Banana Wars Flashcards
Who controlled a large amount of the banana market?
A few TNC’s dominated global banana trade
What allowed TNC’s to dominate the market?
Vertical and horizontal integration allowed them to control the entire supply chain.
They could also benefit from economies of scale, reducing their costs.
What was the banana wars caused by?
The EU had a deal with the Caribbean which allowed preferential trade. The US argued that this broke free trade rules.
Why did the EU have an agreement with the Caribbean?
They aimed to help developing nations in the Caribbean to develop without depending on foreign aid.
Why did the US argue against the agreement?
They argued that giving preferential treatment to a country outside of the trading bloc was against free trade rules.
What other reasons could there be for the US’s argument?
The US trade deficit was at a 9 high so the US believed they could not afford EU protectionism, no matter how petty.
How were US-based multinationals involved?
They dominate the Latin American banana industry. The US president took the banana wars to the WTO within 24 hours of a previously republican supporting TNC making a $500,000 donation to the democratic party.
How has the disagreement resolved?
The US’s complaint to the WTO won in 1997 and the EU was instructed to change its rules.
