Corporate versus National Interest in US Trade Policy by Richard L. Bernal

Author:Richard L. Bernal
Language: eng
Format: epub
ISBN: 9783030569501
Publisher: Springer International Publishing

Think Tanks

The most influential think tanks did not become involved in the debate over US banana policy, largely because institutions like the IIE and The Brookings Institution regarded this as a question of free trade versus preferential trade by the European Union to developing countries. There were no major publications by institutions with a research or policy interest in the Caribbean, except The North South Center.102 This was unfortunate because the Caribbean struggled to counter technical reports by the World Bank (e.g., the infamous “Bananarama” report), which argued that the EU’s banana regime should be replaced by direct aid because this would be better and cheaper. Borrell also claimed that protectionist schemes are an “exceptionally inefficient method of transferring resources” citing the EU banana regime as costing European consumers $1.6 billion to transfer $300 million to eleven beneficiary economies.103 A study by the University of Exeter makes the critical point that a “perfectly competitive model is inappropriate for the banana market. Account must be taken of the oligopolistic elements in that market. Once that is done, it ceases to follow that full liberalization maximizes consumer welfare … it is not, therefore, a correct formulation of the problem to say it is solely about how much consumers would lose in order to favor some producers and suppliers. It is in the interest of EC consumers to maintain genuine access to the banana market by a wide range of suppliers, (i.e., to ensure real competition in the market place) … there are technically several ways of doing this … some combination of effective tariffs and quotas is desirable. In our judgment then, however, the EC must move to more explicit regulation of the market.”104

The Council on Hemispheric Affairs did a very revealing exposé of Chiquita’s operations in Honduras, documenting the disreputable business practices of Chiquita and condemning the “buying of access in Washington”.105 The principal findings of this report were summarized in the Washington Post bringing them to the attention of a wider audience.106

To counter the technical studies arguing that the dismantlement of the EU banana regime not only conformed to the principles of free trade but would actually be good for the Caribbean as they would shift into products in which they enjoy a comparative advantage, the CBEA commissioned its own study. The study entitled “The Economic Consequences of a Banana Collapse in the Caribbean” was produced by two well-known Caribbean academic/trade policy analysts, Henry S. Gill and Dr. Anthony P. Gonzales. They conclude that “were the foundations of the present EU banana regime to be modified in such a way as to reduce the provisions in favor of Caribbean exporters, a disastrous economic situation would ensue in the Caribbean and economic collapse would be inevitable for the smaller banana producing territories.”107 There were severe constraints involved in diversification out of banana production, a finding with which Welch concurs.108

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