The Ministry of Industry of Thailand said Wednesday the Philippines’ effort to impose safeguard measures on car imports is illegal as this would be seen as retaliation to the cigarette tax dispute between the two Southeast Asian countries.
A representative of Ministry of Industry of Thailand said during the first hearing of the Philippine Tariff Commission on the proposed additional tariffication of imported cars that “any acts of brinksmanship will erode goodwill in the ongoing discussion and settlement would all be the more difficult.”
Thailand, in opposition to the Philippine proposal, said the move for safeguards would be inconsistent with the Philippine trade obligation under article 1 of the General Agreement on Tariffs and Trade or the most favored nation clause requiring a country to provide any concessions, privileges or immunities granted to one nation in a trade agreement to all other World Trade Organization member countries.
It called on the Philippines to respect the tariff bindings under GATT and refrain from imposing restrictions on imports in the form of additional tariff.
“Any retaliation by the Philippines against Thailand [cigarette] case will cause unequivocal damage to both sides,” Thailand said.
The Philippine Department of Trade and Industry earlier said the only way it could pressure Thailand to cooperate on the cigarette tax case would be to impose higher taxes, through safeguard duties, on certain products exported from Thailand to the Philippines, including automobiles.
Some 37 tariff lines from Thailand stand to lose concessions and may be subjected to higher duties, according to a recent report form the TC.
These products face suspension of concessions in relation to the dispute case “Thailand - Customs and Fiscal Measures on Cigarettes from the Philippines” docketed as DS 371 before the dispute settlement board at the WTO.
The Philippines was constantly writing to the DSB to end the decade-long dispute on the $594-million overtax case by Thailand on cigarette imports from the Philippines.
The Philippine delegation to the WTO earlier reiterated that while the Philippines is open to a constructive solution to the issues, it is consistent in asserting that it is fully within its rights to seek recourse under Article 22.2 of the dispute settlement understanding, or the compensation and suspension of concessions.
The WTO ruled as early as 2011 that Thailand should correct the trade malpractice it subjected the Philippines and Philip Morris Thailand.