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Poisoned wine and the
WTO
By Laurence Eyton
TAIPEI
- To Taiwanese, rice wine is not a wine, it is a cooking
ingredient - a condiment, if you like, as is
Worcestershire or Tabasco sauce. The World Trade
Organization, however, thinks that wine means, well,
wine - as in claret, Riesling or Chianti. And therein
lies the basis of a cross-cultural misunderstanding that
so far has led to the deaths of 11 people, with two more
deaths looking suspicious, and many more people
hospitalized.
A visit to a tepanyaki stall in a
local nighttime food market gives an indication of the
Taiwanese appetite for rice wine - the chef pours it
over every kind of food as it cooks in astonishing
quantities. Certain traditional dishes, such as drunken
chicken, have to be marinated in the stuff, and its
tonic powers are an essential part of the medicinal
foods given to women in the month after childbirth.
Some people, especially among Taiwan's severely
impoverished Aborigines, actually drink rice wine as a
beverage, but it is not intended to be used this way and
is never sold as such in a bar. It is, however,
everybody's food additive of choice. It gives sauces a
more robust taste and is widely believed to make meat
more "warming", according to the esoteric Doctrine of
Humors which underlies traditional Chinese medicine - to
which the Taiwanese are also addicted.
Overall
demand is hard to estimate, for reasons that will become
obvious. The Taiwan Tobacco and Wine Corp (TTWC), which
until this year had a monopoly of rice wine manufacture,
sold about 300 million 600 ml bottles last year. But it
is possible that imports, microbrewers and bootleggers
might contribute as much as another 100 million bottles
to the market volume, making a total consumption of more
than 17 bottles a year for every man, woman and child on
the island.
The problem is that what is seen as
a food additive by Taiwanese is classed by the WTO as a
distilled liquor. This follows the result of the United
States flexing its muscles during Taiwan's negotiations
for entry into the WTO, which it finally achieved at the
beginning of this year. The US had, of course, no
interest in rice wine. What it did have was a powerful
desire to get Taiwan's formidably high duties levied on
imported alcohol lowered. Taiwan had for the last 50
years followed a policy of selling locally made alcohol
quite cheaply - a 600ml bottle of TTWC beer cost about
US$1, a bottle of the same company's rum (heaven knows
who drank the stuff) about US$3 - while foreign liquor
cost an arm and a leg. The US wanted Taiwan to adopt WTO
standards whereby alcoholic beverages are taxed
according to their strength, not their place of origin
and not, by the way, their intended use.
Before
an anti-globalist sees this as a textbook case of
Western corporatism bullying the defenseless Third
World, it should be pointed out that what the
negotiators sought was a level playing field on which
imported products could compete with domestic ones. If
Taiwan acted sensibly - since nobody seriously thought
it would raise the tax on TTWC "Taiwan Rum" to that of a
bottle of Bacardi - the result should have been better
liquor available to consumers at lower prices.
(Anti-globalists need not be disappointed however; US
negotiations with Taiwan on opening its tobacco market
in 1986 would amply repay their study.)
The
result of classifying rice wine as a distilled liquor
was dramatic. The product was hit, upon entry into the
WTO this January, with a tax of NT$150 (US$4.30) a
liter, which should rise to NT$185 per liter in 2004.
TTWC's most popular brand of rice wine suddenly leapt
from NT$21 a bottle, a price that had been steady for
many years - to around NT$130, an increase of 440
percent.
The government tried a number of
measures to ease Taiwanese into the idea that rice wine
was going to become expensive, none of which worked and
all of which worked to the government's detriment. Its
first plan as far back as 1999 was to stop the sale of
government-owned TTWC's popular "red label" brand and
replace it with a more expensive alternative, priced at
NT$64 a bottle and containing salt - therefore obviously
wine for cooking with only. There were only two problems
with this plan: people didn't like the salted wine, and
immediately stated hoarding as much red label as they
could find. The plan lasted a few days only before the
government caved in and told TTWC to start making red
label again.
If people power was enough to make
the government change its plans in 1999, it could not
defeat eventual WTO entry in January this year. The
price went up and stayed up. Not surprisingly, toward
the end of last year a rice wine crisis slowly developed
as it became clear that people were buying large
quantities of the condiment and hoarding it to offset
the price increase. This ranged from families buying a
few cases of the wine - after all the savings per case
were equivalent to a day's pay for the average worker -
to retailers hoarding hundreds of thousands of bottles.
So bad did the rice wine shortage become that the
government had to import 15 million bottles from
Singapore in the run up to the Lunar New Year in
February.
The government threatened retailers
who hoarded rice wine with swinging fines of NT$2,000
per bottle sold above its original marked price. Since
nobody expected the police to have nothing better to do
than go around checking on the price of rice wine and
housewives were happy to buy at anything less than the
new price, this was not the most effective of policies.
