8:28 AM Jan 28, 1997

THE 'BANANA HEAT' IN US POLITICAL DEBATE

Geneva 28 Jan (Chakravarthi Raghavan) -- Caribbean banana producers and Caribbean economies dependant on this export may or may not win in the case now before a WTO dispute panel over the European Union's banana regime that gives them preferential access to the EC markets, but seem to be getting their case across to the US public.

This week, the WTO panel (with Stuart Harbinson of Hong Kong as Chairman, and Kim Anderson of Australia and Christian Haberli of Switzerland as members) has been holding its own meeting to discuss the case. Trade officials expect that its 'interim report' to the parties will probably be ready in a few weeks and, after hearing the views of the parties, would be finalised and issued perhaps in April.

Trade observers in Geneva generally believe that the panel would hold against the EC (as did two earlier GATT panels which went into the EC's Lome pact). Those rulings though were never adopted because the EC blocked it, but the EC won't be able to block adoption of WTO panels.

The dispute itself is seen as one between US TNCs (chiquita and dole) and European ones like Fyffes.

But whichever way the panel rules, the case that the Caribbean countries seem to be making to the US public, and to Congressmen and Senators -- that the administration is fighting the case of two giant TNCs against the interests of the small Caribbean isles and their banana producers -- appears to be embarrassing, if not hurting the Bill Clinton administration whose former trade representative, Micky Kantor espoused the cause of the two US firms, the Chiquita and Dole corporations, and pursued the case before the WTO.

But the image of small Caribbean producers, and small islands depending exclusively on this single export under a preferential regime that would otherwise be ruined economically, and forced to turn to drug trade seems to be getting across in the United States, and is finding its way into the media there, and raising questions in the Congress and Senate, and in the European Parliament.

The case against the EC banana regime, brought before the WTO by Ecuador, Guatemala, Honduras, Mexico and the US, was referred to a panel in May 1996. The panel (which normally has to report within six months of its establishment) recently sought extension of time and has been granted. Besides hearing the complainants and the EC, the panel has also heard as third parties some 20 countries -- Belize, Cameroon, Canada, Colombia, Costa Rica, Cote d'Ivoire, Dominica, Dominican Republic, Ghana, Grenada, India, Jamaica, Japan, Nicaragua, the Philippines, St. Vincent & the Grenadines, St. Lucia, Senegal, Suriname and Venezuela.

Ecuador, Guatemala, Honduras and Mexico are banana producers. Ecuador is the biggest while the others are relatively marginal producer/exporters. The US has brought up the case, as an EC violation of its obligations under the GATS and the EC schedules therein for wholesale market services.

In Washington earlier this month, and at Geneva Tuesday, US trade officials, at a media briefing, provided background papers, purporting to provide 'facts' to remove 'misperceptions' about the dispute, and to claim that the US was not against the Caribbean countries and their aid and trade preferences in Europe under the Lome Convention, but against the 'needlessly discriminatory and burdensome' banana licensing arrangements for imports of third country and non-traditional ACP bananas. The briefing was attended also by officials of Ecuador, Guatemala and Honduras.

While US officials spoke on background basis, the Guatamalan Ambassador, spoke on record, to argue that his country (which has just ended a long civil war, which was unleashed four decades ago when another US banana TNC got the CIA to stage a coup against an elected government which redistributed its land to peasants) needed market access for reconstruction and peace. Amb. Federico Urruela said in his country all the banana producers were small peasant producers, though 90% of the bananas were exported through TNCs.

The EC regime, he said, was a mercantalist one, and more like a 17th century regime, in terms of the permits and licences needed for trading.

An Ecuadorian official stressed that his country's exports were all handled by Ecuadorian firm.

That firm, NOBOA is the biggest banana trading firm (said to be bigger than Dole and Chiquita).

The US officials, in their background papers, did concede that they had taken up the case because the EC discriminated against US companies and that both Chiquita and Dole Foods want the regime to end. The EC they said was free to provide tariff preferences and aid to the Caribbean and other ACP countries, in terms of the Lome Convention for which they had got a waiver. But the licensing regime for Third country and 'non-traditional ACP' bananas was the most complex and mind-boggling.

The US officials conceded that the background material, also made available in Washington, was related to the domestic debate within the US -- where critics have tied the US sponsorship of the case of Chiquita and Dole corporations to their funding of both the democratic and republican parties in their election campaigns.

A number of Congressmen and Senators appear to have taken up the Caribbean case with the administration, and the President has been receiving letters from them, and the administration is finding this embarrassing.

US officials said the issue related to the EC's failure to abide by the WTO rules to which they were a party, and discriminating against the US service providers. The US was also a major provider of aid to the Caribbean ($700 million since 1990), and provided trade preferences, and was willing to work with the EU, the Caribbean and the complainants to find mutually acceptable alternatives.

The EC could continue to provide tariff preferences and aid to the Caribbean and other ACP countries, under the Lome accord for which the EC had been granted a waiver, the officials said. But what would happen after the current Lome accord expires at the end of the decade was not clear.