The Philippines has expressed its preparedness to defend itself once the two giant economies, European Union and the US, decide to pin down this developing economy before the World Trade Organization (WTO) over the tax issue on distilled spirits even as the country has urged for further dialogue to settle this trade dispute.

This was stressed by Philippine Ambassador to Geveva/WTO Manuel AJ Teehankee on Wednesday’s consultations for DS 396 (Philippine taxes on distilled spirits) held here with the complainants EU and the US.

During the consultation, the EU was represented by Jean Francois Brakeland, head unit – legal aspects of trade policy European Commission Directorate General for Trade while the US by Jenifer Neidhart de Ortiz, trade and investment officer of the US embassy in Manila. The private sector was represented by the Distilled Spirits Association of the Philippines headed by Olivia Limpeaw as an observer.

“The Philippines is cooperating in the dialogue and believes this matter should be subject of further dialogue but we are also prepared to defend our position if EU decides to proceed before the WTO by filing a formal case against us,” Teehankee told reporters after the consultation.

“Our laws if they fully understand it, a closer look at the products involved, their price ranges, and the consumers they cater to, will show that the products coming from the EU are in an altogether different market from those catered to by our local brands,” Teehankee said.

Actually, Teehankee said, the ball is now in the hands of the EU, as the primary complainant, to continue the consultation or terminate it and proceed with a case with the WTO.

But Teehankee also stressed that the dialogue is an important first step and allows both sides to explore all avenues toward a constructive solution and avoid a protracted litigation at WTO.

“The Philippines believes that this matter can be resolved to the mutual satisfaction of all the parties if the respective interests, legitimate sensitivities and policy objectives of all sides are taken into account to balance our respective interests,” Teehankee said during his opening statement at the consultation.

Teehankee cited EU Trade Commissioner Catherine Ashton’s speech on the occasion of the European Union’s settlement of its complaint with Uruguay over the latter’s taxes on imported spirits where she stressed that, “The focus of EU trade policy is to create real benefit for businesses, workers and consumers without having to resort to WTO litigation.”

Teehankee also noted that consultations between WTO members, held under the auspices of the Understanding on the Rules and Procedure Governing the Settlement of Disputes, are to “give special attention to the particular problems and interests of developing country members.”

Teehankee also reminded these giant economies of the mandate of the Doha Declaration whereby members shall continue to make positive efforts to ensure developing countries, especially the least developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development.

“Without doubt, the Philippines noted with appreciation that the EU has been a strong supporter of attempts to ensure that the Doha Round reflects the realities and concerns of developing countries. Thanks to this advocacy, the Doha negotiations have rejected a “one size fits all” approach and have introduced a wide flexibility to address the particular capacities and needs of different developing countries,” Teehankee said in his speech.

But, should EU proceed to file a formal charge before the WTO a legal panel has to be formed soon to review the case.

The legal panel will have to conclude if the tax measure of the Philippines on distilled spirits is violative of WTO rules or not.