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Korea - Taxes on Alcoholic Beverages (WT/DS75/AB/R, WT/DS84/AB/R, WT/DS75/R, WT/DS84/R,): Report of the Panel

Published online by Cambridge University Press:  22 December 2017

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Summary

PROCEDURAL BACKGROUND

This proceeding has been initiated by two complaining parties, the European Communities and the United States.

On 2 April 1997, the European Communities requested consultations with Korea under Article XXII:1 of GATT and Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”) (WT/DS75/1). The United States (WT/DS 75/2) and Canada 6(WT/DS75/3) requested to be joined in those consultations, pursuant to Article 4.11 of the DSU on 17 and 21 April 1997, respectively. Korea agreed to those requests (WT/DS75/4 and WT/DS75/5). Consultations between the European Communities and Korea were held in Geneva on 29 May 1997, in which the United States and Canada participated.

On 23 May 1997, the United States requested consultations with Korea under Article XXII:1 of GATT and Article 4 of the DSU with respect to the same matter (WT/DS84/1). Canada (WT/DS84/2) and the European Communities (WT/DS84/3) requested to be joined in those consultations, pursuant to Article 4.11 of the DSU, on 29 May and 5 June 1997, respectively.

Consultations were held in Geneva on 24 June 1997, between the United States and Korea, and the European Communities and Canada participated as thirdparties. Another set of consultations were held on 8 August 1997, to address US requests for further clarifications, but the parties were unable to settle the dispute.

On 10 September 1997, the European Communities (WT/DS75/6), and the United States (WT/DS84/4), each requested the establishment of a panel pursuant to Article 6.1 of the DSU.

In its panel request, the European Communities claims that:

Korea, by according a preferential tax treatment, through the Liquor Tax Law and the Education Tax Law, to soju vis-a-vis certain alcoholic beverages falling within HS heading 2208, has acted inconsistently with Article III:2 of GATT 1994, therefore nullifying or impairing the benefits accruing to the European Communities under the GATT 1994.

In its panel request the United States claims that:

Korea, under its general Liquor Tax Law, imposes a lower tax on the traditional Korean distilled spirit soju than the high taxes it applies to other distilled spirits such as whisky, brandy, vodka, rum, gin and “ad-mixtures”. This difference in tax burden is made even more dramatic by the application of an Education Tax.

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Publisher: Cambridge University Press
Print publication year: 2001

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