U.S. brawls over Philippine spirits tax
The Office of the U.S. Trade Representative said Friday the United States has asked the World Trade Organization to establish a dispute settlement panel regarding discriminatory taxes applied by the Philippines to distilled spirits.
The Philippines applies tax rates to distilled spirits that differ depending on the product from which the spirit is distilled. The Philippines taxes distilled spirits made from certain materials that are typically produced in Philippines, such as sugar and palm, at a low rate (13.59 pesos per proof liter in 2009), while imported distilled spirits are taxed at significantly higher rates, from about 10 to 40 times higher than the low rate applied to domestic products.
'It is critical that American exports are treated fairly in the Philippines market in accordance with WTO rules,' said Carol Guthrie, a USTR spokeswoman. 'Despite U.S. efforts to resolve this issue through consultations, the Philippines continues to maintain its discriminatory tax regime on distilled spirits.'
As part of its WTO obligation, the Philippines committed not to discriminate against imported products compared to domestic products in the application of its tax regime, the USTR said.
Requesting a WTO dispute settlement panel is the next step in the process after requesting consultations. The United States requested consultations on the Philippine excise tax on Jan. 14. Consultations were held in Geneva on Feb. 23. The United States has now asked that the WTO Dispute Settlement Body consider the U.S. panel request at a meeting to be held on April 8.
'Of course, the United States always remains open to working with the Philippines to find a mutually agreeable solution to our concerns,' Guthrie said.
From 2006 to 2009, U.S. distilled spirits exports worldwide averaged more than $1 billion per year, making the United States one of the world's largest spirits exporters, the USTR said. However, since 2003, imports, including U.S. products, never exceeded 5 percent of total spirits sales in the Philippines. ' Chris Gillis