A Little Rice Wine Spat: Taiwan vs. U.S. and EU

Static Chaos's picture

By Static Choas

Taiwan, (aka The Republic of China, ROC), the tiny island just across the Strait from China-- found itself taking considerable heat from the United States and European Union (EU)—two biggest exporters of alcoholic beverages to the Taiwanese market--over a planned tax cut on its locally brewed rice wine.

As Asia Times reported, both Western governments allege that the local liquor will become an unfair competitor to imported whisky, cognac and brandy after the tax cut. The US and the EU consider Taiwan's move a violation of the World Trade Organization (WTO) regulations and have threatened to file a WTO case against Tawian. 

There’s a classification issue as the WTO classifies liquor by its alcohol level, while the Taiwanese government is trying to define by the way it is consumed. And in its defense, the Taiwanese government maintains that the rice wine is a common cooking ingredient, mostly not consumed as an alcoholic beverage in Taiwan, and therefore should be exempted from the high taxes aimed for liquors.

Taipei reportedly commissioned National Taipei University to conduct a study, which found that 96.4% of rice wine was consumed as cooking wine in Taiwan. However, Washington and Brussels are not buying it…figuratively and literally.

As battle clouds are gathering at the WTO, it seems high time for some quick cross-cultural understanding ….. on rice wine.

Since I had lived in Taiwan for a number of years, I can say with a degree of certainty that, unlike Japanese sake and Korean soju, both of which are also made from rice, Taiwanese rice wine is indeed used predominantly for cooking, as it is an ingredient in almost every recipe. In fact, rice wine is such a cooking staple that it is hard not to see a bottle sitting on the kitchen counter at a house or restaurant, often right next to cooking oil, soy sauce and salt.

And yes, there are some in Taiwan who also drink rice wine in addition to using it in cooking, but they are far and few in between, and mostly of relatively lower income levels, as noted by the National Taipei University’s study.

So, in short, the size of the rice wine drinker is too small, and in an entirely different demographic, social and economic segment, to even remotely have any impact on the likes of cognac or brandy.

Although Taiwan has had a robust economic growth this year after the global recession with expected Q2 GDP growth around 12.53%, its wine market size is quite small on the global scale. According to Research and Markets, the size of Taiwan’s alcoholic drinks market was around $4.4 billion in 2008—about 2,7% of the American wine market.

As such, any kind of monetary loss that could possibly result from the rice wine tax cut would be like less than a drop in the bucket. So it seems odd that the U.S. and EU would choose to go head-to-head with a long-time ally like this.

An editorial by the China Post suggested reasons beyond a simple misunderstanding of Taiwanese culture—worries of the Taiwan tax cut will set off an Asian liquor tax cut spree and they don't want to make Taiwan an exception. (Japan and Korea, in the past tried a similar argument with their sake and soju to no avail.)

For EU, my personal speculation is that Taiwan recently won its first WTO dispute against the EU over LCD flat-screen panel tariffs, reportedly saving island exporters up to $611 million a year, so, it is not that far off to say there could be a bit quid pro quo involved, since Taiwan’s rice cooking wine could not possibly touch the high-end spirits from France, Italy and Spain, etc.

Moreover, this could also be related to the new trade pact-Economic Cooperation Framework Agreement (ECFA ) --signed in June between China and Taiwan after 60 years of separation and political differences/hostilities. With Taiwan and China both playing a significant role in world trade, ECFA has drawn the attention of many WTO members. The China Post reported that the ECFA is likely to formally take effect and be implemented in September after an exchange of instruments between Taiwan and China.

As for Taiwan, Asia Times quoted an unnamed officials of the Taiwan Tobacco and Liquor Company that the tax cut by President Ma’s party was aimed at appeasing Taiwanese voters in the low-income classes—the rice wine drinker audience and mostly supporters of the opposing Democratic Progressive Party (DPP) --at least through the important five special municipality elections to be held later this year.

Meanwhile, Taiwan’s Ministry of Economic Affairs reportedly is working on a presentation to prove to that the rice wine in question is mainly a cooking ingredient; the rice wine does not affect the sales of Western liquors like scotch and brandy.

Good luck with that as it is quite obvious that this seems far beyond just a cultural exchange on wine use.

Static Chaos

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kathy.chamberlin@gmail.com's picture

you people have to B the insane one's, not me. keep rice wine under the sink with the cleaning supplies. jeeze.

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  • billwilson's picture

    Agreed .. it is cooking wine (also from my experience in Taiwan). Now somehow, here in Canada, the land of heavily taxed alcohol, rice wine is quite heaply available at the local chinese grocery store. There is NO way that it is getting taxed at Canadian alcohol rates. Go figure.

    All that said isn't it about time that the 22 million people of Taiwna get to have an officially recognized country?  This bs with China needs to stop. Taiwan is a country, period!

     

     

    Kreditanstalt's picture

    I have a bottle of Red Label rice wine in the cupboard now...if someone will tell me how I will post the picture

    BTW, you know where my wife keeps it?  -under the kitchen sink, with the cooking oil, cleaning stuff, etc.

    fxrxexexdxoxmx's picture

    Since I got back from rehab I have no idea where my wife is hiding the rice wine.

    Ripple or MD 20/20 mixed with a splash of rice wine can really smooth out the shakes on a Monday morning. 

    knukles's picture

    Before rehab I had no idea where I hid the bottle. 

    michael.suede's picture

    M'FING WHISKEY BITCHES

    Read Bourbon for Breakfast by the Mises Institute's Jeffrey Tucker:

    http://mises.org/books/bourbon_for_breakfast.pdf

     

     

    straightershooter's picture

    You stupid and arrogant French and Americans, said the sagacious president MA who vowed to fight the evil.

