Decisions of the Appellate Body of the World Trade Organization

Chile-Taxes on Alcoholic Beverages

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Joel P. Trachtman

WTO Appellate Body Report: Chile-Taxes on Alcoholic Beverages, AB-1999-6, WT/DS87/AB/R, WT/DS110/AB/R, (99-5414), adopted by Dispute Settlement Body, 12 January, 2000. Chile, Appellant; European Communities, Appellee; Third Participants: Mexico and United States. Division: Feliciano, Ehlermann and Lacarte-Muró. Major topics addressed by Appellate Body: De Facto Discrimination under Article III(2) of GATT 1994.

1. Abstract

This case concerned Chile's Special Sales Tax on Spirits, as modified by the Additional Tax on Alcoholic Beverages. The panel found that approximately 75% of domestic spirits would be taxed at 27% under this regime, while over 95% of imported spirits would be taxed at 47%. The Appellate Body upheld the panel's decision that the Chilean regime violated Article III(2) of GATT 1994. The Appellate Body's decision provides a further articulation of the jurisprudence developed in Japan-Alcoholic Beverages and Korea-Alcoholic Beverages. It is notable for its extension of the critiques of domestic regulatory categories structured around types of beverages in the previous decisions to regulatory categories structured around alcohol content. It is also notable for its clarification of the role of legislative intent in decision-making under Article III. It is permissible to consider aim and effects, but only as evidenced by the actual structure of the measure.

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