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    November 21

  • 01:26 PM

Creating a level playing field?

ROLLINS HOWARD,

Added 17 May 2017

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IN APRIL THIS YEAR, America’s President Donald Trump introduced a tariff of up to 24 per cent on lumber imported to the United States from Canada. 

He said that this measure was implemented because the Canadian government was heavily subsidising the Canadian lumber industry and as a consequence, this gave lumber imported from Canada into the US an unfair advantage over that produced in the US.

The imposition of this tariff seems to be a relatively sound commercial reaction to provide the traditional level playing field if it was not such a hypocritical decision.

For many years the West Indies Rum and Spirit Producers’ Association has been battling the US because the US government has been providing heavy subsidies to rum producers in Puerto Rico and the US Virgin Islands (Bacardi and Diageo, respectively) for rum exported to America.

Similar to the lumber industry in the US, these subsidies place rum producers in the Caribbean at a severe disadvantage vis-à-vis rum producers in Puerto Rico and the US Virgin Islands. 

Between 2011 and 2016, the US Treasury reimbursed rum producers in Puerto Rico US$554.8 million, of which US$359.6 million went to Bacardi.

These subsidies violate the trade obligations which the US has at the World Trade Organisation, and Diageo has threatened that if a challenge at the WTO emerges, they may be forced to consider their considerable investment in the region.

It seems apparent that membership of these international organisations is only beneficial to small island developing states when they are in conflict with each other, but when any action involves the developed countries, the small states are like Don Quixote, merely “tilting at windmills”.

– ROLLINS HOWARD

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