NCPA - National Center for Policy Analysis

Banana Fallout

March 5, 1999

European exporters are reportedly irate to incredulous over the U.S. decision to slap a 100 percent tariff on their goods in retaliation for Europe's favoritism toward imports of bananas grown in their former Caribbean colonies. Illustrating the confusion are the comments of one Italian export consultant: "We don't eat a lot of bananas in Italy. We don't even like bananas."

The U.S. has said it would impose tariffs as soon as it has a judgment from the World Trade Organization about how high the dollar amount of the damages should be.

  • The list of European products affected was reportedly designed to cover nearly all of the European Union's 15 member countries -- excluding Denmark and the Netherlands, because they have not been in favor of the banana import rules.
  • Nevertheless, the tariffs will more heavily impact exports from some countries than others -- with Britain being the hardest hit, at 24 percent of its exports to the U.S. being affected.
  • Other countries with a high percent of their exports at risk are Italy, 21 percent; France, 19 percent; and Germany, 14 percent.
  • Levels of exports to the U.S. impacted in the remaining European countries range from 7 percent to 1 percent.

Companies exporting $520 million worth of targeted goods into the U.S. must post bonds to cover the threatened 100 percent tariffs. Although the penalties would not be collected unless the WTO approves the amount involved, the action virtually freezes the targeted products out of the U.S. market by doubling their price.

Source: Anne Swardson, "Tariffs Anger European Countries," Washington Post, March 5, 1999.

 

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