WTO sides with U.S. over Philippine whiskey tax

WTO sides with U.S. over Philippine whiskey tax    A World Trade Organization panel on Monday sided with the United States in a dispute with the Philippines challenging discriminatory excise taxes on imported U.S. distilled spirits.
   The Philippines imposes taxes on imported distilled spirits, such as whiskey and gin, at significantly higher rates than on domestic distilled spirits.
   'We urge the Philippine government to comply swiftly with the panel's recommendations and rulings, and level the playing field for our exports immediately,' said U.S. Trade Representative Ron Kirk in a statement.
   The Philippines' tax rates on distilled spirits differ depending on the product from which the spirit is distilled. Its tax rates on distilled spirits made from materials that are typically produced in the Philippines, such as sugar and palm, are generally low (14.68 pesos per proof liter). However, imported distilled spirits are taxed at rates from about 10 to 40 times higher than those applied to domestic products.

Kirk

   In the Philippines, producers use domestic materials, such as sugar, to create a variety of different 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 WTO generally bars its members from discriminating between imported and domestic products in their tax regimes. The United States brought two legal claims against the Philippines' measures, and prevailed on both. Specifically, the WTO panel found that the Philippines applies higher taxes to imported distilled spirits than to 'like product' or 'directly competitive or substitutable' domestic distilled spirits, in violation of the 1994 GATT's Article III.
   The U.S. government raised concerns over this issue with the Philippines both bilaterally and in WTO forums. The United States sought WTO consultations on the matter in January 2010, and a WTO panel was put together in July 2010. The same panel heard claims by the European Union on the same measures, and findings in that dispute were also issued Monday.
   In 2006 to 2010, U.S. distilled spirits exports worldwide averaged more than $1 billion per year, making the United States one of the largest spirits exporters. According to industry figures, the U.S. distilled spirits industry contributed to more than $113 billion of economic activity and over 1.2 million jobs in 2007.