G/STR/N/16/EU/Add.1  
 
21 April 2017  
(17-2175) Page: 1/12 
Working Party on State Trading Enterprises  Original: English  
 
STATE TRADING  
NEW AND FULL NOTIFIC ATION PURSUANT TO AR TICLE XVII:4(A) OF T HE  
GATT 1994 AND PARAGR APH 1 OF THE UNDERSTANDI NG ON  
THE INTERPRETATION O F ARTICLE  XVII 
EUROPEAN UNION 
Addendum  
The following communication, dated 20 April 2017, is being circulate d at the request of the 
Delegation of the European Union.  
 
_______________  
 
 
I. ENUMERATION OF STATE TRADING ENTERPRISES  
 
A. Identification of state trading enterprises  
 
British Wool Marketing Board (BWMB).  
 
B. Description of products affected (including t ariff item number(s) encompassed in 
product description)  
 
II. REASON AND PURPOSE  
 
A. Reason or purpose for establishing and/or maintaining state trading enterprise  
 
The British Wool Marketing Board's purpose is to ensure a steady supply of quality wool, gr aded to 
IWTO standards, throughout the year for public auction.  
 
B. Summary of legal basis for granting the relevant exclusive or special rights or 
privileges, including legal provisions and summary of statutory or constitutional 
powers  
 
The British Wool M arketing Board was established in 1950 under the British Wool Marketing 
Scheme (Approval) Order (as amended) that is contained in Part I of the Agriculture Act 1957 and 
Part I of the Agriculture Marketing Act 1958. The Order provides that no sales of wool are 
permitted except through the agency of the Board (as per paragraph 71). However, exemptions 
and therefore the right to sell wool independently are available at the discretion of the Board.  
 
http://www.legislation.gov.uk/uksi/1950/1326/pdfs/uksi_19501326_en.pdf  
 
III. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE  
 
A. Summary statement providing overview of operations of the state trading enterprise  
 
The Scheme exists to regulate the collection and marketing of UK fleece wool.  
 G/STR/N/16/EU/Add.1  
 
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  B. Specification of exclusive or special rights or privileges enjoyed by the state trading 
enterprise  
 
BWMB holds the monopoly on the collection of fleece wool from producers.  
 
C. Type of entities other than the state trading enterprise that are allowed to engage in 
importation/exportation and conditions for participation  
 
The Board operates a statutory monopoly on the collection of fleece wool from producers. 
Exemptions exist for  producers of wool from certain specified rare breeds of sheep, producers who 
sell small quantities of wool to handspinners, and producers who sell wool directly to a buyer 
outside the UK where this results in the export of this wool from the UK. Skin wool  is excluded 
from the Scheme. The Board arranges the collection of wool from producers and sells the wool, on 
their behalf, via auction. There was a government Guarantee for the price of wool until 1992 after 
which time the auction price, less costs, have been returned to producers. UK wool is sold at open 
auctions, organised by the Board, in free competition with wool from other sources.  
 
The Board's activities are designed to ensure for producers an orderly collection and marketing of 
wool, without distor ting the operation of the market. With UK wool only accounting for 1.5% of 
global wool production, the Board has no role in determining market prices, although it can dictate 
a reserve price at auction.  
 
D. How import/export levels are established by the state trading enterprise  
 
BWMB does not import any wool, therefore non UK producers (i.e. the producers of wool from non -
UK sheep) are not subject to the Scheme. The BWMB has no role in exports – the buyers are free 
to use the wool for whatever purposes th ey have bought it.  
 
E. How export prices are determined  
 
Merchants buy wool at auction and may export this wool in both greasy and scoured form but as 
the BWMB has no role in exports, it has no control over export prices.  
 
F. How the resale prices of impo rted products are determined  
 
The BWMB does not import any wool/woollen products and, therefore, has no control over the 
resale prices.  
 
G. Whether long -term contracts are negotiated by the state trading enterprise. Whether 
the state trading enterprise is used to fulfil contractual obligations entered into by the 
government  
 
All UK wool is sold via auction and, therefore, the BWMB has no contractual obligations, either 
private or governmental.  
 
