The global banana trade is largely monopolized by three American and one British company and this, in itself, incited both policy and retaliatory policy. Indeed, as the report shows, trade policy is often influenced and shaped by a myriad of complicated factors and not necessarily by domestic economic interests.
As Ahearn (2001) explains, on January 1, 1993 the member states of the European Union created the Single European Market (SEM), at which time, a long list of customs, tariff, and non-tariff barriers were removed among the twelve European nations comprising the Union at the time. Many national laws and policies affecting trade were also removed and replaced with hundreds of new rules and regulations that were consistent in all member states. Among these new regulations was the CMO for bananas, which arose from a concern on the part of certain member states, most notably France and Britain to safeguard the position of banana producers in several small and fragile economies in Africa and the Caribbean that heavily rely on the production and export of bananas.
Although the U.S. neither produces nor exports bananas, US-based multinational corporations such as Chiquita Brands International, Inc. (Chiquita) and Dole Foods Inc. (Dole) operate mostly in Central and Latin American countries that were disadvantaged by the EU's banana import system.
In September 1994, the United States filed a format complaint under the General Agreement on Tariffs and Trade (GAIT). Despite repeated rulings under the GATT and later under the World Trade Organization (WTO) dispute settlement procedures in 1993 1994, 1997, and 1999 that the European banana import system was illegal under international trade law. The EU failed to make the CMO for bananas compliant with WTO rules. As a result, the WTO authorized the U.S. to impose retaliatory sanctions on $191 million worth of EU exports. The Clinton Administration began to impose 100 percent customs duties on selected European goods in March 1999 (Ahearn, 2001). It took another two yean before the EU and the U.S. eventually reached an agreement that included increased market access guarantees for Latin American producers and the establishment of a tariff-only system beginning in 2006.
Although they involve only a small portion of the transatlantic trade economy a series of persistent trade disputes have caused much antipathy for the United States - European Union trade relationship. It took almost eight years for the dispute over the EU's single banana market regime, generally referred to as the Common Market Organization (CMO) for bananas to be finally resolved in April 2001.
The EU-US banana trade dispute emerges as an extremely interesting area of investigation for obvious reasons. The first is that neither the EU nor the US are banana growers or exporters, in which instance the trade in question