From March 2003 Scotch whisky, Cognac and other spirits from the
European Union will no longer be discriminated against in Chile.

An agreement reached between the two sides in Brussels has put an end to the 20-year so-called "whisky-pisco" dispute, in which the EU had accused Chile of imposing excessive taxes on imported liquors to protect the market for its own pisco brands of spirits.

At present spirits from the EU bear a tax of 47% compared to 27% on pisco. Under the deal the duty on imported spirits will be progressively reduced to 27% over the next two years and this rate will then apply to all drinks.

The World Trade Organisation ruled last year that Chile's different alcohol taxes amounted to trade discrimination and ordered the country to level the playing field by March this year.

EU Commissioner for trade Pascal Lamy said the deal "wiped the slate of bilateral trade disputes clean."