Tax-News.com: EU Requests WTO Mediation Over Colombian Spirit Taxes

by Mike Godfrey, Tax-News.com, Washington

23 August 2016

The European Union has requested the establishment of a World Trade Organization panel to rule on a dispute concerning Colombia’s alleged discriminatory treatment of imported spirits.

The EU said in a statement on August 22 that it has had “long-standing” concerns that about tax discrimination against EU spirits in the Colombian market, and has decided to turn to the WTO dispute resolution mechanism after consultations with Colombian officials in March this year failed to result in a solution.

The EU argues that Colombia’s system of alcohol taxation automatically discriminates against foreign imports because duty rates escalate on beverages with an alcoholic content of 35 percent or more, with most locally produced liquor falling into the lower tax bracket.

According to the European Commission, EU spirits producers suffer the most harm as a result of this tax structure because they are the largest exporters of these products to Colombia.

In 2014, EU exports of spirits to Colombia – valued at EUR43m (USD48.7m) – represented approximately 14 percent of total agricultural exports to Colombia and 77 percent of total Colombian imports of spirits.

The EU claims that Colombia agreed to reform this tax regime by August 1, 2016, under the terms of the EU-Colombia free trade agreement, but has yet to do so.

The EU’s request for the establishment of a WTO panel will be discussed at the meeting of the WTO Dispute Settlement Body (DSB) on September 2. If Colombia does not agree to the establishment of a panel at that meeting, the EU may table a second request at the following DSB meeting which, according to WTO rules, Colombia cannot block.

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