1. Benefits of International Trade in the Agri-Food Sector – Case Study on Beverage Alcohol The 1 st ASEAN–EU Business Summit 2011 Jakarta, Indonesia Renato Salud Diageo 11

2. I. Ideal alcohol tax policy environment Reduced customs duties with no quantitative restrictions Non-discriminatory excise structure Regulations that are transparent, simple, predictable, reasonable and subject to public/industry consultation 22

3. II. Greater tax revenue Reduce non-tax paid activity including counterfeit and smuggling Greater choice for consumers and expansion of tax base 33

4. III. Support tourism and hospitality Important sources of economic activity Key consideration of value for money is affordable quality food and beverages (including alcohol) Safe, quality products for the consumer 44

5. IV. Encourage investment and innovation Employment Capability development International reputation Best practice CSR programs 55

6. V. Minimal impact on domestic industry Viable domestic alcohol industries in Asia Trade liberalisation will support their growth: Investment and international partnerships to support expansion, develop capabilities and know-how Access to cheaper raw materials through reduction/removal of trade barriers Export opportunities Enhance competitiveness Examples China and Korea 66

7. VI. China experience 65% customs duty on imported wine & spirits which encouraged illegal trade Joined WTO tariffs reduced to 10% for spirits and 14% for wine from 2005 Reduced illegal activity and revenue collection increased from US$ 30 million in 2000 to US$345 million in 2010 for international spirits and from US$5 million to US$265 million in 2010 for wine Domestic spirits sales continued to grow such that imported wine accounted for only 2.4% of Chinese wine sales in 2009 and imported spirits represent a mere 0.5% of total spirits sales 77

8. VII. South Korea experience Applied discriminatory tariff and tax measures to protect domestic market (Soju) from foreign spirits WTO legal challenges led to Korea aligning tax treatment of Soju and imported spirits by 2000 No harm to Korean Soju volumes in long term. Before the tax change volumes were 11.5m HL, reached 12.57m HL in 2010 Imported spirits still only account for 3.5% of the total spirits market after 10 years of tax equalisation 88

9. VIII. Conclusion: Benefits of ideal alcohol policy environment Greater revenue Supports tourism and hospitality Encourages investment and innovation 99