THE World Trade Organization (WTO) has extended its review of Thailand’s appeal on the ruling invalidating its customs and fiscal measures on Philippine cigarettes, effectively prolonging as well the brewing trade tension between Manila and Bangkok.
In a communication dated November 8, the Appellate Body said it failed to comply with the 60-day requirement under WTO rules to come up with a report on Thailand’s appeal. Further, it will not be able to complete the whole proceedings within the mandated 90 days due to the pile of cases awaiting the panel’s review.
“Thailand notified the DSB [Dispute Settlement Body] on 9 September 2019 of its decision to appeal certain issues of law covered in the panel report and legal interpretations developed by the panel in this case,” the Appellate Body said.
“As a result, the 60-day period expires on 8 November 2019. We regret that we will not be able to circulate a report in this case by the date. As is well known, there is a queue of appeals pending. Consequently, we shall not be able to complete this case within the required 90 days. We assume that members understand the circumstance,” it added.
Under Article 17.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes, the Appellate Body is mandated to circulate its report no later than 60 days after the appellant has formally notified the DSB of its decision to appeal.
As such, the panel is required to inform the DSB in writing if it fails to provide the report within 60 days, citing the reasons for the delay and the projected period of submission. The provision also states that no proceedings for any case should go beyond 90 days.
“When we know more precisely about scheduling the hearing in this appeal, we will inform the participants,” the Appellate Body said in the communication.
Thailand initiated another appeal on the WTO ruling that found its customs and fiscal measures imposed on Philippine tobacco products had violated multilateral trading rules. Bangkok has yet to comply nearly one decade since the WTO issued the decision.
Thailand’s noncompliance with the WTO order compelled the Philippines to study its option of retaliating by raising tariff rates on Thai imports, particularly automobiles.
Last week Trade Secretary Ramon M. Lopez said he is asking the Thai government to observe and implement the WTO ruling instructing Bangkok to align its customs and fiscal measures with multilateral trading rules. Otherwise, Manila will be forced to retaliate by putting tariffs on vehicle imports from Thailand that enjoy duty-free privilege at present under the region’s trade deal.
“I talked to the minister a long time ago to implement it because there was that ruling already,” Lopez disclosed. “We try to convince first Thailand, but that is our next move. If Thailand will not take any action, we will be forced to do the retaliatory move already.”
Aside from retaliating, the government is seriously considering the application of a safeguard measure on vehicle imports, targeting mostly units shipped from Thailand and Indonesia. The move was triggered by the petition filed by trade union Philippine Metalworkers’ Association (PMA), which decried the declining number of workers in the automotive industry, particularly in production.
According to the Department of Trade and Industry (DTI), the PMA lodged the petition to apply a safeguard on automobiles to stop the alleged import surge of the product.
Car makers are reportedly choosing Thailand and Indonesia as their investment destinations in Southeast Asia, as they can just ship units to the Philippines at zero duty. Official data showed the country’s vehicle imports from 2014 to 2018 reached a total of around 1 million units, with roughly 428,000 units from Thailand and 312,000 units from Indonesia.
Direct workers in the motor vehicle manufacturing sector stood at 7,784 in 2014 before slipping to 6,842 in 2015 and dropping to 6,614 in 2016, according to data from the Philippine Statistics Authority.