The Philippines is considering imposing tariffs on auto imports from Thailand in retaliation for the neighboring country’s non-compliance with a World Trade Organization (WTO) ruling that favored the Philippines involving Philippine cigarette exports.
Department of Trade and Industry (DTI) Secretary Ramon Lopez said they will “try to first convince Thailand” to comply with WTO’s rulings, which include amending Thailand’s customs valuations policy and practices, and withdrawing two criminal charges based on WTO-illegal measures.
“If they would not still comply, then we will be forced to move for the retaliatory,” Lopez was quoted as saying.
Under the WTO dispute settlement system, a member country may impose countermeasures against another member country for non-compliance with the organization’s ruling. Retaliatory measures are usually placed on the same product, but “cross-sector” retaliation is allowed if the complainant considers it impracticable or ineffective to remain within the same sector.
DTI Undersecretary Ceferino Rodolfo said the Philippines does not import a significant amount of cigarettes and tobacco from Thailand, and so chose automotive instead as Thailand is the Philippines’ number one source of automotive imports.
DTI is looking at imposing either tariffs or quantitative restriction (QR) as options for its retaliatory measure, but is leaning more toward the former.
Lopez said “tariff is preferred always than QR” as “there’s a clear bit of protection and there’s revenue.”
A WTO panel last July 12 upheld claims that Thailand violated the WTO agreement on customs valuation relating to Philippine exports of cigarettes.
Initiated by the Philippines in 2008, the dispute concerns Thailand’s persistent failure to value Philippine exports consistently with the WTO Customs Valuation Agreement (CVA).
According to DTI, Thailand has already lost three WTO panel proceedings.
In the original proceedings, a WTO panel and the Appellate Body ruled in 2010 that the Thai customs valuation measures violated the CVA and other WTO rules.
Following this ruling, Thailand brought further new WTO-inconsistent customs valuation measures against Philippine cigarettes and filed criminal charges against PMTL (Philip Morris (Thailand) Limited) for underdeclaration. The Philippines successfully brought a first set of WTO compliance proceedings; in November 2018, the WTO compliance panel found that Thailand’s new customs valuation measures and the first criminal charges violated the CVA.
While these proceedings were ongoing, Thailand issued a second set of criminal charges, forcing the Philippines to initiate second WTO compliance proceedings. This latest WTO panel ruled on July 12 that the second charges also violated the CVA.
Rodolfo said the Philippines will file for the right to exercise retaliatory rights before the end of the year.