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WTO rum option still on the table

Published:Sunday | January 13, 2013 | 12:00 AM

McPherse Thompson, Assistant Editor - Business

A determination whether to initiate settlement procedures at the World Trade Organization (WTO) in the dispute over subsidies given to rum producers in United States territories in the Caribbean is still under discussion.

In the interim, the Ministry of Foreign Affairs and Foreign Trade said the Jamaican government will continue its advocacy at the level of Caricom on behalf of the local rum industry.

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

The situation arose because the US Virgin Islands 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.

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 December, the 35th meeting of the CARICOM Council for Trade and Economic Development (COTED) issued a statement calling on the US "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".

In the statement, following a meeting in Guyana chaired by Jamaica's foreign minister A.J. Nicholson, COTED said the US subsidies would likely cause "deleterious effects" on the long-term viability of Caribbean rum.

The COTED meeting, that was chaired by Jamaica's foreign minister A.J. Nicholson, called for CARICOM to pursue "all avenues available" to secure a resolution that "restores the competitive balance in the marketplace".

The Foreign Trade Department in Jamaica's Ministry of Foreign Affairs and Foreign Trade said last Thursday that given the importance of the issue, and at the request of WIRSPA, it was agreed that the rum subsidy would be dealt with as a regional matter.

WIRSPA is an association of national associations of rum producers in the ACP Caribbean/CARIFORUM, including the Dominican Republic, with headquarters based in Barbados. National Rums of Jamaica is a member.

The Foreign Trade Department said the matter has been raised by CARICOM/CARIFORUM with the office of the US Trade Representative on several occasions. In addition, the CARICOM caucus of ambassadors in Washington has been mandated to engage members of the US congress and other US representatives on the concerns of the region's rum industry.

It said Jamaica's ambassador to Washington, a post currently held by Professor Stephen Vascianne, participates actively in those efforts.

Outlining some of the steps taken by Jamaica and the region, the Foreign Trade Department said that in April 2011, a CARICOM ministerial delegation which visited Washington raised the concerns with the office of the USTR and others.

On December 7, 2011, the Barbados minister of foreign affairs and foreign trade, in her capacity as chair of COTED, sent a letter to the USTR, Ambassador Ron Kirk, outlining the region's concerns in respect of the subsidies programme.

On March 6, 2012, State Minister for Foreign Affairs and Foreign Trade Arnaldo Brown raised the issue of the challenges posed by the US 'cover-over' programme - under which the subsidies are granted - for Jamaica's rum exports during a visit to Jamaica by a US inter-agency team.

The ministry said CARICOM members raised the issue with the US at the 4th CARICOM-US trade and investment council meeting on March 31, 2012, in Guyana.

A US/CARICOM technical meeting on rum took place on June 14, 2012, in Washington at which the region's position was reiterated. Officials of CARICOM countries and the Dominican Republic, including Washington-based ambassadors and diplomatic representatives such as Jamaica's, as well as CARICOM Secretariat and WIRSPA representatives participated, the Trade Department said.

The 23rd meeting of the prime ministerial subcommittee on external trade negotiations, held in St Lucia on July 3, 2012, and chaired by Simpson Miller agreed that ambassadors in Washington would undertake the necessary follow-up with the office of the USTR.

"In this regard, a letter dated 9th August 2012, signed by the caucus of ambassadors in Washington was sent to the office of the USTR, on the outcome of its internal consultations with other US government agencies, regarding the region's concerns," the ministry told Sunday Business.

It said a letter was also written by Dr Kenny Anthony, chairman of the CARICOM conference of heads of government and prime minister of St Lucia, to President Barack Obama on August 24, 2012.

Asked what role, if any, producers in Jamaica and the region would play in the matter, the ministry said that "if a dispute is launched (at the WTO), all the rum-producing countries and exporters to the US would have an interest in the case".