RP-US trade spat looms at WTO

The US filed a case against the  Philippines before the World Trade  Organization (WTO), citing higher excise taxes Manila had slapped on imported distilled spirits.

“We are going to the WTO because we want to ensure that US producers have access to their markets overseas,” Ambassador Ron Kirk said in a statement posted on the US Trade Representative’s (USTR) website.

“Although the US has raised this issue many times, the Philippines continues to tax distilled spirits from the US at much higher rates than distilled spirits produced in the Philippines,” Kirk said.

“We urge the Philippine government to eliminate that discrepancy and level the playing field for our exports immediately,” he said.

The USTR cited WTO rules that, in general, bar members from discriminating between imported and domestic goods in their tax regimes.

But the Philippines’ Republic Act 8240 has designated a lower flat rate on spirits produced from the sap of palms such as buri, coconut and nipa, and the juice, sugar and syrup of cane—raw materials used by domestic manufacturers of distilled spirits.

Also, imported distilled spirits are taxed at about 10 to 40 times higher than domestic products.

The USTR said its government has raised concerns over the Philippines’ excise taxes on distilled spirits, both bilaterally and in WTO fora, for several years now.

Since 2003, sales of imports exceeded 5 percent of total sales of spirits in the Philippines, the US trade body said.

It said the US exported about $1-billion worth of distilled spirits a year between 2006 and 2008.

Last year, the European Union (EU) also requested WTO dispute settlement consultations on the Philippines’ high excise taxes on distilled spirits.

Both parties will initially undergo bilateral consultations to resolve the issue without resorting to litigation. If these consultations do not resolve the dispute, the complainant could request the establishment of a WTO panel. –BEN ARNOLD O. DE VERA Reporter, Manila Times