H. Brief description of market structure  
 
The BWMB collects woo l on behalf of all UK wool producers. It has an infrastructure of 11 grading 
Depots, 15 Intermediate Depots and hundreds of collection centres throughout the UK. The wool is 
graded and stored at the Depots until it is sold – no wool is released without pay ment being 
received. There are a number of Third Party Buyers who purchase wool directly from producers, 
some of which also buy at auction. British Wool is traded as a global commodity and, therefore, 
subject to global market changes.  
 G/STR/N/16/EU/Add.1  
 
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  IV. STATISTICAL INFO RMATION (SEE ATTACHED TABLES I - III) 
 
See Appendices.  
 
V. REASON WHY NO FOREIGN TRADE HAS TAKEN PLACE (AS APPROPRIATE)  
 
Not applicable.  
 
VI. ADDITIONAL INFORMATION (AS APPROPRIATE)  
 
 
_______________  
 
 
  
  G/STR/N/16/EU/Add.1  
 
- 4 - TABLE I  
STATE TRADING: BRITI SH WOOL MARKETING BO ARD (BWMB)  
STATISTICAL INFORMAT ION, IMPORTS  
NOT APPLICABLE  
Description of 
product(s)  
(including HS 
number(s))  Total quantity 
imported1 Quantity imported 
by 
state trading 
enterprise1 Average import 
price  Average 
representative  
domestic sales 
price  Mark -up2 National 
production  
1 2 3 4 5 6 7 
 
 
 
 
                                                
1 In cases where no imports have taken place under columns 2 or 3, provide an explanation under Section V of this questionnaire . 
2 Members may rep ort either under columns 4 and 5 or under column 6.  
  G/STR/N/16/EU/Add.1  
 
- 5 - TABLE II  
STATE TRADING: BRITI SH WOOL MARKETING BO ARD (BWMB)  
STATISTICAL INFORMAT ION, EXPORTS  
NOT APPLICABLE  
Description of 
product(s)  
(including HS 
number(s))  Total quantity 
exported3 Quantity exported 
by 
state trading 
enterprise1 Average 
procurement price4 Average 
representative  
domestic sales 
price  Average export 
price  National 
production  
1 2 3 4 5 6 7 
 
 
 
                                                
3 In cases where no exports have taken place under columns 2 or 3, provide an explanation under Section V of this questionnaire . 
4 In cases where the initial procurement price is augmented by other paymen ts, additional payments should also be reported.   
  G/STR/N/16/EU/Add.1  
 
- 6 - TABLE III  
STATE TRADING: BRITI SH WOOL MARKETING BO ARD (BWMB)  
STATISTICAL INFORMAT ION, DOMESTIC ACTIVI TIES 
Descri ption of product(s)  
(including HS number(s))  Domestic purchases by  
state trading enterprise  National production  Domestic sales by  
state trading enterprise  National consumption  
Greasy Fleece Wool : 
 
CN 5101110000  
 Nil 
 1 May – 30 April:  
 
2016 clip – 29.3 m kg* 
2015 clip – 29.0 m kg  
  
 
 2016 clip – £33.73 * m 
2015 clip – £37.54 m  
  
 
15 m kg * 
 
* Estimation  G/STR/N/16/EU/Add.1  
 
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  I. ENUMERATION OF STATE TRADING ENTERPRISES  
 
A. Identification of state trading enterprises  
 
Alko Oy (Alko Inc.).  
 
B. Description of products affected (inc luding tariff item number(s) encompassed in  
product description)  
 
Alcoholic beverages (spirituous drinks, wines and strong beer over 4.7%).  
 
II. REASON AND PURPOSE  
 
A. Reason or purpose for establishing and/or maintaining state trading enterprise  
 
Alko Inc . is a state -owned limited company having an exclusive right (monopoly) stipulated in the 
Finnish Alcohol Act to the retail sale of alcoholic beverages containing over 4.7% alcohol.  
 
Alko's monopoly and operations are based on the social and health policy  objective of mitigating 
the adverse effects of alcohol consumption. The objective of the operations of Alko Inc. is to limit 
alcohol consumption and alcohol -related harms. The company is steered and supervised by the 
Ministry of Social Affairs and Health.  
 
B. Summary of legal basis for granting the relevant exclusive or special rights or  
privileges, including legal provisions and summary of statutory or constitutional 
powers  
 
Alko's mandate is governed by the Finnish Alcohol Act (1143/1994) and the Governm ent Decree 
on the operations of the Alcohol Company (243/2000).  
 
