EU Requests WTO Consultation Over Canadian Beer Tax

by Ulrika Lomas, for LawAndTax-News.com, Brussels

30 November 2006

The European Union on Wednesday requested World Trade Organisation consultations with Canada on new fiscal measures affecting wine and beer.

The legislation eliminates or reduces excise duties on Canadian wine made from 100% Canadian-grown agricultural products and on domestic beer, while leaving the excise tax on imported wine and beer intact.

The act is currently being debated in the Parliament and is expected to be adopted at the end of November. Once approved, the Act foresees retroactive application from 1 July 2006.

For European industry, there are considerable economic interests at stake. The EU exported 446 million euros worth of wine and 110 million euros worth of beer to Canada in 2005. Over the last decade these exports have been growing steadily. The measures introduced by Canada will negatively affect the EU’s ability to compete fairly in the Canadian market.

EU Trade Commissioner Peter Mandelson observed that:

"These measures are contrary to the letter and the spirit of WTO rules. I hope we will be able to use the WTO consultation process to agree an amicable resolution to the problem."

“European wines and beers are second to none,” added Mariann Fischer Boel, Commissioner for Agriculture and Rural Development.

“We can compete with anyone as long as we have a level playing field on which to operate. This measure is unfair and I urge Canada to end this discrimination against our products.”

The consultations requested are the first steps in the WTO dispute settlement process. If they prove unsuccessful after 60 days, the EU will be entitled to ask for a WTO Panel to be set up to rule on the legality of the Canadian measures.

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