[Congressional Record Volume 143, Number 56 (Monday, May 5, 1997)]
[Senate]
[Pages S3973-S3975]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  EUROPEAN UNION BANANA TRADE INEQUITY

 Mr. INOUYE. Mr. President, I join today with my friend and 
colleague from Hawaii, Senator Akaka, to congratulate Ambassador 
Charlene Barshefsky and her staff at the Office of the U.S. Trade 
Representative on their outstanding work to date in the World Trade 
Organization [WTO] action involving the European Union [EU] banana 
policy. On March 18, 1997, a neutral WTO panel charged with reviewing 
the banana case issued a detailed interim report finding the EU regime 
to be in violation of over 20 WTO principles. This represents more 
violations in a single case than has ever before been found in the 
history of the General Agreement on Tariffs and Trade and WTO dispute 
settlement.
  Although narrow in scope, the one implication I am obliged to mention 
first relates to U.S. banana production. Hawaii has produced bananas 
commercially for almost 160 years. Bananas are Hawaii's seventh leading 
agricultural crop by value and show considerable promise for expansion 
and export. This growth potential is extremely important as Hawaii 
makes a critical transition from a large plantation style agricultural 
base in sugar and pineapple to a diversified crop base featuring a very 
wide range of tropical and subtropical products. While Hawaii is a 
small producer of bananas by global standards, the distortions to 
global banana trade caused by the EU banana import regime have taken a 
decisive toll on Hawaiian producers in the form of depressed producer 
prices. If the EU's panel report is adopted as expected, it will have a 
leveling effect on the prices received by Hawaii banana growers.
  Other U.S. agricultural interests far beyond the banana sector also 
stand to benefit if the banana panel ruling is adopted in its present 
form. Farming interests throughout our country, including in Hawaii, 
share a widespread concern that international agreements do not 
adequately protect them against unfair foreign trading practices, 
particularly against repeat offenders like the EU. With the banana 
report now out in preliminary form, we are close to having in hand the 
most favorable, comprehensive findings ever rendered against a single 
EU agricultural policy. The Journal of Commerce properly described the 
ruling as ``a welcome signal that the WTO will not simply acquiesce 
when Brussels requires all member nations to raise their trade barriers 
to the highest level imposed elsewhere in the union.'' I request that 
the Journal of Commerce editorial in which that quote appears, entitled 
``Ending banana inanity,'' be included in the Record immediately 
following our remarks today.
  Mr. AKAKA. Mr. President, I am pleased to join Senator Inouye in 
encouraging the U.S. Trade Representative's continued pursuit of this 
case. The consequences of this interim WTO report are significant--not 
just for Hawaii, but for the U.S. agricultural community and for U.S. 
trading interests generally. Ambassador Barshefsky wisely recognized 
those implications when she joined with numerous other WTO members in 
calling for a WTO dispute settlement panel to condemn the EU banana 
import regime.
  The WTO panel acknowledged that in an increasingly interdependent 
global economy, governments will be held accountable for the adverse 
consequences their trade policies may have on foreign producing 
sectors, however large or small they might be. Hence, if the banana 
panel's interim report is adopted, as we expect it to be, small 
producing interests, such as the banana producers of Hawaii will be 
entitled under the long arm of the WTO to all rights and interests 
guaranteed by that treaty. Since the success of small producing 
interests is a critical aspect of Hawaii's agricultural future, this 
long arm protection is of great reassurance to us.
  Under the new WTO rules, if the banana report is adopted, the EU will 
face a stark choice: it will either have to dismantle this unlawful 
regime or face legal WTO trade retaliation. After decades of EU 
disregard of U.S. agricultural interests, a strict enforcement of that 
choice should establish an effective model for resolving future 
disputes with the EU and, equally important, should deter the EU from 
even engaging in unlawful agricultural policies in the first instance. 
Restored confidence in international dispute settlement should, in 
turn, help broaden the general view that trade agreements are a 
positive force in the promotion of U.S. agricultural trading interests.
  The banana report promises to be helpful to U.S. agriculture in still 
another way. By clarifying the conditions under which agricultural 
tariff rate quotas [TRQ's] can be administered, the report should 
prevent countries from using TRQ's to accomplish the sort of 
nontransparent, discriminatory and restrictive non-tariff barriers that 
the Uruguay Round sought to eliminate.
  In addition to the favorable precedent being set for American 
agriculture, the banana report also gives expansive life and coverage 
to the new WTO agreement governing services. The report found that U.S. 
service suppliers engaged in the wholesale distribution of fresh fruit 
have had their conditions of trade adversely affected by the EU regime 
in numerous ways, always to the direct benefit of EU corporate 
interests. The measure of U.S. harm as a result of these services 
violations may exceed $1 billion, a level well in excess of the harm 
normally implicated in international dispute settlement actions. By 
strictly upholding U.S. service supplier interests in this case, the 
panel has helped ensure meaningful, lasting protection of all U.S. 
sectors covered by the new international services accord.
  In short, if adopted, the WTO banana report will represent an 
unambiguous win for multiple trading interests throughout our country. 
We accordingly ask our Senate colleagues to lend all necessary support 
to Ambassador Barshefsky and her staff to secure adoption and full 
implementation of this important WTO report.
  The editorial follows:

