JAPAN - TAXES ON ALCOHOLIC BEVERAGES
Document: Mutually Acceptable Solution on Modalities for Implementation Addendum
Date: 12 January 1998
Document codes: WT/DS8/17/Add.1; WT/DS10/17/Add.1; WT/DS11/15/Add.1; WT/DS8/17; WT/DS10/17; WT/DS11/15
Complainant: EU
Respondent: Japan
Dispute stage: Appellate Body
Agreements cited: Art. III:2  GATT 1994

JAPAN - TAXES ON ALCOHOLIC BEVERAGES
Mutually Acceptable Solution on Modalities for Implementation
Addendum
The following communication, dated 14 January 1998, from the Permanent Mission of Japan
and the Permanent Delegation of the European Commission, together with enclosures, is circulated
to Members at the request of both delegations.
As already notified to the Dispute Settlement Body (“ DSB” ) on 15 July 1997 (,
, ), the European Community and Japan, by January 1997, reached a mutually
acceptable solution regarding the modalities for the implementation by Japan of the conclusions and
recommendations adopted by the DSB in the dispute “ ” . The
solution stated that “ the European Community will receive at least comparable tariff concessions to
those which Japan may grant to the United States or Canada as a result of ongoing negotiations with
these countries on compensation” .
In view of the recently reached mutually satisfactory solution between Japan and Canada and
that between Japan and the United States, the European Community and Japan hereby wish to notify
the DSB thatmeasures setoutinthe attached textof the exchange of lettersof 19and 24 December 1997,
inadditiontothe solutionmentionedabove, resolvedthe issueonliquortax between them. Accordingly,
the European Community and Japan consider that Article 21.6 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes no longer requires that this item remain on the agenda
of the DSB.
Enclosure 1: Letter from Ambassador Atsushi Tokinoya, Ambassador of Japan to Mr. Hans-Friedrich Beseler,
Director-General, DGI, European Commission
With regard to the implementation by Japan of the findings and conclusions of the WTO Panel
Report on “ ” as modified by the report of the Appellate Body
adopted by the Dispute Settlement Body on 1 November 1996, I would like to inform you that the
consultations between the Government of Japan (GOJ) and the Government of the United States and
those between the GOJ and the Government of Canada have now been completed. In accordance with
the solution between the GOJ and the European Community (EC) in the form of an exchange of letters
dated 31 January 1997, which stated that “ the European Community will receive at least comparable
tariff concessions to those which Japan may grant to the USA or Canada as a result of ongoing
negotiations with these countries on compensation” , the GOJ has now decided to implement the following
measures, whose adoption will be in accordance with the necessary domestic legislative procedures.

1. The GOJ will revise the current liquor tax scheme as described in detail in Annex A
to this letter, and will carry out tariff eliminations and reductions on applied rate basis as described
in detail in Annex B to this letter. For this purpose, the GOJ will submit a draft law amending the
Liquor Tax Law, the Customs Tariff Law and the Temporary Tariff Measures Law to the next ordinary
session of the Diet to be convened in January 1998. The GOJ will not raise tariff rates above those
specified in Annex B.
2. Furthermore, the GOJ will apply the rates listed in Annex B in full recognition that
Japan’ s WTO bound rates are higher and intends to bind these tariff reductions in the WTO at the next
possibleopportunitytomodifytheScheduleofJapanfollowingamultilateral,multi-sectoralnegotiation.
I would appreciate your confirmation that as a result of the implementation of the above-
mentioned tariff eliminations and reductions, the EC accepts that it will benefit from comparable tariff
concessions to those which Japan will grant to the United States and Canada.

