It is a wonder how the Philippines can easily file suit against Thailand at the World Trade Organization (WTO) over cigarette exports. While the Philippines may be in the right legally as it claims that Thailand is violating WTO rules by effectively closing the doors on Philippine-made cigarettes, there is also this matter of moral ascendancy, which it seems to be lacking in this particular case.

Manila is reportedly accusing Bangkok of protecting the Thai state-owned tobacco monopoly by indirectly imposing higher customs duties and retail prices on imported cigarettes, including those coming from Southeast Asian trade partners like the Philippines. This is despite the fact that Manila is wont to using a similar tactic—higher duties and taxes—on imported cigarettes to protect Philippine manufacturers producing cigarette “brands” accorded “legislative protection.” These include the Marlboro brands, made in Batangas by multinational Philip Morris, and the Winston brands made by Fortune Tobacco Corp. of multibillionaire Lucio Tan.

Moreover, there seems to be something inherently amiss with the Philippines in insisting on penetrating foreign markets like Thailand with Philippine-produced products that are scientifically known to cause danger to people’s health. Litigation in the United States already highlighted this fact, with cigarette companies made to pay huge amounts as settlement.

It is for a good reason that local legislation requires cigarette companies to label their products as dangerous to one’s health. It is also for good reason that a local law now limits the advertising of cigarettes. Public health is paramount consideration, of course, regardless of the investment and tax proceeds from the cigarette-manufacturing industry. And in this sense, the government should do anything and everything constitutionally possible to regulate the sale of tobacco products, particularly to minors.

That said, it is a wonder how the same government can then ask a foreign government, like that of Thailand, to relax its own rules on tobacco sale by allowing more liberal importation of cigarettes made in the Philippines. And the issue is restraint of global trade? What about the issue of public health in Thailand? And while Bangkok may be more liberal in safeguarding the health of its people, then let them do that under their own terms. Does the Philippines have to be part of that?

A news report noted that the issue began in August 2006. Bangkok made an issue out of transfer-pricing, suspecting that Philip Morris’s manufacturing plant in Batangas was supplying allegedly undervalued cigarettes to Philip Morris Thailand if only to reduce import duties and taxes due on them.

But taking the cudgels for Philip Morris, a major Philippine investor, Manila complained that Bangkok has now been implementing tax measures that allegedly intended to simply protect the state-controlled Thai tobacco monopoly, which by law has the sole right to manufacture cigarettes in Thailand.

The monopoly reportedly controls 80 percent of the Thai cigarette market, and sells mostly cheap brands. Philip Morris’s Batangas plant, meanwhile, reportedly sells about 30 percent of its output—Marlboro and L&M brands—to Thailand annually, concentrating on the pricier market segments.

Manila’s main complaint at the WTO is how Bangkok determines customs values and maximum retail selling prices for imported cigarettes, particularly those coming from Philip Morris’s plant in Batangas. And Chris J. Nelson, managing director of Philip Morris Philippines, was quoted as saying in a news report that the Philippine government has been “extremely cooperative” in assisting Philip Morris in its campaign to clarify Bangkok’s trade rules.

It seems only fair that Philip Morris’s parent firm in Switzerland is reportedly offering to help pay for legal expenses to be incurred by Manila from the WTO suit. After all, it will be questionable for the government to spend public resources in what is obviously a private tiff between competing cigarette makers. It remains uncertain, however, whether there is a conflict-of-interest issue here. But one can also easily argue that the campaign will benefit not only Philip Morris as a company, but also all its employees in the Philippines, and all the tobacco farmers and other suppliers working for Philip Morris locally.

And as Philip Morris Philippines makes more money from selling cigarettes to Thailand, then the Philippine government also earns more from the taxes it pays. And that, perhaps, makes the entire thing okay, even if smoking is dangerous to one’s health. 

Comments to matort@yahoo.com

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It is a wonder how the Philippines can easily file suit against Thailand at the World Trade Organization (WTO) over cigarette exports. While the Philippines may be in the right legally as it claims that Thailand is violating WTO rules by effectively closing the doors on Philippine-made cigarettes, there is also this matter of moral ascendancy, which it seems to be lacking in this particular case.

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