The Philippine government is open to arbitration with Thailand in seeking compensation over the latter’s non-compliance to a ruling on discriminatory treatment of cigarette exports.
According to a report on the outcome of a June 29, 2020 meeting of the Dispute Settlement Body (DSB) of the World Trade Organization (WTO), the Philippines will tap a “hybrid approach or a mutual agreement” on compensation in resolving its dispute with Thailand,
The Philippines will tap avenues provided under Article 25 of the Dispute Settlement Understanding (DSU) which states that expeditious arbitration within the WTO as an alternative means of dispute settlement can facilitate the solution of certain disputes that concern issues that are clearly defined by both parties.
However, arbitration shall be subject to mutual agreement of the parties which shall agree on the procedures to be followed.
The report added the Philippines said it fully reserves its right to seek authorization to retaliate under Article 22.2 of the DSU.
The Philippines had planned to increase tariffs on motor vehicles from Thailand to make up for the losses incurred on the discriminatory taxation on cigarette.
The report said both the Philippines and Thailand said they remained open to bilateral talks aimed at finding a solution over their differences on the Dispute Settlement (DS) 371 and that consultations were still ongoing.
Last February 28, a DSB meeting was suspended due to a disagreement between the Philippines and Thailand regarding the former’s request to impose retaliatory measures on imported Thai goods resulting from the dispute.
Thailand noted that the appeals proceedings in the dispute were still ongoing, and the Philippines has a sequencing agreement with Thailand under which it can only resort to retaliation after the completion of the proceedings.
Should the Philippines decide the sequencing agreement is no longer valid, Thailand will argue that the Philippines’ request to retaliate is not valid because it made its request outside the 30-day deadline set under the DSU.
Thailand said the real problem is the lack of Appellate Body members, which underlines the need to commence the process for selecting new members.
The Philippines filed in 2008 a complaint against Thailand over its customs valuation that served to protect the latter’s cigarette manufacturer.
The Philippines won the case in 2010 and several more appeals.
The case is now with the Appellate Body of the WTO.
