A FRUITLESS CONFRONTATION ABOUT MORE THAN BANANAS

WASHINGTON - Is this latest U.S.-Europe trade war a matter of high
principles in conflict, or just a silly little spat over bananas?
Whichever it is, it's serious. Already, European companies are
reacting with a mixture of puzzlement and outrage over the U.S.
announcement that it will impose 100 percent tariffs on a line of
products ranging from Belgian cookies and French handbags to English
greeting cards and Scottish cashmere.

The issue: Several European nations have rules favoring bananas
imported from their former colonies in the Caribbean, while
restricting bananas imported from places like Honduras. The United
States has taken the issue to the World Trade Organization (WTO),
where it has won favorable rulings but no end to the
preferences.

Now the Clinton administration has upped the ante, announcing the
prohibitive new tariffs.

Interestingly, neither Europe nor the United States (except for a
relatively tiny crop in Hawaii) grows bananas. The trade warriors
aren't fighting for their own market interests but for - what else? -
important principles. The Europeans understand that the economies of
tiny Caribbean countries like St. Lucia, Dominica and St. Vincent and
the Grenadines are heavily dependent on their banana exports. The
United States argues that the European preferences discriminate
against U.S. companies in Central America like Chiquita - the world's
biggest producer of bananas.

But not only does Dominica seem not much of an economic threat to
Chiquita (the Caribbean growers don't compete at all in the United
States) but, according to those who claim to know about such things,
hardly any of Chiquita's jobs are in the United States.

Thus, while at one level, the fighting appears to be between U.S. and
European multinationals, at another it seems to be a matter of the
United States putting everything on the line for Chiquita Brands
International (and to a lesser extent, Dole Food Co.). As critics of
the U.S. posture keep pointing out, Chiquita's Carl Lindner has been
among the most generous contributors of "soft money" to both Democrats
and Republicans.

Not that Europe has been all that upfront and proper about things.
Surely, the European Union could have made other concessions,
including direct subsidies, to the former colonies. Surely, they could
have helped the islanders switch their economies away from crops that
are viable only with subsidies. And from the U.S. point of view,
surely they could have been more responsive to the four straight
adverse rulings they got from the World Trade Organization.

The fight is not merely about bananas, of course. It is in significant
part about power - about who will set the trading rules in an
increasingly global market. The United States complains that following
the rules of the system - the WTO - has been fruitless, like winning
judgments that the courts won't enforce. The Europeans complain that
the sanctions amount to a unilaterally assessed penalty, like getting
a jury verdict in a civil case and then deciding the penalty phase on
your own.

These are not trivial arguments, but as the African proverb has it,
when bull elephants fight, the grass always suffers.

The grass in this case are those banana export-dependent islands whose
economies, it is generally agreed, will be devastated if the U.S.
position prevails.

Some of the slack could be taken up by expanding the maritime industry
in some of the islands. But the great fear evoked by opponents of the
Clinton administration's policy is: drugs.

Since the island economies are dependent on banana exports, what will
happen when banana exports are ended? For a number of the younger
folk, impatient for serious wealth, one answer could be to use the
existing maritime capacity for the transshipment of drugs. Economic
hardship already has transformed the Dominican Republic into a major
player in the drug traffic, rendering that nation, according to one
observer, "the world's biggest importer of outboard motors."

There is, in short, a lot more at stake than the jokes about banana
warfare imply. Maybe it's time for both the Americans and the
Europeans to give up their macho posturing and negotiate some serious
remedies for a very serious set of problems.