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Friday, January 19, 2001

Quick study needed on Chiquita issue




By Cliff Peale
The Cincinnati Enquirer

        It will take months after Saturday's inauguration for the Bush administration to get up to speed on a seven-year trade war over European banana quotas, the top U.S. negotiator said.

        Greg Frazier, a special trade ambassador for the U.S. trade representative, leaves the post Saturday, having failed to reach a deal. Even though any new administration would want this dispute settled, it isn't likely to happen soon, he said.

        “To be honest with you, I think it's the underlying problem that continues to be at issue,” he said. “That's the allocation of banana licenses.

        “It is complete and total obstinacy on their part. Quite frankly, the Europeans lost. They're the ones who need to move.”

        One party that will have input into any potential settlement is Chiquita Brands International Inc., the Cincinnati company that Mr. Frazier said initiated the U.S. complaint in 1993.

        Chiquita says it has lost more than $1 billion in earnings because of the quotas, which restrict imports from Latin American countries, where Chiquita and California-based Dole Foods grow bananas, in favor of former European colonies in the Caribbean.

        This week, the company's financial condition took an even bigger blow when Chiquita said it would not make debt payments and seeks to restructure $862 million in debt.

        The restructuring could land the company in bankruptcy court.

        Facing severe losses, a stock price at a historically low level and high debt, Chiquita has hinged much of its future on a deal that would regain some of its once-dominant European market share.

        But intense negotiations in November and December did not produce a new trade deal. And with a new administration in power, there will be a learning period of several months, Mr. Frazier said.

        “No matter how smart somebody is, coming in and taking this portfolio is complicated,” he said. “Quite frankly, I believe it will be awhile before any individual will be able to fully engage this issue.”

        One advocate for Chiquita's banana case is Joe Hagin, former vice president of corporate affairs at Chiquita's Fifth Street headquarters. After working in the Bush campaign for nine months, he took a job last month as deputy White House chief of staff.

        Mr. Frazier said he continues to consult with Chiquita about the negotiations with Europe.

        “In a sense, we are acting on their behalf,” he said. “It would be irresponsible not to take their views into account.”

        Mr. Frazier also commented on:

        • Rotating sanctions: There are no immediate plans to rotate the list of products subject to U.S. sanctions. Laws passed last year required the rotation every six months to increase pressure on the Europeans, but the Clinton administration resisted pressure from Chiquita and its supporters to rotate the list.

        • New European system: It would take at least six months for the Europeans to implement a system that has drawn strong objections from both the United States and Chiquita.

        Called “first-come, first-served,” the system would gradually phase out the quotas and replace them with a tariff-only system. But U.S. negotiators have pressed for a system based on previous market share in Europe.

        If Europe implemented “first-come, first-served,” it would almost surely draw a formal U.S. complaint to the World Trade Organization, top Clinton administration officials have said publicly.

       



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