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Thai response to cigarette case with WTO ‘insufficient’

By: - Reporter / @amyremoINQ
/ 12:06 AM May 12, 2014

The Philippines will reserve its right to seek forced compliance before the World Trade Organization if Thailand fails anew to clarify the reported indictment of Philip Morris Thailand officials.

The indictment, which involved the Philip Morris’ alleged under declaration of cigarette imports from the Philippines between 2003 to 2007, is being viewed by local state officials as one that can undermine the three-year old WTO ruling that found Thailand to be unfairly treating cigarette imports from the Philippines.

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“[We will] continue bilateral talks but [we’ll] reserve our right to formal proceedings,” Trade Undersecretary Adrian S. Cristobal Jr. said in an interview.

Cristobal was referring to compliance proceedings, which will allow the Philippines to seek a formal process under the WTO for the enforcement of a ruling. The only process that the Philippines has undertaken with Thailand so far is a bilateral engagement.

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The Philippines has been seeking from Thailand more information regarding reports that a Thai state agency, the Office of the Attorney General, indicted officials of Philip Morris Thailand for the alleged under declaration of the value of cigarette imports from the Philippines between 2003 and 2007 in order to evade taxes.

Based on a previous 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 Thailand government some 68 billion baht in lost tax revenues.

However, it should also be noted that the WTO Appellate Body 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.

It was only last month that Thailand was able to complete the request of the Philippines. In its April status report to WTO, Thailand said that it has already “provided the last outstanding responses to the Philippines’ requests for information with respect to Thailand’s implementation.”

“Thailand remains available to continue discussions with the Philippines on a bilateral basis on any other issues of concern to the Philippines,” the report added.

Cristobal, however, declined to provide a preliminary assessment, noting that they are still “evaluating with our mission in Geneva the information given by Thailand.”

The provision of these items of information, however, does not necessarily mean that Thailand has already fully complied with the measures set by the WTO to compensate a local cigarette maker, which was affected by the Thai policy.

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“We do not consider Thailand in full compliance with the WTO Dispute Settlement Body. We just received replies to questions on [Thailand’s Board of Appeals] rulings. We are assessing them,” Cristobal told the Inquirer.

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.

Thailand, however, has yet to fully comply with all the measures provided by the WTO ruling.

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