WTO warning shot for EU vodka dispute

By Chris Mercer

- Last updated on GMT

Related tags: Vodka, European union, Eu

Restricting the ingredients that could be used to make true vodka
in the EU would likely cause a fresh dispute at the World Trade
Organisation, as EU nations split into three camps.

South Africa has already privately threatened to contest any restrictions on the raw materials than can be used to make vodka, a source close to negotiations told BeverageDaily.com​.

Discussions over what ingredients can be used has split EU nations into three blocks, and the issue is now a major barrier to new European Commission proposals defining spirit drinks.

Some believe a battle at the World Trade Organisation (WTO) would be unavoidable if restrictions on ingredients were introduced.

Alongside South Africa, the US is another potentially strong foe. It has no restrictions on raw materials that can be used, and also provides a €500m market for EU vodka.

Poland and Nordic countries have demanded that true vodka could only be made from potatoes or cereals. Anything else, they said, was just a poor copy and should be labelled as such.

A middle block led by Germany, and recently joined by current EU President Finland, has proposed widening this to include sugar. A third group, including the UK, Ireland and several Mediterranean countries, wants no restrictions.

Opponents to restrictions believe the move is merely a cynical ploy to gain ground in Europe's fastest growing vodka markets around the Mediterranean, and would also hamper innovation in the sector.

The Commission, which is itself against restrictions, has now been asked to investigate the legality of different positions. Commission officials have already stated they cannot support the Finnish approach, even if sugar was included.

A legal opinion would be a decisive step in the dispute, according to Chris Scott-Wilson, a lawyer for the European Vodka Alliance (EVA).

"We're quietly confident that as a matter of the law, they should not restrict raw materials,"​ he said. To do so, supporters of restrictions would have to supply evidence that their policy would serve the interest of consumers.

Recent research by the EVA showed that "Most consumers outside of Poland don't know what vodka is made from, and more importantly they don't care"​. Around one per cent of those asked said raw materials were the most important factor in choosing a bottle of vodka.

Agriculture ministers from the 25 member states attempted to patch up differences at a meeting this week by expressing broad agreement with Commission plans for defining spirits.

A new compromise proposal on vodka will likely be necessary, however.

Scott-Wilson said this may be to drop the idea of restrictions and agree to use labelling on bottles to inform consumers how their vodka has been made.

The onus for making a deal is likely to fall on Germany, which will assume the EU Presidency next year after Finland. Its job will be to produce a compromise that is legally defensible.

If enough member states agreed on that, ministers may be able to force through proposals using the qualified majority voting system.

Related topics: Markets, Ingredients

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