Banana Beef Signals Coming Trade Turbulence

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The Banana War heats up next week, but it may be just the opening act of a turbulent year for international trade. An emergency World Trade Organization meeting Monday will discuss Washington's punitive tariffs against European imports, which took effect Thursday. But this is about more than simply banana subsidies vs. tariffs on Belgian waffles. "If it can't resolve the banana conflict, the WTO becomes an ineffective dispute-resolution mechanism," says TIME business correspondent Karl Greenfeld. And that's a dangerous prospect both sides want to avoid, because the global economic slump is fueling protectionist impulses even in their own backyards.

The WTO has twice ruled in favor of Washington's complaint over Europe's protection of Caribbean banana imports, but its penalty assessment -- expected in two weeks -- is unlikely to be more than half of the $500 million in tariffs Washington preemptively slapped on a range of European imports this week. Even if the banana conflict is resolved, however, hard on its heels come battles over European restrictions on everything from hormone-enriched beef to aircraft engines. While Washington wants to show Americans that the WTO can't be manipulated by the Europeans on technicalities, the EU wants to maintain the sovereignty to decide on such politically sensitive issues as hormone-enriched beef. Trade negotiations would be so much simpler if governments didn't have to worry about elections...