WASHINGTON (Reuters) - The United States and European Union on Monday urged the Philippines to quickly comply with a new World Trade Organization ruling by ending a discriminatory tax system against foreign alcoholic beverages like Jack Daniel's and Spain's Brandy de Jerez.
"Today's panel report confirms that the Philippines' taxes on imported distilled spirits are discriminatory and inconsistent with WTO rules," U.S. Trade Representative Ron Kirk said in statement.
"We urge the Philippine government to comply swiftly with the panel's recommendations and rulings, and level the playing field for our exports immediately," Kirk said.
EU spokesman John Clancy also pressed the Philippines to end the discriminatory tax system "without further ado."
The European Union and United States are the world's No. 1 and No. 2 exporters of distilled spirits, but have been all but shut out of the Philippines, one of the largest markets for alcohol in the Asia-Pacific region.
In separate cases filed at the WTO, Brussels and Washington complained the Philippines had violated global trade rules by taxing foreign alcoholic beverages at rates 10 to 40 times higher than brands made in the Philippines from home-grown materials such as sugar and palm.
The WTO generally bars its members from discriminating between imported and domestic products in their tax regimes.
The United States brought two legal claims against the Philippines' measures, and prevailed on both, USTR said.
Specifically, the panel found the Philippines applies higher taxes to imported alcohol than it does to similar domestic products or to "directly competitive or substitutable" domestic products, USTR said.
"We urge the Philippines to abide by the ruling and quickly replace its current regime with a fair, nondiscriminatory excise tax system," said Peter Cressy, president of the Distilled Spirits Council, a U.S. industry group.
Brandy de Jerez is a grape brandy from the area around Jerez de la Frontera in Andalusia, Spain and is a protected designation that includes its traditional method of production.
"We have been struggling with this issue for a long time, and this is a very positive outcome," she said.