U.S. Files WTO Complaint Against Philippines Over Liquor Taxes

The U.S. filed a complaint at the World Trade Organization against the Philippines’ excise taxes on imports of distilled spirits made by companies such as Brown- Forman Corp. (BF/A)

“We want to ensure that U.S. producers have access to their markets overseas,” U.S. Trade Representative Ron Kirk said in an e-mailed statement today in Washington. “The Philippines continues to tax distilled spirits from the United States at much higher rates than distilled spirits produced in the Philippines.”

The European Union, the biggest exporter of liquor, complained at the Geneva-based WTO in July about the Philippine taxes, which it said discriminate against European producers such as Diageo Plc (DGE), Pernod Ricard SA (RI) and Remy Cointreau SA. (RCO) WTO judges are scheduled on Jan. 19 to agree to rule on the legality of the taxes.

U.S. distilled spirits exports worldwide averaged more than $1 billion a year between 2006 and 2008, making the country one of the world’s top liquor exporters. Since 2003, imports in the Philippines -- including U.S. products -- never exceeded 5 percent of total sales of spirits in the country.

According to industry figures cited by the USTR, the U.S. distilled spirits industry contributed to more than $113 billion of economic activity and more than 1.2 million jobs in 2007. Brown-Forman produces Jack Daniel’s whiskey and Southern Comfort.

Today’s request for consultations is the first step in the WTO case. Under the trade arbiter’s rules, the U.S. and the Philippines must now hold talks for at least two months in an effort to resolve the dispute. If consultations fail, the U.S. can ask WTO judges to rule.

To contact the reporter on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net

To contact the editor responsible for this story: Jennifer M. Freedman at jfreedman@bloomberg.net

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