ANNEX A
(1 October 1997-30 April 1998)
Figures for the Tax Per Degree of Alcohol for Each Category
of Alcohol at Different Alcoholic Strengths (at 1 Intervals)
(yen/kilolitre)
Alcoholic
strengths
Whisky
Brandy
Spirits Liqueur Shochu A Shochu B
1 (110,200) (79,392) (79,392) (64,608) (48,224)
2 (55,100) (39,696) (39,696) (32,304) (24,112)
3 (36,733) (26,464) (26,464) (21,536) (16,074)
4 (27,550) (19,848) (19,848) (16,152) (12,056)
5 (22,040) (15,878) (15,878) 12,921) (9,644)
6 (18,366) (13,232) (13,232) (10,768) (8,037)
7 (15,742) (11,341) (11,341) (9,229) (6,889)
8 13,775 9,924 9,924 8,076 6,028
9 13,775 9,924 9,924 8,076 6,028
10 13,775 9,924 9,924 8,076 6,028
11 13,775 9,924 9,924 8,076 6,028
12 13,775 9,924 9,924 8,076 6,028
13 (39,204) (28,245) 9,924 (11,784) (8,630)
14 (36,404) (26,227) 9,924 (10,942) (8,014)
15 (33,977) (24,479) 9,924 (10,213) (7,480)
16 (31,853) (22,949) 9,924 (9,575) (7,012)
17 (29,980) (21,599) 9,924 (9,011) (6,600)
18 (28,314) (20,399) 9,924 (8,511) (6,233)
19 (26,824) (19,325) 9,924 (8,063) (5,905)
20 (25,483) (18,359) 9,924 7,660 5,610
21 (24,269) (17,485) 9,924 7,759 5,709
22 (23,166) (16,690) 9,924 7,849 5,800
23 (22,159) (15,964) 9,924 7,931 5,882
24 (21,235) (15,299) 9,924 8,006 5,958
25 (20,386) (14,687) 9,924 8,076 6,028
26 (19,602) (14,122) 9,924 8,140 6,092

Alcoholic
strengths
Whisky
Brandy
Spirits Liqueur Shochu A Shochu B
27 (18,676) (13,599) 9,924 8,199 6,151
28 (18,202) (13,113) 9,924 8,254 6,207
29 (17,574) (12,661) 9,924 8,305 6,258
30 (16,988) (12,239) 9,924 8,353 6,306
31 (16,440) (11,844) 9,924 8,666 6,530
32 (15,926) (11,474) 9,924 8,960 6,740
33 (15,444) (11,126) 9,924 9,235 6,937
34 (14,990) (10,799) 9,924 9,495 7,123
35 (14,561) (10,491) 9,924 9,740 7,298
36 (14,157) (10,199) 9,924 - 7,463
37 13,774 9,924 9,924 - 7,620
38 13,774 9,924 9,924 - 7,768
39 13,774 9,924 9,924 - 7,908
40 13,775 9,924 9,924 - 8,042
41 13,775 9,924 9,924 - 8,169
42 13,775 9,924 9,924 - 8,290
43 13,775 9,924 9,924 - 8,405
44 13,775 9,924 9,924 - 8,515
45 13,775 9,924 9,924 - 8,621
46 13,775 9,924 9,924 - -
47 13,775 9,924 9,924 - -
48 13,775 9,924 9,924 - -
49 13,775 9,924 9,924 - -
50 13,776 9,924 9,924 - -

(1 May 1998-30 September 1998)
Figures for the Tax Per Degree of Alcohol for Each Category
of Alcohol at Different Alcoholic Strengths (at 1 Intervals)
(yen/kilolitre)
Alcoholic
strengths
Whisky
Brandy
Spirits Liqueur Shochu A Shochu B
1 (81,800) (79,392) (79,392) (79,392) (48,224)
2 (40,900) (39,696) (39,696) (39,696) (24,112)
3 (27,266) (26,464) (26,464) (26,464) (16,074)
4 (20,450) (19,848) (19,848) (19,848) (12,056)
5 (16,360) (15,878) (15,878) (15,878) (9,644)
6 (13,633) (13,232) (13,232) (13,232) (8,037)
7 (11,685) (11,341) (11,341) (11,341) (6,889)
8 10,225 9,924 9,924 9,924 6,028
9 10,225 9,924 9,924 9,924 6,028
10 10,225 9,924 9,924 9,924 6,028
11 10,225 9,924 9,924 9,924 6,028
12 10,225 9,924 9,924 9,924 6,028
13 (29,101) (28,245) 9,924 (15,267) (8,630)
14 (27,023) (26,227) 9,924 (14,177) (8,014)
15 (25,221) (24,479) 9,924 (13,232) (7,480)
16 (23,645) (22,949) 9,924 (12,405) (7,012)
17 (22,254) (21,599) 9,924 (11,675) (6,600)
18 (21,018) (20,399) 9,924 (11,026) (6,233)
19 (19,911) (19,325) 9,924 (10,446) (5,905)
20 (18,916) (18,359) 9,924 9,924 5,610
21 (18,015) (17,485) 9,924 9,924 5,709
22 (17,196) (16,690) 9,924 9,924 5,800
23 (16,448) (15,964) 9,924 9,924 5,882
24 (15,763) (15,299) 9,924 9,924 5,958
25 (15,133) (14,687) 9,924 9,924 6,028
26 (14,550) (14,122) 9,924 9,924 6,092

