A legal advisor says Philippines has a legal options in the WTO and ASEAN that would push Thailand to implement WTO's ruling on the cigarette tax case. However, conducting bilateral talks with Thailand as soon as possible is still considered the best diplomatic option.
As reported by Manila Bulletin, the former legal counsel of the Philip Morris Philippines on the WTO case said that the country can take legal steps through the WTO Implementation Agreement, or the ASEAN Dispute Settlement Mechanism.
According to Abad, the task of pursuing Thailand to follow WTO's ruling must be done by the Philippine government and not limited solely to DTI.
"It's not just the Department of Trade and Industry [which should initiate proceedings at the WTO]. It's the whole Philippine government. [Demanding compliance] is an important signal that countries should not be allowed to disregard the decision of the WTO", he said via Business Mirror.
Abad added that the government can file for both WTO and ASEAN options to resolve the issue, however, the most diplomatic way would still be to conduct bilateral talks with Thailand as soon as possible.
The cigarette tax issue came about when Manila questioned WTO's dispute settlement body claiming that Philippine made cigarettes are being excessively taxed compared to the cigarettes made in Thailand. It also argued that Thailand's customs valuation measures are not consistent with WTO's customs valuation measure.
WTO ruled in favor of the Philippines and ordered Thailand to comply with the WTO ruling. But instead of following WTO, Thailand filed for a countersuit against Philip Morris Thailand Ltd. (PMTL), saying that the company undervalued the imported cigarettes to avoid the $551.271 million of taxes for the shipments in 2003 to 2006.
On the other hand, PMTL branch manager Troy Modlin asserted that the company did nothing wrong and the charges filed against them are of without merit and in violation of Thailand's obligations to comply with the WTO Customs Valuation Agreement.
According to The Standard, Abad also stated that PMTL's case should be settled as it would also affect the Philip Morris Manufacturing Inc.(PMMI). The Philippines exports cigarettes to PMTL, and is also a major cigarette supplier to Thailand. Philippines has 35 percent share of the local domestic cigarette market.
The Philippine legal counsel is giving assistance to PMTL in its current case. An official from DTI also said that they are planning to conduct bilateral talks with Thailand next month, in time for WTO General Council Meeting.
