Captain Morgan Subsidies May Trigger W.T.O. Complaint

Distiller Serralles Warns Obama that USVI Subsidies Exceed Production Costs

WASHINGTON, Feb. 16  /PRNewswire-USNewswire/ -- The National Puerto Rican Coalition today cautioned President Obama that a proposed $2.7 billion taxpayer-funded subsidy to the British liquor conglomerate that owns Captain Morgan Rum may result in allegations of unfair trade practices against the United States.

"Mr. President, we agree with your inspiring words at the State of the Union Message about America's need to 'get our economy going again,' but surely you did not mean to encourage unfair trade practices or to create competitive advantages for one producer at the expense of others," said NPRC Chairman Miguel Lausell. 

Lausell explained that unless overturned by Congress, the U.S. Virgin Islands plans to give Captain Morgan's British owners, Diageo, LLC,  half of all federal Excise Tax revenues it will receive from the manufacture of the popular-selling rum once it moves distillery operations from Puerto Rico to St. Croix. 

Earlier this week, the President of the world-famous family-owned Serralles Distillery in Puerto Rico, which has long produced Captain Morgan, told Obama that the Virgin Islands' subsidies actually exceed the cost of the rum itself. 

"The subsidies will be almost twice the cost of production of the rum," wrote Felix Serralles. 

In addition, noted NPRC President Rafael Fantauzzi, the value of the subsidies far exceeds the $1.8 billion that Diageo paid for Captain Morgan in 2001. 

"This is a reckless, short-sighted giveaway that'll open the United States to allegations of trade violations," Fantauzzi charged.

In addition, noted Lausell, the taxpayer-funded subsidies will also create an imbalance in the domestic liquor industry. In his letter, Serralles told Obama that the subsidies being paid to Diageo "will dramatically curtail the ability of local businesses, including Destileria Serralles, to compete in the marketplace." 

The National Puerto Rican Coalition's mission is to enhance the social, political, and economic well-being of all Puerto Ricans on the mainland and the Island with a special focus on the most vulnerable.

SOURCE National Puerto Rican Coalition

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