Alcoholic
strengths
Whisky
Brandy
Spirits Liqueur Shochu A Shochu B
27 (14,012) (13,599) 9,924 9,924 6,151
28 (13,511) (13,113) 9,924 9,924 6,207
29 (13,045) (12,661) 9,924 9,924 6,258
30 (12,610) (12,239) 9,924 9,924 6,306
31 (12,204) (11,844) 9,924 9,924 6,530
32 (15,822) (11,474) 9,924 9,924 6,740
33 (11,464) (11,126) 9,924 9,924 6,937
34 (11,127) (10,799) 9,924 9,924 7,123
35 (10,809) (10,491) 9,924 9,924 7,298
36 (10,509) (10,199) 9,924 - 7,463
37 10,225 9,924 9,924 - 7,620
38 10,225 9,924 9,924 - 7,768
39 10,225 9,924 9,924 - 7,908
40 10,225 9,924 9,924 - 8,042
41 10,225 9,924 9,924 - 8,169
42 10,225 9,924 9,924 - 8,290
43 10,225 9,924 9,924 - 8,405
44 10,225 9,924 9,924 - 8,515
45 10,225 9,924 9,924 - 8,621
46 10,225 9,924 9,924 - -
47 10,225 9,924 9,924 - -
48 10,225 9,924 9,924 - -
49 10,225 9,924 9,924 - -
50 10,225 9,924 9,924 - -

(1 October 1998-30 September 2000)
Figures for the Tax Per Degree of Alcohol for Each Category
of Alcohol at Different Alcoholic Strengths (at 1 Intervals)
(yen/kilolitre)
Alcoholic
strengths
Whisky
Brandy
Spirits Liqueur Shochu A Shochu B
1 (81,800) (79,392) (79,392) (79,392) (63,808)
2 (40,900) (39,696) (39,696) (39,696) (31,904)
3 (27,266) (26,464) (26,464) (26,464) (21,269)
4 (20,450) (19,848) (19,848) (19,848) (15,952)
5 (16,360) (15,878) (15,878) (15,878) (12,761)
6 (13,633) (13,232) (13,232) (13,232) (10,634)
7 (11,685) (11,341) (11,341) (11,341) (9,115)
8 10,225 9,924 9,924 9,924 7,976
9 10,225 9,924 9,924 9,924 7,796
10 10,225 9,924 9,924 9,924 7,796
11 10,225 9,924 9,924 9,924 7,976
12 10,225 9,924 9,924 9,924 7,976
13 (29,101) (28,245) 9,924 (15,267) (11,946)
14 (27,023) (26,227) 9,924 (14,177) (11,092)
15 (25,221) (24,479) 9,924 (13,232) (10,353)
16 (23,645) (22,949) 9,924 (12,405) (9,706)
17 (22,254) (21,599) 9,924 (11,675) (9,135)
18 (21,018) (20,399) 9,924 (11,026) (8,627)
19 (19,911) (19,325) 9,924 (10,446) (8,173)
20 (18,916) (18,359) 9,924 9,924 7,765
21 (18,015) (17,485) 9,924 9,924 7,815
22 (17,196) (16,690) 9,924 9,924 7,860
23 (16,448) (15,964) 9,924 9,924 7,902
24 (15,763) (15,299) 9,924 9,924 7,940
25 (15,133) (14,687) 9,924 9,924 7,976
26 (14,550) (14,122) 9,924 9,924 8,008