Alko Inc. belongs to the administrative branch of the Ministry of Social Affairs and Health and the 
State's special assignment companies, 'which have been assigned a certain task by the Stat e'.  
 
III. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE  
 
A. Summary statement providing overview of operations of the state trading  enterprise  
 
The sole purpose of Alko Inc. is to organize retail sales of above mentioned alcoholic beverag es. It 
has a nationwide retail network comprising 354 stores and 66 order points (1 January 2017).  
 
The aim of the arrangement is to reduce alcohol consumption and thereby the harm caused by 
alcohol in several ways:  
 
 the system limits physical availability  of alcoholic beverages (the amount and the 
opening days and hours of retail stores);  
 the system limits marketing and sales promotion activities of alcoholic beverages in 
Alko's retail customer service (however Alko Inc. does not restrict the possibilities  of 
producers and importers to advertise their products independently outside Alko's 
premises);  
 the system safeguards responsible sales of alcoholic beverages (informing the public 
about the health risks of alcohol consumption, ensuring age checks and no sales to 
intoxicated persons).  
B. Specification of exclusive or special rights or privileges enjoyed by the state trading  
enterprise  
 
Alko Inc. has the exclusive right to the retail sale specified in the Alcohol Act for above mentioned 
alcoholic beverages in Finland. Alko's exclusive right for retail sale does not cover any restrictions 
of import or export of alcoholic beverages, but it forbids any other retail sale of alcoholic 
beverages to consumers in Finland regardless of the origin of the seller.  G/STR/N/16/EU/Add.1  
 
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C. Type of entities other than the state trading enterprise that are allowed to engage in 
importation/exportation and conditions for participation  
 
According to the Alcohol Act all domestic and foreign enterprises , which include at present 
Alko Inc. itself, 1 26 producers, 320 wholesalers of alcoholic beverages, 5 500 retail shops selling 
alcoholic beverages of 2.8 to 4.7% and 8 500 on premise restaurants, have the right to import and 
export alcoholic beverages without any licenses or quotas.  
 
However, Alko Inc  holds the monopoly for retail sale of alcoholic beverages above 4.7%. 
Furthermore, the 5 500 retail shops selling alcoholic beverages of 2.8 to 4.7% and the 8 500 on 
premise restaurants need a license to sell alcoholic beverages to customers in Finland. N o license 
is needed for the sale of alcohol beverages of less than 2.8% to customers in Finland.  
 
D. How import/export levels are established by the state trading enterprise  
 
The sole purpose of Alko Inc. is to organize retail sales of above mentioned alc oholic beverages.  
 
Any domestic or foreign producer or seller of alcoholic beverages may apply for a listing of the 
product to Alko's general selection (currently 3 600 products are displayed and sold in the stores). 
Procedures for listing alcoholic bever ages for retail sale in Alko apply similarly for domestic and 
foreign operators. Information is published in Alko's website:  
https://www.alko.fi/en/alko -inc/for -suppliers/  
 
Additionally any do mestic or foreign producer has the right to list their products to Alko's 
sale-to-order selection (currently 1 600 products to be transported to the nearest store for the 
consumer) by announcement only.  
 
Alko Inc. does not affect or limit the quantities o f alcoholic beverages to be sold in general 
selection or sale -to-order selection. I.e. the products may stay in the selection as long as 
customers want to buy them.  
 
Alko Inc. does not export any alcoholic beverages.  
 
E. How export prices are determined  
 
Alko Inc. does not export alcoholic beverages; hence it does not influence their pricing.  
 
F. How the resale prices of imported products are determined  
 
The retail prices of all domestic and imported products are determined in equal terms by adding 
the fol lowing mark -ups to the "back -door price" determined by the supplier:  
 
 Alko's margin (Coefficients for different beverage categories currently between 1.50 
and 1.81),  
 possible bottle or can deposit,  
 excise duty calculated according to the Council d irective 92/83/EEC5 of 19 October 1992  
 on the harmonization of the structures of excise duties on alcohol and alcoholic 
beverages;  
 environmental tax on retail containers,  
 VAT, 24 %.  
 
