Working Party on State Trading Enterprises - State trading - New and full notification pursuant to article XVII:4(a) of the GATT 1994 and paragraph 1 of the Understanding on the Interpretation of Article XVII - European Union

STATE TRADING

NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVII:4(A) OF THE

GATT 1994 AND PARAGRAPH 1 OF THE UNDERSTANDING ON

THE INTERPRETATION OF ARTICLE XVII

European Union

The following communication, dated and received on 11 July 2024, is being circulated at the request of the delegation of the European Union.

 

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Pursuant to Article XVII:4(a) of the GATT 1994 and paragraph 1 of the Understanding on the Interpretation of Article XVII of the GATT 1994, and in response to the call for notifications contained in document G/STR/N/20, the European Union notifies the following state trading enterprises for the years 2022 and 2023.

I. ENUMERATION OF STATE TRADING ENTERPRISES

A.    Identification of state trading enterprises

Systembolaget AB (hereafter Systembolaget)

B.    Description of products affected (including tariff item number(s) encompassed in product description)

Alcohol beverages (spirituous drinks, wines, strong beer and other fermented alcoholic beverages) and non-beverage alcoholic preparations (Sw. alkoholdrycksliknande preparat).

II. REASON AND PURPOSE

A.    Reason or purpose for establishing and/or maintaining state trading enterprise

Systembolaget is a state-owned Swedish limited company that conducts retail sales of alcoholic beverages and non-beverage alcoholic preparations, to the general public in Sweden; a retail monopoly. The reason for the monopoly is that the alcohol-related problems are reduced if alcohol is sold in the absence of a profit motive. Systembolaget aims to reduce the total alcohol consumption by limiting availability in Sweden. Systembolaget further strives to help limit the medical and social harm caused by alcohol in Sweden, and thereby improve public health.

B.    Summary of legal basis for granting the relevant exclusive or special rights or privileges, including legal provisions and summary of statutory or constitutional powers

Systembolaget's mandate is governed by the Swedish Alcohol Act (2010:1622), by Systembolaget's contract with the government dated 19 June 2019 (Sw. Tillkännagivande (2019:552) av avtal mellan Systembolaget Aktiebolag och staten) and by the directives issued by the government in its capacity as the owner of Systembolaget.

III. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE

A.    Summary statement providing overview of operations of the state trading enterprise

Systembolaget has a nationwide retail network comprising approximately 450 stores and 465 agents (in smaller communities with an insufficient customer base for a store of their own). The agents act for and by authority from Systembolaget; they are not themselves selling the items but instead delivering the items on behalf of Systembolaget. The agents account for approximately 1% of Systembolaget's turnover and carry no items in stock, instead the consumers order the goods for collection. Systembolaget is responsible for ensuring that people shall have the option of purchasing alcoholic beverages and non-beverage alcoholic preparations wherever they may live in Sweden and thus Systembolaget is represented in all municipalities in Sweden. The Swedish Parliament sets the guidelines for the opening hours of Systembolaget's stores.

According to Systembolaget's contract with the government, Systembolaget shall inform the public in Sweden about the risks combined with the consumption of alcoholic beverages and non-beverage alcoholic preparations. This undertaking is also mentioned in Systembolaget's Articles of Association. As one way of fulfilling this undertaking, Systembolaget has formed the subsidiary IQ-Initiativet AB. IQ-Initiativet works to persuade people to reflect on their attitudes towards and behaviour in relation to alcohol. The aim is to reduce alcohol consumption and thereby the harm caused by alcohol.

B.    Specification of exclusive or special rights or privileges enjoyed by the state trading enterprise

Systembolaget holds the retail monopoly for alcoholic beverages and non-beverage alcoholic preparations in Sweden.

C.   Type of entities other than the state trading enterprise that are allowed to engage in importation/exportation and conditions for participation

As stated above, Systembolaget holds the retail monopoly for alcoholic beverages and non-beverage alcoholic preparations in Sweden.

Other (non-state) entities are allowed to import and export alcoholic beverages to and from Sweden. As described in section III.H below, wholesale activities may be conducted by an authorised warehouse keeper or registered consignee of alcoholic goods.

D.   How import/export levels are established by the state trading enterprise

Systembolaget may not export any alcohol to other countries. Systembolaget is only entitled to import alcohol upon the request of individual consumers and provided that the product is not already included in Systembolaget's range. If a customer wishes to buy a product that is not included in the range, Systembolaget shall, according to the Swedish Alcohol Act, import the product requested by the customer within the framework of Systembolaget's private import service.

E.    How export prices are determined

As stated above, Systembolaget may not export any alcohol according to the Swedish Alcohol Act.

F.    How the resale prices of imported products are determined

The resale prices of imported products from Systembolaget's suppliers, at Systembolaget, are determined by adding the following mark-ups to the supplier's price to Systembolaget before Excise Duty on Alcohol and, if applicable, recycling fee: (i) a variable mark-up (currently 14.7%) and (ii) a fixed mark-up (that is added on all items sold by Systembolaget and varies according to type of item). Excise Duty on Alcohol and, if applicable, recycling fee, as well as VAT are then added.

G.   Whether long-term contracts are negotiated by the state trading enterprise. Whether the state trading enterprise is used to fulfil contractual obligations entered into by the government

Systembolaget has, as explained under section II.B and further elaborated in other sections above, a contract with the government (Sw. Tillkännagivande (2019:552) av avtal mellan Systembolaget Aktiebolag och staten) dated 19 June 2019.

As Systembolaget is a monopoly, it is obliged to treat all suppliers of spirituous drinks, wines and strong beer and non-beverage alcoholic preparations in a non-discriminatory manner. The principle of non-discrimination means that Systembolaget must apply the same terms and conditions to all such suppliers at any given time, and that Systembolaget is not at liberty to negotiate its terms and conditions with one or several individual suppliers. The purchasing terms are reviewed – and updated – in general twice each year in accordance with a pre-set procedure.

H.   Brief description of market structure

Systembolaget has a monopoly for off-premise retail sale in Sweden - for all alcohol beverages and non-beverage alcoholic preparations containing more than 2.25% alcohol by volume (with the exception of beer where the limit is 3.5% by volume). Beer with no more than 3.5% alcohol by volume can be sold in general stores and gasoline stations also selling food (and do not need a special license). Further, on-premise sale of alcoholic beverages takes place in restaurants, bars and cafés. A special license is required for on-premise sales of alcoholic beverages stronger than 3.5% alcohol by volume.

The Swedish Alcohol Act permits wholesale trade in spirit drinks, wine, strong beer and other fermented alcoholic beverages as well as non-beverage alcoholic preparations to the retail monopoly (i.e. Systembolaget), holders of serving licenses and other wholesalers. Wholesale activities may be conducted by an authorized warehouse keeper or registered consignee of alcoholic goods. The authorization and registration is conducted by the Swedish Tax Agency. A seller and/or importer of alcoholic products that are not beverages such as for example denatured alcohol used for cooking, food additives and/or food products such as "pears in cognac" must notify the Public Health Agency of Sweden of its business.

The legal age limit for buying alcoholic beverages in Systembolaget’s stores is 20 years. The legal age limit for buying beer in general stores is 18 years. The legal age limit for on-premises purchase of alcoholic beverages is 18 years for all alcoholic beverage categories.

IV. STATISTICAL INFORMATION (SEE ATTACHED TABLES I - III)

V. REASON WHY NO FOREIGN TRADE HAS TAKEN PLACE (AS APPROPRIATE)

According to the Swedish Alcohol Act, Systembolaget may not export alcoholic beverages.

VI. ADDITIONAL INFORMATION (AS APPROPRIATE)