Caribbean rum makers fear disaster

Date: 22/07/1999

By Gareth Harding

Caribbean countries claim liberalisation of the EU's rum market at the end of this year will destroy the region's €250-million rum industry and are demanding transitional measures to soften the impact of the move.

For the past 20 years, African, Caribbean and Pacific (ACP) rum producers have enjoyed duty-free entry to the EU market and have benefited from an import quota system which has kept out cheaper products from other countries. However, under a EU-US deal dating back to 1997, the Union has to begin opening up its rum market from 1 January 2000 and complete this process by 2003.

The Caribbean Council for Europe, which represents the region's industries in Brussels, argues this would put its producers at the mercy of heavily subsidised rivals from countries such as Brazil, Mexico and the Philippines and could destroy the region's rum industry.

"The socio-economic impact of the destruction of the industry would be devastating to the region," said Council spokeswoman Melissa Julian. With 10,000 people employed in the sector and the island states still reeling from the World Trade Organisation's recent ruling on EU banana imports, Julian warns of mounting instability in countries such as Jamaica and Guyana.

Caribbean countries are lobbying for the present tariff quota regime to be extended beyond 2003 in order to allow ACP producers to develop higher value rum products.

The region's leaders will press this point home at next week's EU-ACP ministerial talks. But the European Commission has made it clear it has no intention of unpicking the EU-US deal and is not willing to defend the region's privileges in the next round of WTO talks.

Instead, it is banking on the proposed Regional Economic Partnership Agreements to help cushion the effects of liberalisation. However, even if these groupings are accepted by Europe's former colonies, they would only enter into force in 2005.

In order to bridge the five-year gap, Caribbean countries are pushing for the EU to make extra funds available in this year's budget to help hard-hit producers. MEPs are likely to support this demand, having vowed to fight to keep ACP countries' trade privileges when they debated the issue in April. But both the Commission and governments will be reluctant to agree to give extra cash to an industry they see as ripe for market opening.