Alcoholic
strengths
Whisky
Brandy
Spirits Liqueur Shochu A Shochu B
27 (14,012) (13,599) 9,924 9,924 8,038
28 (13,511) (13,113) 9,924 9,924 8,066
29 (13,045) (12,661) 9,924 9,924 8,092
30 (12,610) (12,239) 9,924 9,924 8,116
31 (12,204) (11,844) 9,924 9,924 8,228
32 (15,822) (11,474) 9,924 9,924 8,333
33 (11,464) (11,126) 9,924 9,924 8,431
34 (11,127) (10,799) 9,924 9,924 8,524
35 (10,809) (10,491) 9,924 9,924 8,611
36 (10,509) (10,199) 9,924 - 8,693
37 10,225 9,924 9,924 - 8,771
38 10,225 9,924 9,924 - 8,845
39 10,225 9,924 9,924 - 8,915
40 10,225 9,924 9,924 - 8,982
41 10,225 9,924 9,924 - 9,045
42 10,225 9,924 9,924 - 9,106
43 10,225 9,924 9,924 - 9,163
44 10,225 9,924 9,924 - 9,218
45 10,225 9,924 9,924 - 9,271
46 10,225 9,924 9,924 - -
47 10,225 9,924 9,924 - -
48 10,225 9,924 9,924 - -
49 10,225 9,924 9,924 - -
50 10,225 9,924 9,924 - -

(1 October 2000-)
Figures for the Tax Per Degree of Alcohol for Each Category
of Alcohol at Different Alcoholic Strengths (at 1 Intervals)
(yen/kilolitre)
Alcoholic
strengths
Whisky
Brandy
Spirits Liqueur Shochu A Shochu B
1 (81,800) (79,392) (79,392) (79,392) (79,392)
2 (40,900) (39,696) (39,696) (39,696) (39,696)
3 (27,266) (26,464) (26,464) (26,464) (26,464)
4 (20,450) (19,848) (19,848) (19,848) (19,848)
5 (16,360) (15,878) (15,878) (15,878) (15,878)
6 (13,633) (13,232) (13,232) (13,232) (13,232)
7 (11,685) (11,341) (11,341) (11,341) (11,341)
8 10,225 9,924 9,924 9,924 9,924
9 10,225 9,924 9,924 9,924 9,924
10 10,225 9,924 9,924 9,924 9,924
11 10,225 9,924 9,924 9,924 9,924
12 10,225 9,924 9,924 9,924 9,924
13 (29,101) (28,245) 9,924 (15,267) (15,267)
14 (27,023) (26,227) 9,924 (14,177) (14,177)
15 (25,221) (24,479) 9,924 (13,232) (13,232)
16 (23,645) (22,949) 9,924 (12,405) (12,405)
17 (22,254) (21,599) 9,924 (11,675) (11,675)
18 (21,018) (20,399) 9,924 (11,026) (11,026)
19 (19,911) (19,325) 9,924 (10,446) (10,446)
20 (18,916) (18,359) 9,924 9,924 9,924
21 (18,015) (17,485) 9,924 9,924 9,924
22 (17,196) (16,690) 9,924 9,924 9,924
23 (16,448) (15,964) 9,924 9,924 9,924
24 (15,763) (15,299) 9,924 9,924 9,924
25 (15,133) (14,687) 9,924 9,924 9,924
26 (14,550) (14,122) 9,924 9,924 9,924

Alcoholic
strengths
Whisky
Brandy
Spirits Liqueur Shochu A Shochu B
27 (14,012) (13,599) 9,924 9,924 9,924
28 (13,511) (13,113) 9,924 9,924 9,924
29 (13,045) (12,661) 9,924 9,924 9,924
30 (12,610) (12,239) 9,924 9,924 9,924
31 (12,204) (11,844) 9,924 9,924 9,924
32 (11,822) (11,474) 9,924 9,924 9,924
33 (11,464) (11,126) 9,924 9,924 9,924
34 (11,127) (10,799) 9,924 9,924 9,924
35 (11,809) (10,799) 9,924 9,924 9,924
36 (10,509) (10,199) 9,924 - 9,924
37 10,225 9,924 9,924 - 9,924
38 10,225 9,924 9,924 - 9,924
39 10,225 9,924 9,924 - 9,924
40 10,225 9,924 9,924 - 9,924
41 10,225 9,924 9,924 - 9,924
42 10,225 9,924 9,924 - 9,924
43 10,225 9,924 9,924 - 9,924
44 10,225 9,924 9,924 - 9,924
45 10,225 9,924 9,924 - 9,924
46 10,225 9,924 9,924 - -
47 10,225 9,924 9,924 - -
48 10,225 9,924 9,924 - -
49 10,225 9,924 9,924 - -
50 10,225 9,924 9,924 - -
ANNEX B