    In a move straightly copied from Suntze, the Sagagious president Ma is said to yield and offer concession to both French and Americans to tax their Cognac or Whiskey at only a quarter ( circa NT$5.4) per bottle so long as the labels of their respective cognac or whiskey are clearly marked as " cooking wine" and are marketed as cooking wine around the world.

    Gee, I hope that arrogant and evil Jew  French president take the challenge and mark the label of cooking wine on the face of that elite Cognac and of course I will be happy to buy that cooking wine Cognac at a much reduced price and not so elite sounding cooking wine.

    Make that happen. I dare you.

     

     

     

     

    Kreditanstalt's picture

    (*Dismal Sigh*)  THIS is the extent of American understanding of other cultures...?  Stick to McDonald's.

    CEOoftheSOFA's picture

    Doesn't the US have anything better to do?  The people here in Taiwan have so much faith in the US.  It's one of the few countries that still do.  I've never seen anyone here drink rice wine or whiskey because they are all drinking Budweiser!  I'm going to buy some rice wine tonight in support.

     

     

    Static Chaos's picture

    Try a little rice wine in stir fry dishes and soups, does wonders.

    Dburn's picture

    That's strange. When I was there in the 80s, much to my annoyance, it was served constantly at expensive dinners. At least that what I recall. I also recall it was marginally tolerable after about three bottles. The first sip was like I imagine sipping gasoline might be.  That may be due to cultural and personal preferences or it really was gasoline. Either it was the era of the rice wine or my hosts really hated me like crazy and brought it out every time I came knowing that I couldn't control my facial expressions. Each time I held up my hands as in "no more", more would come, so maybe it was a form of torture when I should have learned Mandarin for "fuck off" instead of trying to be polite. It was just plain nasty. It almost made you happy when they would bring out a course of things-swimming-around-in-your-bowl soup.

     

    Static Chaos's picture

    NO Chinese host would treat guest(s) with rice wine, which is not even available to serve in any kind of real restaurant.  Ergo, the host must have ordered the rice wine "OFF Menu" for your pleasrue only, or you were eating either at a road-side food stand (they have some of the best tasty food, btw), instead of "expensive dinners."  The host probably was footing the bill out of duress, most likely from you.  However, your description of the rice wine taste is close.   

    Kreditanstalt's picture

    It couldn't have been cooking rice wine.  At a DINNER PARTY??  It might have been Kaoliang or Sorghum wine, or that Kinmen Kaoliang or Xiaoxing Jiu (all of which are expensive) but not cooking wine...

    straightershooter's picture

    Dburn,

    Your host was a dirt cheapstake. Oh, wait, that means You are not a VIP either. Otherwise, you would have enjoyed some fine wine not made from rice. ( Any wine made from rice is not good)

    But, if you were attending a wedding Banquet, then sorry, the host can only afford serve you cheap stuff, that is rice wine.

     

    Also, in the 80's, Taiwan was an undeveloped, or more politely, was a developing country. How dare you asked for more expensive wine than rice wine?

    Hang The Fed's picture

    "Any wine made from rice is not good."

    Having personally taste-tested a number of bottles of sake, I have to disagree.  I will, however, contend that drinking it warm is just nasty as hell.

    Kreditanstalt's picture

    Well, I've lived here 20 years and never drunk a drop of rice wine!  I'll bet the amount actually DRUNK amounts to less than a fraction of 1% of the total sold, and just about all of even that tiny percentage is consumed by winos, tax divers, truckers or itinerant labourers...

    The biggest seller here is not imported rice wine.  Hell, I've never even noticed any imported stuff....the popular "red label" is produced by the TTWC and has always been the best seller. Used to be about 25-30NT$ a bottle until a few years ago when the liquor monopoly wasended at the behest of WTO and now it is nearly 80 or so a bottle.

    Rice wine is UNIVERSALLY used as a cooking ingredient!!!!  Get it through your heads....it is nothing like scotch or brandy.

    Not even in the same league.

    ThreeTrees's picture

    Governments can stay the fuck out of markets, please.

    Hang The Fed's picture

    They'd like to, but...the tears of frustration from their subjects are just about the sweetest high that they can get.  It makes crack look like eating a box of chocolates by comparison.

    Hang The Fed's picture

    If any of our reps to the WTO in this country believe that there's really some sound economic reason for pursuing such a totally moronic point as this, then it only reaffirms my belief that we need to grind these assholes up and recycle them into fertilizer.

    duo's picture

    My liquor cabinet has bottles Cuervo, Campari, vodka and rum that I bought on business trips to Japan for sometimes half the price the same bottle would sell for in Dallas.

     

    CR Bill's picture

    is this all these guys have to do ??

    Bill

    EDIT: is reading ZH all I have to do ?? lol

    kathy.chamberlin@gmail.com's picture

    B I L L luv your name. um I was just asking the same thing. I am not in denial anymore. true or at least when I am in Mysore India

    kathy.chamberlin@gmail.com's picture

    well i have been using rice wine (vinegar) for decades for cooking and also salad dressings. Marukan. no alcohol.

    Al Bundy's picture

    Woo Hoo!!!  Beer Summit!!!

    RockyRacoon's picture

    Rice wine = ripple?

    Low-brow stuff that rice wine.

    Hang The Fed's picture

    LOL, the longer the current shit-show goes on, the more likely it is that we'll be reduced to consuming cans of sterno just to blunt the horror of continued existence.  The fact that rice wine is being used as some sort of weird tit-for-tat further demonstrates the absolute absurdity of government intervention in markets.

     

    Sudden Debt's picture

    I'll dare you to drink a pint of rise wine ad fundum ;)