Apparently the Philippines has a USD3 billion market for liquor which the United States and European Union are salivating over. Now under a ruling by the Geneva-based World Trade Organisation, the Philippines will be forced to lower taxes on imported liquor. Before the ruling, local distillers enjoyed a tax regime favourable to them even as imports of competing foreign products vied for the lucrative market in an environment disadvantageous to these…
The Philippines applies a lower tax rate on sugar and palm- based drinks produced within the country. Levies on foreign spirits in some cases may be almost 50 times higher than those on domestic liquor, according to the EU. The Philippines should revise its tax to meet its WTO obligations, a panel of judges said in a ruling posted on the trade arbiter’s website.
“We urge the Philippine government to comply swiftly with the panel’s recommendations and rulings, and level the playing field for our exports immediately,†U.S. Trade Representative Ron Kirk said yesterday in a statement.
Many proponents of “open markets” will undoubtedly laud the ruling citing a need for Philippine industries to “step up” to global standards and “compete” on a “level playing field.”
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Trouble is, the leveledness of this “playing field” depends on which side of the equation you happen to be situated in. For multinationals with the scale and size to engulf entire markets with products that appeal to the renowned colonial mentality of Filipinos, that USD3 billion bonanza is pretty much in the bag.
Then again one would argue that Philippine industry will benefit from pressure to compete in the world market. But then is there a need to do so in the case of local liquor producers considering that there already is a $3 billion domestic market in which to do business in?
And here we are talking the talk about the urgency to “create” employment for Filipinos. Fact is, the only employment that will be created out of this bind the Philippines finds itself imprisoned in in the name of “world trade” freedom is American and European jobs.
As always the Golden Rule applies:
He who has the gold makes the rules.
benign0 is the Webmaster of GetRealPhilippines.com.
Except in this case, the large-scale multinationals have formidable competition in this particular little arena from the likes of San Miguel. I don’t think this is as big a problem for the local industries as they make it out to be — the enormous proportion of their revenue is earned on the backs of low-end products and the lower end of the market, rather than on the premium stuff.
True. According to the report, the Philippines is using that basis in its appeal to the WTO, saying that these imported spirits do not compete for the same market with local products.
Makes perfect sense that the first market we’d really open up to are the ones that fuel the very things that keep us behind.
Frank, I couldn’t have said it better myself!