VIET NAM NATIONAL UNIVERSITY IN HCMC FACULTY OF ECONOMIC LAW

THE UNIVERSITY OF ECONOMICS AND LAW LECTURER: Dr. DAO GIA PHUC

INTERNATIONAL TRADE LAW

ASSESSMENT TASK 2

Team paper: (problem-solving question)

In Moola, a Southeast Asian Country, a wine made from the local fruit Ououa (1) has been an integral
part of Moolan cuisine and hospitality since hundreds, if not thousand of years, comparable maybe to
the role wine (made of grapes or apples) plays in Southern European culture. A famous Moolan proverb
says: “A dinner without Ououa-wine is a dinner on an empty table”. In recent year, thanks to the hard
work of its people and the WTO liberal trading system, Moola has established itself as an “Asian Tiger”
(Moola has joined the WTO in late 2021). GDP per head has soared, and its consumers are becoming
more demanding and curious. Especially Sauvignon wines (from New Zealand, South Africa, but also
France - there is no red wine industry in Moolan (yet)) have become quite popular with young
consumers. In high-end clubs and lounges servicing the top quartile of the market, these Sauvignons
have indeed become the most popular drink.

In most “bottle shops” (the places one can buy alcohol in Moola) one can buy both Ououa-wines
and imported Sauvignons; bottle shops in upscale neighborhoods carry a wide selection of red wines and
the basic Ououa-wines, while in normal neighborhoods there will be a wide selection of Ououa-wines,
and maybe one of two Sauvignons. Some high-end Ououa-wines are almost as expensive as low-end
Sauvignons, but the average price for Sauvignons is five times higher than the average price for Ououa-
wines, making it unaffordable for most consumers, except “on that special occasion”, as some
advertisement for Sauvignon states. On 1 January 2023, the Moolan trade minister, who happens to be
a former CEO of the Moolan Ououa-wine Industry, introduces a draft law for a new “Comprehensive
Law on Food & Beverage” (CLFB) to the parliament. Amongst many other measures the draft statute
contains the following regulations:

1. The system of bottle shops, i.e., designated shops where consumers may buy alcoholic drinks (plus
minor accessories like peanuts, cashew nuts, almonds, rice cakes, pretzels, and other snacks) is
maintained.

2. Normal food stores and supermarkets may not carry alcoholic drinks. That does not apply to Ououa-
wines, which are described as an integral part of Moolan culture and dinner table convention.

3. VAT is changed, in order to improve state revenues in light of a soaring public debt which is the
consequence of major bank bailouts. Basic foods are listed in a “Schedule B” and include the main
ingredients of Moolan cuisine, such as, inter alia, rice, vegetables, seafood, pork, water, and Ououa-
wine. Luxury foods are listed in a “Schedule L” and include bovine meat, carbonated soft drinks (other
than water), and wines and sparkling wines made of grapes. VAT for “Schedule B” products is 8%,
“Schedule L” products are charged with 32%. Schedule L products are regularly bought only by
consumers belonging to the top 1% income bracket.

You are an advisor of the trade minister. She wants to show in the next parliamentary debate that
the government has gotten it all wrong. She also doubts that the CLFB would be compatible with WTO
law and asks you, whether her gut-feeling is right.
 Please prepare for the trade minister an analysis as to whether the proposed CLFB is compatible
with WTO law. You have only the information contained in this exam question. If you think you need
further information, explain why.

………………………

(1) Similar to the red Dragon Green Fruit of Vietnam.

(Source: internet)