WASHINGTON, DC – The Distilled Spirits Council (DISCUS) today welcomed the World Trade Organization’s (WTO) final ruling that the Philippines’ excise tax on distilled spirits is discriminatory and in violation of WTO rules. Further, DISCUS urged the Philippine government to revise its excise tax structure immediately to comply with the ruling.
“The Philippines’ excise tax system is a textbook case of discrimination against imported products,” said DISCUS President Peter Cressy, pointing out that the Philippines levy a tax on imported spirits up to 43 times greater than on domestically-produced spirits. “With a trade barrier of that magnitude, it is no wonder that U.S. spirits have barely made a dent in the nearly $3.4 billion Philippines spirits market. We urge the Philippines to take immediate steps to bring its tax system into compliance with WTO rules and replace its current regime with a fair, non-discriminatory excise tax system.”
The decision represents the final stage before the WTO adopts the findings of the U.S. government’s formal challenge of the Philippines’ discriminatory excise tax system for spirits. The U.S. launched a formal challenge in January 2010. In August 2011, a WTO dispute settlement panel ruled that the Philippines’ excise tax regime violated fundamental WTO rules which prohibit discriminatory treatment of imports. Today’s ruling by the WTO Appellate Body unequivocally affirmed the panel’s ruling and rejected the Philippines’ appeal.
“We are extremely grateful to Ambassador Kirk and his team at the United States Trade Representative for their efforts to resolve this dispute,” Cressy said. “We will continue to work closely with the U.S. government to ensure that the Philippines fully abides by the WTO ruling.”
According to DISCUS, U.S. distilled spirits exports to the Philippines were valued at just $997,000 (FAS export value) in 2010. In the first nine months of 2011, U.S. spirits exports to the Philippines declined 28 percent over the same period in 2010. Worldwide, U.S. spirits exports exceeded $1 billion in 2010 for the fourth consecutive year and are up nearly 17 percent for the first ten months of 2011.