WTO panel order Thailand to set up uniform taxes on both foreign and locally made cigarettes..

November 17, 2010 - In a 400-page decision released late on Monday, a WTO (World Trade Organization) panel went on to order Thailand to set uniform taxes on both foreign and locally made cigarettes and to adopt more transparent policies for determining import values. The decision will become an official ruling in 60 days unless either side appeals or if the entire WTO membership rejects the findings.

The trade dispute arose after Bangkok, in 2006, implemented customs valuation and domestic tax measures that allegedly undermined the competitiveness of imported cigarettes versus those locally produced by the state-run Thailand Tobacco Monopoly.
In 2008, Manila complained that Thai customs officials had set higher valuations for Philip Morris International’s Philippine-made cigarettes. This came amid allegations that the cigarette manufacturer was misdeclaring prices to its Thai sister firm to get away with lower duties.

Thailand also reportedly slapped higher value-added taxes (VAT) on imported cigarettes, the Philippines claimed. The dispute attracted the interest of the United States, European Union and Chinese Taipei which forwarded statements similar to the Philippine position.

Previous news briefs on this subject:
March 18, 2010 - WTO delays verdict on cigarette confrontation between Thailand and the Philippines..;
January 19, 2010 - Thailand - PMI likely breached the Foreign Business Act..;
November 9, 2009 - WTO - "DS 371" Philippines versus Thailand on cigarette customs valuation..;
September 3, 2009 - Thailand unit of Philip Morris International faces charges that it violated custom tax rules..;
November 11, 2008 - Philippines - Thai cigarette import rules.. .

Thailand argued that it was right to reject Philip Morris’ declared values given "legitimate" doubts. It claimed that a third-party importer bought the same products from the Philippines at three times the price contracted between Philip Morris’ units.

Chris J. Nelson, managing director of Philip Morris Philippines Manufacturing, Inc. and president of PMFTC, Inc. -- a merger with Fortune Tobacco Corp. -- said in a separate e-mail: "[We] welcome the decision... We hope... issues relating to Philip Morris exports to Thailand will be settled favorably by Thai authorities."

Manuel A.J. Teehankee, the Philippine Permanent Representative to the World Trade Organization, if Thailand appeals the report, another six to seven months of proceedings can be expected before the issue is resolved.

Reference: RP (Philippines) wins tax case vs Thailand, by JESSICA ANNE D. HERMOSA, Senior Reporter, Business World, 11/16/2010.