WTO panel says liquor tax ruling out in June 2011

Business World

A DECISION on the United States’ and the European Union’s complaint against Philippine liquor taxes will be issued in June, a World Trade Organization (WTO) panel said in a communique.

The statement was released to comply with procedural rules requiring the panel to commit to a deadline in case it isn’t able to meet a six-month timetable.Reasons for the delay were not stated.

"The timetable adopted by the Panel after consultations with the Parties to the dispute envisages that the final report shall be issued to the Parties by June 2011," the communique, dated Dec. 16, states.

WTO rules mandate that a panel report be circulated to all members of the trade body three weeks after it is issued to the concerned parties. The report becomes a ruling within 60 days unless the entire WTO membership rejects it or an appeal is filed. The parties will also have to agree on a compliance period before results can be seen.

The statement came as the panel should have issued a final report to the concerned parties, "as a general rule", within six months from when it was formed back in July 2010.

The panel was convened at the request of the US and the EU which claimed that the Philippines’ National Internal Revenue Code discriminated against imported liquor.

But Manila, which levies lower specific taxes on spirits distilled from coconut and sugarcane, has argued that the tax rate was based on "objective criterion of raw materials and not on whether the products are domestic or imported".

The three parties submitted written rebuttals last week after participating in an oral hearing in November.

Sought for comment, a group representing Philippine distillers said its members were anticipating the decision as uncertainty surrounding the case was making it hard to plan business strategies.

"When you have this situation, the industry can’t be as aggressive. It prevents the industry from expanding in a big way because you don’t know what’s going to happen," Distilled Spirits Association of the Philippines President Olive Limpe-Aw said in a telephone interview yesterday.

The industry group, she said, was "confident" a favorable decision would be handed down.

"If the decision is not favorable, we will have an appeal process," Ms. Limpe-Aw said. -- J. A. D. Hermosa