Barriers to trade
The free movement principles in the EU internal market are of critical importance to spirits producers. The ability to move and sell goods that are legally produced in one country, without facing tariffs, certification or other administrative requirements in other EU Member States allows trade to flow easily and keeps costs down for producers.
Regrettably the internal market is not complete, however, and spirits producers still face various barriers when trading in the internal market. The most blatant of these is taxation. Although beer, wine and spirits are all alcoholic beverages that contain an identical alcohol component, i.e. ethanol, the ethanol that is found in spirits is taxed at a much higher level than the ethanol in beer or wine. Indeed, under EU rules dating back over a quarter of a century, there is no obligation to levy any tax on the ethanol in wine. Many wine-producing Member States consequently do not tax wine. All Member States apply a tax on spirits and it is always at a higher level than on beer or wine even though all these categories are in direct competition.
With spirits subject to the highest tax rates, and consequently more valuable to national finance ministries, many seek to ensure revenues are paid through a system of ‘strip stamps’ or ‘banderoles’, i.e. a paper strip that sits over the cap of the bottle. The system is applied far more on spirits than any other category. It is always complicated and expensive to administer, the stamps are frequently counterfeit and the system is anachronistic.
On a separate aspect, EU Member States, while free within certain limits to apply the level of tax they deem most appropriate for the country, are nonetheless required to ensure that within each category (beer, wine, spirits) the same level of tax applies and under identical conditions to all products. Sadly, for a number of reasons, some Member States seek to protect domestic producers and apply discriminatory tax rules.
Our sector has been helped hugely by the Commission in removing many discriminatory regimes. While there have been many cases brought to the European Court over the last 40 years, in recent times our sector has managed, either by court rulings or settlement before it reached court, to remove discrimination in Hungary and Romania. Further cases are currently in play, again against Hungary and also Greece.
Elsewhere, our sector faces many national labelling barriers. While EU law sets down the broad labelling requirements for all foodstuffs, Member States are permitted in some cases to go further and to require additional labelling information purely for their market. All such rules fragment the EU internal market, add costs and hamper free movement. Some of the national rules are excessive and of negligible value: in Croatia, for example labels are required to show no less than three environmental logos.