TWN Info Service
on WTO and Trade Issues (Apr10/07)
24 April 2010
Third World Network
Panel set over Philippine
taxes on distilled spirits
Published in SUNS #6908 dated 21 April 2010
Geneva, 20 Apr (Kanaga
Raja) -- The WTO Dispute Settlement Body (DSB) on Tuesday agreed to
establish a panel, at the request of the United States, to rule on the
taxation of distilled spirits by the Philippines.
This is a second-time
request and panel establishment was automatic.
At the DSB meeting,
the United States, the European Union and the Philippines agreed that a panel that was established
on 19 January 2010 to examine an European Union complaint against the
Philippines on this
same issue will also examine the US complaint.
Trade officials said
that a single panel will thus be examining the two complaints on this
Thailand, Chinese Taipei, the United States, the EU (both as third parties in
each other's dispute) and India
reserved their third party rights in the dispute.
In a communication
to the DSB, the US complained that the Philippines taxes
distilled spirits at rates that differ depending on the product from
which the spirit is distilled.
Distilled spirits produced
from certain materials that are typically produced in the Philippines are taxed at a low rate.
Other distilled spirits
are taxed at significantly higher rates (for example, at a rate that
is approximately 10 to 40 times higher than the rate for the domestic
According to the US communication, the Philippine taxes
on distilled spirits do not appear to tax imported distilled spirits
and directly competitive or substitutable domestic distilled spirits
The taxes appear to
be applied in a way that affords protection to domestic production.
In addition, the taxes appear to subject imported distilled spirits
to internal taxes in excess of those applied to like domestic products,
said the US.
The US communication lists a range of
instruments reflecting the Philippine measures.
The US argued that the Philippine measures
appear to be inconsistent with the first and second sentences of Article
III: 2 of the GATT 1994.
[Article III: 2 states:
The products of the territory of any [Member] imported into the territory
of any other [Member] shall not be subject, directly or indirectly,
to internal taxes or other internal charges of any kind in excess of
those applied, directly or indirectly, to like domestic products. Moreover,
no [Member] shall otherwise apply internal taxes or other internal charges
to imported or domestic products in a manner contrary to the principles
set forth in paragraph 1.
[The preceding Article
III: 1 states: The [Members] recognize that internal taxes and other
internal charges, and laws, regulations and requirements affecting the
internal sale, offering for sale, purchase, transportation, distribution
or use of products, and internal quantitative regulations requiring
the mixture, processing or use of products in specified amounts or proportions,
should not be applied to imported or domestic products so as to afford
protection to domestic production.]
In a statement at the
DSB, the US said that the Philippines taxes distilled spirits
at different rates depending on the product from which the spirit is
distilled. Spirits distilled from products typically produced in the
taxed at a low rate, while other distilled spirits are taxed at rates
from approximately 10 to 40 times higher.
urged the Philippines
to address the concerns that have been raised, and hoped that the Philippines takes
action soon to level the playing field for imported and domestic spirits
in the Philippine market.
The Philippines reiterated its firm commitment
to a rules-based multilateral trading system, and that it was its fundamental
policy to be fully consistent with its international obligations, including
those undertaken under the World Trade Organization.
It said that it was
in this spirit that it consulted with the US
last February, with the participation of the EU, and it clarified the
non-discriminatory and impartial nature of its excise tax regime on
The Philippines further said that it posed
no objection to the request that a single panel be established to examine
the complaints in this dispute and in the EU dispute (DS396).
In other actions, three
separate first-time panel requests were blocked at the DSB. Panels will
be established automatically when these three requests come up again
before the DSB.
The three panel requests
are on the use by the US of the "zeroing" methodology in anti-dumping
measures involving products from Korea;
US anti-dumping measures
on certain shrimp from Vietnam;
and European Union anti-dumping measures on certain footwear from China.
Meanwhile, under the
agenda item of "other business", both China
and the US
made statements concerning a dispute on Chinese measures affecting the
protection and enforcement of intellectual property rights.
In its statement, China
recalled that at the last meeting of the DSB, it had introduced the
progress of China's
implementation and had stated that China
had completed all necessary domestic legislative procedures in implementing
the recommendations and rulings of the DSB in the dispute.
China said that it wishes to provide
today further information related to these domestic legislative procedures.
It said that on 26
February 2010, the thirteenth session of the Standing Committee of the
11th National People's Congress (NPC) of China
approved the Decision of the Standing Committee of the NPC on the Amendments
of Copyright Law of the People's Republic of China.
This Decision revised
Article 4, among others, of the Copyright Law. This Decision was published
on 26 February 2010 and came into force on 1 April 2010, said China.
On 17 March 2010, the
State Council approved the Decision of the State Council on the Amendments
of Regulations on Customs Protection of Intellectual Property Rights
of the People's Republic of China.
This Decision revised
Article 27, among others, of the Regulations on Customs Protection of
Intellectual Property Rights of the People's Republic of China.
This Decision was published on 24 March 2010 and came into force on
1 April 2010.
China said that with the coming-into-force
of these two Decisions, it has brought its measures under this dispute
into conformity with the DSB's recommendations and rulings.
said that while China
has today stated that it has implemented the recommendations and rulings
of the DSB with respect to its customs regime, "we are not in a
position to share China's assessment
at this time."
added that it has begun working with China
bilaterally on addressing certain questions that it has, and looked
forward to further discussions with China
on this issue.
(The next issue of
SUNS will carry further details of the three panel requests that were
blocked at the DSB.) +
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