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RUM KEPT OFF SOUTH AMERICAN DUTY-FREE LIST

July 29, 2002 – The U.S. Senate continued support for the territory's rum industry last week when it kept rum off the list of zero duty imports allowed under the Andean Trade Preference Act.
The primary goal of the 1991 act, which covers imports from Bolivia, Ecuador, Colombia and Brazil, is to promote export diversification as alternatives to drug-crop production in the Andean region, according to the Department of Commerce web site. The act provides beneficiary countries reduced duty or duty-free access to the U.S. market for most products except those excluded by law.
Brian Modeste, aide to Delegate Donna Christian Christensen, said that if rum had not been kept off the zero duty list, those countries could have sent large quantities of cheap rum to the U.S. "They would have been able to flood the market," Modeste said.
Gov. Charles W. Turnbull said in a news release that he, with the help Christensen, lobbied to keep rum off the zero duty list. The administration's Washington lobbying firm, Winston and Strawn, also helped.
However, rum has always been excluded from the act, which expired Dec. 4 and has not yet received final approval by Congress. Modeste said approval is expected this week.
The act will then have to be signed into law by President George Bush, who favors its renewal.
He told the Organization of American States in January, "Open trade and investment bring healthy, growing economies, and can serve the cause of democratic reform…. I ask the Senate to schedule a vote, as soon as it returns, on renewing and expanding the Andean Trade Preference Act," according to a White House press release.
When the U.S. House of Representatives passed its version of the Andean Trade Preference Act last year, it also excluded rum.
The tax paid by mainlanders on rum made in St. Croix amounts to about $75 million a year for the territory.
An agreement recently worked out with the U.S. Justice Department and the U.S. Environmental Protection Agency to allow the St. Croix-based V.I. Rum Industries to produce 20 percent more rum than it previously could will generate another $13 million to $15 million a year in rum taxes.
That money will pay for improvements to the territory's wastewater treatment facilities. The improvements are expected to bring the territory into compliance with the Federal Clean Water Act for the first time since the standards were set in 1977.

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