100/YOUR MONEY OR YOUR LIFE!Since MNCs do a lot of internal under-charging and over-charging,
it is difficult to determine the exact value of profit repatriation. There
are a number of creative accounting techniques for shifting a
company's profits to one of its production and marketing locations,
depending upon a variety of factors. Corporate tax rates are one such
factor, as is the need to repatriate profits to company headquarters in
the North. The same MNC might switch from one technique to the
next, at a particular time or place, depending on which one best
corresponds to its interests. Some MNCs (those in a monopoly or
oligopoly situation) handle everything from the extraction of raw
materials to their sale to the manufacturing and distribution sector.
For them, it matters not if profits appear on the books of the extraction
subsidiary, of the transport division or of the refinery. A share of the
total value that appears in the data of imperialist countries as domes
tically produced profit is, in fact, surplus created in the Third World.
One technique consists of an MNCs headquarters selling goods
and services to one of its Third World subsidiaries at prices above
world market levels.
Augustin Papic has calculated, for example, that pharmaceutical
MNCs make internal sales to their Latin American subsidiaries at
prices between 33 and 314 per cent above world market levels.
In Colombia, subsidiaries of multinational pharmaceutical
companies import products from company HO at prices 155 per cent
higher than usual export levels. Other examples include 40 per cent
price rises in the rubber industry, 26 per cent in the chemicals
industry and between 258 and 1,100 per cent more in the electronics
industry.
In the other direction, subsidiary exports to company headquarters
are tremendously under-priced. A study revealed that Mexican,
Brazilian and Argentinian MNC subsidiaries under-priced their
exports by about 50 per cent in comparison to local companies
(Mandel, 1978).
Over the last 15 years, the development of industrial free-trade
zones in a number of Third World countries - including China - and
the former Eastern Bloc has made it much easier for MNCs to
repatriate their profits. The structural adjustment programmes
imposed on debtor countries always have clauses that allow MNCs
freely to repatriate profits to company headquarters. Indeed, the
Multilateral Agreement on Investments (MAI) - under negotiation