WORLD TRADE
ORGANIZATIONG/STR/N/4/ISL
16 December 1998
(98-5070)
Working Party on
State Trading EnterprisesOriginal:  English
STATE TRADING
New and Full Notification Pursuant to Article XVII:4(a) of the GATT 1994 and
Paragraph 1 of the Understanding on the Interpretation of Article XVII
ICELAND
The following communication, dated 10 December 1998, has been received from the
Permanent Mission of Iceland.
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I. Enumeration of State Trading Enterprises
The State Alcohol and Tobacco Monopoly (ATVR)
The ATVR has as of 1 December 1995 the following exclusive rights:Retail distribution on alcoholic beverages that is all drinks with alcoholic content above
2.25 per cent alch/vol.
Importation and wholesale distribution of ethyl alcohol (CCCN 2207.1000) until 1 July 1998.
Importation, wholesale distribution and pr oduction of tobacco and tobacco products
II  Reasons and purpose
The ATVR is based on important health and social policy considerations but the purpose of
the Monopoly is also of a fiscal nature.
The activity of the ATVR is governed by Act no. 63/1969 on the Sale of Tobacco and
Alcoholic Beverages as amended by Act no. 95/1995, Regulation no 205/1998, on the State Alcohol
and Tobacco Monopoly, Rules no 117/1998 on the Purchase and Sale of Alcoholic Beverages and
Terms of Business with Suppliers and rules no. 633/1998 on the Purchase and Sale of Tobacco and
Terms of Business with Suppliers.
III.  Description of the functionin g of the state trading enterprise
The ATVR was founded in 1922.  The company is divided into two departments, a
procurement department and a sales department.  The operation of the departments, assets, operational
expenses etc. are kept separate in the accounts.  The procurement department imports, procures and
distributes tobacco and tobacco products, manufactures snuff and sells ethyl alcohol.  The salesG/STR/N/4/ISL
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department runs the retail outlets. In making its purchases the enterprise acts on the basis of specific
rules on the purchasing procedures. It does not import alcoholic beverages or export alcoholic
beverages or tobacco products. The management of th e ATVR is in the hands of a Board of Directors
consisting of three persons who are appointed by the Minister of Finance, but the company is under
the supervision of the Ministry.
Those wishing to produce, import and/or distribute alcoholic beverages at the wholesale level
must obtain a licence.  The licence is valid for a year when it is granted for the first time but when it is
renewed there is no expiration date.  There are three types of licences.  A production license allows
the licensee to produce, distribute and export the production.  A wholesale licence grants the licensee
the right to import, distribute and export alcoholic beverages.  An import licence allows restaurants
holding a liquor licence to import alcoholic beverages for selling in the restaurant.  The producers andwholesalers can distribute the products to wholesalers holding a licence, to the ATVR and to
restaurants holding a liquor licence.
On 1 July 1998 the exclusive right on the importation of ethyl alcohol which the ATVR had
was abolished.
IV.  Statistical information
TABLE 1
Imports of beer, wine and spirit drinks. National production (1996 and 1997).
Year Import of beer, wine and spirit drinks Imported by National
ATVR production
Quantity Value (f.o.b.) Quantity Quantity
(1000 litres)  ISK million (1000 litres) (1000 litres)
1996 7124 1067 3785 5512
1997 7803 1125 3119 5550
TABLE 1A
Sales of beer, wines and spirit drinks. (1000 litres )
Year Sold by ATVR Sold by licensees * Total sale
1996 8980 2450 11.430
1997 9457 3007 12.464
* Sale to restaurants, hotels and embassies, not includi ng sale to the ATVR. As stated earlier the ATVR is not
involved in any wholesale activity in these products, thus the figure for ATVR shows its total sales in its retail
outlets.G/STR/N/4/ISL
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TABLE 1B
The table shows purchase price and retail price of three different types of alcoholic beverages,
the table is intended to show the pricing rules used by company.
The average markup for wine and beer is ca 13 per cent and for spirit drinks ca 7 per cent.
Type Procurement price  in ISK
from wholesalerRetail price in ISK (VAT
not included)
Beer (can 0.50L) 112 150
Red wine (0.70L) 920 1225
Vodka (0,70L) 1872 2364
TABLE 2
Imports of ethyl alcohol CCNO 2207.1000 (1996 a nd 1997). There is no national production.
Year Imports of ethyl alcohol 2207.1000 Average import
priceAverage wholesale
price
Quantity Value (CIF)
tonnes ISK million ISK
1996 101 8,5 84,158 95,800
1997 114 9,4 82,456 96,000
TABLE 3
Imports of tobacco and tobacco produc ts. National production (1996 and 1997).
Year Imports of tobacco & tobacco
productsNational
production   of
snuffAverage import
priceAverage wholesale
price
Quantity Value (CIF) Quantity
tonnes ISK  million tonnes ISK ISK
1996 554 987 10 1781 6430
1997 559 1040 10 1860 7003
TABLE 4
Export of beer and spirit drinks 1996 and 1997.
Year
Quantity Value (f.o.b.)
(1000 litres) ISK million
1996 34 3,6
1997 138 20,6G/STR/N/4/ISL
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V. Reasons why no foreign trade has taken place in products affected.
Question irrelevant.
VI. Additional information
None.
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