Trade tension between Thailand and the Philippines is starting to boil over as the Philippines seeks to have the World Trade Organization (WTO) allow its retaliation against Thailand over a decade-long tobacco customs dispute. And appeal lodged by a WTO group in Bangkok blocked the Philippines bid to get consideration of its retaliatory bid put on WTO’s Dispute Settle Board agenda in February in Geneva, Switzerland.
The Philippines expressed displeasure at Thailand’s “tactics” in getting the matter taken off the agenda, but expressed confidence WTO will eventually uphold their rights at a future meeting
The Philippines is now Thailand's second-largest tobacco supplier after #1 supplier South Korea.
In 2008, the Philippines filed a WTO complaint against Thailand's customs valuations, which it claimed discriminates against tobacco imports to protect the then-named Thailand Tobacco Monopoly, a state-run company (now called TAOT, Tobacco Authority of Thailand). Although the Philippines won the case in 2010 and subsequent appeals, including one last year, Thailand then went to the Appellate Body -- WTO's de facto supreme court which has been unable to decide the issue due to staffing problems supposedly caused by the current US administration’s blocking of appointments.
It seems that if the impasse continues, the Philippines will consider retaliation starting with the imposition of safeguard duties on imported cars to protect its local auto industry. Thailand is a major car exporter to the Philippines.
In related news, the military government of Thailand, in a no-confidence debate, had to defend itself against an accusation that it interfered with state agencies to favor Philip Morris (Thailand) Ltd (PMTL) by lobbying public prosecutors not to press new charges against the company and reduce a fine levied on the company in a tax evasion case.
The government spokesperson denied the allegations saying the meeting in question in June 2015 was called because the Prime Minister needed to prepare information to respond to possible questions about a dispute between Thailand and the Philippines in the World Trade Organization over the Philip Morris price declaration scandal in which Thailand had lost the case three times.
On Nov 29, 2019, the Criminal Court imposed a THB 1.2-billion fine (US$39 million) on PMTL, for evading taxes, though it dismissed a lawsuit against the company's seven local employees.In the lawsuit filed in January 2016, PMTL was charged with evading taxes by under-declaring the value of cigarettes it imported from the Philippines from 2003 to 2006. Seven Thai employees of the firm were also included in the lawsuit. PMTL was accused of setting the price of L&M cigarettes imported from the Philippines at THB5.88, while other importers declared that brand of cigarettes at THB16.81 per packet. The firm also declared the cost, insurance, and freight (CIF) rate on Marlboro from the Philippines at THB7.76 baht per packet, far lower than the THB27.46 baht reported by other importers. The OAG said such undervaluing of imports meant the company managed to avoid paying over THB20 billion (US$645 million) in taxes. The offense risks a fine worth four times the amount, or about THB80 billion, the OAG said.