PH presses WTO to act on non-compliance by Thailand with tax ruling on cigarettes
The World Trade Organization (WTO) is now conducting a second review against Thailand on revised request from the Philippines for non-compliance, more than a decade after it ruled that the Thai government should correct the underpayment of taxes and duties involving more than $800 million worth of cigarette imports from the Philippines.
At its meeting on 27 March, the WTO Dispute Settlement Body (DSB) agreed to establish a second panel to determine whether Thailand has complied with a previous WTO ruling regarding Thai Customs and fiscal measures on cigarettes from the Philippines.
A second panel is currently reviewing Thailand's compliance as part of separate proceedings initiated by the Philippines in 2016, the WTO said.
This was in view of the Philippines’ revised request for WTO dispute consultations with Thailand to address Thailand’s compliance with an earlier WTO ruling concerning measures imposed by Thailand on imported cigarettes from the Philippines under Dispute Settlement 371. The request was circulated to WTO members on 26 February this year.
Based on its submission, the Philippines said it regretted that, more than a decade after the duties and tax cigarette dispute was initiated, Thailand had not taken the necessary steps to comply with the WTO rulings.
The Philippines said it regretted that, more than a decade after this dispute was initiated, Thailand had not taken the necessary steps to comply with the WTO rulings on the matter. While Thailand has taken a number of positive steps to remove some of the inconsistent measures, Thailand has also introduced some new measures which are inconsistent with WTO rulings, according to the WTO.
These include new criminal charges against a Thai importer and its employees in respect of 272 entries of cigarettes that cleared Thai Customs between 28 July 2003 and 24 June 2006 as well as notices of assessment for underpayment of taxes and duties for more than $800 million on 1,052 entries imported in 2001-2003.
The revised request also replaces and supersedes the initial request circulated on 6 July 2017, in order to expand the scope of the consultations. In particular, the revised request includes a number of notices of assessment issued by Thailand's Customs authority with respect to imports of cigarettes between 2001 and 2003.
The Philippines said it has been informed by Thai officials that the notices are to be revised and that this was a positive development but that it was necessary to request a panel. The Philippines noted that under a prior understanding between the two countries, Thailand would not object to the Philippines' request.
Thailand said it regretted the Philippines' request but that it would not object, the WTO said. It said the notices of assessment referred to in the Philippines' request for consultations have been withdrawn and thus will not form part of the panel's terms of references.
The DSB agreed to establish the panel. Japan, the European Union, the United States, Australia, the Russian Federation, China, India, Singapore and Indonesia reserved their thirdparty rights.
It could be recalled that on July 15, 2011, the DSB adopted the Appellate Body Report, and the Panel Report, as modified by the Appellate Body Report, in Thailand – Cigarettes (Philippines). In these reports, 14 various Thai measures were found to be inconsistent with provisions of the GATT 1994 and the Customs Valuation Agreement (CVA).
Primarily, WTO said that Thailand acted inconsistently with Articles 1.1 and 1.2 of the CVA by rejecting the declared transaction values for entries of cigarettes imported by the Thailand branch office of Philip Morris (Thailand) Limited ("PM Thailand").
On August 11, 2011, Thailand informed the DST that it intended to comply with its WTO obligations in this dispute, but that it would require a reasonable period of time to do so. Both parties agreed for two reasonable compliance periods, expiring at the latest October 15, 2012.
Further consultations ensued but there was still no compliance on the part of Thailand. This has forced the Philippines requested to request the WTO for the establishment of a review panel on June 29, 2016.