Thais get more time to comply with WTO ruling

Due to recent political developments in Bangkok, the Philippines has given Thailand more leeway to fully comply with a ruling concerning taxes imposed on imported cigarettes, which was issued by the World Trade Organization three years ago.

“We’re still in bilateral talks with Thailand. But they have promised to do certain things and we’re waiting for the results of that. We’re also quite conscious of what has been happening in Thailand for the past several weeks. So as neighbors, as fellow Asean members, we took that into consideration,” explained Trade Undersecretary Adrian S. Cristobal Jr.

“Now that there’s a new government, we’re assessing again our options and we are reserving that [right to seek for forced compliance before the WTO]. We gave them the benefit of the doubt with the political transition of the new government,” he added.

Based on news reports from Thailand, the country is now under the leadership of Prime Minister Prayuth Chan-o-cha, who came into power after the May 22 military coup. Thailand has been under Martial Law since late May, following months of political unrest, reports further stated.

“Let’s wait for their latest response. We’re giving them a little more time, although we cannot wait endlessly. This is just out of consideration to the political developments in Thailand, now that they have a new government,” Cristobal further said.

The WTO Dispute Settlement Body, however, will still tackle in a meeting Friday this week the country’s concerns over Thailand’s compliance to the customs and fiscal measures on cigarettes imported from the Philippines.

It can be recalled 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.

But the issue currently being raised by the Philippines concerned the move made by a Thai state agency, the Office of the Attorney General, to indict 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. The Philippines thus began investigating last year such reports, to assess if the actions of the Thai government conform with or undermine the 2011 ruling issued by the WTO.

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 revenues, the Bangkok Post had reported last year.