Thai response to WTO tobacco ruling probed

The Philippines is investigating reports that the Thai government has decided to indict executives of Philip Morris (Thailand) for allegedly under-declaring the value of cigarettes imported from the Philippines, as this move will undermine the ruling issued by the World Trade Organization (WTO).

“We have to emphasize that this is not a question of Thailand implementing the recommendations of the Dispute Settlement Body (DSB) of the WTO. The question is whether their actions conform to the WTO rules,” explained Trade Undersecretary Adrian S. Cristobal Jr.

“All member states adhere to WTO rules and we need to make sure that everybody conforms with those rules. We need to seek confirmation if the domestic case, as what has been reported to us, could result in negating a WTO resolution. The  entries that were subject of the WTO ruling should not be included in the domestic criminal prosecution,” Cristobal stressed.

Cristobal was referring to news reports that a Thai state agency, the Office of the Attorney General, has indicted officials of Philip Morris (Thailand) for the alleged under declaration of the value of cigarette imports from the Philippines between 2003 to 2007 in order to evade taxes.

Based on a report posted on the website of Bangkok Post, the alleged under-reporting of the price of imported cigarettes and underpayment of import taxes were expected to have cost the Thai government some 68 billion baht in lost tax revenues.

However, it should also be noted that the WTO Appellate Body had ruled with finality in 2011 that Thailand was unfairly treating cigarette imports from the Philippines between the period August 2006 and September 2007. This meant that the prices declared and taxes paid were in accordance to the rules and policies of the Thai government.

The Philippine complaint to the WTO, which was filed on behalf of Philip Morris Philippines Manufacturing Inc. in 2008, cited the Thai government’s bias against imported cigarette brands, particularly in terms of the customs valuation practices, excise tax, health tax, TV tax, value-added tax regime, retail licensing requirements and import guarantees imposed upon cigarette importers.

According to Cristobal, they have already submitted a set of questions to Thailand, seeking more information regarding the case reportedly filed against Philip Morris.

“Thailand may have complied with recommendations of DSB, but if there is a criminal case invoking entries [of cigarette imports] involved or covered by the DSB ruling, then a conviction will, in effect, negate the WTO recommendations,” Cristobal stressed.

At present, Thailand has complied with nine out of the 10 recommendations set under the WTO ruling, geared at compensating Philip Morris Philippines.

In its November status report, the Thailand delegation to WTO only said that it has “continued to collect information from the relevant Thai agencies in response to the most recent set of questions received from the Philippines regarding aspects of Thailand’s implementation.”

“Thailand will inform the Philippines on a bilateral basis of the status of the responses to those questions. Thailand continues to hope that this process of the informal exchange of information will enable the parties to achieve a mutually satisfactory outcome to this dispute,” the Nov. 15 report further stated.