Political climate in Honduras is costing its economy

The Latin Americanist has been reporting on the political turmoil in Honduras for months now. While politically, Brazil has played a role by allowing ousted President Manuel Zaleya to take refuge in its embassy in the Honduran capital of Tegucigalpa, the U.S. plays a much larger role in terms of economics. The United States is Honduras' chief trading partner. It purchases 70% of Honduran exports, is responsible for 2/3 of it's foreign direct investment, provides tourism, and contains most of the Honduran population living abroad who send remittances back to their home country.

Honduras is one of the poorest countries in the Americas.

Honduras was one of the original banana republics, dominated for years by the United Fruit Company. Even today, US multinationals Dole and Chiquita control a big share of the country's farm output.

Coffee, bananas and other crops remain big earners in a mainly agricultural economy. But these days, they are rivalled by Honduras's thriving sideline in "maquiladoras" - factories that import textiles from the US and export finished items of clothing.

With American consumers cutting back on spending, Honduran maquiladora workers who provide clothing for stores like the Gap and Walmart, have lost their jobs.

Online Sources: BBC News, U.S. Department of State

Image: Kirsten Hubbard, About.com

For more information about bananas in Central America, worker exploitation, and the role of Dole, click here.

Banana rift continue between E.U. and LatAm

The European Union (EU) and several Latin American countries continue to be at odds over tariffs levied on bananas.

In April 2008 the World Trade Organization (WTO) upheld a complaint by Ecuador that argued EU taxes on banana importers in the Americas were “excessive and discriminatory”. Since then, the EU has tried to sidestep the WTO’s decision by arguing that no agreement was reached on banana taxes due to the collapse of the Doha round of trade talks.

On Monday the EU added more wood to the fire by proposing to lower its taxes on banana imports from 176 to 114 Euros per ton by 2019, instead of 2016. The reaction from Latin America has been of justified indignation and anger:

"We will not accept the introduction of new elements and renegotiations to arrive at something that is completely different and disadvantageous compared to the balanced agreement concluded on July 27, 2008," Guatemala's ambassador Eduardo Sperisen-Yurt told AFP.

The world's largest banana exporters, Ecuador, Brazil, Colombia, Costa Rica, Guatemala, Honduras, Mexico, Nicaragua, Peru and Venezuela, have all rejected the EU's argument and have threatened sanctions against the bloc.

The deal will not affect former European colonies in the Caribbean who are part of the so-called “ACP countries.” Nations like Belize, the Dominican Republic, and Haiti don’t pay banana tariffs.

Image- AFP
Online Sources- Radio Netherlands, AFP, The Latin Americanist

EU to appeal WTO banana ruling

The E.U. will appeal an April decision by the WTO based on a complaint brought up by Ecuador. The panel found that European tariffs on banana imports against Latin American countries including Mexico and Costa Rica were excessive and discriminatory.

According to a statement issued today by the E.U.:

“The proposal on bananas made in Geneva was made in the context of the Doha Round'' of global trade talks, the (European Commission) said. ``The failure to reach agreement in Geneva on the Doha Round also meant no agreement was reached on bananas.''

The EU is basing its challenge to the WTO judgments on two points. The panel ``completely disregarded'' evidence showing that Latin American banana suppliers' access to the bloc rose more than 10 percent, according to the commission, which said it also had ``significant systemic concerns'' about judges' interpretation and application of relevant WTO provisions.

Though the WTO decision came in favor of Latin American banana producers, it may’ve hurt those suppliers in the Caribbean who were receiving referential treatment from the E.U.’s policy.

As we mentioned yesterday, Brazil has appealed to the WTO for sanctions to be placed against the U.S. based on a 2007 ruling.

Image- Sky News

Sources- Forbes, Bloomberg, The Latin Americanist, Reuters

Video of the Day: Viva San Marcos!

Apologies for the lack of posts today; I wasn't feeling too well (and on my birthday, no less!)

We hope to return to regular blogging tomorrow.

In the meantime, let's just be happy that no Latin American leader has yet to be as cuckoo as the president of San Marcos.

(Video link):


(The above clip came from the 1971 Woody Allen film Bananas).

Sources- imdb.com, YouTube

Video of the Day: "How to be a Revolutionary" by Woody Allen

Note: Sorry for the lack of posts on Monday. We'll try to make up for that during the rest of the week.

In the meantime, here is a clip from the 1971 movie "Bananas" where the protagonist played by Woody Allen trains with a faux-Latin American rebel faction. (Allen as a guerillero is not too far out of the realm of the imagination if you note that he's married to his "stepdaughter").

(video link):

Tags- YouTube, Wikipedia