U.S.-Haiti Trade: The Politics of Rice

By Michael Dobbs, Washington Post,
Thursday 13 April 2000; Page A24

Lawrence Theriot, chief Washington lobbyist for the U.S.-owned Rice Corporation of Haiti, likes to tell a joke that illustrates the special nature of the international rice trade. Rice, he says, is a foodstuff that is 4 percent protein, 96 percent politics.

A Louisiana Cajun who was once in charge of the Reagan administration's aid programs in the Caribbean, Theriot has the personal experience to prove his point. By forging special relationships with both U.S. politicians and Haitian military dictators, Theriot and his Texas friend Douglas Murphy have turned the impoverished nation of 7 million people into one of the largest markets for American rice anywhere in the world.

In the process, they have made powerful enemies, and equally powerful friends.

Third World advocacy groups have cited the privileged position of the Rice Corporation as a case study in corporate welfare that has resulted from the free market policies advocated by the World Bank and International Monetary Fund. Last month, the Haitian government finally moved against the American rice merchants, fining them $1.4 million for allegedly evading customs duties and smuggling rice into the country over a period of several years.

Outraged by the fine, and insisting they had done nothing wrong, Murphy and Theriot took their case to Capitol Hill. They convinced Senate Foreign Relations Committee Chairman Jesse Helms (R-N.C.) that the case was a simple matter of a left-leaning Third World government harassing a legitimate U.S.-owned business. Helms responded by ordering more than $30 million in U.S. aid programs to Haiti frozen and asking the State Department to deny U.S. visas to the Haitian finance minister, police chief and eight other senior officials.

On closer examination, the Rice Corporation's story turns out to be more complex than either side has acknowledged.

The truth is complicated, lies are very simple, said Theriot, objecting to the portrayal of his company as the enemy of Haitian rice farmers and the beneficiary of free trade policies imposed on Haiti by the IMF. He maintains that the Rice Corporation has benefited Haitian consumers by keeping rice prices low as well as helping more than 100 Haitian rice growers improve yields and market their products.

While conceding that low tariffs helped the Rice Corporation penetrate the Haitian market, particularly in the early 1990s, Theriot argues that IMF policies have harmed the company in recent years. He says the IMF encouraged the Haitian government to boost revenues by imposing various sales taxes on rice after 1996, raising the effective tariff rate from 3 percent to 9 percent. The effect, says Theriot, has been to put the Rice Corporation at a huge disadvantage to smugglers who avoid paying taxes.

But the image propagated by Helms of Murphy and Theriot as innocent victims of Third World arbitrariness is also incomplete. Court records show that Murphy, in particular, has been involved in a string of controversial business dealings. Most recently, he was ousted as president of Rice Corporation's parent company, American Rice Inc., after being found guilty of fraud by a Texas court. The past and present owners of American Rice are struggling for control over the profitable Haitian subsidiary.

Earlier this year, the new owners of American Rice filed suit in American and Haitian courts, accusing Murphy and Theriot of corporate looting. Western diplomats in Port-au-Prince, Haiti's capital, believe that the Haitian authorities used the suit as justification for cracking down on long-suspected tax evasion by the Rice Corporation.