Philippine alcohol taxes discriminate against Jack Daniel’s, Jim Beam and other American brands and should be struck down, U.S. officials urged the World Trade Organization.
“Despite U.S. efforts to resolve this issue through consultations, the Philippines continues to maintain its discriminatory tax regime on distilled spirits,” said Carol Guthrie, a spokeswoman for the U.S. Trade Representative.
“To ensure that Americans’ rights in the global trading system are respected, it is important to move forward with the next step in the WTO dispute settlement process and request the establishment of a panel,” Guthrie said in a statement.
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.
U.S. trade officials asked the Philippines in January for talks on an excise tax system that they said taxes imported whiskey, gin and other alcoholic products 10 to 40 times higher than those made in the Southeast Asian country.
Washington contends the excise tax system is the main reason imports have not exceeded 5 percent of total spirits sales in the Philippines since 2003.
The case could help U.S. producers like Brown-Forman Corp and Fortune Brands Inc break into the $3 billion Philippine spirits market.
Brown-Forman, based in Louisville, Kentucky, owns the Jack Daniel’s brand, and Fortune Brands, headquartered in Deerfield, Illinois, produces Jim Beam whiskey.
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. (Reuters)