DTI seeks bilateral talks with Thailand over non-compliance of WTO cigar tax ruling

Source from:  Manila Bulletin 01/21/2016

The Department of Trade and Industry (DTI) plans to conduct another bilateral discussion with Thailand next month, February, to push for the implementation of the WTO ruling for Thailand to impose the same tax treatment on cigarettes imported from the Philippines with that of the Thai produced cigarettes.

An official said the DTI may seek another bilateral discussion with Thailand in time for the WTO General Council Meeting next month.

During that meeting, the Philippines may also file a statement on the　cigarette case ruling, which Thailand has refused to comply.

Anthony Abad, former counsel on the WTO cigarette case, said Thailand's disregard of the WTO's recommendation on valuation is inconsistent with the ruling.

This developed as the Thai government filed on Tuesday　a case versus Philip Morris Thailand Limited on alleged undervaluation of imported cigarettes from the Philippines to avoid paying $551.271 million in taxes for shipments in 2003 to 2006.

To this, Abad further noted that Thailand's prosecution of this case would be in violation of the WTO decision.

Abad stressed that the Philippines challenged Thailand's claims of under valuation for cigarette imports and the WTO has ruled with finality in favor of the Philippines.

"It will be interesting to see what steps the Philippine government now takes if this WTO decision is now being undermined by these prosecution attempts," Abad added.

An official said that while the Philippine government cannot help much Philip Morris in its under valuation case, which sought a penalty of $2.2 billion against the world's leading cigarette maker, it can leverage the favorable WTO ruling to make its case a lot stronger.

The source further said that the under valuation case may have delisted the specific shipments cited in the WTO case, but the allegations were all the same.

Thailand's action will further disadvantage the 2.2 million tobacco farmers in Ilocos and southern Mindanao.

In a statement, Philip Morris Thailand Limited (Thailand Branch) asserted that charges brought against the company by the Public Prosecutor regarding customs　charges are meritless, unjust and in violation of Thailand's obligations to comply with the WTO　Customs Valuation Agreement.

Troy Modlin, branch manager of PMTL, said, "PMTL has done nothing wrong. Not only are these charges wholly without merit and in violation of Thailand's obligations to comply with the WTO Customs Valuation Agreement, they also call into question Thailand's commitment to fairness, transparency and the rule of law.

Prosecuting this case will also undermine Thailand's stated desire to revitalize its reputation in the international community as a market-based open economy that is investor friendly."

The decision of the former Attorney General, Mr. Julasingh Vasantasing, to charge PMTL and its current and former employees contradicts the non-prosecution order his own office made more than four years ago, as well as prior rulings of the Thai Customs Department, the Customs Board of Appeal, the Customs Post-Clearance Audit Bureau and the WTO.

PMTL has cooperated fully with all involved government agencies since the DSI launched its investigation in 2006.

The company intends to vigorously defend itself against these meritless charges and demonstrate that it is in full compliance with Thai law and international standards of customs valuation. Enditem