PH, Thailand agree to settle cigarette dispute

THE Philippines and Thailand recently agreed to resolve the customs valuation dispute involving Philippine tobacco products, the World Trade Organization (WTO) said.

The WTO in a statement posted on its website said that on June 7, “the Philippines and Thailand signed at the WTO a bilateral Understanding on Agreed Procedures Toward a Comprehensive Settlement of the Dispute in Thailand — Customs and Fiscal Measures on Cigarettes from the Philippines (DS371).”

The understanding was signed by both countries’ permanent representatives to the WTO in Geneva, or ambassadors Manuel A.J. Teehankee and Pimchanok Pitfield.

“The understanding on agreed procedures was negotiated between the two Asean members to be consistent with relevant bilateral treaties, Asean treaties and values, WTO law and agreements including the customs valuation agreement (CVA), WTO dispute settlement body rulings and recommendations, as well as their domestic laws and regulations,” said the WTO. Asean is the Association of Southeast Asian Nations.

In accordance with the understanding, WTO said both parties agreed to establish a bilateral consultative mechanism, which will serve as a channel for their respective relevant authorities to regularly cooperate and dialogue to build further confidence that will support efforts to reach a comprehensive settlement of DS371.

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“The understanding entered into force on signature by the two parties and may be terminated by either party on 60 days written notice,” said the WTO.

The 14-year cigarette trade dispute stemmed from the Philippines’ allegation that Thailand has been consistently failing to adhere to WTO’s CVA when declaring cigarette exports.

WTO mandates that customs value of imported goods be measured at transaction value or the “price actually paid or payable for the goods when sold for export to the country of importation.”

The concerned cigarette shipments were imported by Philip Morris Thailand Ltd. from its Philippine and Indonesian subsidiaries.

A WTO panel and the appellate body earlier ruled that Thailand violated the CVA and other WTO rules. Thailand was also found to be noncompliant with the new customs valuation measures by WTO.

“This bilateral understanding shows the good faith and strong commitment among Asean partners to resolve their differences and support the WTO’s rules-based dispute settlement system. Thailand and its agencies of government, including its judicial branch, have shown positive progress toward upholding WTO rules and the customs valuation agreement,” Lopez told reporters in a Viber message over the weekend.

Lopez said that in a recent related development, the Thai appellate court also affirmed with finality the acquittal of Philip Morris Thailand employees in a case related to imports of cigarettes from the Philippines.

The trade chief added that the court also reduced civil penalties and other fines, which he said “could have discouraged greater trade between the Philippines and Thailand.”

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