Latinnews Archive

Brazil and Southern Cone - 6 July 1984

UPEB backs Costs Rica WORLD BANANAAGREEMENT FOR OCTOBER? Brazil buys up its own gold;NOVEL METHOD OF RESERVE BUILDING Roses 'are cover for drug exports';

THORNY PROBLEM FOR TAX MAN Why the sugar agreement failed;

'INTRASIGENCE OF THE BIG EXP

Ministers from the union of banana exporting countries (UPEB) met in Costa Rica on 14 June to examine tax policies and design a strategy to stave off transnational pressures on Costa Rica, which levies the highest export tax in this cartel. Ecuador, which opted not to sign the cartel agreement in 1974, was formally accepted as a member.

The San Jose meeting agreed to support Costa Rica's current levies and decided that within the next two months UPEB should meet again to halt the descending tax spiral. The three multinationals operating in Costa Rica -- United Brands, Del Monte and Standard Fruit -- have requested a further export tax reduction despite a drop from US$0.95 to US$0.70 per box obtained last December, arguing the country had higher production costs than either Honduras or Panama.


Box rate reductions by UPEB member countries were as follows this year: Honduras from US$0.50 to US$0.40; Panama from US$0.60 to US$0.42; Guatemala's box rate has been falling from US$0.50 to the current US$0.25 and is expected to be eliminated by 1985.

The San Jose meeting was particularly critical of Guatemala for not toeing the UPEB line, and pressed it not to continue reducing its box rate.

In an exclusive interview with us, the outgoing UPEB executive director, Carlos Manuel Zeron of Honduras (CR-84-12), added that a world banana agreement would be reached, between producers and consumers, by October at the latest. According to a UPEB source, a key feature of the agreement is determining the supply of fruit through export quotas.

Carlos Zeron was quick to point out that the market can only carry a certain amount of fruit. After a bad year in 1982, banana prices increased in 1983 solely due to the natural disasters that hit producing countries: 'If an agreement is not reached quickly this year, it is quite possible that the countries will once again encounter over-supply and price problems'. Zeron added: 'The pressures from the transnationals stem from here, as they seek to reduce their costs because the sale price has fallen. They have therefore set their aim on reducing the box rate.'

Criticising the attitude of the banana transnationals and warning of the consequences that might follow from their hard-line position, Zeron pointed out that the member countries were going through a very difficult economic situation. 'They need this extra income for their current accounts and the pressures tend to translate into the dismantling of productive activities or the demand that the levies be compensated. I do not see from where our member countries can recover this income.'

Ever since UPEB was founded ten years ago it has pressed its member countries to adopt a common box rate. Such an agreement has not been possible as the cost structure varies from one country to another, and care has to be taken to avoid distortions and comparative disadvantages between UPEB members. Zeron emphasises the need for harmony, 'which carries a heavy dose of political decision-making and this is what costs most'.

The unified box rate of US$1.00 which UPEB is aiming for is a crucial objective, as it will provide a sizeable income increase for its member countries that will help cover their current deficits: US$25m for Honduras, US$30m for Costa Rica, about US$11m for Panama and between US$8-10m for Guatemala. This will also prove a boost to the most recent entrant, Ecuador -- the largest banana exporter in the cartel, with 15% of the world market.


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