Does the Caribbean Really Plan to Take on the U.S. in the Rum Wars? Believe It!

One thing I learned very soon after arriving in Barbados for my Peace Corps service, is that rum is almost a religion. Rum distilleries- refineries (most expats call them 'refineries') are hallowed ground, as they are throughout most of the English-speaking Caribbean, and no sane human - American or other - would even think of arriving in Barbados, say, with a bottle of Bacardi's! 

First, rum refining comprises the largest remaining driver for the consumption of sugar cane that grows in abundance. Given the world's diminishing taste for sugar (including health reasons) the only large remaining outlets are for sugar-based ethanol, e.g. in Brazil, or for rum manufactured in the Caribbean conglomerate known as the "Cariforum nations".

Second, rum comprises the region's largest agriculture -based export industry - which generates $500 m in foreign exchange each year. Foreign exchange is what keeps all of these island states afloat, because without it, they'd not be able to afford the food imports.....and without the food imports, most islanders would descend to a level of malnutrition common to sub-Sahara Africa.

So, it was with more than the usual interest that an item appearining in the Caribbean press (Jamaica Gleaner, Barbados Advocate, Trinidad Guardian)  some 3 weeks ago, alerted Caribbean folk that they may soon have to wage a pitched battle with the U.S. ...over, yes, RUM!  Specifically, CARICOM Secretary General Irwin LaRoque disclosed in a news conference that the Cariforum alliance had begun a process which would eventually, if unresolved, lead to Cariforum hauling the USA before the World Trade Organization, WTO).

The source of the miff? The U.S. Government's selective application of a cover-over program which repatriates 98 percent of all rum excise duties (raised on rums sold in the U.S.) back to the producing U.S. territories of Puerto Rico and the  U.S. Virgin Islands.   Estimates from 2010 put this unfair repatriation at $450 m.

These offhand deals, made by the respective neo-colonial governments (of Puerto Rico and the USVI) have been struck with the likes of Bacardi and Serrales. It is galling to Caribbean governments which derive no similar special deals based on repatriating duties. In effect, as one writer (David Jessop)  has pointed out, the U.s. congress has enabled the USVI and Puerto Rican development programs to divert hundreds of millions of dollars to primarily provide a development program for the largest distilled spirits companies in the world.

In this sense, the U.S. - maybe wittingly, maybe unwittingly - is damaging one of the few competitive industries that Cariforum nations have and in Jessop's words, "which helps underpin the economic viability of small and vulnerable Caribbean states". And this is on top of an already seething anger and distrust that's erupted since the (now deposed) French idiot Sarkozy remarked at an economic conference that Barbados' offshore banking is ignoble and abets criminals and it ought to be "punished" by the OECD.  Add in the rum fracas, and you have lots of West Indians ready to chew titanium at the offhand way they've been treated by the big Western powers.

The issue is even more close to the hearts of Caribbean folk, since as Jessop has noted :

"Unlike the product of large, multinational distilling groups, the success of Cariforum producers does not result from artificial tax breaks, transfer pricing or subsidy. Instead it is an industry dominated by small local distillers whose product is export-oriented, brings much needed foreign exchange and adds value to primary agriculture.while providing signficant levels of tax revenues to governments struggling to deliver social programs"

Which is very true, since we know the Cariforum nations have one of the most progressive tax systems in the hemisphere, and unlike the faux democrats in the US of A, none of them would ever approve any form of unbalanced tax cuts, or any tax cuts, period.

But isn't it chutzpah of the first order to believe a consortium of small island nations, can take on a Goliath like the U.S. allied with its powerful multinationals who have money to burn? Maybe not! Jessop again:

"This is why rum has always been a product worth fighting for as Europe knows to its cost and the U.S. is soon to discover".

Perhaps this will be the Cariforum nations' counter punch to the U.S. dragging it before the WTO over a banana dispute back in 1998. (The U.S, allied with Chiquita Banana, insisted that despite colonial history and associations, Europe had no right to pay Caribbean nations special, higher prices.)

In any case, this would be the perfect equalizer.