Scotch Whisky producers have welcomed a move by the EU which calls for the Philippines to dismantle its longstanding tax discrimination against imported spirits.

The regime, which has existed since 1997, has seen excise tax increase 30% for locally-produced spirits and 50% for imported spirits.

As a consequence EU spirit exports plummeted from EUR48m (US$68m) in 2003 to EUR18m in 2007, according to figures from the European Spirits Organisation (CEPS).

The EU has raised the issue repeatedly in recent years without success, and said this week it hopes to use a World Trade Organisation consultation process to arrive at a "mutually satisfactory solution".

EU Trade Commissioner Catherine Ashton said: "This long-running problem has prevented EU exporters from competing fairly in the Philippine market, and has led to a sharp decrease in imports of European spirits. I hope that we can still find an amicable solution to this issue through the consultation process."

Martin Bell, international affairs manager at The Scotch Whisky Association, welcomed the Commission's move and said the Philippines' excise regime is a "clear violation of trade rules".

"It is disappointing that the Philippines' Government has not addressed this issue. We have raised our concerns over many years. We hope the EU/Philippines WTO consultations will lead to an early resolution and the introduction of a fully non-discriminatory tax system," he said.

The European Spirits Organisation (ESO) also welcomed the move and said its members have been struggling with the situation for some years.

"The industry hopes the situation can be resolved at the first stage of the WTO dispute settlement process and that the Philippine government will take this opportunity to reform their excise tax regime so that it becomes fully non-discriminatory and in line with its WTO obligations," said Jamie Fortescue, director general of ESO.