Union of Banana Exporting Countries
The Union of Banana Exporting Countries (Spanish: Unión de Países Exportadores de Banano or UPEB) was a cartel of Central and South American banana exporting countries established in 1974, inspired by OPEC. Its aim was to achieve better remuneration from the North American banana trade oligopoly, which consisted of three US companies. UPEB's proposal of an export tax was undermined by the U.S. oligopoly bribing Honduran and Italian officials. The UPEB cartel collapsed when bribes became public. What is referred to as the Bananagate scandal paved the way for the U.S. Congress to create the 1977 Foreign Corrupt Practices Act.
History
In 1974, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, and Panama joined in an attempt to form a banana-exporting country cartel focusing on exports to the North American market.[1]: 207–208 The Philippines was the only major exporter of bananas to the United States which did not join.[2]: 181 The market for banana exports to Europe at this time was quite separate, with mainly former European French and British colonies in the Caribbean supplying European countries.
Banana prices had gone up little in 20 years. A
]UPEB proposed an export tax of one dollar for every forty-pound box of bananas exported. The companies protested and threatened to withdraw their operations. There was also a glut on the world banana market and Ecuador, the leading producer, refused to enact the tax. Former
Bananagate
In 1974, Honduras passed a law to raise the tax on banana exports from 25¢ to 50¢ per 40-pound box. Honduras had supplied more than 22% of United Brands Company exports in 1974.[4][5]
In 1975,
United Brands Company also admitted that it had tried to convince the SEC that the bribes should be kept secret, on the ground that disclosure would hurt the company and its stockholders. The company's Washington law firm,
When the bribe was revealed, it provoked the overthrow of the military government in Honduras and this in turn led to the nationalisation of United's railways along with a major divestiture of land by the companies.[7]
Later history
On May 1, 1975, Costa Rica passed a law to raise the tax on banana exports from 25¢ to $1 per 40-pound box. The decree stated that 45¢ of each tax dollar would go to the government and the other 55¢ to subsidize independent banana growers. United Brands' local subsidiary, the Costa Rican Banana Co., then filed a $3 million suit against the government in April 1975, stating that the export levy violated a government guarantee not to tax the company until its contract with the government expired in 1988.[5]
Since its formation, the Union of Banana Exporting Countries has been largely limited to charging a modest tax on corporate banana exports.[8][page needed]
See also
References
- ^ ISBN 0-393-30964-9.
- ISBN 0-8248-1522-X.
- ^ a b Pauly, David; Rich Thomas (21 April 1975). "The Great Banana Bribe". Newsweek: 76.
- ^ ISBN 1-4010-7134-1.
- ^ a b "Banana tax raised". Facts on File World News Digest. 3 May 1975.
- ISBN 1-4128-0493-0.
- ^ Graham, Robert (17 February 1990). "A modern banana republic". Financial Times: XV.
- ISBN 0-8223-3196-9.