Taiwanese negotiators ran into a brick wall in Washington in their attempt to convince the US to agree to Taiwan's desire to cut the tax on rice wine to combat the problem of bootleg wine that has killed at least 10 people in the past several weeks.
US trade negotiators said that a tax cut would violate WTO rules and the terms of the US-Taiwan bilateral agreement that preceded Taiwan's entry into the global trade organization on Jan. 1 this year.
The US side was unmoved by Taiwanese arguments that the high tax on rice wine has encouraged the production and sale of the cheap bootleg wines, causing the deaths and many other illnesses.
The US side suggested that Taiwan would have to conduct "full consultations with all the members of the WTO and obtain a consensus" and agree to some sort of waiver before taking any unilateral steps to change the tax on rice wine.
Making a unilateral legislative change before that would be "inadvisable," the Americans said.
Taiwanese negotiators, as a result, left Washington with no concessions from the US.
The Taiwanese delegation, headed by Board of Foreign Trade Deputy Director-General Chu Wei-cheng (
Before leaving Taipei for Washington, Taiwanese officials were optimistic, and said they expected the talks to last for two to three days.
The US Trade Representative (USTR) office took the lead in the negotiations for the American side.
USTR Taiwan expert Scott Ki represented the office in the talks, also attended by other USTR specialists and officials from the departments of State and Commerce as well as the American Institute in Taiwan.
Neither the Taiwanese negotiators nor the US officials spoke with reporters about the talks and the only information was contained in a press release issued by the Taiwan side Friday under pressure from the Taiwanese media.
The release made clear that the US feels that Taiwan must fulfill its commitments made in the runup to its WTO accession.
"The US said the question of taxation of rice wine was a very important issue before Taiwan joined the organization, and that we held very long and deliberate consultations about that before the issue was finally resolved," the press release said.
That agreement was that all liquor, imported and domestic, was to be taxed at the same rate under the so-called "national treatment" provisions of the WTO, which aim to give all importers the same treatment as local brands.
Because high-priced liquors are primarily imported, Taiwan's plan to tax rice wine on the basis of price, rather than volume, would "constitute an unfair tariff on imports," the press release quoted the US side as saying.
The US felt the proposed tax cuts would "have a very negative impact on the competitiveness of high-value distilled liquor exported to Taiwan," according to the release.
The US did support an equal reduction in the tax of all liquors if the tax continued to be based on volume rather than price, the press release said.
The Americans advised Taiwan to intensify its crackdown on bootleg liquor as a way to solve the problem, rather than trying to change the tax system.
As a postscript, the release said Washington had "gained a fuller understanding" of Taiwan's "laws and perceptions," and that the Taiwan side would "further study the American views" on the issue.
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