World Trade Organization favors Phl in cigarette case vs Thailand

MANILA, Philippines - The World Trade Organization (WTO) has ruled in favor of the Philippines in a cigarette export dispute with Thailand, as Bangkok was recommended to bring its inconsistent measures in conformity with its WTO obligations, the Department of Foreign Affairs (DFA) said.

Philippine Permanent Representative to the WTO Manuel Teehankee said in a report to the Department of Foreign Affairs (DFA) that a WTO Panel released on Nov. 15 a report in favor of the Philippines.

The panel said Thailand acted inconsistently with WTO rules in valuing Philippine cigarette exports for customs purposes and in failing to treat imported cigarettes the same way as locally manufactured cigarettes.

Teehankee said the report recommended that Thailand bring its inconsistent measures into conformity with its WTO obligations. 

The report is expected to be adopted by the WTO Dispute Settlement Body, if no appeal is taken by Thailand. Thailand may still appeal this ruling to the WTO’s Appellate Body.

The Thailand Tobacco Monopoly (TTM), which is under the control of Thailand’s Ministry of Finance, is the only company allowed to produce cigarettes in Thailand. All other cigarettes are imported.

A number of actions were taken by Thailand with regard to the importation of cigarettes manufactured in the Philippines beginning August 2006. This has severely affected the competitiveness of these imported products compared to those produced domestically by TTM.

Initially, these actions involved customs valuation practices and subsequently, domestic taxation. 

Informal consultations in the bilateral and ASEAN contexts, as well as two rounds of formal consultations under the WTO Dispute Settlement Understanding, all failed.

At the request of the Philippines, the WTO Dispute Settlement Body established a Dispute Settlement Panel in November 2008. This is in order to examine the Philippine claims that Thailand’s actions constituted practices that were not consistent with, inter alia, the customs valuation agreement, the provisions of GATT 1994, and Thailand’s basic obligations with respect to transparency. – Pia Lee-Brago, Aiza Osorio