Above: the St Nicholas Abbey rum company in Barbados (CJ Photo)

By the Caribbean Journal staff

The Caribbean Community is increasingly concerned about what it calls a “threat to the competitiveness of Caribbean rum in the United States” due to subsidies provided by Puerto Rico and the US Virgin Islands to multinational rum producers, CARICOM’s Council for Trade and Economic Development said in a statement this week.

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

The council said it called on the United States to engage with Caribbean rum-producing countries to achieve an outcome that would “support the continued competitive access for Caribbean rum to the US market.”

“Time is not on the side of the Caribbean rum industry,” COTED said. “Given the likely deleterious effect of these subsidies on the long-term viability of an industry which is of such critical importance to the economic fabric of so many countries in the region, the COTED supports 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.”

The “rum cover over” in the US means that any excise tax collected on rum imported to the United States is transferred to the treasuries of the US Virgin Islands and Puerto Rico.

Critics have alleged that the two territories have been using those funds to attract companies to produce rum in Puerto Rico and the US Virgin Islands.