The Association said: "It is totally unacceptable that an international trading nation such as Chile should tax Scotch Whisky at 70 per cent, when the local spirit, pisco is taxed only at 25 per cent. Chile has for many years successfully exported its wines to Europe free from tax discrimination. Indeed, the UK is the second largest market for Chilean wine.

"Chile’s membership of the WTO should be an indicator of its commitment to uphold its obligations to free trade. Given the WTO’s 1996 ruling against Japan’s virtually identical liquor tax arrangements, which resulted in reforms commencing on 1 October this year, and in the absence of Chile’s willingness to eliminate its current tax differentials, the Association believes the EU’s action at the WTO to be fully justified."

Exports of Scotch Whisky to Chile were worth £11.8 million in 1996.