A CRITICAL CONCERN
Global Perspective
WORLD TRADE GOES BANANAS
Rather
than bruising Chiquita Bananas, the wrath of politics instead hammered
Prosciutto di Parma ham from Italy, handbags from France, and bath oils and
soaps from Germany. These and a host of other imported products from Europe were
all slapped with a 100 percent import tariff as retaliation by the U.S.
government against EU banana import rules that favored Caribbean bananas over
Latin American bananas. Keep in mind that no bananas are exported from the
United States, yet the United States has been engaged in a trade war over the
past seven years that has cost numerous small businesses on both sides of the
Atlantic millions of dollars. But how can this be, you ask? Politics, that’s
how!
One
small business, Reha Enterprises, for example, sells bath oil, soaps, and other
supplies imported from Germany. The tariff on its most popular product, an
herbal foam bath, was raised from 5 percent to 100 percent. The customs bill for
six months spiraled to $37,783 from just $1,851 a 1,941 percent tax increase.
For a small business whose gross sales are less than $1 million annually, it
was crippling. When Reha heard of the impending “banana war,”
he
called everyone his congress person, his senator, the United States Trade
Representative (USTR). When he described his plight to the USTR, an offi cial
there expressed amazement. “They were surprised I was still importing,” because
they thought the tariff would cut off the industry entirely. That was their intention,
which of course would have meant killing Reha Enterprises as well.
In effect, he was told it was his fault that he got caught up in the trade war. He should have attended the hearings in Washington, just like Gillette and Mattel, and maybe his products would have been dropped from the targeted list, just as theirs were. Scores of European products, from clothing to stoves to glass Christmas ornaments, dolls, and ballpoint pens, that were originally targeted for the retaliatory tariffs escaped the tariff. Aggressive lobbying by large corporations, trade groups, and members of Congress got most of the threatened imported products off the list. The USTR had published a list of the targeted imports in the Federal Register, inviting affected companies to testify. Unfortunately, the Federal Registerwas not on Reha’s reading list.
In
that case, he was told, he should have hired a lobbyist in Washington to keep
him briefed. Good advice but it doesn’t make much sense to a company that
grosses less than $1 million a year. Other advice received from an offi cial of
the USTR included the off-the-record suggestion that he might want to change
the customs number on the invoice so it would appear that he was importing
goods not subject to the tariff, a decision that could, if he were caught, result
in a hefty fi ne or jail. Smaller businesses in Europe faced similar problems
as their export business dried up because of the tariffs.
