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The Banana: Empires, Trade Wars, and Globalization

Author(s):Wiley, James
Reviewer(s):Bucheli, Marcelo

Published by EH.NET (October 2008)

James Wiley, The Banana: Empires, Trade Wars, and Globalization. Lincoln: University of Nebraska Press, 2008. xxxii + 278 pp. $45 (cloth), ISBN: 978-0-8032-1577-1.

Reviewed for EH.NET by Marcelo Bucheli, Department of Business Administration, University of Illinois at Urbana-Champaign.

In 1996, the governments of the United States, Ecuador, Guatemala, Honduras, and Mexico filed a complaint to the World Trade Organization (WTO) against the banana import policy of the European Union (EU). After the creation of the EU, the Europeans were trying to change their banana import policy in favor of African and French- and English-speaking Caribbean nations to the detriment of Latin American producers and U.S. multinationals. Although bananas are not considered a crucial or strategic good in international trade, and neither the U.S. or the EU depend on this fruit?s production, this conflict (known as the ?Banana War?) received great attention from media and from top politicians in both the U.S. and the EU. The ?Banana War? was also the first major trade conflict the WTO dealt with and therefore constituted a test of how this recently-established organization could handle the kind of problems for which it was supposed to have been created. The conflict ended in 2001, when the EU agreed on gradually dismantling the preferential country quota system it had created in exchange for a tariff-only system. The Banana by geographer James Wiley puts the ?Banana War? in historical perspective and analyzes the effects of U.S. and European banana trade policies in the context of Caribbean and Latin American banana producing countries? political, social, and economic characteristics. Wiley shows how the banana industry evolved in a different way in each country, explaining why each country acted according to different goals during the ?Banana War.?

Wiley, who teaches at Hofstra University, makes an important contribution by putting the ?Banana War? in historical context. He divides the producing areas into two main regions: Spanish-speaking Latin American countries and French-, English-, and Dutch-speaking Caribbean countries. The author shows how the historically determined political status of the two regions and their geographic characteristics defined different paths taken by the banana industry. During the early twentieth century, when the industry was created, the main Latin American banana producing countries (Guatemala, Honduras, Colombia, and Panama) were part of the informal ?American Empire.? The U.S. had overwhelming political and economic power in the region (particularly in Central America), something that facilitated the entry of U.S. banana multinational corporations such as the United Fruit Company (now known as Chiquita) and to a lesser degree the Standard Fruit and Steamship Company (now known as Dole) (chapter 1). United Fruit controlled most aspects of the banana business, creating a vertically integrated structured that included plantations, railways, shipping, and marketing from the producing areas to the United States. The company?s activities created an industry dominated by large landholdings that used salaried or subcontracted workers. According to Wiley, United Fruit?s vertically integrated structure was challenged by rising costs during the Great Depression, the entry of Ecuador as the world?s major producer in the 1950s (with an industry controlled by domestic firms), growing labor unionization, the rise of domestic banana growers? organizations in Central America and Colombia, and disease that plagued plantations (chapter 2). These events encouraged the U.S. multinationals to reduce their producing activities in the producing countries. By the 1970s, the governments of the Latin American producing countries joined to actively reduce the power of the multinationals in the banana industry (chapter 3).

Wiley shows a different situation in the Caribbean. First, except for Jamaica, the banana industry in the Caribbean islands is relatively new (post World War II). Second, due to their status as British, Dutch, or French colonies, the banana industry of these islands was not dominated by U.S. corporations. Third, partly because of government support to small farms, the industry was not dominated by large landholdings owned by a small number of companies. And fourth, the industry was created at a time when the industry was not dominated by vertically integrated firms. By the 1960s, when the Caribbean industry witnessed its early growth, it was not considered technically necessary for a company to own plantations in order to distribute bananas in Europe or the U.S. As a result, the Caribbean small growers remained more independent than their Latin American counterparts. Wiley shows how these small growers organized themselves in associations to negotiate with the firms that bought the fruit to send it to Europe, permitting these growers to have a higher income from the banana industry. Contrary to Latin America, government intervention in the industry was constant in the non-Spanish speaking banana producing nations, with the extreme case as Suriname, where the government owns the banana industry. According to Wiley, these policies permitted a higher standard of living for the banana workers in these countries (chapters 4 and 5).

The social and political framework provided by Wiley permits a good understanding of the interests around the ?Banana War.? Wiley shows how the open competition advocated by the United States would have harmed the relatively good standard of living of the Caribbean workers, who would have needed to make enormous sacrifices to compete with the under-paid and under-unionized Latin American workers in large and more efficient plantations. Despite the European defense of the quota system, Wiley argues that the EU had already been gradually shifting its trade policy with former colonies from one focused on aid to a market-oriented one in which efficiency was the main goal. Under these circumstances, the Caribbean?s independent banana growers were at a disadvantage (chapters 6 and 7). During the negotiations between the EU and the United States, the closer their representatives were to an agreement, the more somber the future looked for both the Latin American and the Caribbean workers (chapters 8 and 9). For Wiley, the agreement between the U.S. and the EU forced the Caribbean producers to embark on a ?race to the bottom? against their Latin American counterparts in order to remain competitive. The much cheaper Latin American workforce forced the Caribbean producers to look for other income sources, such as tourism. Wiley argues that the ?diversification? advice given to the Caribbean producers by multilateral agencies is not easy in tiny islands, in contrast to the larger Latin American countries. The author shows how the number of Caribbean independent producers decreased after the U.S.-EU agreement and how their welfare is in peril because the diversification programs have not provided enough new jobs (chapters 10 and 11).

The ?Banana War? generated a large body of scholarship ? the most being Banana Wars: Anatomy of a Trade Dispute (Cambridge: CABI, 2003), edited by Timothy Josling and Thomas Taylor, and Banana Wars: The Price of Free Trade (London: Zed Books, 2004) by Gordon Myers (books curiously not mentioned by Wiley). Wiley makes a contribution to these studies by carefully considering the role of the geographic characteristics and the social and political history of the countries involved in the dispute and by making a comparison between them. The author also makes heavy use of personal interviews with some of the most relevant actors in the banana industry and trade negotiations. Although some readers might find the exhaustive description of each step of the negotiations at the WTO too detailed, Wiley provides great material for further studies on this subject. Because of its long-term comparative nature, The Banana should become obligatory reference to those studying the political economy of the banana industry during the twentieth century.

Marcelo Bucheli is the author of Bananas and Business: The United Fruit Company in Colombia, 1899-2000 (New York University Press, 2005) and other articles on the banana industry published in Business History and the Business History Review. He has essays on this subject in Banana Wars: Power, Production, and History in the Americas (Durham: Duke University Press, 2003) edited by Steve Striffler and Mark Moberg, and in From Silver to Cocaine: Latin America Commodity Chains and the Building of the World Economy, 1500-2000 (Durham: Duke University Press, 2006) edited by Zephyr Frank, Carlos Marichal, and Steven Topik.

Subject(s):Transport and Distribution, Energy, and Other Services
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII