Corporate versus National Interest in US Trade Policy

Chiquita and Caribbean Bananas

Richard L. Bernal

• Publisher: Palgrave Macmillan
• Year: 2020
• Print ISBN:
  9783030569495
• eBook ISBN:
  9783030569501
• Topic: Business
• Subtopic: International Business
• Index: Business

This book provides a history of the WTO US-EU banana dispute through the lens of a major actor: the US-owned multinational firm, Chiquita Brands International. It documents and explains how Chiquita succeeded in having the Clinton administration pursue a trade policy of forcing the European Union to dismantle its preferential banana import regime for exports from the small English-speaking Caribbean (ESC) countries. The export of bananas was critically important to the social stability and economic viability of these countries and that was in the national security interest of the United States. The experience indicates that succeeding in this goal was detrimental to U.S. national security interest in the Caribbean. 

© The Author(s) 2020

R. L. BernalCorporate versus National Interest in US Trade Policyhttps://doi.org/10.1007/978-3-030-56950-1_1

Begin Abstract

1. Objective and Organization

Richard L. Bernal¹

(1)

Office of Global Affairs, University of the West Indies, Kingston, Jamaica

End Abstract

Introduction

From antiquity, trade has been dominated by private individuals or groups of individuals in the form of companies. When governments decided to regulate trade and to implement the codification of the rules as national trade policies , the private sector exerted influence. In the modern world, the private sector and corporations, in particular, are the drivers of trade policies. This is the first fact to note about trade policy. The second fact is that throughout history, the state has actively and consistently supported private corporations including defending their property abroad, forcing foreign governments to open access to their markets, subsidizing their costs, and compelling governments to give concessions, inter alia. In mobilizing state support for their activities, corporations have always been able to count on the common belief that in a capitalist economy what is good for corporations is good for the government and the country, that is, in the national interest. This is not necessarily true because what a corporation wants or is doing is often in contradiction to the national interest. In a modern democracy with mechanisms for transparency, an active press, and competing political parties, such a contradiction should be uncovered and be part of the debate over public policy. Such debate is a reflection of society consisting of a variety of groups with different interests, and in a democracy, what is determined to be in the national interest is the outcome of the resolution of these differing interests. The idea of a policy based on a consensus resulting from a reconciliation of different perspectives of interest groups is not always realized. When this does not happen, it is the case that a particular interest group and sometimes a single corporation or institution has prevailed in the competition to influence public policy. The public and media find trade issues complex and the beneficiary corporations spend considerable sums to influence public opinion, politicians, and policymaking officials.

Objectives

The objectives of this book are:

First, to document and explain how Chiquita, a large US-owned multinational corporation, succeeded in having the Clinton administration pursue a trade policy of forcing the European Union to dismantle its preferential banana import regime¹ for exports from small Caribbean countries. Chiquita was able to induce the US government to engage in a trade war with the European Union (EU) including the imposition of increased tariffs over a product not produced in the United States and that was equivalent in value to only about 10 percent of US-EU bilateral trade .² It is, therefore, a case study of how corporate interest, in this case, an American multinational corporation, influenced US trade policy and, hence, is illustrative and instructive on the process of trade policy formulation in the United States.

Second, to explain that the United States’ success in having the EU banana regime dismantled was not in the national interest because of the harmful repercussions for the Caribbean banana exporting countries which experienced a very significant decline in production and exports. The export of bananas was critically important to the economic viability of the Eastern Caribbean islands . The decline put in jeopardy the social and economic basis for their prosperity, peace, and democracy. Subsequent to and accompanying the decline in the banana industry, these tiny mono-sectoral economies became more vulnerable to drug trafficking, social instability, crime, and the temptation to indulge in policies such as citizen investment schemes, which were in the national security interest of the United States. The national interest of the United States is to have Caribbean neighbors that are peaceful, democratic, and prosperous. The experience indicates that Chiquita’s success in having the United States dismantle the EU regime was not in the United States’ national interest indeed and was detrimental to US national security interests in the Caribbean. Chiquita’s success in having the United States support its cause is in keeping with an American tradition. Maurer documents several instances in which “American domestic interests trumped strategic concerns again and again, for small economic gains relative to the US economy and the potential economic losses.”³

Methodology

The research methodology examines international trade policy as the outcome of the interaction of competing interests by an application of a nuanced modification of the well-known interest group approach to politics.⁴ International trade policy of the United States, like its foreign policy, is the result of complex, constantly shifting interactions among competing interests⁵ which are not necessarily groups, but are actors which can take the form of political parties, corporations, business associations, individuals, government departments, think tanks, non-government organizations and even foreign governments.⁶ Economic interests dominate the motivations of the interest groups that seek to influence US trade policy . How these goals and efforts translate into trade policy is affected by ideas about trade⁷ and approach to overall foreign policy. A disproportionate influence is exerted among the competing interest groups by what Dreiling and Darves explain as the “class agency of business leaders”⁸ representing corporations.

Organization

Chapter 2 outlines the process of the formulation and implementation of US international trade policy and explains the role of corporations in this process. Ideally, trade policy is a blend and synthesis of competing societal interests working through the governmental system of Congress, the White House, and federal bureaucracy. The end result, as far as possible, is supposed to be a trade policy that reflects a national consensus, the goals which are regarded as in the national good of the United States. This is often not the outcome in reality. On the contrary, the review of trade policy formation reveals that corporations have always exerted a strong influence on US public policy⁹ inclusive of trade policy. This arises from the financial resources that they are able and willing to deploy in support of the objectives. An additional advantage has been the technical complexity of some trade issues, the nature of which often make it difficult for civil society to navigate the arcane and specialized jargon to clearly articulate their respective positions. That corporate interests have always influenced US trade policy is to be expected in a private sector, market-driven economy. After all, it is firms that trade not countries. The predominance of corporate interests in US trade policy is substantiated by a review of the history of international trade policy formulation in the United States citing a substantial number of instances of the powerful influence of corporate interests.

Chapter 3 provides (a) an overview of the Caribbean for readers unfamiliar with the region, and concentrates on (b) explaining and documenting the former vital importance of banana exports to the economies of the banana exporting countries, as reflected in the contribution of the industry to gross domestic product (GDP), exports, and employment. The chapter documents conclusively that banana was the single most important economic activity and that banana exports were the engine of economic growth in the smaller Caribbean islands of Dominica, Grenada, St. Lucia, and St. Vincent and the Grenadines and an important contributor, Jamaica. Banana production and export was by far the most important export, the largest source of foreign exchange earnings, and the largest source of employment. Prime Minister P. J. Patterson tried to convey the importance of the industry to President Clinton when he said: “For many of our countries bananas are what cars are to Detroit.”¹⁰

The United States could not have failed to be aware that the dismantling of the EU banana regi...

Table of contents

• Cover
• Front Matter
• 1. Objective and Organization
• 2. Corporate Influence in US Trade Policy
• 3. The Importance of Bananas in the Caribbean
• 4. The EU Banana Regime
• 5. Chiquita and Its Influence on US Trade Policy
• 6. Chiquita Overwhelms the Small Caribbean States
• 7. Impact of US Banana Policy on the Caribbean
• 8. Implications for US National Interest in the Caribbean
• Back Matter