8. The Philippines maintains that the text of, and jurisprudence on, Article III:2 of the GATT 1994 make clear that this treaty provision does not prohibit the application of differential taxes to products that are not “like” or “directly substitutable”, both because of their different physical characteristics and because their price is well beyond the means of the consumer. The Philippines claims that the Panel made a number of legal errors relating to the interpretation and application of this provision. According to the Philippines, the Panel's errors in this case are not a matter of failing to weigh the evidence correctly, but that the Panel misinterpreted the relevance of the evidence, and in certain instances ignored evidence, because it was applying the wrong legal standard.

9. In the view of the Philippines, the Panel treated this dispute as simply another Article III:2 trade dispute involving distilled spirits. In this respect, the Philippines argues, the Panel failed to recognize important differences in this case, which have consequences for the interpretation and application of Article III:2 in a manner that is faithful to its text and its object and purpose. The Philippines explains that the challenged measure makes no distinction based on the country of origin of the products. The specific tax provided for under Section 141(a) of the Philippines' National Internal Revenue Code of 1997 (the “NIRC”) applies to distilled spirits produced from the designated raw materials (provided that such materials are produced commercially in the country where they are processed into distilled spirits), while distilled spirits produced from any other raw material are taxed at the specific tax levels provided for under Section 141(b) of the NIRC.