Auto-for-cigarette compensation sought

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    The Philippines plans to seek compensation from Thailand in retaliation for its non-compliance to a World Trade Organization (WTO) ruling ordering Bangkok to correct its discriminatory taxes on cigarettes.

    But Ramon Lopez, secretary of the Department of Trade and Industry (DTI) in a chance interview yesterday said the Philippines will not just take action but will continue to dialogue with Thailand and put pressure to abide by the ruling.

    The Philippines eyes a quota on imported completely built-up (CBU) vehicles from Thailand to force the latter to lift all the non-compliant measures under the ruling of Dispute Settlement 371 won by Manila as early as 2010.

    For Lopez, the ideal compensation is through the imposition of tariff rather than quantitative restriction (QR) as this provides clear protection and would even generate revenue.

    Under QR, there will be baseline volume pegged from the imports of the past three years and tariff is imposed for volumes above that baseline.

    “Tariff is always the preferred option. With QR, there are rent seekers. It could be subject to corruption and has that regulatory part. There is no revenue but there is impact on price. Tariff

    Will not capture the economic rent,” Lopez added.

    Lopez said government will hold industry stakeholder consultations for data gathering and research especially on the amount of compensation.

    “We will try to convince Thailand (to implement the ruling), that is the next move; if Thailand does not take action, we will be forced to do the retaliatory move,” Lopez said.

    He added: “The bottomline is,. this is not a trade war against Thailand. We have to handle the non- implementation of Thailand and (see) how we can get compensatation. After all, WTO is rules-based,” Lopez added.

    Ceferino Rodolfo, DTI undersecretary, said the Philippines considers the repeated appeals and counter-actions taken by Thailand on the case as defiance to the trade body whose provisions allow member-countries to retaliate.

    “We (will) exercise our retaliatory rights before the end of the year. What is involved here is the unfair treatment of Philippine exports, ” Rodolfo told reporters in a separate briefing in Makati recently.

    The move, if pursued, will be a big blow to major Japanese brands which import CBUs from

    Thailand, the hub of their production for export to Asean where tariffs have been eliminated.

    This also becomes the second potential strike against Thailand following a petition filed by automotive workers for the imposition of safeguard duties on CBUs.

    The Philippine Mission to WTO in Geneva has been instructed to request the dispute settle body for a meeting.