Leading Article: Our moral duty to the Caribbean nations

ALMOST UNNOTICED, a major trade war is threatening to break out between Europe and the US. Because the dispute concerns the humble banana, it seems difficult to take the subject seriously; media coverage of impending American sanctions has been sparse, to say the least. This is misguided in the extreme.

The imposition of $520m (pounds 324m) worth of tariffs on European goods is no laughing matter. The arbitrary rag-bag of goods covered by the American action includes cashmere - threatening hundreds of jobs in Scotland - and a range of textiles, foodstuffs and other consumer goods. Worse, sanctions could threaten an all-out trade war, in which Britain has much to lose.

Free trade is in everyone's interests in the long run. But Europe's efforts to secure a few years' exemption for their former colonies in the Caribbean are justified. Some islands are totally dependent on this one trade. If protection were to be removed immediately, the economy of such islands - St Lucia, for example - would be destroyed. Europe has a moral duty, having created the banana plantations, to make sure that Caribbeans do not pay for the decisions we imposed upon them in the past. At the same time, money should be provided to allow diversification into other industries, such as tourism. Some islands, such as Barbados, have already embarked on this process. There is no reason why other islands cannot follow suit.

As to our mutual obligations to the rules of the World Trade Organisation, America's threatened sanctions are precipitate. They bring to mind its heavy-handed approach to trade with Cuba in 1996 and 1997. Then, the US attempted to punish European companies' American subsidiaries if they traded with Cuba, criminalising those breaking no law in their own country, and causing months of wrangling.

The Americans may be bluffing. The EU has made a series of concessions in an attempt to head off sanctions; the World Trade Organisation's Disputes Settlement Body has not yet ruled on the conflicting claims for that package, making the legal status of sanctions questionable, to say the least. Europe stood its ground over Cuba, securing a last-minute deal. It must stand up to the Americans again, to secure an acceptable compromise.

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