The WTO and banana wars

From the Independent on Sunday (Sun. 18th July):

The hidden tentacles of the world's most secret body Behind the imposing entrance of a grand 1920s building on the shores of Lake Geneva lies what is probably the most powerful organisation on Earth. Far more potent than any government, its decisions are already affecting our lives and unleashing international conflicts.

The banana dispute is viewed quite differently in Central America.

First of all, contrary to the impression created by the article below, the European banana import regime is only a few years old, not 20 years old.

When it was introduced, it represented a real blow to the economy of countries like Honduras, not only by limiting exports but also by depressing prices.

Europe did it under cover of the Lome convention of giving preferential trade treatment to the poorest countries.

And just who did these poorest countries turn out to be in the banana case? Why, oh happy coincidence, mostly European colonies and semicolonies in the Caribbean, of course.

The European banana regime was being created at the same time that the European imperialist powers were involved in negotiations on the treaty that created the WTO. They finally came to a deal. In exchange for better access to European and U.S. markets, Latin American countries agreed to give Europe and the U.S. better access to the Latin American markets.

The ink wasn't even dry before Europe welched. They figured, heck, screw Honduras, screw Costa Rica, screw Panama, let's, in effect, rob them and give the proceeds to our Caribbean colonies as the "help" we promised them in the Lome convention. And if the Central Americans complain, we'll pass this off as a dispute between third world countries, and see if we can get them to fight each other. I say the Europeans because in this the commission set policy for the whole bloc.

Sure enough, at first it was just the Latin American countries who cried bloody murder, to very little effect. The EU's trade commissioner even suggested that, heck, surely these central american countries could get out of the banana business and leave it to these oh so very deserving places we just happen to own.

The Latin Americans looked at how they were being pitted against the Caribbean islands, and decided to pull the same sort of trick. They cleverly realized that they could get the U.S. on their side in this battle, and started to pressure both the American banana companies and the U.S. government, which eventually did respond. Washington responded, of course, not out of solidarity with its hemispheric partners or any such nonsense, but because the immediate material interests of American capitalists happened to coincide with those of the Central American countries.

The issue was then taken before the WTO. The European banana import regime was flatly discriminatory and prohibited on its face by the treaty that had just been signed. The WTO said as much, and Europe responded, oh yes, quite right, so sorry, we'll fix it. And every where it said a half dozen, they put in six, called it a new regime. Which again got challenged, again got ruled illegal, and again Europe apologized and said, did we illegally say six? We meant the following mathematical expression (3+3). And again it got challenged, and so on, until about the fifth go around or so, when Europe said, oh, so sorry, we'll fix it, and the WTO's dispute resolution body said that any special regime that did not immediately and transparently give equal access to Central American bananas was out, and until such a regime was in place, the U.S. as the aggrieved party was entitled to compensation.

Now all the European imperialists are crying boo hoo hoo, big bad America is trying to bully us with trade sanctions. Serves them right for welching on their promises to Central America, I say.

A similar thing can be said for the beef brou ha ha. In negotiating the WTO treaty, Europe was especially insistent that national health and safety rules not be used as a disguised form of protectionism. Historically, the United States especially has insisted on all sorts of supposed "safety" standards to protect its domestic producers from competition by (frankly) often superior European products. So, for example, the windshields of vehicles sold in the U.S. had to be a particular thickness and composition that was, oh happy coincidence, standard in the U.S. and unknown in the rest of the world (I don't know if this rule is still in effect, but you get the picture). In general the U.S. market is so large that you can impose any number of quite arbitrary and nonsensical requirements without hurting American producers. But for a small European car manufacturer, or dairy plant, or whatever, setting up special lines and procedures for the relatively small percentage of products destined for the US market gets prohibitively expensive. This state of affairs was nirvana for many American capitalists. They could remain the world champions of free trade without suffering any of its inconvenient side effects, like competition.

That's why, for example, (real) Cheddar cheese is virtually unknown in the United States, and why U.S. supermarkets get away with selling a total bastardization as "Cheddar." So there was a huge rumble in the WTO negotiations and eventually it was agreed, that the only way you could impose these kinds of rules is if you had scientific evidence to back it up, and a mechanism was set up to vet these studies and make sure the "health" or "safety" issue was real.

Along comes bovine growth hormone. The more industrial U.S. beef producers immediately latch onto it to increase production. For all sorts of reasons Europe does not. At the WTO, Europe doesn't even claim that its ban on hormone treated beef is defensible. They quite freely and openly admit it is a flagrant violation of the rules that Europe itself especially insisted on writing into the treaty. So again the U.S. is seeking compensatory sanctions as provided for explicitly in the WTO treaty.

Now, in selecting targets for the sanctions, Washington has been anything but subtle. They have gone after especially profitable products and especially those produced by the countries Washington views as having been the main proponents of the objectionable European rules, especially France. There's nothing in the agreed-upon rules to prevent this, indeed, the rules are set up this way on purpose. The idea is to create incentives for the growth of a strong anti-protectionist free trade capitalist lobby in each country, since, under the rules, your own most profitable exporters become a free-fire zone for a trade rival if the global trade referees rule against you and you refuse to back down.

In essence, all of this is pretty much regular tit-for-tat inter-imperialist trade dispute standard operating procedure, codified and systematized in the hope that future spats will be more easily contained, and not lead to a situation like that of the early 1930s with all its attendant unpleasantness, such as lost profits.

Apart from denouncing Europe's discriminatory treatment of bananas from Central America and its refusal to give economic aid from its own pockets to its own colonies and semi-colonies, I don't see where Marxists have much of an ax to grind here one way or another.

Except, perhaps, pointing out the utter idiocy of a system that has no better way of resolving even minor disputes than setting up a huge global bureaucracy designed to contain the "Great Powers" when they decide to act like four year olds throwing a temper tantrum.

Jose Perez