With rum the territory’s second-largest revenue generator behind tourism, Delegate Donna Christian Christensen told her congressional colleagues Tuesday, the local industry needs to be protected.
Christensen was testifying before the House Trade Subcommittee of the Committee on Ways and Means to explain the importance of retaining the current treatment for rum in any new Andean Trade Preferences Act and of opposing future tariff reductions for rum in the context of the future Free Trade of the Americas Agreement.
"Today, rum is the second most important industry in the Virgin Islands, surpassed only by tourism," Christensen told the submcommittee. As such, she said, it "provides an essential revenue source for the Virgin Islands government."
Under a congressionally mandated program for the development of the territory, federal excise taxes on V.I. rum shipped to the mainland U.S. are returned to the local treasury. These funds currently account for more than 15 percent of the Virgin Islands total budget, she said.
"As Congress recognized in 1991, Andean and other non-CBI [Caribbean Basin Initiative] rum producers have significant natural resource advantages in the production of rum," Christensen said. She cited among them "indigenous sugar cane industries, inexpensive fuel and low wages."
As a result, she said, "Without current U.S. tariff preferences, these low-cost regional producers can be expected to overwhelm Virgin Islands and CBI producers of low-value rum in the U.S. market."
Tuesday’s hearing was called by the Trade Subcommittee chair, Rep. Phil Crane, to discuss the outcome of the Summit of the Americas held in Quebec City, Canada, last month and to look at the prospects and timing for achieving the Free Trade of the Americas Agreement (FTAA). The subcommittee also considered proposals to expand trade with Andean countries through the extension and expansion of the Andean Trade Preference Act, which expires on Dec. 5.
Also testifying at the hearing was the U.S. Trade Representative, Ambassador Robert Zoellick; the president of the AFL-CIO, John Sweeney; and the trade ministers of Colombia and Bolivia.