The Philippines is ready to suspend trade concessions to Thailand, a move that will subject specific Thai exports to additional duties once the extension of the dispute settlement proceedings mediated by the World Trade Organization expires, a Trade Department official said Monday.
“We have to make sure that Thailand understands that at any time, we can trigger the process for this suspension of our concessions vis-a-vis the compliance issue. But we will follow WTO rules,” said Trade Undersecretary Ceferino Rodolfo.
Rodolfo said the WTO was assessing if it could further extend the deadline to give Thailand another chance to comply with the WTO recommendation to end the cigarette issue by giving back what it owed the Philippines when it overtaxed Philippine cigarette exports by nearly $600 million in 2007.
“The Philippines is closely monitoring the progress in the facilitator-led process being undertaken in Geneva to try to formulate a comprehensive decision to the Dispute Settlement 371 compliance issues of Thailand. However, the Philippines remains ready to, following WTO procedures, initiate the process of suspension for concessions. In particular, there are domestic processes that have taken place in anticipation of such event,” Rodolfo said.
The Philippine Tariff Commission held public consultations on Jan. 27, 2021 on the coverage of tariff lines that maybe subject to a suspension of concessions.
About 37 tariff lines, including automobiles, were identified as possible products that may be impacted by an increase in duties.
Rodolfo said the Philippine government needed to be sure that there is no other possible way to have Thailand comply with the WTO regulation, but by recouping the value the Thai government overtaxed Philippine cigarette exports through suspension of concessions.
“I believe we are a decent and basically, a rules-compliant nation. We agreed to facilitator-led proceedings if it will provide a comprehensive solution between us and Thailand. But we want this time-bound. There should be a specific date, and if all else fail, we have to go back to the dispute settlement body of the WTO,” he said.
The Philippines filed a dispute settlement case against Thailand at the WTO in September 2008 to challenge the determination of Thailand’s valuation of taxes on Philippine cigarette exports to Philippine Morris Thailand.
The findings of the WTO were in favor of the Philippines, which Thailand refused to acknowledge until this time, according to the DTI.
The WTO ruled as early as 2011 that Thailand should correct the trade malpractice it subjected the Philippines and Philip Morris Thailand.
“They [Thailand] are not complying with the decisions of the WTO on the DS 371 case. We will suspend $600 million worth of tariff concessions to Thailand,” Rodolfo said.