Caribbean Makers of Rum Being Beaten by U.S. Subsidies

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Producers of rum in countries such as Guyana, Antigua and Jamaica are claiming they are taking unfair hits from trade and marketing advantages given to beverage corporations that operate globally and in U.S. territories. The countries also claim that rum subsidies in the U.S. might push some popular Caribbean rums labels out of business.

“The amounts that are being doled out now are staggering,” said Frank Ward, chairman of the West Indies Rum & Spirits Producers’ Association. “We were able to live with the level of U.S. subsidies as they once were. But the massive increases, we believe, have skewed the market.”

  

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Caribbean countries use rum to generate $500 million in foreign exchange and over $250 million in tax revenue. When liquor is sold in the United States, the subsidies come from the money raised through tax placed on that liquor. Almost 100 percent of the money made by the sale of the rum is deposited into treasuries for the U.S. Virgin Islands and Puerto Rico.

“Our Caribbean distilleries need to export rum in order to survive. But bigger subsidies in the U.S. islands means we don’t get a level playing field for our exports, and it’s going to affect both small and large producers here,” said Anthony Bento, managing director of the Antigua company that makes English Harbour Rum.

As of now, there have not been any governments from the Caribbean willing to challenge the United States on its subsidies. If a government wants to challenge the United States it would have to do so with a WTO complaint.