The 134 countries represented at the World Trade Organisation (WTO) talks in Geneva could be forgiven for thinking that the business of trade had moved into surreal territory. Improbable as it may seem, a dispute over what might appear to be a relatively trivial issue, the marketing of bananas, has pushed the EU and the US to the brink of a transatlantic trade war - with potentially serious consequences for a fragile world economy. Washington has already unveiled arrangements to impose 100 per cent tariffs or import taxes on certain EU imports. But in pushing hard, the United States has widened the dispute way beyond its original confines. The 15 member Caribbean Community announced at the weekend that it might renege on a treaty with the United States aimed at fighting drug trafficking if Washington doesn't reconsider its stance. Around £3 million in annual Irish exports are among the $520 million EU exports under threat.
As in all disputes of this nature, there is a certain amount of bluff and bluster in the US threat - and, indeed, in the riposte from the EU's Trade Commissioner, Sir Leon Brittan, who declared that the US measures were "unacceptable and unlawful". But, on this occasion, there is also increasing concern that the banana dispute could spiral out of control, damaging relations between the world's two most important trading blocs and undermining the work of the (WTO) as it seeks to lower protectionist barriers to international trade.
Washington has been trying to break up the EU banana regime since it was established six years ago. The regime was modified slightly after a 1997 WTO ruling that it discriminated against US exporters. But the US maintains that it still favours fruit from former British and French colonies and discriminates over US distributors of cheaper Latin American fruit. In all, US multinationals, like the Chiquita brand, control some 70 per cent of the world banana market, which gives them a great deal of political clout in Washington. The US is demanding much greater access for these companies to the lucrative EU market; it claims that the current regime is costing its distributors about $500 million per year. In the cross-fire between Brussels and Washington, there is fault on both sides. EU import quotas do appear discriminatory and unfair. Brussels is also vulnerable to the charge that it has dragged its feet on the issue and that it was reluctant, until recently, to allow arbitration. But the EU is also entitled to be angry about Washington's threat of sanctions - even before a WTO panel has ruled on the dispute. The Government has already expressed its concerns about the US threats. There is a danger that innocent parties, including some Irish exporters, could be badly damaged by this dispute. And there will be wider concerns: the increasing trade tensions come at a time when transatlantic trade relations are already soured by other disputes over hormones in beef, genetically modified food and aircraft. All of this could hardly come at a less propitious time for the world economy. The world's biggest trading powers seem intent on a disastrous course which could herald a new period of protectionism and prevent global economic recovery - unless good sense prevails.