United States Trade Representative, Ron Kirk, has announced that the US has
requested World Trade Organization (WTO) dispute settlement consultations with
the Philippines regarding the latter’s excise taxes on imported distilled
spirits, such as whisky and gin.
As the Philippines taxes imported distilled spirits at significantly higher
rates than domestic distilled spirits, Kirk said: "We are going to
the WTO because we want to ensure that US producers have access to their markets
overseas." He urged “the Philippine government to eliminate that
discrepancy and level the playing field for our exports immediately."
WTO rules generally bar WTO members from discriminating between imported and
domestic products in their tax regimes. It was confirmed that the US government
has raised concerns over this issue with the Philippines over the past several
years, both bilaterally and in WTO forums.
In addition, after the European Union (EU) requested WTO dispute settlement
consultations on these taxes in July 2009, the US joined these consultations
and participated in meetings between the EU and the Philippines in October 2009.
After there had been no resolution of its dispute, the EU requested the establishment
of a WTO panel last month. It has been reported that the EU is considering a
renewal of that request, given that the problem remains.
It was explained that 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 the Philippines at a low rate. Imported distilled spirits are taxed
at significantly higher rates (from approximately 10 to 40 times higher) than
the low rate applied to domestic products.
In the Philippines, producers use domestic materials, such as sugar and palm,
to create a variety of different distilled spirits, including whisky, brandy,
gin, vodka, and tequila. These distilled spirits compete with US and EU imports
of the same spirits made from other materials (such as whisky distilled from
wheat).
According to US figures, since 2003, imports – including US products – never
exceeded 5% of the total sales of spirits in the Philippine market. The US distilled
spirits industry contributed to more than USD113bn of US economic activity
and over 1.2m jobs in 2007.
USA-TAX-NEWS.COM 
