Soju is one of the most famous alcoholic beverage in Korea. Though other competitors are present in abundance but soju as has its advantage because of the alcohol content which is 25% and the most important is its pricing, lowest in the market. Moreover soju was very popular among the youngsters in Korea and was from a very long time back. The reason of its low pricing was basically cultural, relationship between them above everything else, soju is a medium of culture and that is why Soju has been remained cheaper price than any other alcohol. Dispute:
The EC (European community) and the U.S (United States) disliked the fact that there alcoholic drinks are biting the dust, because soju had an advantage on pricing, which is derived from low tax rates imposed, which came into conflict with the article 3:2 of the GATT 1994 and blamed the Korean government of unfair competition.
Political and economic factors:
The dispute aroused due to the political context, which was by and large led by the economical factor of alcoholic drinks and the taxes imposed on them. It clearly stated that free market practice can sometimes hit the indigenous industries adversely. Korea’s taxation system was not customized for soju itself, it was a result of a very detailed taxation system of the country. The EC and U.S also implied that, lower tax rate on soju means that it’s exporters have more political weight then foreign importers. Korea also highlighted the point that soju is not in direct competition with whisky and those types of imported alcoholic beverages. The consumers in Korea are very much price conscious and the imported beverages are seen as luxury items. Pressure from DSB (Dispute Settlement Body) forced the taxes to increase from 35% to 80%. The increment in the tax rates applicable on Soju was majorly due to the political reasons but the economical factor also acted as the pivotal role.
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