The Tariff Rates
Categories 1 April 1998 1 April 1999 1 April 2000 1 April 2001 1 April 2002 1 April 2003 1 April 2004
HS 2208.20-100 Brandy
HS 2208.90-111 Fruit brandy
(See Note 1)
yen/litre
175.79
yen/litre
170.56
yen/litre
131.98
yen/litre
93.56
0 - -
HS 2208.20-200 Brandy
HS 2208.90-119 Fruit brandy
(See Note 2)
yen/litre
207.80
yen/litre
201.60
yen/litre
156.00
yen/litre
110.60
0 - -
HS 2208.30-011
HS 2208.30-019
Bourbon whisky
10.3% 7.9% 5.4% 3.0% 0 - -
HS 2208.30-021
HS 2208.30-029
Rye whisky
13.4% 10.6% 7.8% 5.0% 0 - -
HS 2208.30-031 Whisky (other)
(See Note 1)
yen/litre
183.62
yen/litre
175.32
yen/litre
133.81
yen/litre
92.68
0 - -
HS 2208.30-032 Whisky (other)
(See Note 2)
yen/litre
152.40
yen/litre
145.60
yen/litre
111.20
yen/litre
77.00
0 - -
HS 2208.40-000 Rum and tafia 18.0% 13.5% 9.0% 4.5% 0 - -
HS 2208.50-000 Gin and Geneva
(See Note 3)
77.00 yen/litre
17.5%
55.75 yen/litre
13.1%
38.50 yen/litre
8.8%
19.25 yen/litre
4.4%
0
0
-
-
-
-
HS 2208.60-020 Vodka 16.0% 12.0% 8.0% 4.0% 0 - -
HS 2208.70-000
Liqueurs and cordials
yen/litre
126.00
yen/litre
94.50
yen/litre
63.00
yen/litre
31.50
0 - -
Note 1 Of an alcoholic strength by volume of 50 per cent vol or higher, excluding those in containers holding less than 2 l.
Note 2 Other than Note 1
Note 3 Ad valorem duty or specific duty, whichever lower, is applied for Gin and Geneva.

Enclosure 2: Letter from Mr. Hans-Friedrich Beseler, Director-General, DGI, European Commission
to Ambassador Atsushi Tokinoya, Ambassador of Japan
Thank you for your letter of 19 December 1997 informing me of the results of the negotiations
that Japan has conducted with the US and Canada in respect of implementing the findings and conclusions
of the WTO Panel report on “ ” as modified by the report of
the Appellate Body adopted by the Dispute Settlement Body on 1 November 1996. In your letter you
also set out proposals for the new liquor tax schedule which will apply to Shochu A, Shochu B and
brown spirits as well as the reduced tariffs which will apply to those liquors itemised in the annex to
your letter.
In accordance with the provisions of the letter sent by Sir Leon Brittan to Minister Ikeda of
31 January 1997, the contents of which were confirmed in a letter from Minister Ikeda to Sir Leon Brittan
of the same day, the European Community and Japan have engaged in further negotiations with a view
to ensuring that the European Community will receive at least comparable tariff concessions to those
granted to the US and Canada as a result of Japan’ s negotiations with these countries. I confirm that
the implementation of the tariff eliminations and reductions set out in your letter of 19 December 1997
constitutes such comparable tariff concessions.
On the basis of the integral application of the additional elements and measures set out in your
letter of 19 December 1997 in addition to those stipulated in Sir Leon Brittan’ s letter to Minister Ikeda
of 31 January, I confirm that the package of Japanese proposals resolves the dispute on liquor tax between
the European Community and Japan.
You will understand that if the proposals are not implemented fully, the European Community
reserves its rights to resort to dispute settlement under the WTO agreements.
I should like to thank you for your cooperation in this matter.