CARICOM still upset at US rum subsidy

sherieholder, sherieholder@nationnews.com

Added 12 December 2012

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GEORGETOWN, Guyana, Dec 12, CMC – Caribbean Community (CARICOM) countries say they continue to have “serious concerns” regarding the competitiveness of Caribbean rum in the United States and have renewed calls for talks with Washington on the issue. A statement issued at the end of the CARICOM Council for Trade and Economic Development (COTED) noted that rum production and export were critical to the socio-economic well-being of the region. “In addition to being the largest agriculture-based export industry in CARICOM, the rum industry is a substantial employer and a major contributor to foreign exchange earnings and government revenues,” the statement said at the end of the two-day meeting on Tuesday. It said as a result, CARICOM continues to have serious concerns about the threat to the competitiveness of Caribbean rum in the United States market resulting from the massive subsidies provided by the governments of the United States Virgin Islands (USVI) and Puerto Rico to multinational rum producers in those territories. “The nature and scale of these subsidies are such that they threaten to distort rum markets not only in the US but elsewhere,” CARICOM warned, adding that “time is not on the side of the Caribbean rum industry. “Given the likely deleterious effect of these subsidies on the long-term viability of an industry which is of such critical importance to the economic fabric of so many countries in the region, the COTED supports strongly the deep commitment of CARICOM countries to pursuing all avenues available to secure a resolution of this matter that restores the competitive balance in the marketplace.” COTED said that it was calling on the United States to “engage early with Caribbean rum-producing countries with a view to achieving an outcome that will support the continued competitive access for Caribbean rum to the US market”. Following their annual summit in July, CARICOM leaders said they would approach Washington for discussions on the issue. CARICOM Secretary General Irwin LaRocque said that the rum issue, involving Diageo, the global rum producer, continues to "threaten Caribbean rum into the US market, and the leaders agreed that strong and urgent political intervention was needed to address that issue. "There is a concern with regards to some subsidy that is being provided for Diageo, the multilateral and one of the largest rum producers which is currently located in St Croix in the US Virgin Islands," said LaRocque. "There is an arrangement in the US government that allows for resources to be provided based on the exports of rum from the Virgin Islands, but more than that the resources are being used to provide a direct subsidy for a modern rum factory that is being constructed in St Croix," he added. In August,  the UK-based Diageo reportedly warned that should CARICOM mount a complaint to the World Trade Organization (WTO) over the alleged subsidies it would  ‘re-evaluate’ its Caribbean interests. Diageo has denied ‘flooding’ the US market and has defended the US governments 100 year old “cover over” programme, which it said granted the USVI and Puerto Rico much-needed revenues to promote economic stability and fiscal autonomy.  

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