Chiquita Bananas

7 Pages 1679 Words

Chiquita Brands International Inc. is best known as the world’s number one distributor of banana’s, which account for more than half of its sales. For the past decade, Chiquita’s sales have dropped dramatically and the company is now on the verge of bankruptcy. Currently, Chiquita is trying to avoid filing for a Chapter 11 by attempting a major financial restructuring of their debt. There are many factors that have contributed to the company’s downward spiral, although all of these factors are linked to the trade barriers imposed by the European Union on banana imports.
The European Union enacted import restrictions on banana’s in 1993, and just recently, is attempting to revise the old regime in order to comply with the World Trade Organization. The EU is preparing to introduce a new import system dubbed “first-come first-served” which they believe will be a WTO compatible system. Chiquita filed a lawsuit in January, 2001 against the European Union seeking reparations in the amount of $525 million for their losses that resulted from the old biased import system (Palmer).
Chiquita is just one of many companies that were affected by this biased import regime, but some other companies still managed to work around the import restrictions. Chiquita’s rivals, Dole Food and Fresh Del Monte, although bruised as well by the European restrictions and falling banana profits, are in much better shape. Both have managed to increase their market share in Europe, largely at Chiquita’s expense (Alden). Chiquita, however, sought out and fought a political battle against the European Union with the United States government backing them.
The old EU import regime was not only an issue for the companies involved, but for the United States as a whole, since it affected banana’s and other agricultural products sold in the US. The regime initially was enacted in 1993, and was later ruled in 1997 to not be in compliance with...