Philippines remains poised to slap tariffs on Thailand

MANILA, Philippines — The Philippines remains poised to suspend tariff concessions on Thai products entering the country if needed, even as it is closely watching the facilitator-led process to resolve Thailand’s compliance issues regarding a World Trade Organization (WTO) decision on a cigarette tax case, the Department of Trade and Industry (DTI) said.

Trade Undersecretary Ceferino Rodolfo told reporters that the Philippine government is monitoring developments on the facilitator-led process being undertaken in Geneva to try to formulate a comprehensive solution to the compliance issues of Thailand to the WTO decision.

“However, the Philippines remains ready, following WTO rules and procedures, to initiate the process for suspension of concessions,” he said.

The Philippines and Thailand have agreed to pursue facilitator-assisted discussions aimed at resolving outstanding issues in relation to the cigarette tax case.

Under the communication from the Philippines and Thailand delegations dated Dec.18, 2020 on the understanding between the two countries to pursue facilitator-assisted discussions, the facilitator shall, in consultation with the WTO Dispute Settlement Body (DSB) chairperson and the parties, report back to the DSB the outcome of the further consultative process and any steps the parties may agree to take to resolve the issues.

“The facilitator should provide such a report back to the DSB on the 31st of March 2021, without prejudice to the facilitator recommending continuation of the process up to but no later than 31 July 2021, unless the parties agree otherwise,” the document stated.

While this is taking place, the Tariff Commission had conducted a public consultation last January on the coverage of products or tariff lines which may be subject to the suspension of concessions, should it become necessary.

“It is important that we maintain a credible and realistic threat to trigger a WTO rules compliant suspension of concession because that is important for us to be able to forge a comprehensive solution, for example, through the facilitator-led process,” Rodolfo said.

In February last year, the Philippines requested authorization from the WTO to suspend concessions and obligations on Thai imports due to Thailand’s failure to comply with the ruling on the cigarette tax dispute.

The Philippines had filed a case, on behalf of Philip Morris Philippines, against Thailand for imposition of higher duties on cigarettes in 2008 and won the dispute when the WTO issued its ruling in 2011.

Should the Philippines proceed with suspending tariff concessions, products to be affected include motor vehicles, corn, milled rice, soya bean oil, mixed condiments, and materials for plastic goods.

Earlier, vehicle assemblers, motorcycle manufacturers and the local plastics industry said they oppose the government’s plan to suspend preferential tariffs on imports from Thailand as such move would hurt domestic firms and consumers.