U.S. Raises the Stakes in the Banana Beef

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You say buh-nar-nah, I say banana -- let's call the whole thing off. Washington on Wednesday slapped $500 million in punitive tariffs on European imports, pending World Trade Organization approval of that amount, which the U.S. has set as its estimated loss in the banana war's escalation. Although there's still room to negotiate agreement in the battle to open Europe's protected banana markets, the hard line on both sides of the Atlantic signals that there's more at stake than fruit. "If the Europeans back down on bananas, they're going to have to back down on the more costly issue of beef," says TIME business correspondent Karl Greenfeld. Europe forbids imports of most U.S. beef because it contains a growth hormone.

For the White House, however, the beef is about more than bananas or beef: "The Clinton administration needs to show Capitol Hill that the World Trade Organization works," says Greenfeld. "If Europe's markets aren't opened up despite the WTO's ruling for us in the dispute" -- the WTO having already decided in favor of the U.S. on the principle of the issue -- "that may prompt Congress to adopt a more unilateral approach to trade. And unilateralism will inevitably lead to protectionism." In the current world economy, that could lead to a slope covered with some mighty slippery peels.