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Caribbean rum programme approaches closure

07 June 2010

In April 2010 it was confirmed that the EC would close the Caribbean rum programme in June 2010, despite outstanding payment commitments under agreed projects. The West Indies Rum and Spirits Producers Association (WIRSPA) has asked that ‘a mechanism be found to allow the money to continue to be made available, so that it can continue to work towards the purpose [for which] it was designed.’ It is estimated that between €8 and €10 million has not yet been disbursed.

This development is compounded by the recent trade deals with Peru and Colombia, which are lowering EU import duties on rum and giving rise to the expectation that similar concessions will be granted under trade deals with central American countries. According to EC officials, ‘the EU had already prolonged the programme once, for an additional three years, but a second prolongation is simply not possible under EU rules.’ However it is argued that a ‘special dispensation by the EU authorities would appear to be warranted’ given the innovative nature of this programme and the success so far achieved in ‘pump priming’ a very difficult process of production and trade adjustment.

The success which the Caribbean rum industry is achieving, in part with the support of the EC-financed rum programme, is illustrated by the growth in exports of rum from the Dominican Republic. According to an interview with the Executive Director of the Dominican Association of Rum Producers (ADOPROM), while rum exports generated US$6 million in revenue in 2006, by 2008 this had risen to US$100 million, with exports not only to Europe, but also to the USA and Chile.

Editorial comment

The Caribbean rum programme is one of the most comprehensive and ambitious sector-restructuring programmes that the EC has supported in the ACP, entailing as it does the repositioning of an entire sector within the global rum marketplace. The successes achieved under this programme potentially offer a model for other ACP sector-based restructuring processes. This is particularly the case as regards the successful engagement of the private sector in the restructuring process: it is in this context that a case can be made for an exceptional dispensation to allow a further extension of the programme until existing commitments have been disbursed. This would enable other sectors to draw on the successful implementation modalities used under the rum programme.


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