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|13 December 2009
EU seeks to push case for liquor tax dispute with Philippines
The European Union (EU) will pursue its case against the Philippines’ allegedly discriminatory taxation of imported liquor, it said in a statement, reported online news portal GMANews.TV.
The EU has asked the World Trade Organization (WTO) to form a panel that will rule on the case.
“Unfortunately, WTO consultations have not indicated any clear prospect of a possible remedy to this longstanding tax discrimination against imported spirits. Therefore, the EU has no other option [but to request] a WTO panel to rule on this issue," European Trade Commissioner Benita Ferrero-Waldner said in a statement.
“We are convinced the EU will prevail in what is a clear case of tax discrimination but we still hope the Philippine government would remedy the situation without waiting for the completion of WTO dispute settlement procedures," she added.
In a separate statement, the Philippines said it would oppose the Western bloc’s move.
“The Philippines will assert all its legal rights and oppose the EU request for the establishment of a panel at the upcoming meeting," Manuel A. J. Teehankee, ambassador and permanent representative to the WTO, said.
The EU decision came after the two economies failed to settle after formal talks in October. The EU earlier complained Republic Act 9334 unfairly increased excise tax rates by half for imported spirits, compared with only 30 percent for locally made liquor.
This, the EU said, has had a significant impact on exports of EU liquor to the Philippine market. It estimates that from 2004 to 2007, EU liquor exports to the Philippines have more than halved to €18 million from around €37 million.
Ambassador Alistair MacDonald of the Delegation of the European Union to the Philippines said he hoped that pending legislation in Congress would be passed shortly.
There is a bill that seeks to lower excise taxes on liquor via changes to RA 9334 has been filed at the House of Representatives, but lawmakers may no longer have the time to approve it since they are busy campaigning for the 2010 elections.
The European Union is the Philippines’ fourth largest trading partner, accounting for 12 percent of total trade in goods worth €9 billion.
In 2008, the European Union was the top market destination for Philippine merchandise exports (17.3 percent of the total), the largest source of foreign direct investment (34 percent) and the largest supplier of foreign commercial loans contracted by the Philippines (48 percent).
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