The Banana Case.ppt

The Banana Case Miguel Green, Arianne Confesor, James Lobo, and Brittany Whiting Origin of Bananas Banana exporters importers Int’l Banana Economy Bananas 3rd most important traded foodstuff by value Exports worth $4.7 billion in 1999 after wheat and coffee Production in tropics largest consumption in US, EU Japan 60% of trade controlled by US MNCs Dualistic structure of banana trade Source: Robert Read, Department of Economics, University of Lancaster , The Anatomy of the EU-US WTO Banana Trade Dispute US MNC Banana Regime MNCs began the banana trade to U.S. in late 1800s Historical US Gov. protection over banana trade In the 1960s began exporting to Europe Today, control 60% of global banana production, shipping, ripening and retail distribution Dole had total revenues of $4.4 billion in 2002 Chiquita sales in 2002 of $1.4 billion; recently emerged from bankruptcy EU Banana Trade Regime Under the Lomé Convention, preferential trade and quotas with former European colonies: Traditional ACP countries such as Cameroon, Cote d’Ivoire, Somalia, etc. Special protection for DOM (Departements d’Outre –Mer): French Caribbean, Madeira, Canary Islands Price support payments under CAP since 1993 Imports from other countries (Dollar Area) were subject to tariffs and licensing restrictions. EU Import Regime Cont’d This import regime was found to be illegal by the WTO in 1997. The main criticisms were the setting aside of a quantity reserved solely for ACP imports, and the system of allocation of licenses which did not completely eliminate discrimination vis-à-vis third-country operators. The Issues 3 US MNCs Chiquita, Dole Del Monte control 2/3 world trade in bananas US estimated $520m in lost revenue Nations Involved Dollar Area siding with the US Ecuador Guatemala Honduras Mexico Accepting of EU quotas ACP states Colombia Costa Rica Nicaragua Venezuela Banana Trade Cases Complaints against the EU EU preferential treatment to former colonies while discrim