PH still ‘very diplomatic’ on cigar tax case vs Thailand

Published December 31, 2019, 12:00 AM

by manilabulletin_admin


Trade and Industry Secretary Ramon M. Lopez has kept his cool as he sent a very diplomatic letter to his Thailand counterpart on hopes the fellow ASEAN will finally honor its obligation to comply with the ruling of the WTO to remove its discriminatory taxes on Philippine cigarettes.

Trade and Industry Secretary Ramon M. Lopez
Trade and Industry Secretary Ramon M. Lopez

“We’ve written a very diplomatic letter to my Thai counterpart,” Lopez told reporters when asked on the status of the government’s planned trade retaliatory action versus Thailand. He said the letter was sent first week of December. The DTI plans to impose punitive tariff against cars imported from Thailand should it continued to comply.

On Thai’s court’s recent imposition of $40 million fines on Philip Morris Thailand for alleged underdeclaration of its cigarette imports from Philip Morris Philippines, Lopez said the government can use that also as another evidence for Thailand’s continued defiance versus the WTO ruling.

Lopez, however, said the DTI has yet to formally notify WTO of its intention to exercise its right to implement retaliatory measure against Thailand for non-compliance.

Earlier, Lopez said the Philippines would like to wait until the first quarter of 2020 for Thailand to finally remove the discriminatory tax treatment on its tobacco exports in a last ditch effort before the country exercises its trade retaliatory right against the fellow ASEAN country.

“We’ll be done ‘til next year or by January next year we should have something already,” he said noting that will be the last ditch effort to make Thailand comply.

The Philippine Mission to WTO in Geneva has been notified already of the country’s plan to impose safeguard measure against Thailand.

The government is seriously studying a possible trade remedy, most possibly a safeguard duty, on Thailand’s car exports to the Philippines in retaliation to its fellow ASEAN country’s continued refusal to comply with the WTO ruling on cigarette taxes.

Trade and Industry Undersecretary Ceferino S. Rodolfo said the process for retaliatory action can be implemented quickly.

While Lopez supports the review towards the exercise of a retaliatory trade remedy, he stressed, “We have to study well,” noting there will still be negotiation and hopefully Thailand would compensate for the injury caused on cigarette exports.

Rodolfo further said that the Philippine government has followed all the sequencing agreement with Thailand signed in 2012 over the cigarette dispute settlement or DS 371 before the WTO. The Philippines won in all of its cases against Thailand with favorable WTO ruling, but Thailand remained uncompliant.

Under the WTO rules, the Philippines has the right to retaliate. Generally, the complainant may seek suspension of concession or obligation in the same sector in which the violation or impairment was found. However, if the complainant considers it impracticable or ineffective to remain within the same sector, the sanctions can be in a different sector or the so-called sector retaliation.

Rodolfo explained that since the Philippines does not import much tobacco from Thailand, a retaliation on that same product would not do justice to the economic injury caused by Thailand’s illegal imposition of sanctions on the Philippine export.

“That is why we are looking at automobiles because that is our biggest import from Thailand,” he said.

Thailand is Philippines’ number one source of automobile imports. From 2014 to 2018, the Philippines imported 428,000 units from Thailand. These are products covered under HS Codes 8703 and 8704 or the tariff lines for automobiles used for the transport of persons and goods. The country’s third biggest import from Thailand is rice.

“We are seriously calculating retaliatory rights on automotive product exports from Thailand,” said Rodolfo. Under the ASEAN Trade in Goods Agreement, automotive products produced within the region and traded among the 10 ASEAN member countries have zero duty.