Thailand urged to comply with WTO ruling on Philippine cigarettes

MANILA, Philippines — The Department of Trade and Industry (DTI) has written its Thai counterpart to press for compliance to a ruling issued by the World Trade Organization (WTO) on a cigarette tax case the Philippines won, warning of possible consequences of non-compliance. 

Trade Secretary Ramon Lopez sent a letter earlier this month to the head of the Ministry of Commerce of Thailand to urge the latter to comply with the WTO order. 

“It’s really enjoining them to implement the WTO (ruling),” Lopez said. 

He said he also invited his counterpart to hold a dialogue sometime in January. 

“We’ll have to find time to settle it once and for all,” Lopez said. 

The head of the Ministry of Commerce has likewise been informed of the action the Philippines is mulling, in case Thailand still does not follow the WTO order.

To recall, the Philippine government filed a case on behalf of Philip Morris Philippines in 2008 against Thailand for imposition of higher duties on cigarettes from the Philippines. 

Philip Morris Philippines was exporting 30 percent of its output from its Batangas plant to Thailand per year and the latter’s move to discriminate cigarette exports from the Philippines was seen to favor state-owned Thai Tobacco which accounted for 80 percent of the Thai market at that time.

While the Philippines won panel and appellate rulings, Thailand has yet to comply.

To protect the Philippines’ interest in the case and as a form of compensation for non-compliance to the WTO ruling, Lopez said the DTI is looking at slapping tariff on automobile imports from Thailand. 

Trade Undersecretary Ceferino Rodolfo said the DTI has chosen to target motor vehicles in seeking compensation as such account for bulk of Thailand’s exports to the Philippines.

Under WTO rules, cross sector retaliation or the imposition of sanctions in a different sector is allowed when the complainant sees it impracticable or ineffective to focus on the same sector.