Trade official cites ‘outstanding issues’ with Thailand
Posted On: July 8, 2014
THE GOVERNMENT is still awaiting assurance from Thailand that a World Trade Organization (WTO) ruling on cigarette taxation issued in favor of the Philippines will not be invalidated by an ongoing tax evasion case there.
Asked to comment on a status report submitted by Thailand to the WTO last June 5 regarding that country’s compliance with a 2011 ruling on taxes on imported cigarettes, Trade Undersecretary Adrian S. Cristobal, Jr. replied: “We disagree. There are still outstanding issues.”
Bangkok, in its status report, said: “Thailand has no further actions outstanding to implement the recommendations and rulings of the DSB (dispute settlement body) and, therefore, has nothing further to report at this time.”
Mr. Cristobal, however, said Bangkok has yet to guarantee that an ongoing tax evasion case against Philip Morris Thailand, which covers the period in the Philippines’ case against its neighbor, would not negate the WTO decision.
“We’re still waiting for more information [from Thailand regarding] customs transactions in the WTO ruling in the case the Thai government intends to prosecute,” he said.
“We want to make sure the victory we had at the WTO would not be rendered inutile by a domestic ruling.”
In 2011, the WTO, acting on a complaint filed by the Philippines on behalf of Philip Morris Philippines Manufacturing, Inc. (now Philip Morris Fortune Tobacco Corp.) in 2008, ruled that Thailand granted less favorable treatment to imported cigarettes from 2002 to 2003 by exempting domestic cigarettes from administrative requirements like filing tax returns, filing revenue and expense reports, and related sanctions for failure to report.
To comply, the Geneva-based organization said Thailand had to, among others, implement a general rule for customs valuation of imported cigarettes; use the same computation for the maximum suggested retail prices of both imported and locally made cigarettes; and establish independent review tribunals or processes for the prompt review of customs valuations.
The original deadline for the reforms was October 2012 but the Philippines allowed Thailand some leeway as some changes may require legislation.
Bilateral meetings between the two countries over Thai compliance with the WTO ruling have been ongoing since May last year.
However, another obstacle to resolution was the tax evasion case filed by Thailand’s Department of Special Investigations against Philip Morris Thailand for allegedly undervaluing its cigarette imports from 2003 to 2007, thereby avoiding about $2 billion in duties and import taxes.
Mr. Cristobal said it is important that this development will not negate decisions made at the WTO.
“If that happens, the WTO decision now becomes useless,” he told reporters last February.
He declined to say, however, if the Philippines would hale Thailand to arbitration should the WTO decision be overturned.
WTO rules allow for further arbitration or the imposition of limited trade sanctions should a country that has won a case feel unsatisfied with compliance by the losing party. — D. E. D. Saclag