. /.  RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/281 
28 May 2010 
 (10-2966) 
Dispute Settlement Body 
8 April 2010  
 
 
   
MINUTES OF MEETING 
 
Held in the Centre William Rappard
 
on 8 April 2010  
 
Chairman:  Mr. Yonov Frederick Agah (Nigeria) 
  
1. Philippines – Taxes on distilled spirits 
(a) Request for the establishment of a panel by the United States (WT/DS403/4) 
1. The Chairman
 drew attention to the communication from the United States contained in 
document WT/DS403/4, and invited the representative of the United States to speak. 
2. The representative of the United States  said that his country had been concerned with the 
Philippine excise taxes on distilled spirits for many years.  The Philippines taxed distilled spirits at 
different rates depending on the product from which the spirit was distilled.  Spirits distilled from 
products typically produced in the Philippines were taxed at a low rate, while other distilled spirits 
were taxed at rates from approximately ten to 40 tim es higher.  As had been described in more detail 
in the US panel request, the Philippine taxes on distill ed spirits did not appear to tax imported distilled 
spirits and directly competitive or substitutable domestic distilled spirits similarly.  The taxes 
appeared to be applied in a way th at afforded protection to domestic production.  In addition, the taxes 
appeared to subject imported distilled spirits to internal taxes in excess of  those applied to like 
domestic products.  The taxes thus appeared inc onsistent with the first and second sentences of 
Article III:2 of the GATT 1994.  The United States had raised its concerns with the excise tax and its 
effect on market access with the Philippines many ti mes but, regrettably, without resolving them.  
Accordingly, the United States requested that the DS B establish a panel to examine the matter set out 
in its panel request, with standard terms of refe rence.  The United States urged the Philippines to 
address the concerns that had been raised, and hope d that the Philippines would take action soon to 
level the playing field for imported and dom estic spirits in the Philippine market. 
3. The representative of the Philippines  said that his country regrette d that the United States had 
chosen to request the DSB to establish a panel in  this matter, given the Philippines' constructive 
engagement towards clarifying its excise tax regi me on distilled spirits.  The Philippines was fully 
committed to a rules-based multilateral trading system  and, being fully conscious of its obligations 
under the WTO Agreements, was confident that its exci se tax regime would be determined to be fully 
consistent with its WTO obligations.  The Philippin es wished to reiterate th at, as fellow Members of 
the WTO, it shared with the United States the comm on vision of economic de velopment, growth and 
trade liberalization that was rooted in a fair, non-discriminatory, transparent and predictable 
regulatory environment in which economic opera tors from both countries could prosper.  The 
Philippines hoped that this matter could still be resolv ed to the mutual satisfaction of all the parties if WT/DSB/M/281 
Page 2  
 
  the respective interests, legitimate sensitivities, a nd policy objectives of all sides were taken into 
account to balance their respective interests.  Th erefore, the Philippines believed that establishing a 
panel at the present meeting would be premature, a nd was thus not able to agree to the establishment 
of a panel at that time. 
4. The representative of the European Union
 said that her delegation regretted that the 
consultations between the Philippines and the United States had not provided any indication that this 
long-standing discrimination could be remedied an y time soon.  The EU could only support the US 
request for the establishment of a panel, which follo wed a similar request by the EU that had resulted 
in the establishment of a Panel on 19 January 2010.  The EU noted that this was a case of a long-
standing tax discrimination that had only worsened over the years.  Currently, imported spirits were 
subject to an excise tax ten to 50 times higher th an the tax imposed on domestic spirits.  This had 
prevented EU spirits producers from benefiting from the growing demand for spirits in the Philippine 
market.  Furthermore, as estimated, the EU exports  to the Philippines more than halved between 2004 
and 2007, as a result of the increasing discrimination.   The EU believed that the Philippines excise tax 
regime was in clear violation of Article III:2 of  the GATT 1994 and was confident that the panel 
would confirm that. 
5. The DSB took note  of the statements and agreed  to revert to this matter. 
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