The World Trade Organization’s Role in the Caribbean

Stabroeck News focuses on the growing number of reasons “why the Caribbean should be looking very closely at how best to use the World Trade Organisation’s (WTO) dispute resolution procedures to guard against larger more powerful nations discriminating against or damaging its economic interests; particularly in relation to rum but also, for instance, in the case of the UK’s Air Passenger Duty.” Here are excerpts with a link to the full article below:

[. . .] The consequence is that a consensus on a multilateral agreement is now all but impossible until a new global balance of power emerges. If, as seems likely, the probable driver of any new approach will be an eventual stable relationship between China and the United States and a consequential new economic balance that provides a matrix of advantage that other emerging and developing countries find acceptable, any comprehensive WTO agreement is many years away.

In recognition of this, there is now an emphasis on nations and regional groupings establishing bilateral and bi-regional trade relationships. [. . .] It is an approach that the Caribbean in its own way is also pursuing. Individual members of Caricom are involved more and more in establishing partial scope trade agreements of the kind that St Kitts signed when it recently acceded to the Guyana-Brazil agreement, or that Trinidad has established with Panama. [. . .] As these smaller needs-based trade deals emerge, the WTO has begun to take on a less glamorous, but arguably in many respects a more fundamental and important role, for small countries such as those in the Caribbean. [. . .] In this respect, the Caribbean currently has three potentially important cases that it can bring to the WTO: one is on rum against the US, and on which there is a consensus at the level of Caribbean Heads of Government; another is being mounted by the Dominican Republic against Australia over its tobacco packaging laws; and there is also a possible case that still has some way to go, on the UK’s Air Passenger Duty.

In the matter of rum, a WTO case has been developed with the advice of counsel and is at an advanced stage. The Dominican Republic is completing its due diligence and is preparing to proceed while the Caricom Secretariat is anxious to move forwards, not least because technical meetings with the United States indicate an acceptance that there is a case to answer. At risk are many tens of thousands of jobs and for the region, and the loss of considerable sums in foreign exchange and tax revenues at a time when governments are having difficulty funding pensions, education, health care and other social programmes.

There is already evidence that the subsidies and marketing support offered by the USVI and Puerto Rico have driven down pricing to levels at which Cariforum rum distilleries cannot compete in the US market. It is also apparent that unless the nature of the support is addressed rapidly it will damage, eventually irretrievably, the Caricom rum industry and the regional economy, irrespective of the economic interests that some of the cover over beneficiaries are trying to use as leverage in Caricom.

Importantly, there are also first indications that other nations concerned about US subsidies may also take an interest. The rum issue with the US and the Dominican Republic’s case against Australia make the case that the WTO can provide a forum and a structure that can lead to the resolution of trade issues that discriminate against small nations and small producers. There are now clear and sound reasons why Cariforum governments, in the case of rum should proceed rapidly to make the best use of the opportunities for redress that the WTO offers. In this the WTO’s disputes settlement procedures will be of particular importance.

For full article, see http://www.stabroeknews.com/2012/features/07/29/the-wto-has-an-important-role-for-small-countries-like-those-in-the-caribbean/

Photo: Bacardi Rum Distillery in Puerto Rico

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