Wed | Dec 7, 2016

Dissent over rum subsidies still on

Published:Friday | September 12, 2014 | 12:00 AM
File Dr Frank Ward, chairman, West Indies Rum and Spirits Producers Association.

Mcpherse Thompson, Assistant Editor - Business

The West Indies Rum and Spirits Producers Association (WIRSPA) said the matter of seeking redress in the dispute over subsidies given to rum producers in United States territories in the Caribbean is not dead as suggested by recent commentary.

However, chairman of WIRSPA, Dr Frank Ward, declined comment on whether Caribbean producers were still pressing their governments to initiate settlement procedures at the World Trade Organization (WTO).

The Financial Gleaner also asked him to say what other action, if any, has been pursued by the rum producers or the 15-member CARICOM bloc on their behalf, and what other action is being contemplated in order to resolve the issue.

"You will appreciate that the rum industry will not speculate on the intentions of governments," he said in emailed responses to the queries.

"However, the issue is not dead as suggested by one commentator. Erroneous conclusions on the fortunes of the industry are arrived at on the basis of faulty analysis of published data. This is exemplified by recent comments on the supposedly solid export performance of the Barbados rum industry," Ward said.

ministry waits

Jamaica's Ministry of Foreign Affairs and Foreign Trade, also responding to Financial Gleaner queries, was only prepared to say that "we are awaiting further developments from within CARICOM".

Caribbean rum producers have been facing the possibility of losing ground in the US market.

The situation arose because the US Virgin Islands (USVI) and Puerto Rico, two US territories that compete with producers in Jamaica and the rest of the region, have been taking advantage of US government refunds to them - representing excise taxes on rum - to subsidise production and marketing for multinationals that set up business in those countries.

in breach of WTO rules

The complaint is that those incentivised producers will be able to produce and export rum to the US at much cheaper rates than many of the spirits made by producers in CARICOM. They argue that the subsidies were in breach of WTO rules.

In commentary posted on his website, titled 'No Caribbean appetite for a rum fight', Sir Ronald Saunders, business executive and former Caribbean diplomat, said that despite calls for CARICOM to take a position on the issue of the region's rums being wiped out of the US market, there appears to be no appetite by CARICOM to seek a ruling from the WTO, even though "that was the response that was needed".

He quoted Barbados' Ambassador to the United States, John Beale as saying that island's rum exports to the US have dropped by 21 per cent and warned that the industry is in danger of being wiped-out.

"CARICOM governments have clearly been divided on whether to take the matter to the WTO for arbitration since it would involve a complaint against the US government - not the governments of the USVI or Puerto Rico that have no international standing on their own," Saunders said.

"The cost of doing so would be a deterring factor for any one government. Other governments to whom rum sales in the US market is negligible probably see no gain in it for themselves."

He said that Ambassador Beale, like the Barbados Minister for International Business, Donville Innis, in bemoaning the absence of strong action in defence of their rights by CARICOM countries, called on the private sector to join governments to fight what is clearly an injustice.

"Regrettably, however, it would seem that by virtue of uncertainty, lack of cohesion and delay, the opportunity for such a fight may have passed to the detriment of rums produced in CARICOM and the DR (Dominican Republic)," Saunders said.

mcpherse.thompson@gleanerjm.com