BANANA ARTICLE BY DOLE CHAIRMAN DAVID H. MURDOCK
Westlake Village, CA - March 09, 2001
The following article was written by David H. Murdock, Chairman and Chief Executive Officer of Dole Food Company, Inc. (NYSE: DOL).
EUROPE'S STEP TOWARD FREE TRADE
The European Union has finally committed to an open and competitive banana market. In January it passed a law committing to open its banana market "no later than 1 January 2006." Dole applauds this step. The United States has long wanted it. So have we.
We at Dole Food Company believe in free trade and the freedom of everyone to compete for markets. Over the past fifteen years, Dole has grown its business worldwide and, today, we are the largest banana company in the world and we have done it profitably. Since Europe imposed its illegal banana trade regime in 1993, we have lost substantial market share in the European Union. We've managed to cut our losses by growing our other businesses but there's no doubt that Europe's illegal trade discrimination hurt us and hurt us badly. For the past eight years we have supported the USTR's efforts to obtain a more fair, open, competitive, banana market in Europe. Therefore, when we say that Europe is finally heading in the right direction, we do not do so lightly.
To transition from today's illegal regime to the open market of 2006 Europe has chosen the most pro free trade interim device that it could have adopted. Europe calls it "first-come first-served." A banana exporter applies for entry to the European Union market only when its bananas are loaded on a ship, fully documented, and already on the water committed to the European Union. The discrimination of the current illegal system is eliminated because all applicants will be treated equally and each applicant gains market access in the same proportion as every other applicant based on the applicant's actual commitment of bananas to the European Union. Instead of giving market access to any European company that applies for it - which is now the case - it goes in a non-discriminatory manner only to operators of those ships already on the water.
Europe proposed this idea to the United States last fall. The Clinton Administration opposed it; Chiquita opposed it. Chiquita wants managed trade a closed market and a guaranteed market share that is significantly greater than every other participant, including Dole. Under the Clinton/Chiquita proposal licenses would be awarded only to certain importers based on their historic market shares of five to ten years ago.
The Clinton/Chiquita proposal is flawed. First, there is no fair, equitable or legal basis to achieve it. Second, it draws from a period of time the illegal regime was in effect a period already condemned by the WTO panel that decided the case. Third, it sets bad precedent for other trade negotiations because it continues a managed market instead of an open, competitive system. Finally, it would result in fewer exports from Central and South American countries because banana export companies would shrink their production and exports to match their allotted market share. This could have disastrous repercussions for Latin America, whose banana exports would be substantially curtailed. The United States is putting billions of aid dollars into Colombia and Ecuador. Does it make sense to impose a managed trade regime that will result in reducing these countries' exports of a legal cash crop?
Europe's first-come first-served system would have the desired effect of encouraging Europe to make good on its commitment to open trade. This system will benefit those banana exporters that invest in the jobs, people, countries and infrastructure that it takes to grow markets, open trade and compete. Everyone will have the right to compete for a share of the market by putting themselves into the business, at risk, with ships sailing for Europe. In contrast, managed trade by historic reference periods - the Clinton/Chiquita proposal - would make it politically difficult for the Europeans to keep their commitment to an open market. Companies with favorable fixed market shares would find it in their interest to lobby the governments not to go to an open market.
Dole Food Company has often criticized Europe for violating both free trade principles and World Trade Organization rulings. Now we at Dole see a change in Europe's attitude and the United States should build on that change to finally end the greatest single dispute in the history of international trade.
President Bush has and is campaigning for free trade and open markets. We at Dole strongly agree with the principle of free trade. This is certainly not the time to take a step backward on the banana issue, as the Clinton/Chiquita proposal would have us do. It is time to step forward and negotiate the European proposal on terms beneficial to the United States free trade and competition principles and put an end to managed markets. We urge President Bush to do just that and end the banana trade war with Europe.