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Banana Import Policies In Europe Defy Logic And Ultimately Hurt Consumers

Jim Prevor’s Perishable Pundit, July 3, 2007

It is rather odd that Europe and the U.S., neither of which are significant producers of bananas, should constantly be at loggerheads over the issue of banana import policies in Europe.

If you want a perfect example of how governments often adopt policies that hurt their own people, you can not do much better than to look at the European machinations on bananas.

For various reasons — powerful people holding import licenses and quotas, corrupt politicians benefiting from largess of corrupt overseas producers and domestic importers — the Europeans have for as long as most schoolchildren can remember been trying to set up systems that favor banana imports from favored countries, mostly in Africa and the Caribbean.

Over and over again these regimes have been knocked down by the World Trade Organization as a violation of Europe’s treaty obligations. Each time Europe concocts some new scheme that gets knocked down eventually.

In the meantime, Europeans are either deprived of the bananas they would like to buy or forced to pay an excessively high price due to tariffs. The Latin Americans who would sell the bananas are impoverished even further as their natural markets are closed or constricted.

For Americans, the whole thing is inconceivable. Once in a while, we hear Europeans talking about the need to help former colonies, when the primary effect of the rules is to hurt banana exports from former Spanish colonies.

To us in America, it is as if Spain should withdraw from the European Community in outrage over favoritism to former French and British colonies over Spain’s former colonies.

Now the battle is being joined again. The U.S. interest in the matter is both the prosperity of America’s Latin neighbors and the American companies, notably Chiquita, that would likely sell more bananas in Europe if they were freed from restrictions.

There used to be quotas; now there are just high tariffs applied in a discriminatory manner. Last time it came to countervailing duties against European products. Hopefully we can avoid that this time.

In the past, though Chiquita was on the right side, it never actually pushed for a free market, thinking it benefited by getting a larger share of the quotas in a supply-restricted market.

Still, the solution is simple:

  1. Anyone who wants to export bananas to Europe should be able to do so without quotas, tariffs or other impediments.
  2. Europe should take the money saved by buying less expensive bananas and devote those funds to a five-year foreign aid fund to assist growers and regions that can no longer compete to adjust to the new competitive environment.

The whole purpose of the WTO is to say that countries can’t choose favorites. There are exceptions for countries that don’t have normal relations or what we used to call “most-favored-nation” trading status, but, overall, the point of the WTO is that Europe cannot say, in the absence of a free trade agreement, that it favors African producers over South American producers.

It is time to let European consumers buy what they wish. If they wish to buy FairTrade bananas from St. Lucia, more power to them, but if they would rather buy a banana from South or Central America, that is their right as well.

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