EU, US complain over GCC duty on energy, fizzy drinks

Countries raise concerns at World Trade Organisation about an excise tax imposed by three Gulf states on carbonated and energy drinks
(Getty Images)
By Sam Bridge
Wed 18 Jul 2018 02:13 PM

The European Union, Switzerland and the United States have complained at the World Trade Organisation about an excise tax imposed by three Gulf states on carbonated and energy drinks.

According to notes of a WTO meeting, concerns were raised earlier this month about the 100 percent excise duty on energy drinks and a 50 percent duty on other carbonated drinks.

The EU, Switzerland and US claimed that there is no rationale for applying duties on these products, and no indication that the measures would be modified to make them consistent with the WTO.

According to the notes, GCC countries, particularly Saudi Arabia, the UAE and Bahrain, were asked to explain the rationale for targeting only carbonated soft drinks, with and without sugar, as well as energy drinks and why excise tax was applied instead of a tax-based on the volume or quantity of the relevant ingredients.

On behalf of the three GCC members, Saudi Arabia said that the tax aims to protect human health and the environment, and is not intended to protect the local industry.

The tax was introduced in 2017 and aims to promote healthy lifestyles in countries where there are high rates of diabetes and obesity.

Reuters also reported that the US called on the three countries to repeal the tax and urged other Gulf states not to implement it, while Switzerland asked Gulf finance ministers to consider modifying the tax, citing a Geneva trade official.

The Gulf’s soft drink market, which also includes Qatar, Kuwait, and Oman, was worth $8.4 billion last year, according to market researchers Euromonitor. The tax would hit brands such as Coca-Cola, Pepsi and Red Bull.

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Last Updated: Wed 18 Jul 2018 02:14 PM GST

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