             [From the Journal of Commerce, Apr. 11, 1997]

                         Ending Banana Inanity

       An interim ruling last month by a World Trade Organization 
     dispute panel, calling on the European Union to overhaul its 
     system of banana trade preferences, was a big achievement for 
     the 40 countries--one-third of the WTO's membership--involved 
     in the case. It showed that a rules-based trading system can 
     yield just decisions even in complex and politically charged 
     cases.
       The banana case involved a decades-old system of trade 
     preferences that European nations granted their banana 
     producing former colonies in Africa, the Caribbean and the 
     Pacific. For six of those countries, that preferential access 
     left relatively slim quotas for Latin American producers, 
     many of whom market their fruit through U.S.-based Chiquita 
     Brands.
       That difficulty was compounded when, in 1993, the EU sought 
     to transform the voluntary preference program adopted by some 
     of its member states into a uniform regime for the entire 
     union. That meant forcing Germany, Belgium, the Netherlands 
     and other EU states to impose caps on banana imports, driving 
     up the price and limiting the supply of the Latin American 
     bananas their consumers prefer.
       In principle, the EU could have handled this change in a 
     way that did not discriminate against third countries and 
     break WTO rules. But Brussels took the opportunity to set up 
     a whole new system that favored European banana marketing 
     companies and put Chiquita Brands at a disadvantage. The 
     mechanism was a Byzantine system of import and export 
     licenses, which were made available to European marketers and 
     to the foreign governments willing to cooperate with them.
       Four countries--Colombia, Costa Rica, Venezuela and 
     Nicaragua--were made an

[[Page S3974]]

     offer by the EU that they couldn't refuse: Agree to supply 
     bananas under the EU regime or be punished with less access 
     to the world's largest banana market. The EU also enlisted 
     Caribbean politicians to defend the system it had set up to 
     benefit European marketers. The result was that Chiquita saw 
     its market share in Europe plunge by nearly 50%, costing it 
     hundreds of millions of dollars.
       The United States has fought this system in world trade 
     bodies for years. Dispute panels of General Agreement on 
     Tariffs and Trade, forerunner of the WTO, twice ruled that 
     Europe's banana regime violates trade law, but the EU refused 
     to honor those rulings. Washington's persistence may pay off 
     yet, however, since the WTO's rules prevent a single nation 
     from blocking a panel ruling.
       To its credit, the three-member WTO panel withstood 
     overheated lobbying by the EU and its allies in the 
     Caribbean, who falsely charged that the United States was out 
     to wreck the original preference program for former colonies. 
     Instead, the panel identified the real issue: the right of 
     investors in services--in this case, marketing and 
     distributing bananas--to have a fair shot at a big market.
       Moreover, the EU's claims notwithstanding the panel's 
     interim ruling will not threaten Caribbean exports to Europe, 
     which amount to 8% of Europe's banana imports. The only 
     losers will be the big European banana trading firms, which 
     will not longer be able to charge monopoly prices.
       The ruling also is a welcome signal that the WTO will not 
     simply acquiesce when Brussels requires all member nations to 
     raise their trade barriers to the highest level imposed 
     elsewhere in the union. The WTO allows this ``leveling up,'' 
     but also requires that exporters in third countries be 
     compensated for their losses. The panel decision, if 
     finalized, would require the EU to offer such compensation.
       The decision is a victory for European consumers, who have 
     been paying high prices as a result of the EU banana regime. 
     If the interim ruling is finalized--as is expected--and the 
     EU implements it as it should, Europe's long chapter of 
     banana inanity may finally draw to a close.


