Manila has given Bangkok until October 2012 to comply with the ruling of the World Trade Organization (WTO) on the discriminatory tax treatment of Philippine-made tobacco in Thailand.
Trade Secretary Gregory L. Domingo said this came out in the discussions between the two countries to determine the reasonable period of time for Thailand’s compliance with the WTO recommendations.
“The Philippines and Thailand mutually agreed to a reasonable time frame for Thailand to comply with the ruling of the WTO. This agreement reflects the effectiveness of the multilateral trading system in resolving trade issues to expand global trade,” Domingo said.
During that period, Domingo said Thailand will have to meet certain rulings of the dispute settlement body by May 15, 2012, and the rest by October 2012. This was based on the consultations conducted by the DTI with the Technical Committee on WTO Matters, external counsels, and affected private industry on the time frame.
The WTO appellate body, in its final ruling in June, determined that Thailand acted inconsistently with the WTO rules in valuing Philippine cigarette exports for customs purposes and failed to treat imported cigarettes the same way as locally manufactured cigarettes. This led to the discussions between the two countries on the time
frame. The dispute settlement body, Domingo said, will monitor the implementation of the recommendations and rulings until the issue is resolved and will discuss this in its meetings, the first of which will be held six months after the time frame has been established.
“We recognize the importance of the WTO in upholding equitable, transparent, and mutually acceptable principles in the global trading system. Employment and investments in the tobacco industry are more secure now that both countries have agreed to a reasonable period of time on implementing the ruling,” Undersecretary for Industry Development and Trade Policy Adrian S. Cristobal Jr. said.
The WTO ruling, he said, was 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 brought to the attention of the WTO the discriminatory treatment of its tobacco exports in Thailand in 2008.
The Philippines is a cigarette exporter to Thailand. In 2010 the Philippines holds an estimated two-fifths share of the Thai domestic cigarette market. Local exporters place the value of the Philippines’s current share of the $849-million Thai domestic cigarette market at around $200 million.
Data from the Bureau of Export Trade Promotions showed that tobacco exports amounted to $266 million in 2010. The country’s tobacco markets include Germany, Hong Kong, Singapore, the United States, Russia and Japan, among others.
