Domestic Pressure Drives the Banana War

Bill Clinton knows the best way to beat the Republicans is to steal their agenda, and his burgeoning trade war with Europe may be driven by the growing protectionist sentiment on Capitol Hill. With the banana war unresolved, new punitive tariffs against an arbitrary array of European imports ranging from Scottish cashmere to Belgian cookies came into effect Thursday -- importers are now required to post bonds to cover some of the $500 million in tariffs that will apply retroactively if approved by the World Trade Organization. Although the WTO found in favor of the original U.S. complaint over protected bananas, it has fixed no penalties and Europe claims it is already in compliance with the WTO ruling.

"Some U.S. trade negotiators are far from comfortable with the hard line, particularly since the U.S. still mostly dominates the European banana market," says TIME Brussels bureau chief James Graff. "But the White House wants to curb the protectionists, and it can't afford for Capitol Hill to paint the WTO as an instrument manipulated by the Europeans." With further battles looming over beef and other agricultural exports, expect a year of sporadic trade battles. And spare a thought for the poor residents of Hawick, a Scottish border town whose cashmere-centered economy is may now collapse because of an entirely extraneous banana battle. Even trade wars have collateral casualties.