Part II of the banana saga is unfolding. Yuppies, stock up on your Perrier, canned truffles and cashmere sweaters. If agreement cannot be reached, a full-scale trade war may occur. Links to explanatory articles are at the BBC site.

http://news.bbc.co.uk/hi/english/business/the_economy/newsid_290000/29

Friday, March 5, 1999 Published at 08:22 GMT

Business: The Economy

Telephone diplomacy in banana war

US says EU unfairly favours bananas from former colonies

UK Prime Minister Tony Blair and US President Bill Clinton have pledged to seek a solution to the escalating dispute over bananas after discussing the matter on the telephone.

Mr Blair called the president on Thursday night in an effort to avert a full-scale trade war.

"Neither side wants to damage such an important and positive relationship," a spokesman for Mr Blair said after the 15-minute telephone conversation.

The six-year quarrel between the United States and the European Union has blown up into a row of massive proportions, with the US slapping import restrictions on a range of EU goods.

Officials in Washington have told the BBC they will not back down, despite the EU having made a formal complaint to the World Trade Organisation, the body which polices such matters.

At the heart of the problem is Washington's claim that European import rules favour bananas from former Caribbean colonies over those from central American companies.

The EU continues to maintain its import rules have been changed to bring them into line with WTO regulations.

But the US finally lost patience with both the EU and the WTO, which has so far delayed a decision on whether the EU is breaking trading laws.

Fury with US

Washington's move has been denounced as "unacceptable" and "unlawful" by European Trade Commissioner Sir Leon Brittan.

American trade authorities have said importers of a range of European products, varying from French cheese to Scottish cashmere, will have to pay a money bond to customs before the goods are allowed to be imported.

The bonds will cover the cost of duties that Washington might impose, if the World Trade Organisation finds in its favour.

Some $520m a year of EU exports are affected by the action, and thousands of jobs could be put at risk.

UK Trade Minister Brian Wilson warned the American action could be "potentially catastrophic" to the UK's cashmere industry.

Earlier, Mr Blair said: "No-one should be in any doubt about our determination to make sure British jobs are protected."

But the US Ambassador to London Philip Lader said discussions between the two countries had been cordial.

"The friendship between our two countries is extraordinary and it's in the context of that friendship that we are seeking an acceptable solution," he said.

-- Old Git (anon@spamproblems.com), March 05, 1999

Answers

99.99% of all cashmere sweaters, raw and/or dehaired fiber, is coming in from China and Mongolia. We have a large cashmere sweater company right here in the US. They get their fiber from Mongolia, which has the best cashmere in the world. There will be no shortages of cashmere.

Got knitting needles?

-- Taz (tassie@aol.com), March 05, 1999.

Sorry, Taz, my attempts at irony sometimes don't make it. I guess it's because you can't see my tongue in my cheek! If a trade war erupts between the US and Britain/Europe, there will be serious consequences--like higher US unemployment due to lost jobs from the people Over There not buying goods from Over Here. There will be much ill-will from the Scots over the loss of business vis a vis small family business, like knitting, weaving and distilling, not to mention oodles of ill-will from all the EU members because of what they perceive as the US banana industry's pressure on Clinton (via campaign contributions) for protectionism. There will be higher prices for imports. Let's look at what we import from a small country like Eire (Irish Republic), for instance (from the US CofC site):

Organo-inorganic & heterocyclic compounds etc, automatic data process machs & units thereof, special transactions & commod not classif by kind, parts etc for office mach & auto data process mach, medicinal etc products, except medicaments, alcoholic beverages, thermionic, cold cathode, photocathode valves, etc, medicaments (inc veterinary meds), starches, inulin & wh gluten, albumin subst, glues, nitrogen-function compounds, elec aparatus for swtichg or protectg elec circ, measuring/checking/analysing & contr inst & appt, glassware, inst & appls for medical, dental, etc. purpose, natural abrasives inc industrial diamonds, pumps, air or other gas compressors and fans, telecommunications equipment & pts, essential oils, perfume & flavor materials, toosl for use in the hand or in machines, engs & motors, nonelect & pts.

And that's only Eire's Top 20 categories of imports. You can imagine what we get from all the other EU countries, like Britain, France, Switzerland, Italy, and so on.

-- Old Git (anon@spamproblems.com), March 05, 1999.

To keep this related to the forum:

What if they had a trade war, and no one showed up?

-- Bill (y2khippo@yahoo.com), March 05, 1999.

Brazil in Real Trouble? Bananas Foster Trade War? Now I know where those ubiquitous British tabloids come up with their whacky headlines.

-- Puddintame (dit@dot.com), March 05, 1999.

Old Git is right on! Trade embargos or Y2K interruptions are impediments to voluntary exchange. Impediments to free exchange kill the inocent.

-- Watchful (seethesea@msn.com), March 05, 1999.

Puddintame - (chuckle) you caught it! Not just another pretty face, are ya?

Watchful - in a nutshell.

-- Old Git (anon@spamproblems.com), March 05, 1999.