Mental Lexicon

shochu

buckwheat

rice

wheat

drink

liquor

potato

vodka

The World Trade Organization on Thursday gave Japan 15 months to correct the difference in the disparity between Japan's taxes on shochu spirits and whiskey.

The international trade organization said 15 months was a reasonable amount of time for Japan to implement the ruling, effectively giving Tokyo until Feb.1 next year to comply with the decision.

The ruling stems from a U.S. request for WTO arbitration, filed in December after Tokyo and Washington failed to reach an agreement in bilateral talks centered on a U.S. request that Japan raise taxes on shochu spirits to the level of those on bourbon whiskey.

Sources said the latest WTO ruling puts Japan in a weak negotiating position. If Japan and the United States opt to hold negotiations on alternative ways of settling the shochu tax rates dispute, Japan would face retaliation in accordance with WTO rules if the outcome of the negotiations did not suit the United States.

The question of Japan's tax disparities was first brought to the WTO by the EU in June 1995. The United States and Canada followed suit. After the WTO Dispute Settlement Board ruled in November that Japan's differing liquor tax levels were unfair, the government said it would introduce a 1.6-fold increase in the taxes on one kind of shochu spirit within 23 months and a 2.4-fold tax increase on another kind over a five-year period. It also said it would introduce a planned 58 percent tax reduction on whiskey ahead of schedule.

(The Daily Yomiuri: 2/15/97)