The World Trade Organization (WTO) last Monday issued a compliance panel report regarding Thai measures on imported cigarettes and concluded Thailand has failed to implement the recommendations and rulings of the DSB to bring its measures into conformity with its obligations under the customs valuation agreement (CVA) and the General Agreement on Tariffs and Trade (GATT) of the WTO.
“The panel concludes that, in implementing the DSB’s (dispute settlement body) recommendations and rulings in the original proceeding, Thailand’s VAT (value-added tax) notification requirement accords less favorable treatment to imported cigarettes as compared to like domestic cigarettes by exposing cigarette importers to legal risks and additional administrative burdens and costs, which the domestic producer of cigarettes does not have to face,” the panel said in the report.
“To the extent that Thailand has failed to comply with the recommendations and rulings of the DSB in the original dispute, those recommendations and rulings remain operative,” the report said.
This means Thailand would have to fix its tax regime and remove its discriminatory provisions as contained in the 2010 ruling.
The ruling said charges filed by the Thai prosecutor against Philip Morris Thailand and one of its former employees over 272 entries of Marlboro and L&M cigarettes imported by PMTL between July 2003 and June 2006,
are inconsistent with the CVA because they reject Philip Morris Thailand’s (PMTL) declared transaction values without a valid basis.
The report also said the public prosecutor acted inconsistently with the agreement by not engaging in an examination of the circumstances of sale that was apt to reveal whether the relationship between PMTL and Philip Morris Philippines Manufacturing Inc. (PMPMI) influenced the price paid by PMTL.