Posts Tagged ‘National treatment’

As this post from the International Centre for Trade and Sustainable Development has pointed out some days ago, the European Union (EU) filed a World Trade Organization (WTO) challenge against Colombia in the beginning of January. According to the European Commission’s presse release, European businesses of spirits could be facing an infringement of the WTO’s national treatment provisions, which hold that no taxes or regulations shall be imposed to the commercialisation of foreign products as long as local products are not equally subject to them.

The EU argues that Colombia’s additional tax on beverages whose alcohol dose exceeds 35 percent is directly related to the fact that Colombian-made spirits are usually below that threshold,

World Trade Organisation’s headquarters in Geneva, Switzerland.

whereas imported European beverages tend to have higher levels of alcohol. Therefore, a regulation which would seem neutral prima facie would entail a indirect discrimination against imported products, in outright violation of WTO law.

Even though the consultations request of the EU leads to negotiations which must last no less than 60 days, wasn’t the dispute to be settled through this amicable way, the WTO’s Dispute Settlement Body’s (DSB) case-law would prove essential in trying to work out the dispute’s result.

In this sense, the 1998 “Japan – Taxes on Alcoholic Beverages” case must be very much taken into account in order to predict a possible outcome. At that time, the DSB condemned Japan’s practices consisting in taxing imported whisky and cognac stronger that the local Shochu drink. To understand the DSB’s ruling, it must be stressed that the national treatment principle forbids any discriminatory treatment not only against identical imported products but also against those which are substitutable in the analysed market. In the present case, the EU precisely holds that Colombia’s practices lead to “unjustified imposition of a higher fiscal burden on like or directly competitive and substitutable imported spirits than the one applied on domestically produced spirits“.

Notwithstanding that some of the present case’s details could calle for a more nuanced approach, the DSB’s 1998 decision could anyway prove decisive to the EU-Colombia dispute’s outcome.