(from BusinessWorld 9 August 2010)
GENEVA -- The Philippines has welcomed a ruling by the World Trade Organization on its complaint over Thai taxes on imported cigarettes, suggesting that Manila has won the dispute with its southeast Asian neighbor.
The case turns on "customs valuation" -- the value put by customs officials on imports which can differ from that declared by the importer, and is often a source of trade disputes.
Manuel Teehankee, Philippine ambassador to the WTO, declined to comment specifically on the outcome of the case or even say whether Manila had won, because the ruling is still confidential while the WTO panel’s report is translated into the trade body’s official languages.
But Mr. Teehankee said in a statement: "The Philippines is satisfied with the findings and rulings of the panel which strengthen the rules-based multilateral trading system, and addresses Philippine concerns regarding the treatment by the Thai government of Philippine cigarettes exports."
No comment was immediately available from Thailand’s WTO mission in Geneva.
If the panel report indeed favors the Philippines, it will -- as with those for other disputes -- likely require Thailand to reverse measures that are inconsistent with the World Trade Organization’s rules, Jeremy I. Gatdula, Ateneo Law School professor for international economic law, said in a telephone interview yesterday.
A timeframe for correcting the trade measures will be up to the two parties to work out, said Mr. Gatdula who was one of the lawyers that provided assistance to the Philippine team.
"As far as we are concerned, we believe our position is meritorious," Mr. Gatdula said.
"Anyway, we should look at disputes more positively as a way of managing relations rather than just creating hostility.
"[A panel decision] will allow us to move forward with our relations with Thailand which has been a great trading partner," he added.
Mr. Teehankee said a series of customs valuation and domestic taxation measures starting in 2006 had undermined the competitiveness of imported cigarettes against those produced by the state-controlled Thailand Tobacco Monopoly.
This hurt Philippine exporters such as the local operation of Philip Morris International as well as tobacco growers in the archipelago.
Thai customs stopped accepting the transaction value declared by importers and set their own higher valuation as a basis for import duties. They also calculated a higher value-added tax for imported cigarettes, Philippine officials said.
The Philippines complained to Thailand that these measures were discriminatory and broke international trade rules.
After consultations between the two states to resolve the matter the WTO set up a panel in 2008 to rule on the dispute.
The report, which has been issued confidentially to the two parties, will be published in a few weeks, after which both sides have 60 days in which to appeal. -- Reuters with a report from Jessica Anne D. Hermosa