EU, Switzerland, US complain against Gulf excise tax at WTO

The European Union, Switzerland and the United States have filed a complaint at the World Trade Organization (WTO) about the excise tax imposed by Saudi Arabia, the United Arab Emirates (UAE) and Bahrain on carbonated and energy drinks, Reuters reported, citing diplomatic sources.

The three Gulf states have been asked to explain the reasoning behind a 100 percent duty on energy drinks and a 50 percent tax on other carbonated beverages, according to the notes of a July 3-4 WTO meeting.

According to the minutes of the meeting, Saudi Arabia said the tax aimed to protect human health and the environment and was not intended to shield local industry.

Last year, Saudi Arabia, the UAE and Bahrain imposed the additional levy on certain products that were deemed harmful to health.

The list included tobacco, apart from energy and carbonated drinks.

The US has now called on the three countries to repeal the tax and urged other Gulf states not to implement it.

Switzerland has asked Gulf finance ministers to consider modifying the tax, a Geneva trade official said.

The EU does not oppose the tax but believes the levy is discriminatory because it is based only on the retail price and is not imposed on non-carbonated drinks that contain sugar, said an EU source and two diplomats in the Gulf.

“It makes no sense at all from a health perspective,” said a European diplomat.

The EU will consider calling for formal consultations at the WTO if the issue cannot be resolved through bilateral talks, the EU source added.

The EU source said Bahrain has indicated the three countries were willing to engage in bilateral consultations, the report cited the EU source as saying.