The deadline for Thailand to comply with the WTO ruling regarding customs valuation and several taxation issues expired on May 15, the Permanent Mission of the Philippines to the WTO reported.
The dispute stemmed from a complaint filed by the Philippine government in behalf of Philipp Morris Philippines Manufacturing Inc. asking the WTO panel to scrutinize the customs, fiscal and health measures that the Thai government imposed on imported cigarettes.
The complaint cited the Thai government’s “bias” against imported cigarette brands, particularly in terms of the customs valuation practices, excise tax, health tax, TV tax, value-added tax regime, retail licensing requirements, and import guarantees imposed upon cigarette importers.
The panel declared that Thailand indeed acted inconsistently with its WTO obligations and that it failed to treat imported cigarettes the same way it did local brands and eventually gave the Thai government to comply with its WTO obligations.
Thailand’s own report to the WTO on May 11, 2012 showed that it has not yet fully complied with the WTO’s Dispute Settlement Body’s (DSB) recommendations and rulings. This worries DTI officials, noting of the adverse impact to the Philippines of the delay on the part of the Thai government to make the necessary measure.
The National Tobacco Administration reported that the Philippine tobacco industry produced P5.3 billion worth of tobacco in 2011, with $91.1 million (roughly P3.9 billion) exported to overseas markets, including Thailand. Thailand is the Philippines’s major export market for finished tobacco goods.
During the course of the dispute, the tobacco industry suffered a 20-percent decline in exports in 2009 alone, in part due to the Thailand cigarette tax issue. The decline has since substantially hurt tobacco farmers in the South.
The industry provides livelihood to 54,337 farmers and their families, and to thousands of manufacturing workers, traders, and retailers. In 2008 the industry contributed P32.3 billion to government coffers through taxes, duties, and other fees on tobacco products.