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Carib rum faces growing threat

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Saying time is fast running out, Caribbean trade group ministers Wednesday called for an urgent meeting with the U.S. to discuss heavy American subsidies to multinational rum producers as these are distorting the export market and threatening the existence of the Caribbean product.

A statement released by the Guyana-based bloc secretariat Wednesday, said trade ministers discussed the issue in full at their meeting which ended at the weekend and concluded that the threat to the regional product is real as exports will no longer be able to compete with cheaper subsidized rum given to western distilleries in Puerto Rico and the U.S. Virgin Islands.

“Rum production and export are critical to the social and economic well-being of the region. The nature and scale of these subsidies are such that they threaten to distort rum markets not only in the U.S. but elsewhere,” the statement said.

The move is the latest by regional governments and the umbrella West Indies Rum and Spirits Producers Association (WIRSPA) to resolve the issue with the U.S. They claim that the subsidies granted to UK-based Diageo PLC and US-owned Cruzan Rums have allowed them to build state of the art distilleries and other plant infrastructure as well as accessing molasses and other products at a much cheaper rate than the region, therefore making their own product cheaper and able to dominate the lucrative U.S. market.

Caribbean leaders had raised the issue briefly with President Obama at the hemispheric Americas Summit in Colombia earlier this year but are now pressing for detailed discussions to end the impasse.

The statement gave a hint about possible WTO dispute resolution, saying that the ministers “support strongly the deep commitment of CARICOM countries to pursuing all avenues available to secure a resolution of this matter that restores the competitive balance in the marketplace” but also left the door open by calling on the “the U.S. 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 U.S. market.”

Updated 4:58 pm, December 12, 2012:
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