WT/DS371/32  
 
14 February 2020  
(20-1158) Page: 1/3 
  Original: English  
 
 
THAILAND – CUSTOMS A ND FISCAL MEASURES O N CIGARETTES  
FROM THE PHILIPPINES  
RECOURSE TO ARTICLE 22.2 OF THE DSU BY THE PHILIPPINES  
The following communication, dated  12 February 2020 , from the delegation of the Philippines  to the 
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 22.2 of the DSU.  
 
 
_______________  
 
 
1. Pursuant to Article 22.2 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes  ("DSU") and the expiry of the agreed reasonable period of time (RPT) on 
15 May 2012, the Philippines hereby requests authorization from the Dispute Settlement Body 
("DSB") to suspend the application to Thailand of concessions or other obligations  under the covere d 
agreements , covering trade in an amount of  approximately  USD 594 million annually . 
2. In addition, in respect of certain notification requirements regarding the tax base for 
value -added tax ( "VAT"), the Philippines seeks authorization to suspend concessions  or other 
obligations in an annual amount based on a formula commensurate with the trade effects to be 
caused.  
3. The requested level of suspension is equivalent to the level of nullification or impairment of 
the Philippines' benefits as a result of Thailand 's failure to comply with the DSB's recommendations 
and rulings in th is dispute.  The Philippines seeks authorization to update the relevant amounts to 
account for changes in the circumstances.  
4. In preparing this request, the Philippines has followed the pri nciples and procedures set forth 
in Article 22.3 of the DSU.  The Philippines intends to take measures in the goods sector under 
agreements described in Article 22.3(g)(i) of the DSU .   
5. The Philippines intends to hold public consultations to determine the imported Thai goods to 
be subject to suspension measures.  The Philippines will provide the DSB with a list of the chosen 
goods, and the levels of tariffs to be applied, in due course.  
Thailand's Failure to Implement the DSB's Recommendations and Rulings  
 
6. On 17 November 2008, the DSB established the original panel in this dispute to examine a 
number of Thailand's customs valuation and tax measures.  The original panel and the 
Appellate  Body found that Thailand 's measures violated the  Customs Valuation Agreement  ("CVA") 
and the General Agreement on Tariffs and Trade 1994  ("GATT  1994").1  On 15 July 2011 , the DSB 
adopted the original panel and Appellate Body report s.2  The DSB recommend ed that Thailand bring 
its measures into conformity with its WTO obligations.   
 
1 Panel Report, Thailand – Cigarettes ; Appellate Body Report, Thailand – Cigarettes . 
2 WT/DS/371/11, 18 July 2011, Thailand – Cigarettes , Appellate Body Report and Panel Report, Action 
by the Dispute Settlement Body.  WT/DS371/32  
 
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  7. The Philippines and Thailand agreed "that the reasonable period of time to implement the 
DSB's recommendations and rulings regarding paragraphs 8.1, 8.2, 8.3(a) and 8.4 of the panel 
report would be 10 months, expiring on 15 May 2012 ."3 
8. Thailand has failed to comply with the DSB's recommendations and rulings, within the agreed 
upon reasonable period of time, including through the following four WTO -inconsistent measures 
taken to comply ( "four MTTCs "):  
(1) criminal charges brought against  the Thai branch office of Philip Morris (Thailand) Limited 
("PMTL") regarding the alleged under -declaration of the customs values of 272 entries of 
cigarettes imported into Thailand from 28 July 2003 to 24 June 2006; the charges resulted 
in conviction of PMTL  on 29 November 2019 and the imposition of a fine of approximately 
USD 40.5 million, which was paid on 27 December 2019;  
(2) criminal charges brought against PMTL regarding the alleged under -declaration of  the 
customs value of  780 entries of cigarettes importe d from 22 January 2002 to 28  July 2003;  
(3) a ruling by Thailand's Board of Appeals, issued on 16 November 2012 regarding 210 entries 
of cig arettes between 2002 to 2003; and,  
(4) the notification requirements imposed under Thailand's  amended VAT regime . 
 
9. As a result of Thailand's failure to comply with the DSB's recommendations and rulings, the 
Philippines is entitled to redress under Article 22 of the DSU.  
Request for DSU Article 22 .2 Authorization to Suspend Concessions  
 
10. On 7 June 2012, the Philippines and Thailand informed the DSB of the ir "Agreed Procedures 
under Articles 21 and 22 of the Dispute Settlement Understanding " ("sequencing understanding ").4  
Therein, Thailand fully com mitted that it would not object to any such request under Article 22.2 of 
the DSU, by the Philippines , made after the expiry of the time period specified in the first sentence 
of Article 22.6 of the DSU.  
11. In good faith compliance with the sequencing underst anding, which provided that both parties 
would cooperate so that the appeal would be resolved within 90 days from its initiation, and in 
reliance on Thailand's commitment not to object to a request under Article 22.2 made after the 
expiry of the time perio d in Article 22.6 , the Philippines initiated two compliance proceedings.  
12. On 12 March 2018 and 12 July 2019 , respectively, the compliance panel issued its reports.  
The panel found that Thailand had failed to comply with the DSB's recommendations and rulin gs.  
On 9 January 2019 an d 9 September 2019, respectively, Thailand appealed the compliance panel 
reports  to the Appellate Body .  On 10  December 2019, the  Division in each appeal informed  the 
parties that it had indefinitely  suspended  its work.  
13. The sequenc ing understanding provides that the parties shall endeavor to find a prompt 
solution to any procedural issues that arise and that are not properly addressed in the understanding, 
and that appeals would be resolved within "no more than 90 days from the date  of notification of 
the appeal to the DSB. "  It may be noted that Thailand had filed their notifications of appeal 
respectively on 09 January 2019 and on 09 September 2019.  
14. The sequencing understanding does not expressly address the current institutional a nd 
budgetary constraints that have led the Appellate Body to suspend its work indefinitely.  However, 
Article 22.1 does require Thailand to fully comply within the agreed reasonable period of time and 
does grant to the Philippines the right to request auth orization for the suspension of concessions or 
other obligations under the covered agreements should no mutually acceptable compensation be 
reached within 20 days from the expiry of the agreed reasonable period of time.   
15. The Philippines has repeatedly, mo st recently last 13 December 2019, requested Thailand to 
engage  in good faith efforts to bring its measures into compliance or to find mutually acceptable and 
 
3 WT/DS371/16, 7 June 2012, Thailand – Cigarettes , Understanding b etween the Philippines and 
Thailand Regarding Procedures under Articles 21 and 22 of the DSU, concluded on 1 June 2012, preamble, 
p. 2. 
4 WT/DS371/16, 7 June 2012, Thailand – Cigarettes , Understanding  between the Philippines and 
Thailand Regarding Procedures under Articles 21 and 22 of the DSU, concluded on 1 June 2012.  WT/DS371/32  
 
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  prompt solutions, as well as to cooperate in good faith on the current procedural impasse.  
Regre ttably, Thailand has failed to resolve this matter.  
16. The Philippines, therefore, has no choice but to proceed to request authorization to suspend 
concessions or other obligations, as set out in paragraphs 1, 2 and 3 above.  
 
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