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JUST THE FACTS: TRADE AGREEMENTS DO NOT UNDERMINE ALCOHOL POLICY
Article first published online: 14 DEC 2009
Journal compilation © 2010 Society for the Study of Addiction
Volume 105, Issue 1, pages 174–175, January 2010
How to Cite
CRESSY, P. H. and FORTESCUE, J. (2010), JUST THE FACTS: TRADE AGREEMENTS DO NOT UNDERMINE ALCOHOL POLICY. Addiction, 105: 174–175. doi: 10.1111/j.1360-0443.2009.02811.x
- Issue published online: 14 DEC 2009
- Article first published online: 14 DEC 2009
Zeigler's contention that free trade agreements are a barrier to the introduction of public health measures to tackle alcohol misuse  is incorrect. National governments are not prevented from introducing measures to tackle misuse of alcohol provided that, in so doing, they do not seek to protect domestic producers over imported products.
Internationally traded brands have a high visibility but, by focusing upon such brands and on international trade agreements, there is a real danger of missing the larger target, namely the very considerable consumption of locally produced drinks that goes unseen in many markets. A restriction on international trade will not tackle problems emerging from misuse of local alcohol.
In 2003, the most recent year for which World Health Organization production, export and import data are available, aggregate imports of beer, wine and spirits globally accounted for less than 5% by volume of world-wide domestic apparent consumption of alcoholic beverages . Distilled spirits exports to developing countries from the European Union (EU) and the United States—the two leading sources of internationally traded spirit drinks—account for only a small fraction of total EU and US spirits exports. EU spirits exports to Brazil, China and India in 2008 each accounted for less than 3% of total EU exports by value, while exports to all the countries of Africa accounted for less than 7% of the total . For the United States, 2008 spirits exports to Brazil, China and India each accounted for less than 1% of total US spirits exports, with all of Africa accounting for just 2.7% of the total .
Internationally traded alcoholic drinks are generally much more expensive than their domestically produced counterparts. This is because they are predominantly premium brands, which carry a high price tag pushed higher still by the costs of freight, insurance and import tariffs. Such products are therefore less likely to be misused compared with cheaper, locally produced brands.
For all these reasons targeting internationally traded products would have virtually no effect. It is also unnecessary.
Most World Trade Organization (WTO) Agreements make specific provision for exceptions aimed at protecting human life or health. For example the General Agreement on Trade in Services (GATS) states inter alia at Article XIV that ‘. . . the Agreement shall not prevent Member States from adoption or enforcement of measures necessary to protect human, animal or plant life or health’.
The WTO specifically does not require Member States to abandon state monopolies established to control the importation, distribution and/or sale of alcoholic drinks, although it does require them to operate in a transparent and non-discriminatory manner, based upon normal commercial practice.
It is true that successive rounds of multilateral trade negotiations have brought about significant reductions in the import tariffs on alcoholic drinks. However, governments remain free to regulate alcohol in any way they deem necessary for public health reasons, provided that they respect the most favored nation and national treatment provisions of the General Agreement on Tariffs and Trade (GATT). This could include high levels of internal taxation if high shelf prices are desired to deter consumption (or, more accurately, to deter purchases through formal retail channels).
Finally, there is the general exception provided under Article XX(b) of GATT 1994 to the effect that contracting parties may take any measure ‘necessary to protect human, animal or plant life or health’ provided that it is not discriminatory and is not a disguised restriction on international trade. Any objective analysis of this provision demonstrates conclusively that specific measures against the international trade in alcohol are not needed, effective or appropriate to protect public health.
Declaration of interest
Dr Peter H. Cressy is President and CEO, Distilled Spirits Council of the United States. Mr Jamie Fortescue is Director General, The European Spirits Organization—CEPS.
- 2World Health Organization Global Information System on Alcohol and Health. Available at: http://apps.who.int/globalatlas/default.asp (accessed 27 August 2009). [It is not clear whether the WHO production data include estimates of informal production and to the extent that it does not, the data may overstate the role of imports.
- 3European Commission, Market Access Database. Statistical Database. Available at: http://mkaccdb.eu.int/mkaccdb2/statistical_form.htm . accessed 26 August 2009).
- 4United States International Trade Commission Dataweb. USITC Interactive Tariff and Trade Database. Available at: http://dataweb.usitc.gov/scripts/user_set.asp (accessed 27 August 2009).