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MANILA, Philippines - Manila and Bangkok have agreed on the reasonable period of time for Thailand to comply with the ruling of the World Trade Organization (WTO) over the two Asean countries’ tobacco tax row, the Department of Trade and Industry said on Tuesday.
In a statement, Secretary Gregory L. Domingo described the agreement as proof of the effectiveness of the multilateral trading system in resolving trade issues to expand global trade.
The DTI initially consulted the Technical Committee on WTO Matters (TCWM), external counsels, and affected private industry on the time frame.
Under the agreement between the two countries, Thailand will adopt a two-track approach, where certain rulings by the WTO Dispute Settlement Body (DSB) must be complied with until October 15, 2012; and the rest even earlier, or within 10 months before May 15, 2012.
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 such meetings will be held six months after the date for the reasonable period of time has been established.
In June this year, the WTO Panel and Appellate Body ruled in favor of the Philippines regarding the Philippines’ tax issue of its cigarette exports to Thailand.
In 2008, the Philippines filed a complaint alleging that Thailand violated WTO rules in designating higher customs values for Manila’s cigarette exports. Thailand also jacked up the maximum retail prices on imported cigarettes in order to protect the Thai state-owned tobacco monopoly.
The Philippines is Thailand’s top supplier of imported cigarettes. Per local exporters’ estimates, the value of the Philippines’ share accounts for about a quarter, or $200 million, of the $849-million Thai domestic cigarette market.
Tobacco is among the fast growing resource-based exports of the Philippines. Data from the Bureau of Export Trade Promotions (BETP) showed tobacco exports reached $266 million in 2010.
Philippine tobacco is also exported to Germany, Hong Kong, Singapore, United States, Russia, and Japan, among others. The industry provides direct livelihood to 43,960 farmers and over a million industry workers and their dependents, according to the National Tobacco Authority.
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