Thailand slaps import tax on RP firm’s liquor shipments

Thailand has decided recently to slap import taxes on the liquor shipments of Diageo Philippines, a local liquor firm which distributes and exports international liquor and beverage brands of spirits, wines and beers such as Gilbey’s, Hennessy Cognac, Cuervo, Johnny Walker, Smirnoff, Baileys, J&B, Tanquerat, Moet & Chandon, B&G and Spey Royale Whisky.

Thailand’s Rules of Origin Committee had ruled that the 15 shipments of Spey Royale Whisky were not eligible for the special AFTA (ASEAN Free Trade Agreement) tariff rate of five percent and must instead pay the Most Favored Nation (MFN) tariff rate of 61 percent.

The Philippine government, on behalf of Diageo Philippines, however, is arguing that while the liquid raw material comes from Scotland, the concentrate is further processed, bottled and packaged in the country and complies with the 40 percent ASEAN content threshold.

Philippine trade officials complain that Thailand’s treatment of the liquor case is not consistent with the rules of origin commitment under AFTA and the existing trade relations within ASEAN.

As such, the Philippines warned, the standoff may not only derail the benefits of ASEAN trade liberalization, but also cast doubt on the credibility of the ASEAN Free Trade area as a rules-based regional institution.

The Philippines, according to Trade Undersecretary Thomas Aquino, is determined to pursue the case.

The Philippines’ export of alcoholic beverages to Thailand increased from only $1.741 billion in 2002 to $36.34 million in 2003, for a percentage increase of 1,986.15 percent.