Source: Simon Dawson, Bloomberg
Richard L. Bernal, Corporate versus National Interest in U.S. Trade Policy: Chiquita and Caribbean Bananas. Palgrave Macmillan, November 2020.
Price: $24.99 | Length: 300 pages
One does not usually think of bananas as big business, let alone as a factor in the fate of nations. But according to Statista, in 2019 the banana was the world’s most produced fruit crop, ahead of watermelons, oranges, and apples. It is estimated that the global banana trade generates around USD $8 billion a year, a tidy sum for primary exporters such as Ecuador, Colombia, Panama, Costa Rica, Guatemala, and Honduras. Considering the economic significance of the banana market, then, it should come as no surprise that bruising trade wars have been fought over the fruit known by some as “green gold.” One of the more ignominious chapters in the corporate history of the banana came in the 1990s, when the American multinational company Chiquita lobbied the United States government into seeking to end the Caribbean’s preferential banana trade regime with the European Union (EU). This battle had only one winner—Chiquita.
Richard L. Bernal, Jamaica’s former ambassador to the U.S. and a noted Caribbean trade economist, has used the history of the banana trade wars to write a masterful and thoughtful book about corporate influence and its impact on governments, and the fate of small countries when negotiating with larger, more powerful nations. To Bernal, who was involved in the aforementioned trade negotiations in the 1990s, Chiquita’s push to dismantle the EU’s preferential banana trade regime benefited the fruit company exclusively. It was a disaster for countries in the Eastern Caribbean like Dominica, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines—which had become almost totally dependent on bananas as a major export—and Jamaica, where the fruit was a also a significant foreign export.
Bernal notes the importance of the EU’s preferential banana regime: “Essential to the viability of the banana export industry in the Caribbean was the EU banana regime. The EU banana regime …was a preferential market access restricted to the former European colonies in Africa and the Caribbean which were banana exporting countries. The banana regime consisted of a combined system of tariffs, quotas, and import licenses.” In a sense, the regime functioned as an economic lifeline for many of the Caribbean countries that found it difficult to compete with the more cost-efficient Central American and Ecuadorean producers.
Bernal’s book has two objectives. The first is to document and explain how Chiquita succeeded in pushing the administration of then-President Bill Clinton to pursue a trade policy of forcing the EU to dismantle its preferential banana import regime for exports from small Caribbean countries. In essence, one single company, Chiquita, drove the U.S. into a trade war with Europe.
His second goal is to argue why the U.S.’s success in ending the EU banana regime was not ultimately in its national interest, “because of the harmful repercussions for the Caribbean banana exporting countries which experienced a very significant decline in production and exports.” This decline set the stage for a challenging decades-long period for much of the Caribbean, as island states underwent economic structural adjustment—causing popular resentment toward the U.S. to build—and became more susceptible to external forces like drug trafficking. Consequences that were written off in the U.S. as “collateral damage” constituted a veritable catastrophe, which over the long term opened the door to increasing Chinese influence in the Caribbean.
Although the U.S. was repeatedly warned that ending the EU’s preferential market would cause major problems in the Eastern Caribbean, the Clinton administration ignored the advice. Indeed, Chiquita’s lobbying machine in Washington triumphed. As Bernal observes: “Chiquita used its financial contributions to get the Clinton administration to pursue a policy in its interest.” Moreover, U.S. national interests were not well-served: “The collapse of the banana industry caused serious economic dislocation and thereby made these small island developing states more vulnerable to narcotics trafficking and the associated transnational crime.”
Bernal does a great job in demonstrating what sort of company Chiquita was during the 1990s. The company had its roots in the United Fruit Company, which was infamously instrumental in the 1954 coup that deposed the democratically elected President of Guatemala Jacobo Árbenz. The company feared that Árbenz would deepen land reforms and give more power to the country’s labor unions, which would likely push to raise wages for farmworkers. At the same time, Árbenz formally legalized the communist Guatemalan Party of Labor. United Fruit, which ran a highly profitable operation in the Central American country, viewed Árbenz’s reforms as a threat to its profit margins, and embarked upon an intense lobbying campaign in Washington that would result in a U.S.-sponsored coup that knocked Árbenz from power, opening the door to a succession of pro-U.S. authoritarian leaders.
Bernal does conclude his book with by providing the reader with some sense of justice—albeit a limited one—in that Chiquita did not have much time to savor its victory and penetrate European banana markets. After waging another banana war in Central America against an Irish-based competitor, Fyffes—which included accusations that Chiquita had bribed judges in Costa Rica and attempted to kidnap its rival’s manager—the banana giant was forced to file for Chapter 11 bankruptcy in 2001. Although Chiquita restructured its business and emerged from bankruptcy, it was eventually bought out by a combination of Brazilian interests, Cutrale and Safra Group, bringing the long saga of United Fruit-Chiquita to an end. The effects of this company’s actions, however, are still being felt today across the Caribbean. Bernal’s book is a thought-provoking read for anyone interested in the Caribbean, corporate politics, and the challenges that corporations pose to democratic governments.
Scott B. MacDonald is the chief economist at Smith’s Research & Gradings, founding director of the Caribbean Policy Consortium, Senior Associate at the Center for Strategic and International Studies, and a Research Fellow at Global Americans. He is currently working on a book on the new Cold War in the Caribbean.