The Philippines plans to temporarily withdraw tariff concessions on motor vehicles and other imports from Thailand in retaliation to the latter’s non-compliance to a ruling on tax treatment on the former’s cigarettes.
A notice for public hearing by the Tariff Commission showed 37 tariff lines will be covered by the planned suspension of concessions. The list includes motor vehicles, Thailand’s top export to the Philippines, as well as rice and corn, which enjoy zero to preferential duty rates under Asean.
The planned suspension of concessions — in relation to the dispute case against Bangkok filed by Manila — is a second blow to Bangkok whose exports of passenger cars and light commercial vehicles are subject to additional duties of P70,000 and P110,000 each unit, respectively, as ordered by the Department of Trade and Industry recently.
The imposition of regular tariffs plus the additional duties will make Thai car imports more expensive.
The proposed list identified motor cars and other motor vehicles principally designed for the transport of persons as among those whose tariff concessions will be suspended.
But the list exempt those under heading 87.02 or those motor vehicles for the transport of 10 or more persons including driver. By definition, these are commercial vehicles.
Covered also are motor vehicles for the transport of goods; fuel tanks and other parts and accessories of motor vehicles; parts and accessories of motorcycles, including mopeds.
The dispute Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines —(or DS371) has been pending with the World Trade Orgganization (WTO) which earlier ruled in favor of Manila that Bangkok’s tax treatment on cigarettes were discriminatory.
Despite the ruling 10 years ago, Thailand is yet to comply and to correct its tax regime. The suspension of tariff concessions is also seen as compensation to the Philippines for lost business opportunities.
But in the last meeting on Dec. 18, 2020, the WTO Dispute Settlement Body announced the Philippines and Thailand have agreed to the appointment of a facilitator to help mediate in their dispute over Thai customs and fiscal measures on imported cigarettes from the Philippines.
The TC’s public hearing will be held virtually ion Jan. 27, 2021. Product coverage also lists soya bean oil, mixed condiments/seasonings, non-dairy creamers, white cement, lubricating oils, monosodium glutamate, face or skin creams and lotions, polyethylene, new pneumatic tires tiles, semi-finished products of iron, combined refrigerator-freezers, parts of integrated circuits among others.
The United Nations COMTRADE database showed of the $6.47 billion exports of Thailand to the Philippines in 2019, vehicles accounted for 31 percent at $2 billion.