PH-TH may end tobacco dispute, prevent auto parts tax retaliation

Last year, trade issues became the topic to talk about in the Philippine auto industry, particularly with regards to safeguard duties on imported vehicles that comprise the good majority of what is sold locally. Those issues have already been resolved, but there is another that needs some attention: proposed retaliatory measures on many Thai made products.

The Philippines and Thailand have been in a trade dispute since 2008 over tobacco products. Actually, the Philippines is the complainant to the WTO, as Thailand has been making some customs and tax related measures against tobacco products exported by the Philippines to Thailand. These practices are inconsistent with the 1994 GATT, and thus the Philippines went to the WTO for dispute resolution that was tagged as DS371.

Well it seems that might be coming to an end. Thai media have been reporting that the Thailand government has a draft agreement with the Philippines to settle the dispute over Thailand's measures against imported tobacco products from the Philippine. There were no details published on the draft agreement itself, but the move is a positive step towards preventing any issues moving forward.

So how does that relate to the Philippine auto industry? For the last year or so, the Philippine government has been considering trade retaliatory measures against Thailand over a wide variety of stuff: maize (corn), rice, and many other products including auto parts.

The DTI has a petition with the Tariff Commission (TCI WS No. FTA-2021-DS371-Various Products), and the report is already with NEDA. It aims to suspend tax and tariff concessions on these products as a means to bring Thailand to the table to discuss.

If Thailand ceases what they have been doing with Philippine tobacco, the Philippines could withdraw these proposed retaliatory measures. That means prices of Thai-made auto parts won't be affected. And as we all know too well, many vehicles built in the Philippines do rely on auto parts or CKD from Thailand.

SOURCE: https://www.nationmultimedia.com/in-focus/40015227