The Banana Wars

The progressive reduction of tariff barriers has caused World Trade to increase by several hundred per cent since 1945, and there is no doubt that this has created both work and prosperity. It has also improved products: (1) ………….. the planned economies of the Soviet Union and the Communist block countries created industries that produced nearly as much as Western companies, the products were much less sophisticated, reliable or marketable, (2) …………. they were excluded from competition. Today, most economists argue that nations which try to shelter declining industries behind tariff barriers are simply resisting the inevitable, and that they could use those subsidies to create new jobs in more modern industries. (3) ………….., tariff barriers penalize consumers: the Japanese, (4) …………., pay ten times more for rice than they would if they could buy rice from South East Asia.

(5) …………… for many years, the banana industry had a special status. The European Union allowed former British and French colonies in Africa, the Caribbean and the Pacific islands to export to Europe as many bananas as they wished, at slightly above world prices. Banana production costs are higher in the Caribbean than on American-owned plantations in Latin America, (6) ………… the small size of family-run farms, the difficult terrain, and the climate.

In 1999, (7) ……………., the US-based company Chiquita Brands made a $500,000 donation to the Democratic Party. The very next day, the US government complained to the World Trade Organization about Europe’s banana trade, and put a 100% import tariff on various European goods.

Opponents of the American case pointed out that only 7% of the 2.5 billion tonnes of bananas imported into Europe every year come from the Caribbean. The US’s banana policy only cost American companies abut $200 million a year, (8) ……… trade between the US and the EU is worth about £200 billion.

Half the population of the Caribbean relies on the banana industry to supply their basic needs such as food, shelter and education. Small states such as Dominica depend on banana exports to the EU for around 70 per cent of all export earnings and much of their employment. No other countries in the world have the same degree of dependence on a single product. (9) ……………., if the Caribbean banana industry was taken away without farmers being given enough time to develop other ways of using the land, the counties’ economy would collapse. (10) …………., the results of entirely free trade in bananas could be disastrous.

It could also be pointed out that American, Japanese and European farmers are currently subsidized by billions of dollars every year. (11) ……….., America itself erected massive tariff barriers in the 19th century. (12) …………., the Americans wanted to end subsidies to Caribbean banana producers, even though the consequences might have included many of the farmers turning to drug production and trafficking, or trying to immigrate illegally to the US.

The ‘banana wars’ ended in July 2001 when the Americans ended their special import taxes on selected European goods after the European Union agreed to import more Latin American bananas from the large US banana companies, while still also buying bananas from their former colonies.