HC Deb 17 February 1998 vol 306 cc568-9W
Mrs. Ewing

To ask the President of the Board of Trade what representations she has made to the Government of Japan concerning the tax regime for whisky in that country and on the need for adequate regulations on the definition and labelling of whisky. [27902]

Mrs. Roche

[holding answer 9 February 1998]: The long-standing dispute with Japan over discriminatory taxation of imported spirits, including Scotch Whisky, was resolved during December 1997. An agreement has been negotiated with Japan, building on the interim settlement reached in January 1997. Letters were exchanged between the European Commission and the Japanese Government on 24 December 1997. The new agreement now guarantees a level playing field on taxation for our spirits exports to Japan. In addition to accelerated equalisation of tax rates, exports of whisky and brandy will also benefit from the total elimination of import tariffs by 2002. These significant, new tariff concessions will also apply for the very first time to gin, vodka, rum and liqueurs. DTI officials were closely involved in negotiations with the Japanese Government and the final agreement was concluded with the full support and endorsement of the Scotch Whisky Association and the Gin and Vodka Association.

Whisky exports to Japan were worth £129 million in 1996, and have already seen a 33 per cent. rise since 1 October 1997, when the first tranche of tax cuts were introduced. This new agreement presents even greater opportunities for the growth of British spirits exports, which this Government will continue to help the industry to pursue as appropriate. This case also shows the effectiveness of the WTO in dealing with trade disputes and sends an important signal to other countries which continue to tax foreign spirits at a higher rate than those produced domestically.

Mrs. Ewing

To ask the President of the Board of Trade what discussions she has had with her European counterparts regarding action to ensure Japan and Taiwan introduce non-discriminatory taxation for (i) EU spirits and (ii) Scotch whisky. [27903]

Mrs. Roche

[holding answer 9 February 1998]: In the case of Japan, I refer the hon. Member to my earlier answer.

In the case of Taiwan, officials in this Department continue to work closely with their colleagues in the European Commission and in fellow EU Member States to press Taiwan to put an end to its discriminatory taxation of imported spirits. The current discrimination particularly affects the UK's Scotch whisky and the Irish whiskey industries, but France has concerns over brandy, as do other Member States on white spirits. As a result of such consensus between the UK and other Member States, the European Commission has maintained a strong line with Taiwan during its bilateral market access negotiations over Taiwan's accession to the World Trade Organisation (WTO).

In November last year, the Head of the British Trade & Cultural Office in Taipei and his French counterpart wrote a joint letter to Taiwanese President Vincent Siew urging immediate equalisation of taxation on all spirits. Disappointingly, this request was rejected. Nevertheless, the UK, other Member States and the Commission are continuing to keep up the pressure.

UK officials both in London and Taipei have conveyed their disappointment to Taiwan over this response and their expectation of a speedy end to the tax discrimination, as has Sir Leon Brittan, Vice-President, European Commission, in a recent letter to the Taiwanese Minister of Finance, Paul Chiu.

The discriminatory taxation on imported spirits, along with other concerns—notably on the lack of Taiwanese legislation on spirits definitions—is one of the key issues holding back an EU-Taiwan market access agreement in relation to Taiwan's accession to the WTO. Officials in this Department will, therefore, remain in close contact with the European Commission to ensure that it continues to reflect the UK's and other Member States' concerns on spirits in negotiations with Taiwan on WTO accession, the next round of which takes place in Taipei from 23–25 February.