The Philippines has told Thailand it will assert its right to retaliation following a decade-long dispute over cigarette taxation to ensure that the rules-based trading system of the World Trade Organization is upheld and applied while deliberating on the list of 146 tariff lines such as rice. , motor vehicles, auto parts, whose zero duty privilege can potentially be suspended.
The Tariff Commission held a virtual public hearing on Tuesday, August 24, on the additional list of 34 tariff lines to be included in the initial list of 112 under the AHTN 2017, which includes imports of rice and automobiles from Thailand for which the suspension of tariff concessions is proposed.
If the Philippines followed through on their threat, these tariff lines, which represent Thailand’s largest export to the Philippines, could lose their zero-duty privilege and face higher tariff rates.
During the hearing, representatives of the Thai government, the Thailand Automotive Industry Association for the Philippines and the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) took turns urging the Philippines to end the process in order to ‘avoid negative economic consequences on both sides. , not to jeopardize the harmonious bilateral relations of the two countries, to protect economies, value chains and consumers.
Deputy Secretary of Trade and Industry Allan B. Gepty assured Thai officials and private stakeholders that all concerns and points raised, including the mediation process assisted by a WTO facilitator , as well as the negative consequences of such a decision are taken into account in the current study and evaluation. .
Gepty pointed out that the Philippines has applied all available out-of-court settlement terms over the past 12 years to resolve the cigarette tax issue with Thailand. He observed and heeded all WTO rules even though the country won all three cases, including the 371 dispute settlement appeals or the cigarette tax dispute against Thailand.
“We don’t want a scenario where the Philippines will be coerced or forced to exercise this measure because if that happens, let’s say Thailand, which is still not following the observed processes, is not fulfilling its obligations under WTO, in particular the Agreement on Customs Valuation, not to mention respect and respect for WTO rulings, what if the Philippines does not take concrete action to assert its right ? That’s a big question and our concern is what will happen to the international trading system, what will happen to the rules-based trading system? We have won many cases at the WTO and here we are, we couldn’t see a scenario where these rulings could be implemented, ”Gepty said.
Due to Thailand’s refusal to follow WTO rulings, Gepty is sad, the Philippines is forced to take this last resort: ask the WTO for retaliation. This request has led to the preparation of a list of Thai exports whose zero tariff privilege under the ASEAN Trade in Goods Agreement can be suspended.
“This is an ultimate cure, we have heard all the concerns, we will keep this in mind,” he said, noting that the Philippine government is paying attention and will ensure that the consequences on industries and consumers are minimized. price increases and the impact on supply chains.
“If there is one thing that I can assure the stakeholders, it is that in the process of study and consultation, all your points and concerns will be seriously taken into account as the Philippine government itself will there are other options available, we will not offer this ultimate measure but what we also do not want to happen is that the rules-based system will simply be ignored or the WTO ruling will simply be ignored . We also want to assert our rights within the framework of the international trading system, ”he said.
Even though the government brought the retaliation request to the WTO Dispute Settlement Body, Gepty said the Philippines continued to engage Thailand through the process led by the WTO facilitator. “We hope that Thailand will fulfill its obligations and I hope Thailand will do the same because if there is one thing to prevent retaliation or the suspension of concessions which are legitimately available to the Philippines, it is Thailand.” , he stressed.
Ferdinand Raquelsantos, president of the Philippine Parts Makers Association (PMMA), said the 34 additional tariff lines under AH2012 that they proposed to include were also the subject of Executive Decree 262 issued in 2004, which supported local items produced in the Philippines. “It is time that these were included in the suspension of concessions and would certainly support the local production of these items,” he said.
The cigarette tariff dispute arose out of Thailand’s imposition of higher tariffs on exports of Philippine cigarettes. The Philippines won in the first round and in the two WTO compliance cases, but Thailand refused to implement the WTO’s decision to align its taxes and discriminate against Filipino cigarettes. Instead, he sued local company Philip Morris Thailand Ltd. and its employees for a tax assessment issue.
Data showed that in 2019, the tobacco industry provided a direct and primary source of livelihood for an estimated 2.17 million Filipinos.
As one of the high value added crops, the tobacco industry generated an average annual income of 126.6 billion pesos for the government in the last three years 2017-2019. In 2017, the share of the local tobacco manufacturing industry in the Philippine GDP was around 0.1%.
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