                                                
5 O.J. L 316, 31 October 1992:  
http://eur -lex.europa.eu/legal -content/EN/TXT/?qid=1491894841970&uri=CELEX :31992L0083  
 G/STR/N/16/EU/Add.1  
 
- 9 - 
 
  Alko's margins and other pricing information are openly published in Alko's website:  
https://www.alko.fi/en/alko -inc/for -suppliers/prices/price -calculator  
 
If a for eign producer does not want to deliver the products to Alko shops, it may use any 
contractor/importer to do this or request the service from Alko (freight, insurance, warehouse and 
shop delivery costs are added).  
  
G. Whether long -term contracts are negot iated by the state trading enterprise. Whether 
the state trading enterprise is used to fulfil contractual obligations entered into by the 
government  
 
According to the Government Decree on the operations of the Alcohol Company (243/2000), it is 
obliged to t reat all domestic and foreign beverage suppliers equally. The principle of equal 
treatment means that Alko Inc. must apply the same terms and conditions to all beverage 
suppliers at any given time, and is not at liberty to negotiate different terms with on e or several 
individual suppliers.  
 
The general purchasing terms are reviewed and updated twice each year.  
 
H. Brief description of market structure  
 
Alcoholic beverages, including spirituous drinks, wines and strong beer, over 4,7 % are sold to 
customer s in 350 Alko shops. Additionally Alko has 70 delivery points in the rural areas, where 
customer's orders are transported to be picked by customers (no beverages on display in delivery 
points).  
 
Alcoholic beverages of 2.8 to 4.7 % are sold to customers in  5 500 licensed retail grocery shops - 
and all beverages under 2.8 % freely without any license requirements.  
 
All alcoholic beverages are served to customers in 8 500 licensed restaurants and pubs.  
 
The total number of alcohol products in the market is around 22  000.  
 
IV. STATISTICAL INFORMATION ( SEE ATTACHED TABLES I - III) 
 
V. REASON WHY NO FOREIGN TRADE HAS TAKEN PLACE ( AS APPROPRIATE ) 
 
Not applicable.  
 
VI. ADDITIONAL INFORMATION ( AS APPROPRIATE ) 
 
//  
  G/STR/N/16/EU/Add.1  
 
- 10 - TABLE I  
STATE TRADING: ALKO INC. 
STATISTICAL INFO RMATION, IMPORTS  
Description of 
product(s)  
(including HS 
number(s))  Total quantity 
imported  
(litres)  Quantity imported 
by 
state trading 
enterprise  
(litres)  Average import 
price  
 Average 
representative  
domestic sales 
price  
 Mark -up 
(per litre)  National prod uction  
(litres)  
1 2 3 4 5 6 7 
Alcoholic beverages  2014: 255  536 474 
2015: 244  565 604  2014: 1 687  581  
2015: 1  921 310* 2014: 13.30 €/l  
2015: 13.60 €/l   2014: 2.04 EUR  
2015: 2.10 EUR  2014: 557  234 136  
2015: 570  607 851  
* this amount corresponds to t he imported alcoholic beverages by Alko, as requested by the seller.  
   
  G/STR/N/16/EU/Add.1  
 
- 11 - TABLE II  
STATE TRADING:  ALKO  INC. 
STATISTICAL INFORMAT ION, EXPORTS  
Description of 
product(s)  
(including HS 
number(s))  Total quantity 
exported  Quantity exported 
by 
state trading 
enterp rise1 Average 
procurement price  Average 
representative  
domestic sales 
price  Average export 
price  National 
production  
1 2 3 4 5 6 7 
 
 
 
 
 
 
 
  
  G/STR/N/16/EU/Add.1  
 
- 12 - TABLE III  
STATE TRADING: ALKO INC 
STATISTICAL INFORMAT ION, DOMESTIC ACTIVI TIES 
 
Description of product(s)  
(includi ng HS number(s))  Domestic purchases by  
state trading enterprise  National production  
(litres)  Domestic sales by  
state trading enterprise  
(litres)  National consumption 
(litres)  
1 2 3 4 5 
Alcoholic beverages  2014: 96 708  066  
2015: 94 043 895  2014: 557  234 136  
2015: 570  607 851  2014: 96  708 066  
2015: 94  043 895  2014: 589 545 000  
2015: 577 570 000  
 
 
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