Barbadian rum producers are keeping a close eye on the French presidential run-off election scheduled for May 7, fearing the results could hurt the local industry.
The political novice and centrist Emmanuel Macron of En Marche! and Marine Le Pen of the far right National Front will go head-to-head in the final race for the French presidency.
Macron, a pro-European centrist, topped the first round of voting on Sunday with 24.01 per cent of the votes – much to the relief of pro-Europeans across the continent – while the anti-immigrant, anti-Europe Le Pen placed second with 21.30 per cent, according to final results released yesterday by the French interior ministry.
Le Pen has threatened Frexit – a common name for a hypothetical French withdrawal from the European Union – following the example of Britain, which last month formally advised the EU that it would leave the union in 2019.
Many observers believe the EU, which has an Economic Partnership Agreement (EPA) with Caribbean Community countries, would not survive a French withdrawal.
And outgoing chairman of the West Indies Rum and Spirits Producers Association (WIRSPA) Dr Frank Ward said a Le Pen win could have a damning effect on the rum industry.
“If there are any changes in Government in some of our major markets, that may also have an impact. The idea that France may pull out of the EU that could have a significant impact upon us . . . .
“So if the outcome of the French elections is such that it engenders a more protectionist outlook, that would not bode well for us as an export-oriented industry because then there may be barriers put up to us being able to trade. I’m not saying that it’s going to happen but we always have to be thinking of various possibilities which will negatively impact upon us,” Ward told Barbados TODAY.
Barbados earned $89.9 million from rum exports to Europe between 2012 to 2016, according to Minister of International Business Donville Inniss at a WIRSPA reception last night at Accra Beach Hotel, at which the minister also said the Brexit vote in the United Kingdom last June posed a potential threat to the rum sector, and would have implications for Barbados and the region, particularly in the EPA provisions for trade and development.
Inniss also pointed to challenges facing the rum industry “under the guise of technical barriers to trade, coupled with non-compliance and technical regulations which have been instituted by players in the extra-regional markets”.
He made specific reference to heavily subsidized spirits produced in Puerto Rico and the United States Virgin Islands through the rum Cover-Over grant, the annual payments from the US government to the two territories out of federal excise taxes on the product.
This financial injection, Inniss said, has adversely affected the sustainability of the region’s rum industry in key export markets of some US territories.
“Additionally, the ease in accessing key inputs, that is molasses, to be used in the rum producing process has brought to the fore the risk that could jeopardize the sustainability of the industry if the supplies of the main rum ingredient is inadequate and if the appropriate formula for the production of molasses is not determined to guarantee adequate stock for the future,” he said.
Nonetheless, Inniss hailed the rum industry as one of the main drivers of the economy, and one of the few sectors that can boast a strong trade surplus in the midst of the current economic decline.
He told the reception, held during WIRSPA’s meeting here this week, that rum remained “an important prop in the economy”, and its strong performance has been due mainly to increased exports of high quality rums.
“Additionally it is known that the industry provides valuable foreign exchange and revenue for Government’s coffers, supports the sustainability and linkages of many other businesses with the agro-processing and tourism industries, and contributes significantly to job creation among other things,” Inniss stated.
He added that Government had launched a project to expand the local rum industry, with the objective of transitioning the output of bulk rum to branded rum, and forming strategic partnerships to expand the market share of local brands in the hospitality sector.
“Right here in Barbados we have the history, the heritage, a legacy, global awards and accolades, rum connoisseurs of sorts. What is left for us to do is to establish the value of rum as an integral part of Barbados’ heritage through branding and implementing the requisite marketing strategies for Barbados rum,” he said.