Japan, U.S. to address liquor taxes at Denver

Japan and the United States will hold senior-level talks in Denver on June 19 regarding a long-standing dispute over liquor taxes, the Foreign Ministry announced June 17.

Yoshiji Nogami, director general of the Foreign Ministry’s Economic Bureau, will attend the talks, along with Hiroyasu Watanabe, deputy director general of the Finance Ministry’s Tax Bureau, and James Southwick the deputy assistant U.S. trade representative. The argument springs from U.S. dissatisfaction with Japan’s proposed timetable of five years to correct tax disparities between the domestic spirit “shochu” and whiskey.

The World Trade Organization ruled in November that the tax difference, which shows a disparity of up to six times per degree of alcohol, discriminated against imported spirits. This followed a previous similar claim filed by the U.S., the European Union and Canada. While Europe and Canada are now willing to concede to Japan’s schedule the U.S. has refused to withdraw its complaint.

In December, Tokyo agreed to reduce the difference between the taxes over five years giving its reason for the delay as the need to address domestic pressures. Tokyo pledged to complete the process by October 2001. In February, the WTO said Japan’s schedule was too long and asked that corrective measures be taken by February 1998. Unless Japan wins approval for its timetable from the U.S., the WTO’s ruling will stand.