04/12/2011 02:49 pm ET Updated Jun 12, 2011

Trade, Islands, and Diversity

Delice, Dominica -- The Carib name for this island was Waitukubuli: "Her body is tall." And, small as this island is, it still stands tall. On short notice, Dominica can assemble -- with a population of only 70,000 -- an impressive group of 15 environmental and sustainability leaders and activists to brainstorm with me. I was told a group of 100 could just as easily have been assembled. But that density reflects the particular vulnerability and price this island has paid for the emergence of the global neo-liberal trade regime -- the World Trade Organization (WTO) and its brethren.

Bananas here were "yellow gold." The island was fertile, the fruit was excellent, and England provided a secure market. But with the WTO, that market was no longer secure, and United Fruit Company (Chiquita bananas) drove higher-quality Dominican bananas from the British market -- empowered by UFC's economies of scale and global trade rules that put price above everything.*

If you are over 50, incidentally, and think that bananas tasted better when you were young, you are right. The bananas of your youth -- a single variety, the Gros Michel, which UFC made virtually the only banana sold in the U.S. -- were wiped out in 1960 by a fungus -- the perils of monoculture. UFC had to replace them with an inferior variety, the Cavendish, whose global scale has guaranteed that it, too, is on the verge of meeting its Waterloo in the form of Panama disease. It will be replaced by a still less tasty variety. Still certain globalism makes life better?

But bananas are not the only example of how neo-liberal trade rules are bad news for small places -- and indeed for diversity and small niches in all their forms. Vanilla was Dominica's "black gold," but when artificial vanilla temporarily flooded global markets, Dominican farmers couldn't sell their crop, and stopped growing it -- although today the price has recovered. Limes here were wiped out by a virus almost a century ago -- it took years to find a resistant variety, but by then the local supply chain had withered. There are mechanisms, lots of them, that a government can use to protect the diversity of small scale, artisanal agriculture from the volatility of global commodity prices and diseases. But almost all of them are illegal under WTO rules, because they require favoring local production over global and take into account not only price but also how commodities are grown or produced.

Indeed, Dominica is an almost perfect challenge to conventional theories of free trade. Because of its tiny size, it has a competitive advantage -- in the sense of being able to make something cheaper -- in absolutely nothing. It will never produce the world's cheapest banana, cheapest lime, or cheapest vanilla. In fact, the island still has an old Colgate-Palmolive factory that once processed local coconuts into copra, cosmetics, soaps, etc. It still operates -- but the raw materials come from the Philippines -- because that's cheaper than processing local coconuts (which, for the record, grow free). But just the cost of transporting them over windy mountain roads to the factory makes local coconuts uncompetitive.

What Dominica could do is produce the world's best version of certain crops. But "best" would need to include factors like lack of pesticides, decent wages, and reasonable environmental standards -- all things the WTO prohibits its members from taking into consideration.

When the Dominican banana market collapsed, something else happened. Half the island's population migrated -- mostly to the United States. So in the pre-WTO world, British distributors paid a little more for bananas, farmers on this island sent their kids to college on yellow gold, there was a deeper potential for recovering from disease, and Dominicans got to live in their Dominica. In the post-WTO world: no Dominican bananas, poor Dominican families, bananas slightly cheaper (but shortly to become much less tasty), and tens of thousands of Dominican refugees still pouring into New York.

Still certain "free trade" makes the world better? Come enjoy Dominica and see if you still feel that way.

*Correction: In my previous post I mistakenly said that Chiquita drove Dominican bananas from the U.S. market -- not, as was actually the case, the UK market.