Congresswoman Yvette Clarke to help seek answers to Rum Row

By Tony Best

The New York Carib News
10/24/2012 4:20 PM

Brooklyn Congresswoman Yvette Clarke is coming to the aid of Caribbean rum-producing nations to get the Obama Administration to the table to discuss the region’s complaint against the damaging subsidies the U.S. Virgin Islands and Puerto Rico are giving to rum producers on their soil.

Two months after 14 Caribbean ambassador in Washington sent a letter to Ambassador Ron Kirk, U.S. Special Trade Representative, warning him about the potentially crippling subsidies the U.S. Virgin Islands is giving to Diageo in return for a commitment to produce large quantities of bulk rum in St. Croix for export to the U.S. mainland and complaining about similar financial help Puerto Rico is offering to its own major rum producers there, the region’s top diplomats haven’t received even an acknowledgment of their diplomatic note. Now, Congresswoman Clarke, the daughter of Caribbean parents in Brooklyn has taken steps to get Kirk to respond to the region and hopefully to sit down and discuss the frightening prospect of the Caribbean’s bulk rum exports to the U.S, being wiped out completely.

“The Caricom nations have a very valid concern and I certainly want to use my office to get to the bottom of the thinking of the U.S. Trade Representative’s office,” Clarke told the Carib News. “We have already reached out to Ambassador Kirk to request a meeting to discuss the issue around this question of subsidies and its impact on the Caribbean. We also wish to hear about his response to the Caricom letter.

“This is a very important issue both on the U.S. end as well as on the Caricom side,” said Clarke. “The competition the Caribbean rum producers would face because of the subsidies would not make their rum industry sustainable and at some point we would face a major collapse of the bulk rum industry in the Caribbean if something isn’t done.”

In a four-page letter signed by Ambassadors from Antigua & Barbuda, the Bahamas, Barbados, Belize, Dominica, the Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St. Kitts-Nevis, St. Vincent & the Grenadines, Suriname, St. Lucia and Trinidad and Tobago, Caribbean nations said that the U.S. Virgin Islands’ decision to grant subsidies “covering 100 per cent of all costs to build a state of art production plant in St. Croix and then providing an operating subsidy that would “approach or exceed 100% of the cost of production of all rum exported to the United States” as well as “generous tax breaks and incentives” could wipe out the Caribbean’s bulk rum industry .

Caricom states and the Dominican Republic fear that subsidies provided by the USVI and Puerto Rico to their rum producers, would place the Caribbean at “an unfair disadvantage, making them unable to compete with large multi-national producers that will be receiving subsidies covering virtually all of their fixed and variable production costs.”

Rum is the largest agriculture-based export industry in Caricom and the DR, bringing in $700 million in foreign exchange and more than $250 million in tax revenues to governments across the region. At least 15,000 workers are directly employed in rum production and 60,000 people indirectly hold jobs in that business sector.

“The vital economic benefits that the region obtains from rum production and exports have now been placed in jeopardy by special arrangements that a handful of large multi-national producers have been able to arrange with the USVI and Puerto Rican government,” stated the diplomats.

“Time is not on the side of the Caribbean rum industry,” they added. “Caribbean producers are already having supply contracts cancelled because they cannot meet the price of subsidized competition from Puerto Rico and the USVI.”

Clarke, now seeking re-election to her fourth term on Capitol Hill said that in the end the issue could come down to how the USVI and Puerto Rico were allowed to use the refund of their excise taxes.

“We have already made it known both to the USTR’s office in Washington and other officials that this is an issue that requires their immediate attention,” Clarke insisted.

She was quick to explain that the rum controversy emerged last year but few if any members of the House of Representatives “knew of its full implications” of the subsidies on the Caribbean because the issue was “framed” as a battle the two U.S. territories, not the region as a whole.

“The clarity of what the impact would be on the overall region outside of the U.S. territories was never part of that conversation,” she asserted. “I intend to get to the bottom of it because the damage to the Caribbean could be huge and we just simply allow that to happen.”

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