RP prepares to defend liquor tax policy vs US, European Union

"This is a battle between David and Goliath and in the battle, it was David who won." This was how Solicitor General Jose Anselmo Cadiz described the liquor tax dispute between the Philippines and the United States (US) and the European Union (EU). The US and the EU have filed separate suits against the Philippines for imposing higher taxes on foreign distilled liquor products and lower taxes on local distilled products. At a news briefing on Thursday, Cadiz said his office will file a pleading next week and he will fly to Geneva, Switzerland, where the World Trade Organization (WTO) is based. The WTO is the adjudicatory body tasked to settle international trade disputes and issues. "I will be leaving for Geneva next week to finalize the submission in coordination with our lawyers," said Cadiz. The oral arguments on the case are set in November, Cadiz said. Banned from discriminating products Citing WTO rules, the US said WTO-member countries are banned from discriminating between foreign and domestic products in imposing taxes. Both the US and the EU want the higher taxes eliminated to level the playing field in the Philippine liquor market. The US claimed that between 2006 and 2008, its exports of distilled spirits averaged more than $1 billion a year but American liquor products only have at least 5-percent of the market share in the Philippines. The EU, on the other hand, said its sales of its liquor products have plummeted since 2005 while sales of Philippine liquor in the country rose. Not the drink of choice of Filipinos Cadiz explained: "These are the taxes imposed on Philippine spirits, which were thought by the United States and the EU as too low, which allegedly gives Filipino products an advantage because European products like scotch and brandies from France will be more expensive and will not be the drink of choice of Filipinos." Cadiz described the case that the US and the EU filed against the Philippines as alleged bullying by powerful nations on a small, developing country like the Philippines. "We will really give them a good fight . We will give it all our efforts to defend the Philippine products, to defend the Filipino nationals before an international body like the WTO," said the solicitor general. "They want to penetrate the Philippine market. I cannot understand why they are suing us. I see this as a battle between David and Goliath. And you know, in that battle, it was David who won," he added. He added that locally-made spirits are cheaper because of low-cost raw materials. "In other words, if your raw materials are expensive, then your inputs and taxes and duties will also be expensive," he said. Cadiz also said that if the WTO decides in favor of the United States and the European Union, there will be negative implications on the Philippines' liquor industry that generates some P50-billion annually. –VVP, GMANews.TV