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As several Caribbean countries scramble to deal with Europe’s announcement that it has closed a special fund earmarked for development of rum producers of the African, Caribbean and Pacific (ACP) states, local giant, Demerara Distillers Limited (DDL), says that it has already applied to the fund to recoup some of its costs on ongoing projects.Under the Cotonou Agreement, the EU and its ACP partners, of which Guyana is a part, signed a Joint Declaration on Rum (XXV) that recognizes its value in competing in the global economy and the need to develop the industry further, particularly through modernization and better marketing.The EU committed €70 million to a rum-specific programme. The deal was that the rum producers would spend their own money to carry out the upgrades and marketing projects. The claim would be made to the EC once the projects were complete.Many rum producing companies with trading arrangements with Europe had committed themselves to commercial banking loans for expansions, hoping to recoup as much as 30% of money from the special developmental funds.Yesterday, Chairman of the DDL, Dr. Yesu Persaud, in response to an article published Tuesday in Kaieteur News on the decision to “prematurely” stop the fund, as was being claimed, said that the rum company has embarked on several projects that were hoping to capitalize on the funds. These include a new bottling plant and a bio-methylation plant, among other major upgrades.The businessman said that when the Cotonou Agreement was signed, he was among several producers who “knocked on the doors” of delegates lobbying for a special fund to help ACP businesses to be more competitive on the world market.Initially it was agreed that €100M would have been made available, but this was revised to €70M, of which a significant portion was to help prop up the rice industry.Part of the money would have also been used to aggressively market Caribbean rum products, under a program called “Real Caribbean Rum”. However, that initiative started late and the European market, especially UK, Spain and Italy, are still to feel the impact, the Chairman said. The campaign did not bear “much fruit” and was “short changed”.“On the rehabilitation side, we have taken advantage (of the fund).”Of the €70M, there is still €14M left and the West Indies Rum and Spirits Producers Association (WIRSPA), of which Guyana is part of, has written to European Commission’s Trade Commissioner, Karel DeGucht, repeating the request for access to the unspent and allocated funds for rum.Meanwhile, Kaieteur News understands that the regional rum producers will face another challenge as Europe is expected to remove a Residual Duty which is currently charged to non-quota exporters. With this move, WIRSPA will be facing more competition for other exporters who have been looking to gain a toehold in the lucrative European market with no duty now; it is a further blow to the region’s rum which is now being forced to make its operation more efficient.Attempts to contact officials at Banks DIH, another major rum producer, for a comment on the ending of the fund proved futile yesterday.The funding, according to a New Europe article of April 2, started three years late and was scheduled to end in June 2010 – an unrealistic date ,according to EC project monitors who recommended an 18-month extension to December 2011.Now the EC is closing down the fund early and refusing to extend it because of a Council regulation, leaving the rum producers in debt, the article said.Additionally,Francisco Lindor Indians Jersey, the EC is removing tariffs from Latin American rum and eroding the time they led Caribbean rum producers to believe they had to upgrade their production and become competitive.“The EC has formally told the Caribbean that they have already settled liberalised tariffs and quotas with Colombia and Peru and are now talking in similar terms with Central American and Andean countries.”According to Caribbean business executive and diplomat, Sir Ronald Sanders, the EU agreed to establish a fund of 70 million euros under the Eighth European Development Fund (EDF) to facilitate the adaptation of production facilities by Caribbean rum companies.“But to access this fund, companies first had to provide at least matching amounts of money, recovering the EDF grant element only when their upgrading or marketing projects are completed. “Many of the  companies borrowed money on commercial terms to undertake the projects.  They did so expecting the programme to continue until at least June 2010 when the funding window was scheduled to be closed.”However, with about 14 million Euros still in the Fund, the EC is closing in March 2010 on the basis that the rules of the 8th EDF demand it.  This means that the rum companies cannot get reimbursement for the money they’ve invested on projects that cannot be completed by the cut-off date on which the EC has insisted.According to Sanders, “Poignantly, the country that will be hardest hit by this EC reversal is Haiti. Its rum producer, Barbancourt, which was devastated by last January’s earthquake, will now have no chance of getting assistance for its recovery from this programme.“It will also find it well nigh impossible to regain a place in the EU market by the time it is able to limp back into any semblance of export production.”WIRSPA, in its letter to the European Commission, which is circulating among ACP circles in Brussels, also pointed out that in the deals the EC has done, and is continuing to do with Latin American countries, two things will happen.First, on low cost and heavy bulk rum, there is a strong risk that European importers will switch to using lower cost suppliers in Central or South America and immediately make full use of any tariff free quotas which are granted.“The loss of such major contracts would prove devastating to Caribbean suppliers of bulk rum in Barbados, Guyana, Jamaica and Trinidad and Tobago. And, second, on bottled rum, Central and South American producers will be able to use the reduction in the tariff to further undercut ACP products in the EU market.“After facing crises in the region’s sugar and banana industries, people are hoping that the EU will rethink its decision. If not, they fear that Caribbean rum will end its 300-year trade with Europe.”