Thailand's Customs Department on March 15 announced a customs valuation on cigarettes from the Philippines to facilitate their import six months after a complaint that the Kingdom was discriminating to protect the Thailand Tobacco Monopoly (TTM).

The Philippines complained to the World Trade Organisation (WTO)'s dispute-settlement body about Thailand's "discriminatory practices" in customs valuation

and domestic tax on imports of Philippine cigarettes. It urged Thailand to abide by WTO agreements.

It also said Thailand imposed higher duties and taxes on Philippine-made cigarettes in an attempt to protect its state-run TTM.

A Thai official who has worked close to the dispute said Thailand had followed the WTO's Customs Valuation Agreement, which prescribed six steps in the case of a valuation dispute. He said Philip Morris (Thailand), the marketing arm of Philip Morris Philippines Manufacturing, which has exported Marlboro and L&M to Thailand since 2003, had been tardy in sending required documents to the Customs Department.

"We work strictly step by step according to WTO regulations, and we had to wait for documents from Philip Morris to ensure fair practice," the official said.

After the valuation announcement, the company pays outstanding tax to the department. If it is not satisfied with the rate, it must petition the department within 30 days.

Without a valuation a company must provide a guaranteed bond on its imported cigarettes.

The Manila BusinessWorld newspaper quoted Philip Morris as saying that higher customs duties had cost the company around US$37 million (Bt72 million) last year and that Thailand's new VAT policy had caused it annual losses greater than $8 million.

Thailand is the Phillippines' biggest market for cigarettes, accounting for $16.7 million or nearly two-thirds of total Philippine cigarette exports in 2006.

The WTO's Council for Trade in Goods reported that Thai Customs on August 4 last year refused to clear cigarettes imported from the Philippines at their invoice prices, without providing any reason or explanation. Later, the department temporarily and unilaterally imposed guarantee values that exceeded the declared invoice price of Philippine cigarettes by 13 to 16 per cent, depending on brand.

Earlier, Thailand had stated to the Philippines during negotiations in Geneva that it was willing to discuss this matter in any appropriate forum, including Asean, to find a mutually satisfactory solution.

Achara Pongvutitham

The Nation