Memorandum submitted by Gin & Vodka
Association
1. The Gin and Vodka Association is a trade
association that represents the interests of the British gin and
vodka producers, brand owners and importers. Our main objective
is to protect and promote the gin and vodka industry.
2. Our members range from the biggest spirit
drinks producers in the world to small start-up companies. Their
products, valued at £226 million in 2006, are exported around
the globe. Equally, some of the larger members produce well-known
British brands of gin and vodka in 23 countries around the world,
supplying local markets directly from these production sites.
3. International trade is a vital to the
health of the British spirits drinks industry. Over a number of
years, our members and we have actively supported a number of
campaigns aimed at removing barriers that imposed discriminatory
taxes and virtually insurmountable technical hurdles.
4. The Turkish spirits drinks market has,
since 1995, been one of unfulfilled promise. The background and
current difficulties are described at Enclosure and Reference.
In addition, we have the added problem of a de facto import ban
on Ready-to-Drink (RTD) products. These beverages are usually
spirit based and the sector also includes pre-mixes such as gin
and tonic, rum and coke, and other well-known mixtures. Our member
companies have found it impossible to gain a Turkish import licence
for these products and in addition, the Turkish authorities have
effectively prohibited their sale in the on-trade (hotels, pubs
and bars), albeit that there is no official measure to support
their actions.
5. Turkey is potentially a very important
market for our members. However, Turkish market access barriers
and bureaucratic impediments make it a most difficult and frustrating
country in which to try and do business. We are in full agreement
and fully support the comments stated by the Scotch Whisky Association.
We seek fair market access and an equitable trading relationship
with Turkey and would welcome the removal of Turkish trade barriers.
6. We stand ready to provide any further
written evidence should the Select Committee require it.
ENCLOSURE TO GVA SUBMISSION DATED 31 OCTOBER
2007 TURKEY
MARKET SIZE
AND POTENTIAL
Spirits make up 10% of the 92M case alcohol
beverage market, the rest being beer and wine. The 9.7 million
case spirits market comprises Raki (77%); Tekel vodka (9%); Tekel
gin (8%); Imported whisk(e)y 8%; and imported white spirits 2%.
Much of the gin and vodka is locally produced. Vodka sales have
grown significantly in the two years. With a significant domestic
spirits market and favourable social/demographic climate, Turkey
is potentially a massive export market. The EU Member states decided
in 2004 to open negotiations for accession of Turkey to the EU.
The market for white spirits was deregulated in June 2003.
BACKGROUND
For many years, EU spirits producers have sought
to resolve trade disputes concerning market access and excise
tax discrimination against imported spirits, both of which not
only contravene Turkey's commitments under the Customs Union Agreement
but possibly also its WTO obligations. Regrettably, however, with
no obvious willingness on Turkey's behalf to address the longstanding
problems, CEPS has indicated its intention to prepare a complaint
under the EU Trade Barriers Regulation (TBR).
LABELLING AND
DEFINITIONS
Turkey published new spirit standards in March
2005 which harmonized these with comparable EU standards. However,
EU spirit drinks are still required to show labelling information
that does not apply in the EU and which provides no benefits for
Turkish consumers. Due to their different definitions and
analytical parameters for some spirit drinks, these are effectively
excluded from the market.
IMPORT PERMITS
Turkey agreed in the 1995 EU-Turkey Customs
Union Agreement (CUA) to remove non-tariff barriers and liberalise
its markets in the spirits sector. Unfortunately this has not
happened. Despite the adoption of the Implementation Decree last
year for the Alcohol Act prepared by the new Turkish "Tobacco
and Alcohol Board" (TAB), trade in EU spirit drinks has been
seriously disrupted by delays of two to three months in the issue
of the two different permits required by the TAB and Agriculture
Ministry (MARA). RTD's are not officially banned but their access
to Turkey is difficult and their sale is now prohibited in the
On-trade by the TAB.
EXCISE RATES
The rate on spirits is 275.6% ad valorem, subject
to minimum rates as follows: Raki (100% domestically produced)—YTL
35.84 per lpa; Vodka (97% domestically produced)—(below
45.2%abv)—YTL41.42 per lpa; Gin—YTL 41.42 per lpa;
Whisky, Rum (principally imported)—TL 70.93 per lpa. The
understanding is that the current two-tier structure will be removed
and a system based fully on alcoholic strength introduced. It
is expected that a reduced rate of excise tax will continue to
apply on raki. Should this happen, this would remove the current
discrimination between whisky and a number of other spirits, but
retain a differential in favour of the raki, by far the largest
category in the market, and thus continue to breach Turkey's WTO
obligations. Turkey defends its position on raki by reference
to Ouzo as the latter is exceptionally treated in Greece for taxation.
PRIORITY AND
WAY AHEAD
High priority. The Scotch Whisky Association
leads on these issues for CEPS.
UK EXPORTS TO TURKEY 28 APRIL 2007
TURKEY
31 October 2007
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