Government to appeal WTO ruling on alcohol tax
Seems like they want to buy time. Or why should the Philippine government ask the World Trade Organisation (WTO) to revisit a ruling that declared a tax levied on spirits from the European Union and the United States in violation of the trade body’s rules? The Philippines government said in August that the ruling was not binding until the appeal was taken into consideration and processed by the WTO Appellate Body.
The government has 60 days (until mid-October 2011) to file an appeal. Once filed, the Appellate Body is expected to take 90 days to come out with its findings and conclusions.
All in all, the Philippines’ drinks producers have until the end of the year at most to prepare for the inevitable, a lowering of taxes, which, they maintain, will threaten the very survival of the distilled spirits manufacturing sector including allied and downstream industries.
According to a WTO ruling, sent out to all parties involved in July 2011, the Philippines’ alcohol taxes discriminated against imported brands, while favouring domestic producers in the archipelago’s USD 3.4 billion spirits market.
The Philippine distilled spirits market is big in terms of volume consumption, but 98 percent of consumption is in the low-priced or economy brands segment with an average retail price of 65 pesos (USD1.5) per 700 ml bottle. The domestic market is structured like an oligopoly, says the EU, as it is controlled by three large Filipino groups.
The plaintiffs, the European Union and the U.S., which are the world’s number one and number two exporters of distilled spirits, had urged the Southeast Asian nation to quickly comply with the WTO ruling.
The WTO generally bars its members from discriminating between imported and domestic products in their tax regimes.
In separate cases filed at the WTO, Brussels and Washington complained the Philippines had violated global trade rules by taxing foreign alcoholic beverages at rates 10 to 40 times higher than brands made in the Philippines from home-grown materials such as sugar and palm.
