PH lists 37 Thai exports that may lose tariff concessions

Published January 14, 2021, 7:00 AM

by Bernie Cahiles-Magkilat

The Philippines’ Tariff Commission (TC) has set a public hearing on wide ranging product categories totaling 37 tariff lines, including rice, corn, cars, motor vehicle parts, chemicals, and cement imported from Thailand which tariff concessions may be suspended in retaliation to Thailand’s refusal to align the cigarette tax it imposed on Philippine tobacco.

In a notice of public hearing, the TC said it will conduct a public hearing via videoconferencing on January 27 at 10 am on the proposed list of products for suspension of concessions in relation to

Thailand’s refusal to comply with the WTO order to align the taxes it imposed on Philippine cigarettes to its local tax rates (DS371 Thailand-Customs and Fiscal Measures on Cigarettes from the Philippines).

Based on its notice, the product coverage of the hearing includes AHTN 2017 Code. Notably, the product coverage includes tariff lines 8701.92.10; 87.03;87.04; 8708.99.21; 8708.99.99; and 8714.10. Items covered are agricultural tractors; motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02); motor vehicles for the transport of goods; fuel tanks and other parts and accessories of motor vehicles; parts and accessories of motorcycles (including mopeds).

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.  ASEAN countries allow duty-free importation of cars produced in the region.

Some agricultural products such as maize (corn); semi-milled or wholly milled rice; soya-bean oil and its fractions; mixed condiments and mixed seasonings; and non-dairy creamer are also identified as among those that could lose tariff concessions. These products are under tariff lines 1005.90.90; 1006.30.99; 1507.90.90; 2103.90.29; and 2106.90.30. The country’s third biggest import from Thailand is rice.

Also included are tariff lines 6809.19.90; 7207.11.100; 7408.11.10; 8415.82; 8418.10.19; 8433.51.00; 8473.30.90; 8479.90;8482.10.00;8482.80.00; 8501.10; 8542.39.00; 8542.90.00; and 8544.49.21. Product coverage are boards, sheets, panels, tiles and similar articles of plaster or of compositions based on plaster, not ornamented; semi-finished products of iron or non-alloy steel; wire of refined copper; air conditioning machines incorporating a refrigerating unit; combined refrigerator-freezers; combine harvester-threshers; parts and accessories suitable for use solely or principally with the machines of heading 8471; parts of machines and mechanical appliances having individual functions; machine parts and mechanical appliances ball or roller bearings, electric motors; electronics integrated circuits; and shielded wire for use in the manufacture of automotive wiring harness.

 Also in the list of products that could lose tariff free concessions are white cement; lubricating oils; monosodium glutamate; medicaments; face or skin creams and lotions; preparations for use on the hair; dentifrices; polyethylene; plates, sheets, film, foil and strip of plastics of chemical derivatives of natural rubber; supplementary feeding system for babies, of plastics; new pneumatic tyres of rubber; rubber grommets and rubber covers for automotive wiring harnesses. These products are under tariff lines 2523.21.00; 2710.19.43; 2922.42.20; 3004.90.99; 3304.99.30; 3305.10.90; 3306.10.90; 3901.20.00; 3921.90.30; 3924.90.30; 4011.10.00; 4011.20.10; and 4016.99.54.

 Interested parties are encouraged to submit position papers to the Commission’s website.

In February last year, the Philippines requested the WTO for retaliation authority against Thailand to force it to align its tax treatment on the country’s cigarette after WTO’s first favorable ruling in 2011 and winning subsequent appeals from Thailand. Specifically, the Philippines requested the WTO a suspension of concessions covering $594 million in trade. This was, however, met with some technicalities regarding the composition of the WTO Appellate Body, resulting in the suspension of the meetings of the Dispute Settlement Body.

“We will wait for WTO to give us that authority,” said DTI Secretary Ramon M. Lopez earlier. How long the wait is something Lopez cannot tell. It took more than a decade for the Philippines to finally flex its muscle over Thailand’s continued refusal to obey with the WTO ruling cigar tax ruling under WTO DS 371 case.

The cigarette tax dispute started in 2008 when the Philippines, on behalf of Philip Morris Philippines Manufacturing Inc., asked the WTO panel to look into the discriminatory tax treatment the Thai government imposed on imported cigarettes, particularly on customs valuation.

The case has dragged on for a total of 12 years on Thailand’s delaying tactics, affecting the country’s cigarette exports and local tobacco industry.

Earlier, Trade and Industry Undersecretary Ceferino Rodolfo, who led an inter-agency Philippine Panel that successfully defended the country’s trade and economic policies before 164 WTO Members during the Philippines’ 5th Trade Policy Review in Geneva on Feb 26-28, 2020 said “The Philippines has and will exercise its rights and uphold the interests of Filipinos and of Philippine-based enterprises; and in the process, demonstrate that the WTO works.”

The exercise of a legal trade measure is a unilateral right of a WTO member country.

Rodolfo noted that while the world has been witnessing countries that resort to unilateral bilateral trade measures and retaliations, the Philippines even sought WTO’s authorization to exercise its rights over a dispute that can already be considered a saga starting in 2007.