PH may turn to world body to force Thailand’s hand

The Philippines may be forced to turn to a world body to compel Thailand to compensate a local cigarette maker.

The case stemmed from a complaint filed by the Philippines on behalf of Philip Morris Philippines Manufacturing Inc. and submitted to the World Trade Organization.

In their complaint, Manila officials claimed that the Thai government had been unfair in dealing with imported cigarette brands, particularly in terms of its customs valuation practices, excise tax, health tax, TV tax, value-added tax regime, retail licensing requirements, and import guarantees imposed on cigarette importers.

In 2011, the appellate body of the World Trade Organization (WTO) ruled in favor of the Philippines and declared that Thailand was unfairly treating cigarette imports from the Philippines.

Now, Thailand has to explain why it has complied with only nine out of the 10 measures set out under the WTO ruling.

This explanation, which concerns customs evaluation, is expected by November this year, according to Trade Undersecretary Adrian S. Cristobal Jr.

If the Philippines were to find Thailand’s explanation to be less than satisfactory, then it would seek the WTO’s help to compel Thailand to comply with the ruling.

“We’ll know by November [this year] whether or not to pursue the compliance proceedings because we are still waiting for the answers of Thailand. That will determine our position. If the Philippines is not satisfied with these answers, we will push through with the compliance proceedings,” Cristobal said in an interview last week.

According to the trade official, the compliance proceedings is a formal WTO process to enforce a ruling.

At present, the Philippines has only a bilateral engagement.

According to an earlier Inquirer report, the Philippines claimed that the measures were administered in violation of GATT 1994 Article X 3a.

Philip Morris cannot go straight to the WTO to file a complaint. Only governments are allowed to do that on behalf of businesses that are operating in their countries.

Thailand has so far been granted a two-pronged reasonable period of time (RPT) to implement the WTO ruling covering the dispute.

The 1st RPT involving VAT measures ended on Oct. 15, 2012, while the RPT for the other measures, including those involving the WTO Customs Valuation Agreement, ended in May 2012.

Since the expiration of the RPTs, Thailand and the Philippines have engaged in bilateral discussions in Geneva through a series of WTO missions.

Two meetings were likewise held in Bangkok, the most recent of which was in May this year.

The ruling of the World Trade Organization was considered a landmark decision, being the first to describe in detail how the WTO rules on customs valuation should be applied, particularly when the transaction value is rejected by customs authorities and customs value is to be established.

The Philippines’ cigarette case with Thailand dates back to 2008.

The Philippines requested consultations, filed a dispute settlement case, and won the case.