St. John’s Antigua- Chairman of the West Indies Rum and Spirits Producers Association (WIRSPA) Frank Ward is urging regional governments to keep the pressure on the United States as growing rum subsidy dispute may be sidelined in the election fervour.
While reluctant to speculate on what the US government’s next move will be, Ward admitted that there is always the danger that the issue will be overlooked.
“The fact that there is a presidential election taking place around the same time, yes this could run the risk of being sidelined. This is why it is vitally important for the governments of the region to continue to press the US government to deal with the issue, they can’t allow it to just slide,” he said.
Ward is referring to an official letter written by Dr Kenny Anthony to senior US officials and President Obama asking them to address the issue. The exact details of the letter remain unknown.
Speaking on OBSERVER Radio’s Voice of the People yesterday, the chairman explained that another mechanism to resolve the disputes would be to approach the World Trade Organization; a move that Ward says can only be done by sovereign governments not private associations, such as his.
“It rests with the governments in the region to determine whether or not they will need to take it to that level. I believe that the consensus is they would prefer to have a negotiated settlement with the US government without having to go via the WTO dispute settlement mechanism,” Ward said.
Ward warned that countries that do not get on the bandwagon when the region approaches the WTO may be left out when a resolution comes about.
“I believe that at the end of the day, if a judgement is made then only those countries that were at the table at the time would stand to benefit from any resolution. It is quite important for all of the countries to sign up at the same time,” he noted.
The annual excise tax collected by the US federal government on global rum imports are refunded to Puerto Rico and the United States Virgin Islands (USVI) thus making rum production in those countries much cheaper than in Caricom territories.
Regional rum producers are concerned that if the Puerto Rico and USVI rum producers push them out of the international market, they will not be able to continue running their distilleries in an economical manner.
Anthony Bento, manager of Antigua Distilleries, explained that his business must produce about 30 to 35 thousand cases of liquor per year to generate enough revenue to break-even, that is cover their overhead.
“We are running above that thanks to exports,” Bento said.
The impact of the US subsidies may be some ways down the road. “Overall it is still early days to definitively say that rum exports from the Cariforum group of countries to the US has declined dramatically,” Ward explained.
Despite this, he reports that distilleries in some countries have been heavily impacted already. Some have lost contracts for supply of their products into the US market.
“The early victims are the suppliers of bulk rum. They are operating in a very competitive end of the market,” he said. “Those companies that supply a branded product they, too, will feel the effects. It will take a little longer to filter through to them but it will come,” he added.
