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SWA backs EU moves to end market rigging in Colombia

Published:  15 January, 2016

The Scotch Whisky Association has welcomed moves by the European Union to end restrictive trade practices in Colombia.

Colombia signed a free trade agreement with the EU which came into force in 2013.

Scottish whisky must be at least 40% abv by law. However, because there is a significantly lower excise rate in Colombia for spirits at 35% abv or less, domestic producers are at an unfair competitive advantage, the SWA argues.

Provincial distribution monopolies within Colombia also distort the market by favouring domestic distillers, it says.

Colombia previously committed itself to addressing these concerns by August 2015.

But in the absence of any progress on the issues, the EU has requested formal consultations with Colombia under the World Trade Organisation's Dispute Settlement Understanding, which represents the first step in the WTO's dispute resolution framework.

The SWA regards Colombia as a key target market with significant potential.

Exports of Scottish whisky to Colombia hit £24 million 2014, up 7% year on year.

David Frost, chief executive of the SWA, said: "Scotch whisky is being treated unfairly in Colombia and is unable to compete against local spirit producers due to the discriminatory tax system and anti-competitive practices of the monopolies.

"We are pleased that the European Union has requested consultations with Colombia at the World Trade Organisation with a view to resolving these longstanding issues.

"The removal of tax discrimination and other discriminatory measures would give a major boost to the market.

"The current model in Colombia is similar to the Chilean system that was condemned by the WTO in a case some years ago.

"The WTO panel on Chile and three previous ones - Korea, Japan and the Philippines - said that all spirits categories compete and therefore governments cannot discriminate between them."