science

Union of Banana Exporting Countries

Union of Banana Exporting Countries is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Union of Banana Exporting Countries rather than just read about it. In short: 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.

Key takeaways

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Reference excerpt

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. 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 highly concentrated with only three US companies participating: 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 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 Costa Rican president José Figueres stated that Standard Fruit's property should be nationalized if the companies 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.

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. In 1975, Eli M. Black, the chairman and president of the United Brands Company, jumped to his death from the forty-fourth floor of the Pan Am Building in Manhattan. When the Securities and Exchange Commission (SEC) investigated Black's suicide, it uncovered a scandal that was named "Bananagate". United Brands had paid a $1.25 million bribe to Honduran President Oswaldo López Arellano, followed by another $1.25 million the next year. The money was to be put in a Swiss bank account. The operation was managed via the Honduran Minister of the Economy, Abraham Bennaton Ramos. After the bribe the Honduran tax was reduced from fifty cents to twenty-five cents per box. This caused the UPEB cartel to collapse. This reduction saved United Brands Company about $7.5 million in tax payments. In addition it was discovered that United Brands Company had paid another $750,000 in bribes to an Italian official to prevent restrictions on United's banana exports to Italy, beginning in 1970. The SEC determined that none of the bribes could have been paid without the knowledge and approval of Black. While it was not illegal at the time for US companies to bribe officials, it was illegal for companies to hide such bribes from their stockholders. 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, Covington & Burling, asked the U.S. State Department to intervene, arguing that news of the Honduran bribe could harm U.S. relations with that country. The State Department declined. 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.

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. Since its formation, the Union of Banana Exporting Countries has been largely limited to charging a modest tax on corporate banana exports.

Worked examples

Example 1 — a first encounter with Union of Banana Exporting Countries

Start with the simplest possible case. Write down what Union of Banana Exporting Countries claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Union of Banana Exporting Countries before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Union of Banana Exporting Countries ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Union of Banana Exporting Countries

In research: Union of Banana Exporting Countries appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Union of Banana Exporting Countries in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Union of Banana Exporting Countries is common in secondary-school and first-year university syllabi. It links to neighbouring topics Banana production, Corporate scandals, History of Central America, so understanding it makes those chapters shorter.
In everyday life: Look for Union of Banana Exporting Countries outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Union of Banana Exporting Countries in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Union of Banana Exporting Countries means in your own words.
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Frequently asked questions

What is Union of Banana Exporting Countries in simple terms?

Why does Union of Banana Exporting Countries matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Union of Banana Exporting Countries?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Union of Banana Exporting Countries.