Phl, Thailand agree on time frame for WTO ruling compliance

MANILA, Philippines - The Philippines and Thailand mutually agreed on a reasonable period of time to comply with the ruling of the World Trade Organization (WTO) over Thailand’s tax treatment of Philippine cigarette exports.

“The Philippines and Thailand mutually agreed to a reasonable time frame for Thailand to comply with the ruling of the WTO. This agreement reflects the effectiveness of the multilateral trading system in resolving trade issues to expand global trade,” said Trade Secretary Gregory L. Domingo.

DTI said they recognize the importance of the WTO in upholding equitable, transparent, and mutually acceptable principles in the global trading system. Employment and investments in the tobacco industry are more secure now that both countries have agreed to a reasonable period of time on implementing the ruling.

The DTI has initially consulted the Technical Committee on WTO Matters (TCWM), external counsels, and affected private industry on the time frame. Under the agreement, Thailand will have a two-track approach where certain rulings by the WTO Dispute Settlement Body (DSB) will have to be complied with until Oct. 15 2012 and the rest even earlier in 10 months before May 15, 2012.

The Philippines is Thailand’s number one supplier of imported cigarettes. In 2010 alone, the Philippines holds an estimated 2/5 share of the Thai domestic cigarette market. Since 1990, the numbers have risen steadily. Local exporters place the value of Philippine current share of the $849 million Thai domestic cigarette market at around $200 million.

The WTO’s DSB will monitor the implementation of the recommendations and rulings until the issue is resolved and will discuss this in its meetings, the first of which will be held six months after the date for the reasonable period of time has been established.

The WTO ruling was a landmark decision, being the first to describe in detail how the WTO rules on customs valuation should be applied particularly when the transaction value is rejected by customs authorities and customs value is to be established.