1 - INTRODUCTION

Summary

The Philippines and the European Union each appeals certain issues of law and legal interpretations developed in the Panel Reports, Philippines – Taxes on Distilled Spirits (the “Panel Reports”). The Panel was established to consider complaints by the European Union and the United States regarding the consistency of the Philippines' excise tax regime applicable to distilled spirits with Article III:2, first and second sentences, of the General Agreement on Tariffs and Trade 1994 (the “GATT 1994”).

Pursuant to a joint request from the European Union and the United States, the Panel issued its findings in the form of a single document containing two separate reports with common descriptive and analytical sections but separate conclusions and recommendations for each complaining party, each of which bears only the document symbol for that report. The Panel Reports were circulated to Members of the World Trade Organization (the “WTO”) on 15 August 2011.

Before the Panel, the European Union and the United States claimed that the Philippines has acted inconsistently with Article III:2, first and second sentences, of the GATT 1994, in applying different tax treatment to distilled spirits produced from the sap of the nipa, coconut, cassava, camote, or buri palm, or from juice, syrup, or sugar of the cane (“designated raw materials”), and to distilled spirits made from other raw materials (“non-designated raw materials”). For the reasons set out in its Reports, the Panel found, in relation to the complaint by the European Union, that the Philippines has acted inconsistently with its obligations under Article III:2, first sentence, of the GATT 1994.