Stuart: Barbados, US in “High-Level” Talks on Rum Subsidies

By: Caribbean Journal Staff - January 18, 2013

Above: the Mount Gay Distillery in Barbados (CJ Photo)

By the Caribbean Journal staff

Barbados, other CARICOM states and the Dominican Republic are currently engaged in “high-level” talks with United States officials on the issue of rum subsidies, according to Barbados Prime Minister Freundel Stuart.

Stuart was speaking at an opening ceremony for Mount Gay Distilleries’ New Aging Bond in St Lucy this week.

The Prime Minister said the talks were necessary, with the Caribbean concerned over what it sees as subsidies given to rum producers in the US Virgin Islands and Puerto Rico that are “to the disadvantage” of Caribbean producers.

“The government of Barbados has had to take a stand on this issue, and under my instructions, the Ministry of Foreign Affairs and Foreign Trade communicated with the US government on this issue,” he said. “We are not going to relax our persistence on this issue — we do not intend to allow rum producers in the Caribbean to be so severely damaged by this market distortion which has resulted from these overwhelming, if I may use that word, subsidies being extended to producers in the US Virgin Islands and Puerto Rico.”

The issue concerns the “Rum Cover Over” programme that means that any excise tax collected on rum imported to the US is transferred to the treasuries of the USVI and Puerto Rico.

The Caribbean has argued that the territories have been using the funds to attract companies to produce rum there.

Stuart said last year that the Caribbean could take the issue to the WTO.

In an Op-Ed in Caribbean Journal last month, US Virgin Islands Delegate to Congress Donna Christensen defended the programme, calling it “smart, autonomous economic development policy.”

Christensen warned the Caribbean against bringing the issue to the WTO, calling it “not in the best interest of the Caribbean.”

She also said that rum imports from the Caribbean had actually grown in recent years.

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