BEHIND THE BANANA DISPUTE

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.

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 is 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 to the United States and
elsewhere. 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."

In short, a lot more is 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.