Of Villar and the WTO's drinking problem

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

At the outset, let it be known that the country is obviously immersed in serious matters and we clearly need a serious leader. Really, would you trust somebody who never had to work for a living in his life, much less had to fight for it, to be the president of our Republic? In these trying times, this crucial time in our nation’s history, we need a psychologically stable, experienced, and capable leader.

We have previously put people in office based on the emotions and passions of the moment and let’s all remember how that turned out: daily blackouts, a falling economy, massacred farmers in Mendiola, increased kidnappings and terrorist attacks, secessionist movements, corruption by relatives and so-called "kamaganaks," and even a president marching to the Senate to ask that US bases be allowed to stay in the country. Do we really want that all over again? Maawa naman kayo sa bayan -- don’t vote with your emotions or sentiment. Don’t vote for some untested spoiled rich kid. Don’t vote merely to vindicate a person or a family. Don’t vote for them. Vote for your country. Vote Villar.

Having said that, focused as we are in the elections, it still must be remembered that the Philippines is in the middle of two significant trade disputes at the WTO. DS371, formally designated as Thailand -- Customs and Fiscal Measures on Cigarettes from the Philippines, and DS396 or Philippines -- Taxes on Distilled Spirits.

DS371 (which includes allegations of Thai discrimination against our cigarettes) involves the provisions of Articles 1 and 4 of the Dispute Settlement Understanding, Article XXII:1 of GATT 1994, and Article 19 of the Customs Valuation Agreement. The report on this should be out anytime soon.

Meanwhile, in the midst of Pascal Lamy’s call for a "cocktail approach" to the Doha dilemma, DS396 involves the EC’s complaint that Philippine excise taxes on distilled liquor (as imposed by RA 9334) discriminate against imports and favors domestic products. In essence, the EC centers its complaint on Republic Act No. 9334 -- An Act Increasing the Excise Tax Rates Imposed on Alcohol and Tobacco Products. Allegedly, the excise tax law imposes considerably lower rates for distilled spirits that are made from indigenous materials, making it contrary to WTO rules.

Also, as expected (considering that the US joined last year’s consultations on the matter), last April 20, 2010, the DSB agreed to the United States’ request for a panel (for the complaint docketed as DS403). In its Request for Panel dated March 29, 2010, the US alleges that the "Philippines taxes distilled spirits at rates that differ depending on the product from which the spirit is distilled. Distilled spirits produced from certain materials that are typically produced in the Philippines are taxed at a low rate. Other distilled spirits are taxed at significantly higher rates (for example at a rate that is approximately from 10 to 40 times higher than the rate for the domestic product). The tax rate also depends on whether the product from which the spirit is distilled is produced commercially in the country where it is processed into distilled spirits." Thusly, according to the US, "Philippine measures appear to be inconsistent with the first and second sentences of Article III:2 of the GATT 1994."

In instances where more than one WTO member requests the establishment of a panel related to the same matter, a single panel may be established to examine these complaints taking into account the rights of all members concerned. Single panels are actually encouraged to examine such complaints whenever feasible. Nevertheless, such panel shall organize its examination and present its findings to the DSB as if separate panels examined the complaint. The written submissions by each of the complainants shall be made available to the other complainants, and each complainant shall have the right to be present when the other complainants make their arguments. When a dispute is between a developing country member and a developed country member the panel shall, if the developing country member so requests, include at least one panelist from a developing country member. As reported by the WTO, "The US, the Philippines and the EU agreed that the panel established on 19 January 2010 to review the EU complaint on the same issue will also examine the US complaint."

Also, as in the case of DS396, several countries (including China, India, and Thailand), have indicated interest in the case as "third parties." A third party is any WTO member having a substantial interest in a dispute. It could eventually morph into a complainant in its own right and in such case the dispute shall be referred to the original panel wherever possible.

All this just emphasizes the following undisputable facts: we are in serious situations that have serious consequences, faced against serious foreign countries. Vote, therefore, for a serious, capable, experienced, purposeful, and stable leader. Vote for your country. Vote Villar.