The World Health Organisation Regional Committee for Europe recently adopted a ‘European action plan to reduce the harmful use of alcohol 2012-2020’. The plan recommends a number of policy options intended to reduce alcohol consumption: increasing alcohol taxes, instituting proportionally higher taxes on products with higher alcohol content, adding special taxes to products attractive to youth and setting a minimum price for alcohol.
However, such regulations may be contrary to EU law and other international trade obligations. For example, the imposition of a minimum price, currently being considered in Scotland, could amount to an unlawful restriction contrary to Article 28 of the European Community Treaty. Minimum pricing could prevent alcoholic products imported from other EU member states having a competitive advantage against UK-produced drinks.
Similarly, the imposition of higher or ‘special’ taxes on alcohol could breach provisions of the General Agreement on Tariffs and Trade 1994 (GATT), which is binding on all World Trade Organization member countries. For example, a WTO member country could violate GATT by imposing a border tax adjustment on imported alcohol that is higher than the taxes and charges that would apply if purchased domestically, or by varying quotas for duty-free importation of alcohol according to a traveller’s country of origin.
Most countries, and the EU, are also party to free trade and customs agreements, many of which include obligations to reduce or eliminate Customs duties on imports of goods, including alcohol. A party to a free trade agreement or Customs union could, therefore, be precluded from imposing Customs duties on imports of alcohol originating within the free trade agreement or Customs union.
The WHO plan recommends a number of actions to increase the price of alcohol, but these raise a plethora of international trade issues. Alcohol companies, trade associations and other industry participants and stakeholders need to be aware of these initiatives and ensure governments considering alcohol pricing regulations are reminded that such regulations must be consistent with their international trade obligations.