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SEEN UP NORTH: A dead end street


Tony Best

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A feeling of disappointment.
After almost a year of waiting for the talks, frustration was the overwhelming emotion as Caribbean ambassadors in Washington, led by John Beale, Barbados’ top diplomat there, considered their next move after a meeting with the Obama administration’s departing top trade negotiator, Ambassador Ron Kirk.
“A dead end street,” said Beale, of any dealings with the United States Special Trade Representative’s (USTR) office over the US-Caribbean rum subsidy issue which, if not resolved, could end up causing irreparable harm to an industry that’s steeped in Caribbean history and culture.
“It was a meeting that went nowhere and will go nowhere. The USTR, as far as the rum issue is concerned, is a dead end street and there is a simple reason for that.
“[Ron Kirk] is on his way out, and people who are on their way out are normally not as guarded as someone on the way in or someone in office.
“I think he was pretty frank and open, which I certainly appreciated, and while I think the discussion went nowhere, at least it confirmed a lot of things.”
One confirmation was that the fight over subsidies which Puerto Rico and the United States Virgin Islands were providing to major rum producers on their soil can, in the long term, kill the industry in Barbados, the Dominican Republic, Trinidad and Tobago, Jamaica and their neighbours – and it won’t be resolved by the Obama White House.
Indeed, President Barack Obama, who is to be inaugurated on the steps of the Capitol tomorrow, has little power to change the subsidies. Any change must come from the United States Congress.
Another fact of life made clear during the meeting with Kirk was that the solution to the controversy would most likely come ultimately from the World Trade Organization (WTO).
“We will have to shift emphasis by going to the United States Congress to get the law changed,” said Beale.
“Kirk said that the United States Congress can put a cap on the excise taxes” that the Virgin Islands and Puerto Rico were providing to rum producers to cover their production costs and for marketing.
“The alternative for us is to go to the World Trade Organization which can rule that the subsidies are illegal under its rules,” explained Beale.
Rum industry exports to the lucrative American market are a US$700 million business that provides direct and indirect employment for 15 000 people across the Caribbean. In Barbados’ case, the country exports almost all of the rum it produces.
Anibal DeCastro, the Dominican Republic’s Ambassador in Washington, didn’t hide his frustration over what took place last week.
“Ambassador Kirk didn’t provide any answers that would lead us to a way out of the impasse. We must now go to the United States Congress to get the law changed and take the matter to the WTO.
“The rum industry in the Dominican Republic is very important to us and like the rest of the Caribbean, it is hurting because of the subsidies.
“Rum is a product that’s deeply linked to Caribbean culture.”
That explains why the Dominican Republic seems ready to haul the United States before the WTO, charging that its territories are using rebates of American excise taxes to provide hefty subsidies to rum producers in American territories that are undermining their Caribbean competitors. The money was originally intended to finance economic and social development in Puerto Rico and the United States Virgin Islands but most of it is now being channelled into subsidies to boost rum profits while reducing the market share of Caribbean rum producers.
“We are consulting with our attorneys, studying the situation and evaluating all of our options,” DeCastro told the SUNDAY SUN.

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