Dole campaign on hold

US/Labor Education in the Americas Project
US/LEAP Newsletter
April 2001

The European Union (EU) and the U.S. have reached a tentative agreement in a nine-year old banana trade war that sets aside the EU's controversial "first come, first served" (FCFS) free trade proposal.

While the new agreement is still being analyzed, the end of FCFS represents a reprieve for workers with higher wages and decent benefits in most of Central America and Colombia who would have seen a rapid acceleration in the shift of production to low-wage, non-union Ecuador. FCFS could have been the death blow to many of the banana unions already struggling to survive the crisis that has plagued the industry for the past two years.

FCFS is essentially a free market proposal that would have eliminated country quotas for the EU market that currently protect higher-wage Panama, Costa Rica, Colombia and Honduras from low-wage imports from Ecuador and would have provided access to the lucrative EU market on the basis of who could ship to Europe the cheapest and fastest.

Campaign Deferred

The agreement came on April 11, just hours before US/LEAP, the Euroban Banana Action Network (EUROBAN), and Global Exchange were to launch an international campaign against Dole Foods for leading a "race to the bottom" in the industry and for its support of FCFS. Dole, which is highly dependent on Ecuador, was the only U.S. company backing the EU proposal. All Latin American exporting countries and Caribbean producers opposed FCFS except for Ecuador. FCFS was also opposed by the Coordination of Latin American Banana Worker Unions (COLSIBA) and the International Union of Foodworkers (IUF).

A letter initiated by US/LEAP and signed by 170 organizations, including Church Women United, the Hotel Employee and Restaurant Employees union (HERE), the Canadian Auto Workers Union, Global Trade Watch and over 40 European groups, was being readied to send to Dole CEO David H. Murdock when the EU-US agreement was announced. Joint actions in Europe, the U.S. and Central America set for April 17 were postponed as a consequence.

The campaign against Dole was requested by COLSIBA, which represents 35,000 workers in Costa Rica, Colombia, Guatemala, Honduras, Nicaragua and Panama with affiliates in Belize and Ecuador.

Besides asking Dole to back-off FCFS, slated to have gone into effect on July 1, 2001, other demands of the letter included meeting with COLSIBA. Dole has agreed to meet with COLSIBA and the IUF to discuss Ecuador and other issues, including Dole's March announcement that it is ceasing operations in Colombia where unionized workers are paid $9 to $11 a day with benefits compared to $3-4 a day with no benefits across the border in Ecuador.

Company Quotas, Not Country Quotas

The new agreement, which also eliminates country quotas, instead allocates quotas in the form of import licenses to companies based on their EU market share during the 1994-96 period. Chiquita, which lost half of its market share in the EU during the past decade, gains significantly and will be able to dramatically increase exports to the EU. The new agreement also protects national producers in Colombia, Nicaragua and elsewhere who received licenses.

The new agreement does not directly protect higher wage Central American countries and Colombia from Ecuador, but national producers who received licenses are not likely to abandon their investments in Colombia and Nicaragua, for example, to use their licenses in Ecuador.

Likewise, Chiquita is not as free to rush immediately to Ecuador since it owns a high percentage of its plantations in Central America and is much more unionized than Dole (or Del Monte).

The "losers" are primarily European importers who had less market share during 1994-96 than they do now. These "losers" could include the burgeoning "fair trade" importers who buy bananas produced according to environmental and social criteria, primarily from small producers. While the Caribbean will lose some access to the EU, Caribbean producers welcomed the demise of FCFS while withholding judgement on the new proposal pending further analysis.

Costa Rican national producers who rely on independent European importers have also come out against the new agreement, with the support of SITRAP, one of the leading banana unions in Costa Rica, which fears a negative impact on workers.

The long-running banana trade war between the U.S. and the European Union was precipitated by Chiquita, which urged the U.S. government to challenge the EU's banana import policies at the World Trade Organization on grounds that they discriminated against Latin America operations in order to protect higher-cost production in former colonies in the Caribbean and Africa.

Chiquita Wins; Dole Loses

The new agreement could save Chiquita from being taken over by new investors. Chiquita has been on the verge of bankruptcy, which still may not be avoided. But news of the agreement has increased Chiquita's stock by 50%. Earlier, on April 2, Chiquita's auditors stated they had serious doubts that the company could survive in its current form.

The new agreement is subject to approval by EU governments and a possible challenge at the World Trade Organization by Ecuador. Dole is lobbying aggressively against the new agreement, calling it antithetical to free trade. As a consequence, US/LEAP sent Dole a copy of the sign-on letter noting the wide-spread opposition to FCFS and the general concern about Dole leading a race to the bottom in the banana industry.

The EU-U.S. agreement is a transition system until January 1, 2006, when a free trade system is to go into effect. It therefore provides some time for unions and their supporters to campaign for policies that promote bananas produced by unionized workers paid a decent wage and provided good benefits. Approximately 40% of Latin American bananas outside of Ecuador are produced on plantations whose workers are unionized, the vast majority of whom are employed directly or indirectly by Chiquita.

No immediate action is proposed at this time as COLSIBA, the IUF and worker rights supporters are regrouping in light of the EU-US decision to determine next steps.