EU turns to WTO in alcohol row with Philippines

The European Union (EU) said Wednesday it had begun action against the Philippines at the World Trade Organization (WTO) over what the bloc claims are excessively high duties imposed on imports of EU brandy and whisky.

The European Commission said it had “requested consultations with the Philippines at the World Trade Organization regarding excise taxes on distilled spirits, which the EU considers to be discriminatory and therefore in breach of international trade rules.”

“Imported spirits including Spanish brandy and Scotch whisky can face taxes 10 to 50 times higher than those on domestic products, and exports to the Philippines have fallen significantly as a result,” a statement said.

According to the EU, the Philippines introduced Republic Act 8240 jacking up by 50 percent the excise tax rates of most imported spirits while imposing a lower 30-percent hike on spirits produced from the sap of palms such as buri, coconut and nipa, and the juice, sugar and syrup of cane.

“The discriminatory measures are in clear violation of Article III: 2 of the General Agreement on Tariffs and Trade,” the EU said.

The commission noted that sales of local spirits in the Philippines have risen by 8 percent since 2005, while EU exports to the Southeast Asian nations fell by roughly half from 2004 to 2007.

The EU said data from the International Wine and Spirits Record shows that the Philippines in 2007 consumed about 47 million cases (of nine liters) of spirits, of which only one million cases are imported. The EU said the Philippines is one of the biggest spirits markets in Asia Pacific.

Brussels said the WTO action became necessary because EU’s efforts to resolve the problem had for years fallen on deaf ears.

“This long-running problem has prevented EU exporters from competing fairly in the Philippine market, and has led to a sharp decrease in imports of European spirits,” EU Trade Commissioner Catherine Ashton said.

“I hope that we can still find an amicable solution to this issue through the consultation process,” she said.

Bilateral consultations give WTO members the opportunity to discuss contentious issues and find a satisfactory solution without resorting to litigation. If these consultations fail to reach a satisfactory solution within 60 days after the receipt of the request for consultations, the complaining party may request the establishment of a WTO panel.
— AFP with Reports From Ben Arnold O. De Vera AND Llanesca T. Panti