Arguing that heavy American subsidies paid to two of the world’s largest rum-producing companies will soon devastate regional exports to the US, Caribbean governments this week announced plans to directly write President Barack Obama asking him to help negotiate a solution before it is too late.
Current Chairman of the 15-nation trade bloc and St. Lucia’s Prime Minister Kenneth Anthony is to send a letter of appeal asking the White House to urgently review the situation where authorities in the US Virgin Islands and Puerto Rico are giving significant subsidies to British producer Diageo and Illinois-based Cruzan Rums to operate plants there and sell rums much cheaper to American mainland markets than the Caribbean the bloc said Thursday.
The bloc also said that the Dominican Republic which is also teaming up with its English-speaking neighbors to fight the issue has asked the legal advisory council at the World Trade Organization for an opinion on the matter as its entire exports to the US could be wiped out like those in the bloc. Officials say the DR is likely to fully pursue the issue at the Geneva-based WTO. They also speculate that it is leaning in this direction while Caricom, with which the DR sits in a grouping called CariForum, seems for now to prefer to negotiate with the Americans.
The rum industry that dates back to the European colonial era is worth $60M in annual sales to the Caribbean. The region said that it is forced to take the issue to the White House even though it is aware that these are the final months in the run up to presidential elections in November and little might get done in congress in this regard.
Talks have already been held with US Trade Representative Ron Kirk. The foreign ministers forum, (COFCOR) say they also plan to write Secretary of State Hilary Clinton as part “of a double-barreled approach” to get movement on the issue.”
Diageo is the world’s leading premium drinks producer responsible for brands like Johnny Walker Whiskey, Smirnoff Vodka, Baileys and Captain Morgan Rum which is now being produced from the USVI for export to the US mainland, while Cruzan is known for its spiced and other rums.
Apart from the subsidies which allow the two to produce cheaper spirits than the Caribbean, the firms have received help to build new state of the art plants and are getting molasses much cheaper than producers in the region, advantages that officials argue are contrary to WTO rules.