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World Trade


17 September 1998
Original: English

Korea - Taxes on Alcoholic Beverages

Report of the Panel

The report of the Panel on Korea - Taxes on Alcoholic Beverages is being circulated to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from 17 September 1998 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the dispute may appeal a panel report. An appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed by the Panel. There shall be no ex parte communications with the Panel or Appellate Body concerning matters under consideration by the Panel or Appellate Body.

Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat.

I. Procedural Background
II. Measures in Issue

A. The Liquor Tax Law
1. Categories
2. Tax Rates

B. The Education Tax Law
III. Factual Arguments A. European Communities
B. United States

C. Korea

1. Features of Distilled Alcoholic Beverages
2. Consumer Behaviour

3. Price

4. Korean Soju

5. Changes Since 1990

IV. Claims of the Parties
V. Legal Arguments

A. Preliminary Issues
1. General
2. Specificity of the Panel Requests

3. Adequacy of Consultations

4. Confidentiality

B. Panel and Appellate Body Reports on Japan - Taxes on Alcoholic Beverages
1. Complainants
2. Korea

C. The Burden of Proof
1. Korea
2. Complainants

D. Article III Arguments
1. Complainants
2. Korea

VI. Rebuttal Arguments

A. European Communities
1. Shochu and Soju
2. The Japanese Market and the Korean Market

3. All Types of Soju are one and the Same Product

4. Soju and Vodka are Like Products

5. Soju and the Other Distilled Spirits are Directly Competitive and Substitutable Products

6. The Dodwell Study

7. The Sofres Report

8. The Trendscope Survey

9. The Measures are Applied "So as to Afford Protection to Domestic Production"

B. United States
1. General: Violation of Article III:2
2. Violation of Article III:2, First Sentence

3. Violation of Article III:2, Second Sentence

4. The Dodwell Study

5. The Measures are Applied "So as to Afford Protection to Domestic Production"

C. Korea
1. The Nielsen Study
2. General Comments

3. Generalisations About the Korean Products

4. Actual (or Potential) Competition

5. Broad or Narrow Interpretation of Products in Dispute

6. "So as to Afford Protection"

7. Comments of Korea to the EC Trendscope Survey

D. EC and us Comments on the Nielsen Study

VII. Answers to Questions

A. European Communities
B. United States

C. Korea
VIII. Third-Party Arguments A. Canada
B. Mexico

1. Background
2. Legal Aspects
C. Korea's Response to Third-Party Arguments
IX. Interim Review
X. Findings
A. Claims of the Parties
B. Preliminary Issues

1. Specificity
2. Adequacy of Consultations

3. Confidentiality

4. Late Submission of Evidence

5. Private Counsel

C. Main Issues
1. Interpretation of Article III:2
2. Evidentiary Issues

3. Products at Issue

4. Product Comparisons

5. Not Similarly Taxed

6. So as to Afford Protection

7. Like Product
XI. Conclusions

To continue with Procedural Background