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The following text is intended for general reference only. It is currently under review for accuracy and completeness, as well as formatting.
JAPAN AGREEMENT ON DISTILLED SPIRITS
U.S.-JAPAN AGREEMENT ON DISTILLED SPIRITS
AGREEMENT ON DISTILLED SPIRITS
EXECUTIVE OFFICE OF THE PRESIDENT
THE UNITED STATES TRADE REPRESENTATIVE
WASHINGTON, D.C. 20508
His Excellency Kunihiko Saito
Ambassador of Japan
Embassy of Japan
2520 Massachusetts Avenue, N.W.
Washington, D.C. 20008
Dear Ambassador Saito:
I am pleased to receive your letter of today's date concerning the liquor tax issue.
I confirm, on behalf of the United States Government, that this exchange of letters, together with the amendments to the Liquor Tax Law promulgated in March 1997, resolves the dispute on liquor taxes between the United States and Japan.
I welcome the commitments made by your government with regard to subsidies and other measures in relation to the settlement of the liquor tax issue. I also welcome the GOJ's commitment, expressed in your letter, to provide relevant information on measures for domestic producers of distilled spirits.
I note that it is jointly understood that acceptance by the United States of Japan's proposals to settle this dispute can not be interpreted as in any way prejudging the position of the United States in the WTO with regard to the definition of de minimis differentials or the "reasonable period of time" for implementation.
In particular, this arrangement is without prejudice to the question of whether the differential in tax rates between brown and white" spirits that will remain as of 1 October 2000 is a de minimis differential or would constitute a de minimis differential in any other market or under any other factual circumstances.
This exchange of letters is without prejudice to the rights and obligations of the United States under the WTO Agreement. If this mutually satisfactory solution to the liquor tax issue is not implemented fully, the United States reserves its rights to resort to dispute settlement under the WTO Agreement.
Sincerely,
Charlene Barshefskv
EMBASSY OF JAPAN
WASHINGTON, D.C.
December 15,1997
Dear Ambassador Barshefsky:
I refer to the consultations between the officials of our two governments on the liquor tax issue, the most recent sessions of which were held in Vancouver in November, in Geneva and in Washington, D.C. in December 1997. I am pleased to confirm, on behalf of the Government of Japan (GOJ), that the GOJ has decided to take the following measures, whose adoption will be in accordance with the necessary domestic legislative procedures, to implement the recommendations and rulings of the WTO Dispute Settlement Body pursuant to the panel and the Appellate Body reports on "Japan-Taxes on Alcoholic Beverages."
Based on the outcome of the consultations referred to above, and having carefully considered the WTO arbitration award issued on 14 February 1997, the GOJ will revise the current liquor tax scheme as described in detail in Annex A to this letter, and will carry out tariff eliminations and reductions on the applied rate basis as described in detail in Annex B to this letter.
As compensation for the longer implementation period in the amended Liquor Tax Law for the new taxation scheme, from I April 1998 onward the GOJ will apply reduced tariff rates and in some cases zero tariffs on the items in Annex B to this letter as specified therein.
For this purpose the GOJ will submit a draft law amending the Customs Tariff Law and the Temporary Tariff Measures Law to the next ordinary session of the Diet to be convened in January 1998, and will do its utmost to obtain Diet approval of such an amendment. The GOJ will not raise tariff rates above those specified in Annex B. Furthermore, the GOJ will apply the rates listed in Annex B in full recognition that Japan's WTO bound rates are higher and intends to bind these tariff reductions in the WTO at the next possible opportunity to modify the Schedule of Japan following a multilateral, multi sectoral negotiation. In addition, the United States will receive at least comparable tariff eliminations/reductions to those which Japan may grant to the EC, Canada or any other WTO Members (if any) as a result of negotiations on compensation recording the liquor tax issue.
Any measures, including subsidies, to be taken for domestic producers of distilled spirits in relation to the settlement of the liquor tax issue will be fully consistent with the GOJ's obligations under the WTO Agreement, and will in no way nullify or impair the benefits provided by the GOJ to the United States as a result of this mutually satisfactory solution to the liquor tax issue.
With regard to subsidies, tax measures or other measures of Japan that may alter the conditions of competition, between imported and domestic distilled spirits, the GOJ confirms that it cannot be anticipated that the United States Government (USG) is aware of existing measures other than those listed in Annex C.
In addition, the GOJ confirms that it will neither grant nor maintain subsidies or special tax measures or other measures benefitting domestic producers of distilled spirits which would have effect of displacing or impeding the export to Japan of distilled spirits from the United States and other countries.
The GOJ will provide the USG, upon request, relevant information on such measures for domestic producers of distilled spirits unless such information is of a confidential nature and its provision would impede enforcement of domestic laws and regulations or would prejudice the legitimate commercial interests of particular enterprises.
I confirm that at the request of either party, consultations on the implementation or effects of any aspect of this mutually satisfactory solution to the liquor tax issue will be held expeditiously with a view to reaching a satisfactory solution.
I would appreciate your confirmation that implementation of the measures set out in this letter, together with the amendments to the Liquor Tax Law promulgated in March 1997, will be a mutually satisfactory solution to the dispute between the United States and Japan concerning the taxation of distilled spirits.
Sincerely,
Kunihiko Saito
Ambassador of Japan
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