Directions : For Questions 31 to 45. Read the two passages given below carefully. Each passage is followed by questions based on the contents of the passage. Answer the questions by selecting the best alternative from among those given in the questions.

      Anybody could be excused for slipping over bananas. But fighting over them ? Consider the current spat between the EU and USA over the pulpy fruit. The EU imports about 3.75 million tonnes of this commodity every year, but restricts the supply from US companies to 2.35 million tonnes. The remainder is acquired largely from countries from Africa and Southeast Asia, mostly from former colonies. US firms would like to increase their share and are prepared to supply bananas nearly 15 per cent cheaper than their competitors. However, they are constrained by banana quotas imposed by the EU.

      The US has challenged these restrictions three times before the WTO, winning twice. The new ruling is expected soon. In 1996 and 1997 the WTO’s Dispute Settlement Body ruled that the EU’s quota barriers be dismantled. To arm twist, or to pre-empt this judgement, the US has declared a trade offensive against the EU. On 3rd March, it announced the use of the controversial Section 301 of the US Trade Act against 16 types of EU exports including biscuits, war products, fine woollen clothing, coffee percolators and more. These goods have been placed under a 100 per cent import duty regime. As it turns out, such EU exports as have been targeted by the US do not amount to much. In 1998, the value of such imports into the US was under $ 600 million. Not surprisingly, the US administration has held out the threat of extending this regime to a wide range of dairy and agricultural products.

      There is baser aspect to the story as well. The EU banana imports from African and Asian countries are primarily in the hands of Western firms who had established themselves as traders in the former colonies. In contrast, almost the entire US exports of bananas to the EU markets are controlled by just one business, Carl Linder’s Chiqita Inc., and the two sides have been exerting great preassure on their respective governments.

      On a surface view the conflict might mean little for India. While it is the largest producer of bananas involved — it trades little of that commodity internationally. Last year India exported a meagre 28 tonnes to the US, and 18 tonnes to EU. However, analysts and policy makers would do well to consider the spat from three perspectives. First, it sharply highlights the manner in which the industrialised countries violate and stretch the rules of the WTO whenever convenient. This reality is in complete contrast to the impression that these countries are the real upholders of the fine principles of international trade. Second, the US and the EU could use the banana precedent to bypass the WTO, or ignore it altogether, for many more goods and services. The US is also fretting for retaliatory action against the EU’s ban on hormone-treated beef from the US, which itself could be extended to other genetically modified foods. It has also been fuming over the manner in which several large European airlines are subsidised by their respective governments. There are also signs of a long-lasting war over steel beween the EU and the US, which will have a definite impact on producers in developing countries as well.

      The third aspect is perhaps the most important. The arbitrary ways of banana war being used by the big boys of global trade are very often used against the developing countries as well. This is particularly true for imports of commodities, manufactures or services from the developing countries. In lip service to the WTO, the industrialised countries have reduced many of their general tariff barriers to imports from developing countries. In real content, exporters from developing countries repeatedly run non-tariff barriers including discretionary countervailing duties. Many of these barriers have to be combated not at the WTO but in the national courts of US and Western Europe, involving huge legal expenses. Indian exporters will readily testify that these non-tariff barriers are the biggest obstacles that they face in their business.

      It is very much in the interest of India and other countries to make efforts to prevail upon the industrialised countries to conduct their trading practices entirely within the ambit of WTO. In this regard, the Indian Government’s request to be granted third-party status in the US-EU dispute over bananas is a praiseworthy move.

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