Recently, da'Rum, jank and yes, Moi, have all noted what we thought was a lack of unaminity by CARICOM to jointly approach the WTO regarding what they strongly felt were three serious viloations of the WTO Rules on Fair Trade. The countries most affected included Barbados, Jamica, the Dominican Republic and Guyana. The DR and Barbados were ready to go, but Jamaican and Guyana were holding back.
This simply didn't make sense. But we were wrong - now it does...
The sense of it is this. First of all the import tax situation is far worse than we thought. A number of observers had the attitude that all the distillers paid import taxes, and had done so for years, so big deal, right? Wrong.
The USVI and Puerto Rico pay nearly $500 Million USD per year - but - they get 98% of it back, and most of this is directed back to the Big Three (Diageo, Bacardi and Fortune). The rest of the Caribbean producers - much smaller - also pay taxes, about $40 Million per year and not only NOT get it back, guess who does? Yup, even those taxes are returned - but again - to the USVI and Puerto Rico, who funnel these too to the Big Three.
Now THAT is outrageous. Add to that the $4 billion in special subsidies given directly to Diageo and Fortune by the USVI, again under the auspices of the United States and it's clear that 2012 has been a horror story. Our dear Caribbean rums will be squeezed out of business and soon.
So again, why not unaminity among Barbados, the DR. Jamaican and Guyana. Barbados and DR are ready to pull the trigger and engate the WTO - a serious and effective move, but Jamaica and Guyana are hedging. Why?
Because Diageo is threatening them...
Here's the deal. According to Sir Ronald, Diageo buys many millions of dollars of bulk rum from Jamaica and Guyana. In fact, Diageo has an interest in Jamaica's Clarendon Distillers who benefits from these bulk sales. Make no mistake this is a direct threat. Per Sir Ronald:
In other words, Diageo's position seems to be "''...either shut up, or we stop buying millions of dollars of your bulk rum.". The truth: Jamaica and Guyana are fucked coming or going in that deal. It's like when the only jobs left in America are greeters at Walmart. The good news is this: it only takes one country to engage the WTO, and that is a very serious and effective step. As so well put by Sir Ronald: "That’s what the WTO is for – it will open the door for institutional consultation with the US government that cannot be ignored. ""Diageo may also feel that because it buys bulk rum from producers in several non-US Caribbean countries, those countries would be well advised to accept the situation and be content with negotiating the best sales contracts they can.
But, the effect of accepting the situation would be to harm the rum industry in the non-US Caribbean gravely if not fatally. Very quickly, the already fragile rum industry would be crippled, significantly reducing the US$500m foreign exchange it earns for these economies and shrinking the US$250 million tax revenues to governments.
A further fall out for non-US Caribbean countries is cultural. Rum production and the use of rum in a variety of ways, including in making Christmas cakes, is ingrained in the Caribbean culture. It is as Caribbean as sunshine and sea. So too is the rivalry between Caribbean countries over which one produces the best rums. The loyalty to national brands among rum users is renowned. No Caribbean citizen would forgive the disappearance of national brands."
I feel better now, and you should too...