Zoellick, who made the threats on the eve of a visit to the United States by European Union (EU) trade commissioner Pascal Lamy, said adoption of the banana import rules would give him "no recourse other than to start to use the carousel provisions," whereby Washington would impose punitive duties on $308 million worth of imports, targeting one product, then another.

Since the EU adopted new import rules on bananas in 1993, the U.S. corporation Chiquita Brands International has lost market share on the continent to its rivals, one factor driving it close to bankruptcy. Chiquita has filed suit against the European Commission, demanding payments of $519 million for losses it says it suffered as a result of the changes. The company won several rulings from the World Trade Organization, which called the restrictions illegal, and said the EU's new rules, known as "first-come, first-serve," would only make the problem worse.

The trade measures adopted by the European imperialist powers in 1993 to protect their investments in former colonies in Asia, Africa, and the Caribbean ensure a steady export market for the countries and give them a competitive edge over their U.S. rivals.

Three leading U.S. enterprises, Chiquita, Dole, and Del Monte, have long dominated the banana industry in Central America, Colombia, Venezuela, and Ecuador. Chiquita--formerly the United Fruit Co.--saw its best profits in the European markets during the 1980s and early 1990s, where regulations made it possible for the company to sell bananas at twice the price as in the United States.

In response to the changes in 1993, Del Monte and Dole bought up fruit and flower companies based in Europe and countries benefiting from the new rules, such as Jamaica, Cameroon, and the Ivory Coast. This allowed them to gain market share in Europe against Chiquita, which still sells more bananas in Europe than any other company.

As the competitive struggle has sharpened, Chiquita has sought to cut costs, including by driving down what it pays to suppliers and workers. For example, Chiquita recently reduced the price it pays to Atlantic Banana Cooperative in Panama, one of its suppliers, by 8 percent, from $3.11 to $2.86 for a 42 pound box. "We can survive at that level but we cannot prosper," Atlantic's president, Bolivar Aguirre, told the Financial Times.

Dole, on the other hand, has shifted where it gets bananas from Costa Rica and Panama to Ecuador, where wages are $2 a day and unions are more scarce. The company reports the move has allowed it to cut its cost of production in half.

Armuelles Fruit Company, Chiquita's subsidiary in Panama, said that in order to stay competitive with bananas produced in Ecuador it has to lower the price per box from $5.20 to $5.

The company employs 7,000 people in Puerto Armuelles and "suffered a damaging strike in 1998 from which it has yet to recover," the Financial Times reported. The paper complained that "productivity and worker morale has slumped and more than 25 percent of the fruit is damaged during harvest and packing." The Chiquita subsidiary shut down part of its operations already and threatened to lay off 500 more workers.

The European Union announced March 9 it will delay implementation of the banana import regulations in order to discuss the issue with Washington.  
 
 
Front page (for this issue) | Home | Text-version home