From a recent op-ed by USTR Ron Kirk:
Tariff levels are generally falling around the world, but U.S. companies still face significant “behind-the-border” barriers, which typically take the form of complex, burdensome regulations and standards. The story of Tuthilltown Spirits of Gardiner, N.Y., illustrates the challenges to U.S. producers that want to export their merchandise overseas.
Ralph Erenzo and his partner, Brian Lee, run Tuthilltown Spirits, a Hudson Valley distiller with fewer than 20 workers. Tuthilltown makes Hudson Baby Bourbon—recently awarded a Double Gold medal at the San Francisco International Spirits Competition—from locally grown corn and uses special American Oak barrels in its innovative aging process, which takes less than six months to complete.
When Mr. Erenzo decided to expand sales to the European Union, he learned that a product sold there as whiskey must have been aged for at least three years. Removing the word whiskey from Hudson Baby Bourbon labels in the EU raises Tuthilltown's costs and forces the company to rely on word-of-mouth to educate European consumers about its products.
The EU's three-year aging requirement for whiskey essentially functions as a trade barrier that severely limits Mr. Erenzo's access to the EU market.
Should the EU modify its rules, so as to let products aged for less than three years be called whiskey? Or should the U.S. company, if it wants to export, age the whiskey it is producing for three years, so that it conforms with the EU rules? (A few web searches did not give me any indication of the basis for the three year aging requirement. If anyone knows, feel free to post in the comments.)
U.S. regulations on labeling and advertising of distilled spirits have various aging requirements as well. Are they trade barriers?
More here:
What is whiskey? Depending on where you sit, there is more than one correct answer. Hudson Baby Bourbon, whiskey in the United States, is not whiskey in Europe.
There was a show on Discovery Channel last night called "How Whiskey Made America." As far-fetched as their stories were, they were only fetched at all if you consider 'whiskey' and 'alcohol' synonyms.
They most emphatically are not.
After the Civil War, the growth of railroads and introduction of the column still transformed distilling from an extension of agriculture into a fully commercialized industry. Trains gave distillers a national market, which allowed them to grow big. At the same time, the new technology of the column still made it possible for the first time to produce a colorless, odorless, and tasteless distillate, which they called 'grain alcohol,' that was virtually pure ethanol.
Terminology was pretty simple then. If it was made from grain it was whiskey, just like it was rum if made from molasses and brandy if made from grapes.
People who took the newly-available grain alcohol (what we call vodka) and flavored it with tea, prune juice, tobacco, and other ingredients to make it resemble aged whiskey felt entitled to call their product whiskey too, since it was made from grain.
But the people who carefully crafted a rich, low-proof spirit and flavored it with nothing but oak felt they had the sole right to use the word. The grain alcohol flavorers, known as "rectifiers," were by far the larger block. The forces for "pure whiskey" were concentrated in Kentucky and Tennessee.
The battle between these two groups raged until 1909 and the Taft Decision, which represented a victory for the Taylors, Browns, Motlows, Samuels, Beams, Dants, Wathens, Medleys and other whiskey-making families.
The Taft Decision codified the definitions of "whiskey," "straight whiskey," and "blended whiskey" as we know them today. Since then it has been the case that although "storage in oak containers" is required, no minimum aging duration has ever been specified.
As recently as 1968 a group of producers argued for the adoption of a three- or four-year minimum, but the U.S. Treasury Department's Alcohol and Tobacco Tax Division (predecessor of today's Tax and Trade Bureau) rejected the proposal. The agency concluded that "it is preferable to permit the consumer an adequate basis for the selection of whiskies (even immature ones) than to limit his choice by banning them from the market. The mere desire to conform American regulations to those applicable in foreign countries is not sufficient justification for imposing the proposed limitation." (Industry Circular 68-03)
Interestingly, EU producers have had their own complaints about how the EU's trading partners approached the issue of aging requirements for whiskey:
1. Ageing requirement for whisky
According to the complaint, Uruguay's excise taxes on spirits (IMESI) are based on a system of price bands and fictional prices in order to determine the taxable base for each spirit drink. A flat tax rate is then applied in order to establish the final tax liability
The price bands for whisky are set at levels designed to ensure that all domestic brands benefit from the lowest taxation. At the same time, Uruguay excludes from the lowest price band all whiskies aged more than three years. Since EU regulations require that whisky be matured for at least three years, Uruguay's ageing requirement has the effect of excluding EU whiskies from the lowest tax category
...
The SWA contends that Uruguay's ageing requirement accords treatment to imported Scotch whiskies that is clearly less favourable than that accorded to ‘like’ products of national origin, in breach of GATT, Articles III.2 and III.4.
According to the SWA, the three-year ageing requirement has the effect of excluding from the lowest price band imported whiskies that would otherwise be included in such lowest band. Only imported whiskies are affected by such requirement, as Uruguay's standards for spirits require only two years of ageing for whisky. Moreover, the SWA claims that price bands for whisky are set at levels designed to ensure that all domestic brands benefit from the lowest taxation.
