Bananagate

The Union of Banana Exporting Countries (Spanish: Unión de Países Exportadores de Banano or UPEB) was a 1974 cartel of Central and South American banana exporting countries, inspired by OPEC. Its aim was to achieve better remuneration from the North American banana trade monopoly, which consisted of three US companies. UPEB's proposal of an export tax was undermined by the U.S. monopoly bribing Honduran and Italian officials. The UEPB 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.

In 1974 Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, and Panama joined together in an attempt to form a banana exporting country cartel focusing on exports to the North American market.The Philippines was the only major exporter of bananas to the United States which did not join. 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 United Nations study had concluded that no more than seventeen cents of each United States dollar spent by North Americans on bananas went to producing countries. At the time the banana trade was monopolized by three US companies: United Brands Company (formerly United Fruit), Standard Fruit, and the Del Monte Corporation.

UPEB proposed an export tax of one dollar for every forty-pound box of bananas exported. The monopolies 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 President of Costa Rica José Figueres stated that Standard Fruit's property should be nationalized if the monopolies refused to pay the tax. Standard Fruit threatened the new President, Daniel Oduber that if there were any more threats, the company would pull out of Costa Rica. Costa Rica dropped its demand to 25¢ a crate.

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