January 14, 2010 / 7:15 PM / 9 years ago

UPDATE 2-US fights Philippine tax on whiskey, gin at WTO

* U.S. presses for opening in $3 billion spirits market

* Philippine tax called “blatantly discriminatory”

(Adds reaction, background)

By Doug Palmer

WASHINGTON, Jan 14 (Reuters) - The United States on Thursday filed a World Trade Organization complaint against Philippine taxes on alcoholic drinks it said discriminate against U.S.-made brands such as Jack Daniel’s and Jim Beam.

“We are going to the WTO today because we want to ensure that U.S. producers have access to their markets overseas,” U.S. Trade Representative Ron Kirk said in a statement.

The United States asked the Philippines for formal talks on an excise tax system it said taxes imported whiskey, gin and other alcoholic products 10 to 40 times higher than those made in the Southeast Asian country.

The main U.S. alcohol industry group applauded the action, which it said could help U.S. producers like Brown-Forman (BFb.N) and Fortune Brands FO.N break into the $3 billion Philippines spirits market.

“The Philippines has imposed a blatantly discriminatory tax on imported spirits for well over a decade,” said Peter Cressy, president of the Distilled Spirits Council.

“It is time for the Philippines to eliminate its WTO-incompatible tax system and provide a level playing field for imported spirits,” Cressy said.

The United States is one of the largest exporters of distilled spirits, with worldwide exports averaging more than $1 billion per year from 2006 through 2008.

Brown-Forman, based in Louisville, Kentucky, owns the Jack Daniel’s brand, and Fortune Brands, headquartered in Deerfield Illinois, produces Jim Beam whiskey.

U.S. trade officials said the Philippine excise tax system was the main reason imports have not exceeded 5 percent of total spirits sales in the Philippines since 2003.

The European Union has already mounted a WTO challenge against the Philippine taxes, which also hamper European-based companies such as Pernod Ricard (PERP.PA) and Diageo (DGE.L).

Manila taxes alcoholic products such as whiskey, brandy, gin, vodka and tequila made from domestic materials, such as sugar or palm, at much lower rates than imported spirits made from different materials, USTR said.

That violates a general WTO principle that countries should not discriminate between imported and domestic products in their tax regimes, USTR said.

The first step in a WTO dispute is formal consultations between the parties. If that brings no resolution, the United States can ask that a panel be established to determine whether the Philippines has violated its WTO obligations.

The WTO dispute settlement body is expected to approve the EU’s earlier request for a panel on Tuesday. (Reporting by Doug Palmer; editing by Cynthia Osterman)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below