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The bilateral understanding aims to resolve a long-standing trade dispute between the Philippines and Thailand on customs valuation for imported cigarettes
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A bilateral consultative mechanism will be set up as a channel for relevant authorities from either side to cooperate and dialogue regularly
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The understanding should ideally lead to a mutually agreed solution
The Philippines and Thailand have signed a deal aimed at resolving their long-standing cigarette customs valuation row.
The signing of a bilateral understanding agreement seeks to iron out the countries’ trade dispute over customs valuation procedures for imported cigarettes. The understanding establishes a bilateral consultative mechanism (BCM) that will serve as a channel for relevant authorities to cooperate and dialogue regularly. Such meetings are expected to build further confidence that will support efforts to reach a comprehensive settlement of the dispute.
The Understanding on Agreed Procedures towards a Comprehensive Settlement of the Dispute in Thailand-Customs and Fiscal Measures on Cigarettes from the Philippines (DS371) was signed by the respective permanent representatives of the Philippines and Thailand at the World Trade Organization (WTO), Ambassador Manuel Teehankee and Ambassador Pimchanok Pitfield.
Ambassador George Mina of Australia, who acted as facilitator in the negotiations between the two parties, noted that the signing of the Understanding represented a successful outcome of the facilitator-assisted process that began in 2021.
The negotiations followed the signing in December 2020 of the Understanding between the Philippines and Thailand to pursue facilitator-assisted discussions aimed at progressing and resolving outstanding issues in regard to DS371.
“Throughout the facilitation process, the Philippines and Thailand have actively and constructively engaged in discussions, both in Geneva and through their respective capitals, to arrive at the Agreed Procedures Understanding signed earlier this month. This further demonstrates the commitment of Thailand and the Philippines to the WTO dispute settlement system,” Mina said in a statement.
The Understanding came into force upon its signing by the two sides and may be terminated by either party on a 60-day written notice.
Taking into account the progress made in the implementation of their cooperation, it should ideally lead to the notification by the parties of a mutually agreed solution under Article 3.6 of the Dispute Settlement Understanding (DSU).
Initiated by the Philippines in 2008, the dispute concerns Thailand’s persistent failure to value Philippine exports consistent with the WTO Customs Valuation Agreement (CVA).
According to the Philippine Department of Trade and Industry, 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 Philip Morris Thailand Ltd. 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 the second WTO compliance proceedings. This latest WTO panel ruled on July 12, 2019 that the second charges also violated the CVA.
READ: PH presses WTO to act on ruling vs Thailand
