Guyana is among several Caribbean Community (Caricom) member nations that Tuesday called on the United States (US) to urgently discuss multimillion dollar subsidies being granted to rum producers in the US Virgin Islands and Puerto Rico at the expense of regional competitors.

The issue was discussed by Caricom’s trade ministerial council (COTED) during a two-day meeting held in Guyana.

“The COTED calls on the United States to engage early with Caribbean rum-producing countries with a view to achieving an outcome that will support the continued competitive access for Caribbean rum to the US market,” said Caricom in a statement.

Caricom says the rum industry plays a major role in the social and economic well-being of the region by being a “substantial employer and a major contributor to foreign exchange earnings and government revenues.

Statistics show that Caricom’s rum industry generates about US$500 million and more than US$250 million in tax revenues.

The COTED suggested in a thinly veiled manner that the issue could be taken to a dispute settlement body.

“Given the likely deleterious effect of these subsidies on the long-term viability of an industry which is of such critical importance to the economic fabric of so many countries in the Region, the COTED supports strongly the deep commitment of CARICOM countries to pursuing all avenues available to secure a resolution of this matter that restores the competitive balance in the marketplace,” added Caricom.

No dispute settlement mechanism was named by Caricom but the World Trade Organisation’s (WTO) could be the next logical move if talks with the US fail.

Caricom rum producers contend that 98 percent of excise taxes levied by the US on rum produced in the USVI and Puerto Rico is remitted back to those American territories. In 2010 the remittances totalled about US$450 million.

Against that background Caricom said it continued to have serious concerns about the threat to the competitiveness of Caribbean rum in the United States (US) market resulting from the massive subsidies provided by the governments of the United States Virgin Islands (USVI) and Puerto Rico to multinational rum producers in those territories.

“The nature and scale of these subsidies are such that they threaten to distort rum markets not only in the US but elsewhere,” Caricom added.

USVI-based rum producer has denied engaging in uncompetitive practices by flooding the US with its rums. The company pointed to a 39 percent increase in Caribbean rum exports as testimony that the region is not facing unfair competition.

At the same time, Diageo defended the excise tax remittance programme, saying that the more than 100-year old scheme aids development in the US territories.