Press Release
January 16, 2010


CEBU CITY - Sen. Loren Legarda yesterday advocated preferential treatment for developing countries in international trade as she deplored the United States' filing of a complaint against the Philippines in the World Trade Organization (WTO) over its taxes on imported liquor.

Loren said that the Philippines should join other developing countries in pressing for "fair trade" that would "take into consideration the need for poor countries to support local industries in order promote employment and economic sustainability."

Loren cited the US case filed with the WTO, complaining against the Philippine imposition of taxes on imported distilled spirits or liquor from the United States which are higher than those imposed on distilled spirits produced in the Philippines.

The European Union has filed a similar case against the Philippines with the WTO.

Under Republic Act 8240, the Philippine Congress has designated a lower flat rate on spirits produced from the sap of palms such as buri, coconut and nipa, and the juice, sugar and syrup of cane-raw materials used by domestic manufacturers of distilled spirits.

Imported distilled spirits or liquor are taxed at about 10 to 40 times higher than domestic products.

Loren said that if the Philippines should place local and imported liquor on the same tax level, thousands of Filipinos dependent on the manufacture of spirits produced from local raw materials would lose their means of livelihood.

"Also it is immoral to push developing societies like the Philippines to drink more liquor just for the sake of profits for foreign manufacturers," said Loren. "Distilled spirits or liquor are not food, medicine or essential commodities, and may even be harmful to health if taken in excessive amounts," Loren declared. "It is only proper that they should be taxed higher than staple commodities, so as to discourage excessive consumption."

Loren said that if advanced industrial countries like the US and Europe should push people in developing countries to import more liquor from them because of lower cost, they would in fact be contributing to more alcoholism in Third World countries, sapping the health of their people.

"That is why it is acceptable government policy to impose sumptuary or 'sin' taxes on socially prescribed products like alcohol and tobacco in order to discourage their consumption," Loren declared. "On the other hand, efforts are made to favor local products over imported ones because of the recognized higher technology and production process in advanced countries that put local producers at a disadvantage."

Loren said that developing countries should press for "fair trade" rather than "unfettered free trade" in order to level the playing field between the developing countries and the First World countries, and allow developing countries to catch up with the advanced industrial nations.

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