-ing and fro-ing' that is taking place. While these two giants battle it out, Ecuador, whose industry really is at stake, is being caught in the middle."

According to the EC, Ecuador is now the largest of the six main banana suppliers from Latin/Central America to the EU market, accounting in 1997 for a 23.4% share - an increase from its 11.75% share in 1989 - and thus has not suffered any "negative discrimination", but is seeking more market share, competing with other Latin and Central American countries, and African, Caribbean and Pacific (ACP) countries (and the overseas territories of France, as well as some Southern European producers).

But what distinguishes Ecuador from some of the other Central American co- complainants, is that it is a country where the production and export is predominantly national - unlike in the other Central American countries, where the banana export trade is dominated, if not controlled, by the US TNCs - Chiquita (old United Fruit Co) and Dole (old Standard Fruit Co) - or by EU-based TNCs (marketing ACP products).

Cloak-and-dagger manoeuvrings

Published US records relating to those days now show that it was the United Fruit Co., which had the law firm of the Dulles brothers as its legal counsel (during the Eisenhower era, with two Dulles brothers heading the State Department and the CIA), that staged the CIA-managed coup d'etat in Guatemala to overthrow Jacobo Arbenz. Arbenz was dubbed a communist for initiating land reforms for peasant ownership that threatened the US TNC plantation economy. United's banana empire was made safe through a right-wing military- and paramilitary-dominated regime (which the CIA put in place) that plunged Guatemala into nearly 50 years of "civil war" and "death squads", ending with an "election" and a UN-sponsored reconciliation process.

The United and Standard fruit companies "abandoned" their old names and the notoriety associated with them to take on their current new names, based on their banana brands, and, through funding (soft money) of campaigns of both parties, have been pushing their marketing interests.

Chiquita is the bigger of the two, and its owner Lindner had handsomely contributed to the 1996 election campaign (of Clinton and the Democrat and Republican senators and congressmen). The day after the then US Trade Representative (USTR), Mickey Kantor, had the latest US banana complaint lodged at the WTO, Clinton's election campaign got a generous $500,000 cheque.

But the ensuing fights, panel rulings, and complaints and voices at the WTO, have now become so distorted that, as in other matters, the WTO machinery, its Director-General and the press office see the exercise as a US-EC trade issue, and speak with an eye on the US (and now the European media), and little about other interests.

So much so, even geography has become muddled for the media, with the Financial Times on 3 February, in reporting the Ecuador press release, describing Ecuador as a "central American" country. (Third World Economics, 16-28 February 1999)

The above article was originally published in the South-North Development  Monitor (SUNS) of which Chakravarthi Raghavan is the Chief-Editor.