24 May 2012

Caribbean Rum facing threat in the United States

By Sir Ronald Sanders 
(The writer is a former Caribbean representative to the World Trade Organization)
Rum-producing countries of the Caribbean Community and Common Market (CARICOM) may have to take the US to arbitration at the World Trade Organization (WTO), unless diplomatic efforts settle a looming problem before it concretises.

At stake is rum production in several CARICOM countries together with the foreign exchange earnings and employment that it generates.

The problem has not arisen out of direct action by the US government. It has originated in the US Virgin Islands (USVI) and Puerto Rico both of which have been long-time rum producers in competition with CARICOM manufacturers. But, now, these two US affiliates are taking advantage of US government refunds to them, of excise taxes on rum, to subsidize vastly increased rum production and marketing in their territories. The huge increase in rum exports to the US mainland, at a subsidized cost, would squeeze-out CARICOM rums; and subsidized marketing would make it virtually impossible to compete.

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