Tax dispute may force EU to buy fewer RP goods

The European Union may buy fewer Philippine-made canned tuna and electronics products to protest Manila’s alleged discriminatory taxes on liquor products. This was announced by Trade Assistant Secretary Jose Antonio Buencamino during the House ways and means committee hearing. “Canned tuna [exports] would be hurt," Buencamino said, referring to the case filed by the EU at the World Trade Organization (WTO). The EU sued the Philippines at the WTO, claiming that Manila discriminated against foreign liquor brands when it adopted a multi-tier excise tax rate. The new rates imposed higher duties on foreign and high-end brands and lower charges on local and cheaper brands. The case may drag on for 15 months and may even reach the WTO’s three-member appellate body if the Philippines’ decides to contest the trade body’s decision. One of the members in the appellate body is Lilia Bautista, a former Filipino trade official. The Department of Trade and Industry (DTI) will have to study the impact should the Philippines refuse to comply with the decision During the same hearing, DTI undersecretary Thomas Aquino warned lawmakers against painting bleak scenarios regarding the case to avoid panic among the affected sectors. Panel chair Rep. Exequiel Javier called the case “unfair," adding that there was no sizeable market of imported distilled spirits in the country. A local group of distillers said that the EU’s claim of discriminatory taxation is without basis. Imported spirits only account for two to five percent of the total Philippine market, the group added. This was confirmed by Jose Romero Salas of the Spanish Chamber of Commerce who said that EU liquor brands do not have a big size of the market. Foreign liquor brands are sold at prices lower than their local counterparts, industry representative Olivia Lim-Aw said foreign liquor brands. A bottle of Alfonso brandy sells at P107 while the locally-produced Napoleon brandy costs P113 per bottle, she said. Moreover, local distillers paid P4 billion in excise taxes in 2008 as against the P36 million paid by exclusive distributors of foreign liquor brands during the same year, she said. The Philippines has sold $8.5 billion worth of products to EU in 2008. Of this figure, $5.85 billion were electronic products while canned tuna exports reached $163.25 million. Coconut oil and apparel exports valued at $412 million and $190 million, respectively, were likewise exported to EU countries in the same period. - GMANews.TV