Saturday, July 28, 2012

Rum Subsidies Polarizing the Caribbean Rum World

     It seems that the gap is getting larger in the Caribbean vs the US territories rum subsidies dilemma.

OP-ED: Rum Parting the Ways Between U.S. and the Caribbean

Sir Ronald Sanders
Sir Ronald Sanders
The rum industry in the non-U.S. countries in the Caribbean is now under serious threat.At risk are the jobs of 15,000 workers directly employed in the industry and another 60,000 jobs that benefit from it.  Apart from employment, non-U.S. Caribbean countries face the loss, annually, of US$700 million in foreign exchange and over US$250 million in tax revenues at a time they can ill afford it.

There is evidence that Barbados is already being adversely affected and the Dominican Republic, Guyana, Jamaica, and Trinidad and Tobago are under immediate threat.

As I pointed out in a commentary in May this year, the problem has not arisen out of direct action by the U.S. government. It has originated in Puerto Rico and the US Virgin Islands (USVI) both of which have been long-time rum producers in competition with other Caribbean manufacturers. Now, these two US affiliates are taking advantage of U.S. government refunds to them of excise taxes on rum to subsidize rum production and marketing for huge multinational companies. The vast increase in rum exports to the U.S. mainland, at a subsidized cost, will squeeze-out other Caribbean rums; and subsidized marketing will make it virtually impossible to compete.

     This is a serious situation that can effect the rum world for a long time to come is it isn't resolved.   I would guess that their isn't any easy answers, but we do live in a global economy and what we do does effect the rest of the world.