U.S. challenges Philippine whiskey excise tax

U.S. challenges Philippine whiskey excise tax    The United States on Thursday has requested World Trade Organization dispute settlement consultations with the Philippines regarding the Asian country's excise taxes on imported distilled spirits such as whiskey and gin.
   'Although the United States has raised this issue many times, the Philippines continues to tax distilled spirits from the United States at much higher rates than distilled spirits produced in the Philippines,' said U.S. Trade Representative Ron Kirk, in a statement. 'We urge the Philippine government to eliminate that discrepancy and level the playing field for our exports immediately.'
   According to the Office of the U.S. Trade Representative, the Philippines applies tax rates for 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 domestically, such as sugar and palm, at a low rate (13.59 pesos per proof liter in 2009). Imported distilled spirits are taxed at rates 10 to 40 times higher than the rate applied to domestic products.

Kirk

   In the Philippines, producers use domestic materials, such as sugar, to create a variety of distilled spirits, including whiskey, brandy, gin, vodka and tequila. These distilled spirits compete with U.S. imports of the same spirits made from other materials, such as whiskey distilled from wheat.
   The USTR noted WTO rules generally prohibit members from discriminating between imported and domestic products in their tax regimes.
   The United States has raised concerns over this issue with the Philippines for several years, both bilaterally and in WTO forums. In addition, the European Union requested WTO dispute settlement consultations on these taxes in July 2009, and the United States joined these consultations and participated in meetings between the EU and the Philippines in October 2009.
   According to the USTR, between 2006 and 2008, U.S. distilled spirits exports worldwide averaged more than $1 billion annually, making the United States one of the world's largest exporters of spirits. However, since 2006, spirits imports, including U.S. products, never exceeded 5 percent of total sales in the Philippine market.
   The first step in a WTO dispute is for both parties to consult formally. If consultations fail to resolve the dispute, the United States will be entitled to request that a panel be established to determine whether the Philippines is acting consistently with its WTO obligations.