Trade Rules and Alcohol

8/13/2019 Trade Rules and Alcohol

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TRADE RULES AND

ALCOHOL:AN UNHEALTHY MIX

Prepared by:

Michelle Swenarchuk

Counsel and Director of International Programmes

CANADIAN ENVIRONMENTAL LAW ASSOCIATION

LASSOCIATION CANADIENNE DU DROIT DE LENVIRONMENT

Prepared for the Pan American

Conference

on Alcohol Policies

Brasilia 28-30 November, 2005


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THE WEB OF INTERNATIONAL

TRADE AGREEMENTS

GATT - GENERAL AGREEMENT ON

TARIFFS AND TRADE (1947)

trade in goods, standard-setting

WTO - WORLD TRADE ORGANIZATION

(1994)

goods, standard-setting, services, trade-

related intellectual property

140+ countries


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TRADE AGREEMENTS,

continued NAFTA - NORTH AMERICAN FREE TRADEAGREEMENT (1994)

goods, standard-setting, services, trade-related

intellectual property, investment Canada, United States, Mexico

CAFTA - CENTRAL AMERICAN FREE TRADE

AGREEMENT (2005) goods, standard-setting, services, trade-related

intellectual property, investment

Costa Rica, Dominican Republic, El Salvador,

Guatemala, Honduras, Nicaragua


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TRADE, continued BILATERAL AGREEMENTS

Many in the Americas, including

US-Chile

US-Uruguay

Canada-Chile


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2. FUNDAMENTAL

INTERNATIONAL TRADE

RULES

NON-DISCRIMINATION PRINCIPLES:

National Treatment: foreign products andproducers get effective equality with

domestic ones

Most Favoured Nation: all trading

partner-countries get any trade

advantage first provided to one country


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Fundamental International Trade

Rules

State Enterprises and Monopolies

must buy and sell without discrimination between

domestic and foreign

must base purchases and sales solely oncommercial considerations


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QUANTITATIVE

RESTRICTIONS Rules prohibit restrictions on quantities

of imports or exports by any means;

duties;

taxes;

quotas,

licences; or

other measures.


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In Canada, this applies to provincial

alcohol monopolies on imports offoreign liquors to the province.

Canada listed them in NAFTAnegotiations to preserve them.

NAFTA extends this prohibition to

services.


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3. GENERAL AGREEMENT ON

TRADE IN SERVICES (GATS) A WTO Agreement

Covers all measures affecting services,

meaning;

laws, regulations, procedures,decisions, administrative actions, or

any other type of government action.


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GATS (continued)

GATS exemption for services provided under

government authority is weak.

Most favoured nation and transparency must be

applied to all services.

National treatment and market access provisions

apply to those services listed by each government

in 1994.

Currently the focus of negotiations in the Doha

Round of trade negotiations.


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4. INVESTMENT AGREEMENTS

Several thousand bilateral investment

agreements exist.

Also in NAFTA and CAFTA

Broad definition of investment and investor.


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Powerful protection for foreign corporate

investors, including alcohol producers.

Broad definition of expropriation allowingdirect investor-state lawsuits.

Cases and threats have affected

environmental and tobacco-control strategies.

INVESTMENT AGREEMENTS, continue


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5. HEALTH POLICY

EXCEPTION

Government may adopt measures

necessary to protect public morals and

health.

In 12 of 14 trade disputes over domestic

regulations, the challenged regulation was

found not necessary by trade panelists.

Not a reliable defence when measure is

challenged.


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6. IMPLICATIONS FOR

ALCOHOL REGULATION

POLICIES

European integration treaties reduced alcohol

control options in Scandinavia.

Requirement to operate on a commercial basis

restricts monopolies attempts to limit alcohol supply

STATE MONOPOLIES


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Japan: shochu - gin, rum, brandy, whiskey

Chile: pisco - other foreign spirits with higher alcoholcontent

Korea: soju - imported spirits

A problem for grandfathering domestic

practices and regulating foreign ones.

NATIONAL TREATMENT AND TAXATION

Trade disputes have required three countries (Chile, Korea,

Japan) to tax foreign products like domestic ones.

Not only for like products, but for directly competitive or

substitutable products.


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QUANTITATIVE RESTRICTIONS:

Policies countries were required to

abandonGermany:

minimum alcohol rule (to prevent increase of low alcohol

beveragesBan on beers not meeting purity requirements

Holland:

minimum price for gin


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Canada (Beer 1):

Domestic beer sales in locations not available to importedbeers;

Domestic brewers (only) could deliver;

Differential price mark-ups not due to additional selling coststo sell imports;

Minimum prices for beer if they prevented imported beersfrom being sold more cheaply than domestic ones.


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United States (Beer II):

Lower taxes on some US producers;

Imports to be sold via in-state wholesalers;

Higher licensing fees on imports than on domestic beer andwine;

In-state wine sales permitted, but not imported wine;

No selling imports at lower prices than like products fromother US States;

Listing practices giving imports less favourable treatment thanlocal products.


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GATS SECTORAL

COMMITMENTS Alcohol related services:

distribution (commission agents services,

wholesale trade, retailing, franchising and other

services;

advertising;

retail and wholesale sales.

GATS market access rules prohibit limits

on: Numbers of service suppliers;

Numbers of service operations;

Participation of foreign capital.


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GATS SECTORAL

COMMITMENTS

Affects alcohol-control strategies of limits on: retail outlets;

volumes of sales; or

total sales, even if the limits are applied to both domestic and

foreign sellers.

Distribution services commitments by countries

in the Americas:

Argentina, Brazil, Mexico, Panama, Peru, US, Canada

Some limits on alcohol coverage by Canada and the United

States.


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Advertising services commitments by

countries in the Americas:

Argentina, Brazil, Dominican Republic, El Salvador,

Honduras, Jamaica, Mexico, Panama, Peru, US,

Venezuela.

Five European countries exempted advertising on

alcohol from GATS coverage:

Poland, Slovenia, Liechtenstein, Switzerland,

Bulgaria.


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Current GATS Negotiations

Priority objectives for the World Spirits Alliance:

Significant liberalization and, where possible, elimination of

tariffs including the removal of peak tariffs;

Liberalization of non-tariff trade barriers;

Liberalization of restrictions on services, including distribution

and advertising;

Enhanced measures to facilitate trade in distilled spirits;

Improved certainty of legal protection for spirits with

geographical indications.


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GATS, domestic regulations and pressures for a

necessity test:

GATS negotiators suggest restrictions/prohibitions on

marketing and advertising could be subjected to thenecessity test.

Other alcohol-control regulations which could be

affected:

licensing of alcohol facilities;

limits on the numbers of alcohol outlets in a particular area;

regulations on hours of operations; and

training or qualifications of alcohol managers and staff.

The EU is pressing countries to remove alcohol

controls and restrictions.


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SUGGESTED RESPONSES FOR

HEALTH OFFICIALS

Become involved in trade policy formation.

Research international trade constraints and yourcountrys position in current negotiations.

Intervene in current GATS negotiations to prevent

liberalization that undermines alcohol controls.

Promote increased political oversight of trade negotiatorsto introduce balance in trade policy goals.


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SUGGESTED RESPONSES FOR

HEALTH OFFICIALS

Ally with the global organizations of people and

governments working for trade policy reforms.

Consider the negotiation of an international convention on

alcohol control to bolster domestic protections in the event of

trade-based challenges.

Documents

Trade Rules and Alcohol