PHL thanks Australia for breaking cigarette trade stalemate with Thailand

The Philippines thanked Australia for facilitating confidence-building negotiations with Thailand, a major step towards ending the 14-year-old trade dispute between the two ASEAN countries over taxes on the cigarettes.

The Philippines and Thailand disagree over the 5% tariff imposed on Philip Morris cigarettes imported into Thailand. Manila has insisted that cigarettes should have been exempted from tariffs when the ASEAN Free Trade Area was fully implemented. The two have escalated their trade dispute to the World Trade Organization, registered as DS371.

The WTO Dispute Settlement Body, then the Appellate Body, ruled in favor of the Philippines and found Thailand guilty of protecting domestic cigarettes. Thailand has refused to comply with the WTO ruling.

On June 7, the Philippines and Thailand signed a bilateral agreement aimed at building confidence between two countries whose trade relations were strained due to the trade dispute over cigarettes. A communication channel of the two countries will be established for the relevant authorities to carry out regular consultation and dialogue, hoping that there will eventually be a “comprehensive settlement” of their dispute in DS371.

The agreement, titled “Agreement on Agreed Procedures for the Comprehensive Settlement of the Dispute in Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines (DS371), was signed in Geneva, Switzerland, by the Ambassadors to the from the WTO Manuel AJ Teehankee from the Philippines and Pimchanok Pitfield from Thailand.

Australia’s Ambassador to the WTO, George Mina, brokered the Philippines-Thailand CBM talks.

The Philippine Foreign Ministry said Manila expressed gratitude to Australian Trade Minister Don Farell for the “successful facilitation” that led to an agreement that allowed both sides to return to the negotiating table.

“Throughout the process and with the assistance of Ambassador George Mina, Permanent Representative of Australia to the WTO, acting as Facilitator, the Philippines and Thailand engaged in active and constructive discussions, both both in Geneva and in their respective capitals, with a view to exploring possible ways for the two countries to reach a mutually acceptable resolution of their customs valuation dispute, without prejudice to their respective rights and obligations under the Memorandum of Dispute Settlement Agreement (DSU),” the WTO said in a statement.

Ambassador Mina and WTO Director General Ngozi Okonjo-Iweala were also introduced at the conclusion of the negotiations.

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