Select Committee on Trade and Industry Appendices to the Report


Memorandum submitted by the Scotch Whisky Association


  The numerous barriers to trade facing UK produced spirits such as Scotch whisky, gin and vodka are essentially a consequence of Turkey's efforts to protect its national spirits producer, Tekel. However, under the terms of the 1995 EU-Turkey Customs Union Agreement, the trading conditions for EU spirits in Turkey should be identical to those within the Single Market.

  Turkey is considered to be a market of considerable potential. With the barriers to trade, however, UK spirits exports to the market are lower than they were before Customs Union entered force. We therefore particularly appreciate you and your colleagues raising our concerns during the visit of the Select Committee on Trade and Industry to Turkey in November. You indicated that the Undersecretariat of Foreign Trade had not been able to answer some of the Select Committee's questions but had promised a written response in due course. Has such a reply ever been received?

  As you may be aware, both the SWA and the Gin and Vodka Association are members of the European Confederation of Spirits Producers (CEPS), the Brussels-based organisation which represents all EU spirits producers. Through CEPS, we have established excellent relations with the European Commission, which is also fighting to remove the barriers facing our industry. Indeed, the Commission has confirmed that their removal is its top trade priority in Turkey. In addition, we are in regular contact with the DTI and British Embassy in Ankara regarding the trade barriers. Both have provided invaluable assistance and guidance in our efforts to secure improvements in trading conditions.

  One of the key areas of concern has been the Monopoly Bill, which was intended to amend Turkey's Alcohol Act, ostensibly to make it compatible with Customs Union. A Bill, which had been around for several years, was finally adopted in January 2001. Although its scope and application are vague, the Bill introduces further restrictions on the free movement of goods. Essentially it introduces a threshold of 1 million litres: companies trading more than this volume will be permitted to do so independently; smaller companies will be obliged to channel their goods through Tekel, ie the national production monopoly and a competitor organisation.

  There are many questions as to how the new law will operate in practice. The Turkish government has promised its interpretation will be clarified through an "implementation decree". They have also promised that the Commission will be consulted over the provisions of this decree. Meanwhile, the timing for this decree remains unknown.

  The trade believes that if the decree allows the new law to be interpreted in a wide manner, it may premit them to trade more freely than at present. However, despite Turkish government assurances regarding consultation, it is fair to say that there exists a degree of scepticism that this process will be meaningful!

  Given the above, it would therefore be very helpful if, in any contacts you may have with Turkish Government officials, you were able to continue to press the case for an improvement in trading conditions for UK spirits. In particular, we would appreciate you urging them to introduce greater market access through a generous interpretation of the threshold in the recent law.

13 February 2001

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