                  WTO DISPUTE SETTLEMENT PANEL REPORT

  Mr. GLENN. Mr. President, I rise to bring my colleagues' attention to 
a recent and very significant decision by a dispute settlement panel of 
the new World Trade Organization [WTO]. The case is extraordinarily 
complex and I congratulate Ambassador Charlene Barshefsky and her staff 
at USTR on their skillful handling of this matter on behalf of the 
United States.
  To summarize the issue, the United States, Mexico, Ecuador, Honduras, 
and Guatemala went to WTO dispute settlement seeking an end to an EU 
banana trade regime which discriminates against banana exports from 
certain Latin American countries and against certain United States and 
Latin American banana marketing companies. The EU regime has deprived 
Latin American countries of market share and export growth in the EU 
and has taken business away from United States and Latin American 
banana marketers, giving that business over to European marketing 
firms.
  The WTO panel's decision is a major victory for the United States and 
our Latin American partners in the case. The panel found that the EU 
banana regime is founded on over 20 violations of international trade 
agreements, including the General Agreement on Tariffs and Trade 
[GATT], the General Agreement on Trade in Services [GATS], and the 
Agreement on Import Licensing Procedures.
  This case has implications much broader than simply the banana trade. 
The United States has many, very contentious, on-going agricultural 
trade disputes with the EU, and for that reason U.S. agricultural 
interests have been watching the banana case with great interest. 
First, this case is an example of the successful use of WTO dispute 
settlement to resolve these agricultural trade issues. Further, 
according to the American Farm Bureau, the panel's report ``helps 
establish clear parameters for the implementation of agricultural 
tariff rate quotas [TRQ's]. These parameters will help prevent TRQ's 
from becoming the very type of nontariff barrier the Uruguay Round 
sought to eliminate.''
  In addition, this case is the first test of the General Agreement on 
Trade in Services. The United States was instrumental in ensuring that 
GATS was included in the final Uruguay Round Agreement. It is in our 
interest to see the MFN and ``national treatment'' obligations, 
traditionally applied to goods in trade agreements, now extend to 
services, an increasingly important portion of U.S. foreign commerce. 
The panel decision in the banana case interprets broadly the GATS 
protections against government policies which discriminate against 
foreign service suppliers. This is an important precedent and a 
significant victory for U.S. interests.
  Once again, Mr. President, I complement USTR on a job well done and 
urge the administration to persevere through the inevitable appeal 
process, doing everything necessary to ensure that this important 
ruling is not undermined. I sincerely hope that, with the panel's 
decision in hand, a negotiated solution to end the discriminatory 
banana regime can be found. However, if not, the United States has a 
WTO-sanctioned right to retaliate, which we should not hesitate to 
invoke, if necessary, to achieve full EU conformity with the panel 
ruling in this case.


                  A Hopeful Step for America's Farmers

  Mr. DeWINE. Mr. President, I am very pleased to join with my 
distinguished colleagues from Hawaii, Senator Inouye and Senator Akaha, 
to congratulate Ambassador Charlene Barshesfsky and her team at the 
Office of the U.S. Trade Representative for the efforts they have taken 
in their case against the European Union [EU] banana regime, which is 
pending before the World Trade Organization [WTO]. I know this is an 
issue of interest not just for the three of us, but also my Ohio 
colleague, Senator Glenn, my distinguished friend from Utah, Senator 
Hatch, and the majority leader, Senator Lott. Last week, the six of us 
joined together in a letter to Ambassador Barshefsky, expressing our 
appreciation for her office's great work to date.
  The case in question was brought before the WTO by the United States, 
Mexico, Guatemala, Honduras, and Ecuador. Last March, a panel of the 
WTO made public an interim report, which found the EU banana regime to 
be in violation of more than 20 WTO principles. As the senior Senator 
from Hawaii pointed out, this one case has produced more violations 
than any other in the history of the WTO dispute settlement process.
  I am sure one could ask why a Senator from Ohio would be interested 
in a trade dispute involving bananas. It's easy to answer: I am a 
Senator who represents a large number of farmers in Ohio. Ohio farmers 
produce agricultural goods for both domestic and international markets. 
Indeed, if American agriculture is to remain a growth industry, we need 
to increase our presence in world markets. It's that simple.
  The hard fact for many farmers is that free and fair trade on the 
world stage hasn't always been simple, particularly when they have to 
go up against the EU. It is our job in Washington to achieve and 
advance trade agreements that protect and advance our agricultural 
interests. That can be easier said than done. It took years of 
negotiations before Congress finally ratified the General Agreement on 
Tariffs and Trade and supported the creation of the WTO. Despite this 
progress in our trade laws and agreements, I still hear from farmers 
who believe that international trade agreements don't do the job, or 
express a lack of confidence in the WTO system.
  That's why I followed with great interest the case against the EU 
banana regime. The ultimate outcome of this case stands to shape both 
the real and perceived effectiveness of our U.S. trade team, and the 
WTO as a means to achieve those goals.
  Last month's interim report represents the most significant and 
hopeful sign that our Nation's interests can be voiced effectively in 
the WTO. It's important to emphasize the interim report is a first 
step. The report still must be adopted by the WTO and the EU be 
compelled to achieve full conformity with its findings. If the WTO 
adopts the report, it will be the first time the United States has won 
a case brought against the EU in the WTO. If adopted, U.S. agricultural 
trade policy will stand at a vital crossroads. America's farmers have 
battled the EU's tough and predatory trade practices for decades. Now, 
it appears that the WTO is in a position to shift the balance toward 
fairness and respect for U.S. agricultural interests in two ways: 
First, by offering an impartial forum to hear and resolve trade 
disputes; and second, by serving notice to the EU that its past 
practices will not be tolerated.

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  Again, I congratulate Ambassador Barshefsky and her team for their 
persistent efforts to stand up for America's farmers before the WTO. I 
urge my colleagues to express their support as well. I hope we will see 
continued success as this report proceeds through the adoption process, 
and as other cases are brought before the WTO.

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