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CARICOM defends intention to take rum issue to WTO

Caribbean Community (CARICOM) countries say they will continue to oppose subsidies being granted to UK-based Diageo, one of the world’s biggest producers of rum, because of the impact the subsidy is having on rum producers in the Caribbean.

CARICOM Secretary General Irwin LaRocque told the Caribbean Media Corporation (CMC) that trade ministers who met in Guyana last week had endorsed the stance being taken to have the matter aired at the World Trade Organization (WTO).

“I want to make it clear, we do not have an issue with the United States Virgin Islands. We do not have an issue with the recoverable programme of the resources that the US Virgin Islands receives from the US Treasury,” LaRocque said.

“The problem is the subsidy that is being provided to probably the largest alcohol producer in the world, Diageo, and it puts our rum producers at a distinct disadvantage,” he added.

“All of the member states are very supportive of those who are going to go forward for consultations at the WTO under the dispute settlement mechanism,” he pointed out.

“The region has been trying now for almost two years” to enter “into dialogue, consultation with the United States government, and sometimes it has been a little bit frustrating in terms of trying to get a door open to get those discussions,” LaRocque explained.

“I think that has caused the region to want to put the matter in a forum where it can be looked at,” LaRocque told CMC, adding that “we are always looking for some way of resolving the matter”.

Last August, the UK-based Diageo reportedly warned that should CARICOM mount a complaint to the WTO over the alleged subsidies it would ‘re-evaluate’ its Caribbean interests.

Diageo has denied ‘flooding’ the US market and has defended the US government’s 100-year-old ‘cover over’ programme, which it said granted the USVI and Puerto Rico much-needed revenues to promote economic stability and fiscal autonomy.

AMICABLE SOLUTION NEEDED

But last week, the CARICOM Council for Trade and Economic Development (COTED) reiterated the need for an amicable solution to the dispute with the United States.

COTED said it “is determined to seek a satisfactory solution to the matter of trade-distorting subsidies being granted to USVI and Puerto Rico rum producers that threaten the long-term viability of the rum industry in the Caribbean”.

It added that “ministers agreed to explore all avenues to address this serious matter with the United States and other relevant parties”.

In March, US Virgin Islands Governor John de Jongh wrote regional leaders urging CARICOM governments to back down on their plans to take the ongoing dispute before the WTO.

DIFFICULT LEGAL CASE

De Jongh wrote the prime ministers of Antigua and Barbuda, St Vincent and the Grenadines, Grenada, St Kitts and Nevis, Dominica and St Lucia urging them to avoid the WTO, claiming that this could lead to a prolonged legal case that could also be divisive and difficult to win.

He also warned that going to the WTO could “inflict damage on all of our economies”.

Earlier this year, Barbados Prime Minister Freundel Stuart said rum-producing countries had been holding high-level talks with the United States on resolving issues surrounding the rum industry in the region.

Stuart said the discussions, which were also attended by officials from the Dominican Republic, were necessary since, within recent times, subsidies had been given to rum producers in the USVI and Puerto Rico, much to the disadvantage of Caribbean rum producers, including Barbados.

He said the situation is so serious that Barbados is prepared to take its case to the WTO if a solution is not forthcoming.

Source: Jamaica Gleaner

http://jamaica-gleaner.com/gleaner/20130515/business/business6.html