Thursday, August 19, 2010

U.S., EU observing Taiwan's move on rice wine tax cuts


Taipei, Aug. 19 (CNA) The representative offices in Taiwan of the United States and the European Union (EU) both took a wait-and-see approach Thursday to an imminent amendment of a law that would lower the tax on rice wine, which both parties consider a violation of World Trade Organization (WTO) regulations.

The Executive Yuan passed a draft amendment to the Tobacco and Alcohol Tax Law last month to adjust the tax on rice wine by moving it from the distilled spirit category to the cooking wine category. The amendment was expected to clear the Legislative Yuan late Thursday.

"We will carefully look at new laws or amendments that may conflict with the WTO obligations of members, particularly any changes that will treat domestic products more favorably than imported ones. We expect WTO members to act in accordance with their WTO commitments, " said Sheila Paskman, a spokeswoman of the American Institute in Taiwan (AIT).

The European Economic and Trade Office said meanwhile that it will let the EU Parliament in Brussels handle the EU's official response.

Under the draft amendment, the tax on a 0.6-liter bottle of rice wine will be reduced from NT$29.25 (US$0.93) to NT$5.4 and the price of a bottle of rice wine will be cut to NT$25 from NT$50. The price adjustment has sparked questions in the U.S. and the EU as to whether it violates the regulations of the WTO, of which Taiwan is a member.

Citing public opinion surveys, the government has argued that 96.4 percent of the population use rice wine solely for cooking rather than drinking, in an effort to convince the U.S., the EU and other WTO members that lowering rice wine prices will not have an impact on other types of alcohol.

Both the U.S. and the EU -- the main producers of brandy and whisky -- fear that once the price of the kitchen staple is lowered, sales of whisky, brandy and other varieties of alcohol will be affected. (By Chris Wang) ENDITEM/J