Taiwanese are, however, nothing if not ingenious
and it wasn't long before an inventor had come up with a
machine to desalinate salty rice wine which at the time
was classed as a condiment and carried a tax of NT$22
per bottle instead of the NT$90 charged on the non-salty
product. Su Hsin-hsiang's contraption took half an hour
to take the salt out of a bottle of salty rice wine and
was marketed in two versions, an economy model at
NT$68,000 and an industrial one for NT$188,000. Su
claimed in October last year to have 1,000 orders
already, mostly from restaurants in southern Taiwan.
For this observer of Taiwan affairs, the drama
that has revolved around rice wine pricing, provision,
hoarding and consumption for the past three years has
been an amusing delight, a change from the endlessly
repetitive and sterile arguments about Taiwan's national
status and relationship with China - which is all that
most of the world knows.
But things have now
gotten ugly; the high price of rice wine and the
comparative ease of making it have attracted bootleggers
into the business. Since the end of the TTWC monopoly at
the beginning of the year, more than 200 companies in
Taiwan have received licenses to make rice wine. Even
so, the CEO of one wine manufacturer thinks that 70
percent of the rice wine now on the market is made by
unlicensed firms. TTWC has seen its own rice wine sales
plummet due to competition. And a former employee of the
cabinet-level Department of Health (DoH) caused a
sensation last month when he said that as many as 100
million bottles of bootleg rice wine might be sold this
year.
Competition is supposed to be good for the
consumer, but not when it kills them. Some of the
unlicensed companies turn out quality products - though
the companies' illegality makes any kind of public
health-related quality control difficult. Other
companies have been plain murderous. The most expensive
part of brewing the wine is the distilling. One could
save money by distilling less and fortifying the wine
instead. The problem is that what has been used is
methanol. And methanol consumption can be deadly.
So far 11 deaths have been recorded as being
from poisoned rice wine. Authorities last week exhumed
two recent burials to check if these deaths, too, were
related to the rice wine scam. More worryingly, when on
November 26 health departments across the country
started conducting free tests on rice wine for worried
consumers, of the 726 bottles tested, 31 - over 4
percent - were found to contain excessive levels of
methanol. It could be that the free tests tempted those
who had special reason to worry about their rice wine -
price unusually low, taste not what it should be,
feelings of sickness after eating - and were not
representative of the island's rice wine supply as a
whole. On the other hand it might be that there is a
huge reserve of potentially deadly rice wine out there,
necessitating a massive campaign to alert consumers to
the dangers of cheap rice wine and to smash the
bootleggers who produce such stuff.
The DoH has
been swift to let people know how to identify those
brands of wine that have been found contaminated. But
Taiwanese are deft at faking labels so to buy a
"reputable" brand might mean nothing. People have also
been warned that any rice wine sold under NT$90 - the
tax on each bottle - is suspicious and should be
avoided. Also, the contaminated wine involved in the
deaths so far all appears to have been sold in plastic
rather than glass bottles. Consumers are virtually
boycotting rice wine in plastic bottles, a boon for
TTWC, which still uses glass, but a business disaster
for licensed microbrewers.
The government isn't
interested in the ills of small rice wine producers as
much as it is eager to stop the bootlegging. Police
action can only go so far; Taiwan hasn't the law
enforcement resources to devote to locating hundreds of
illegal brewing operations, nor does it have the budget
to create them.
The government has been
considering asking the WTO to recategorize rice wine in
some way, perhaps as a cooking additive, or else to seek
a ruling allowing that tax should not be equivalent to
more than half the untaxed retail price - which would
bring rice wine down to perhaps NT$30 a bottle - making
it too cheap to be worth bootlegging. Bodies such as the
American Chamber of Commerce have, however, impressed
upon the government that renegotiation of WTO entry
terms is not really an option so soon after entry.
This might force Taiwan into what would be, for
it, drastic action - simply unilaterally lowering the
tax on rice wine in violation of its WTO agreements.
This it is loath to do; compliance with trade agreements
is one of the ways Taiwan tries to show what a good
international citizen it is, so many other avenues
having been denied it by China's opposition.
Nevertheless, people's lives might be at stake and the
government can't sit idly by.
It also has a
precedent in this regard. According to Yang Chiung-ying,
a Kuomintang legislator, when Japan encountered the same
problem in the past with sake it simply cut its tax
rate. This led to 10 years of bickering within the trade
body before Japan was granted another four years to
bring itself into compliance. It thereby earned 14 years
to deal with the problem.
There are reasons why
this strategy might not be wise: Taiwan is not an
800-pound trade gorilla like its northern neighbor and
the WTO has powers to penalize far in excess of anything
possessed by the GATT.
But opposition
legislators like Yang are beginning to ask why Taiwanese
should live in danger simply because of an international
trade agreement. And many ordinary Taiwanese are
beginning to listen.
(©2002 Asia Times Online
Co, Ltd. All rights reserved. Please contact content@atimes.com
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