The fierce rhetoric about such a seemingly trivial issue has caused many observers to question the motivation behind it. European officials note that the administration lodged a complaint with the WTO last year within 24 hours of a decision by Carl H. Linder Jr., chairman of Chiquita, to make a large donation to the Democratic Party.
But whatever the motivation, there are several reasons why the current U.S. strategy is misguided.
First, the harsh rhetoric isn’t likely to work. Indeed, officials in Brussels are already showing defiance. “No WTO member has the right unilaterally to judge the compliance of another, nor to be judge and jury in its own cause,” said European Trade Commissioner Sir Leon Brittan. “If the United States persists with such unilateral action, the EU will have no choice but to take rapid steps to challenge it in the WTO.”
Unfortunately, Europe’s response isn’t likely to be limited to a WTO challenge. Asked whether by the EU would back down from the threat of an all‐out trade war, a spokesman for European Commission president Jacques Santer said that the EU was completely ready to take any necessary actions.
Second, as even most fans of aggressive brinkmanship admit, this is a terrible time to be contemplating new trade barriers. It’s bad enough that the U.S. economy may soon take a hit for the benefit of a few steel and semiconductor firms. Endangering U.S.-EU trade on behalf of mammoth fruit companies is another step down that slippery protectionist slope. And by allowing such special interests to drive U.S. trade policy, the administration and Congress risk crippling the world’s multilateral trading system.
Mr. Santer described that danger in a recent letter to Bill Clinton. “The consequence of the U.S. pursuing its unilateral action against the EU,” he wrote, “would be serious damage to the entire multilateral WTO system as well as to the agenda for positive EU-U.S. cooperation.”
Finally, aggressive saber rattling isn’t Washington’s only — or its best — available option. Instead of disciplining Europe at the expense of U.S. consumers and importers, the administration should seek to negotiate compensation through the WTO’s regular dispute settlement channels. If the ultimate goal is open markets, compensation would be a step in that direction, allowing Washington to take a firm line without shooting itself in the foot.
If anything, the banana dispute illustrates the need for a change in the overall U.S. trade strategy. If Europe insists on clinging to self‐destructive economic policies, let it. It is ludicrous for America to threaten to close its markets for the benefit of a few politically favored firms. A much better strategy would be to lead by example: to enjoy the benefits of open trade regardless of the folly of others.