WT/DS371/RW2/Add.1  
 
12 July 2019  
(19-4565) Page: 1/120 
  Original: English  
 
  
THAILAND – CUSTOMS A ND FISCAL MEASURES O N CIGARETTES  
FROM THE PHILIPPINES  
SECOND RECOURSE TO A RTICLE 21.5 OF THE D SU BY THE PHILIPPINE S 
REPORT OF THE PANEL  
Addendum  
This addendum  contains Annexes A to C to the Report of the Panel to be found in document  
WT/DS371/RW2 . 
 
 
_______________  
 
 WT/DS371/RW2/Add.1  
 
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  LIST OF ANNEXES  
ANNEX  A 
PANEL DOCUMENTS  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
Annex A -2 Interim Review  10 
 
ANNEX B  
ARGUMENTS OF THE PAR TIES 
Contents  Page  
Annex  B-1 Integrated e xecutive summary of the arguments of the Philippines  58 
Annex  B-2 Integrated e xecutive summary of the arguments of Thailand  81 
ANNEX  C 
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex C -1 Integrated e xecutive summary of the arguments of the European Union  107 
Annex C -2 Integrated e xecutive summary of the arguments of Indonesia  112 
Annex C -3 Integrated e xecutive summary of the arguments of Japan  115 
Annex  C-4 Integrated e xecutive summary of the arguments of  the United States   117 
 
 
 WT/DS371/RW2/Add.1  
 
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  ANNEX  A 
PANEL  DOCUMENTS  
 
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
Annex A -2 Interim Review  10 
 
  WT/DS371/RW2/Add.1  
 
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ANNEX  A-1 
WORKING PROCEDURES O F THE PANEL  
As amended on 30 May 2018  
 
General  
 
1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on Rules 
and Procedures Governing the Settlement of Disputes (DSU).  
2. In addition, the following Working Procedures shall apply. The Pan el reserves the right to modify 
these procedures as necessary, after consultation with the parties.  
3. The parties to the dispute (hereinafter "the parties") and the Members participating as third 
parties to the second compliance panel proceeding (hereinafter  "third parties") are also subject to 
the additional working procedures concerning third party access to the final report of the Panel in 
the Philippines' first recourse to Article 21.5 of the DSU, adopted by the Panel on 24 May 2018 
(electronic copy provi ded).  
Timetable  
4. The Panel will provide the parties and third parties with a timetable for the panel proceeding . 
The Panel reserves the right to adjust the timetable upon request of a party or third party, or in the 
light of unforeseen developments, followi ng consultation with the parties.  
Confidentiality  
5. The deliberations of the Panel and all documents submitted to it shall be kept confidential.  
6. Nothing in the DSU or in these Working Procedures shall preclude a party or third party from 
disclosing statements of its own positions to the public.  
7. A party may indicate particular instances of confidential information contained in its submissions 
that it wishes to be redacted within square brackets in the report of the Panel by placing the 
information between square brackets in its submissions. The cover letter to any submission 
containing such information shall give notice of this request and explain w hy that party considers 
the information should be redacted. The Panel may redact in its interim/final reports all such 
information submitted to the Panel by a party that the submitting party has designated for redaction 
in its submissions. Such information  may include particularly sensitive information  submitted to the 
Panel in the course of these proceedings that is not otherwise available in the public domain. The 
designation of specified information by one party may, in the absence of any objection by th e other 
party, be presumed to constitute confidential information; however, the Panel retains the authority, 
as adjudicator, to determine, based on objective criteria, whether such information is, in fact, 
confidential and should be redacted, and the Panel  will explain the basis for its decision in its report.   
8. Where a party designates its written submissions to the Panel as confidential , it shall also, upon 
request of a Member, provide a non -confidential summary of the information contained in its 
submissi ons that could be disclosed to the public. Non -confidential summaries shall normally be 
submitted no later than one week after the written request is presented to the Panel, unless a 
different deadline is granted by the Panel where good cause is shown.  
9. The Panel shall meet in closed session. The parties and third parties shall be present at the 
meetings only when invited by the Panel to appear before it.  
10. Each party's written submissions, written answers to questions and comments thereon, 
comments on the des criptive part of the report, and written request for review of precise aspects of WT/DS371/RW2/Add.1  
 
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  the interim report and comments on the other party's request shall be made available to the other 
party and, where appropriate, to the third parties.  
11. All submissions and exhi bits presented by the parties in the Philippines' first recourse to Article 
21.5 of the DSU  shall form part of the record of this proceeding. Parties, therefore, may incorporate 
by reference those submissions or exhibits in their argumentation in this proc eeding. In this case, 
upon request, the parties shall provide to the third parties copies of their own submissions or exhibits 
from the Philippines' first recourse to Article 21.5 of the DSU to which they refer in this proceeding. 
Those submissions and exh ibits shall be treated as confidential and shall not be disclosed to the 
public.  
Submissions  
12. Before the substantive meeting of the Panel with the parties, each party shall submit a written 
submission in which it presents the facts of the case and its arguments, in accordance with the 
timetable adopted by the Panel. Each party shall also submit a second written rebuttal submission 
before the substantive meeting, in accordance with the timetable adopted by the Panel.  
13. A party shall submit any request for a preliminary ruling at the earliest possible opportunity and 
in any event no later than in its first written submission. If the Philippines requests such a ruling, 
Thailand shall submit its response no later than in its first written submission. If Thaila nd requests 
such a ruling, the Philippines shall submit its response no later than in its second written submission. 
Exceptions to this procedure shall be granted upon a showing of good cause. The Panel reserves the 
right to ask the parties to submit copie s of their preliminary submissions to the third parties, if and 
when appropriate. The Panel may decide to rule on any preliminary request at an early stage of the 
proceedings, or may instead defer its ruling to a later stage of the proceedings. If the Pane l decides 
to rule on any preliminary request at an early stage of the proceedings, it shall communicate that 
intention to the parties. In that case, the Panel reserves the right to hear the parties in the most 
appropriate manner, be it in writing or electr onically or otherwise. Should a meeting on the 
preliminary ruling request be held, the Panel will consult the parties on suitable dates for the 
meeting.  
14. Each party shall endeavour to submit all factual evidence to the Panel with its first written 
submissio n and, in any event, no later than during the substantive meeting, except with respect to 
evidence necessary for purposes of answers to questions or comments on answers provided by the 
other party. Exceptions to this procedure shall be granted upon a showi ng of good cause. Where 
such exception has been granted, the Panel shall accord the other party a period of time for 
comment, as appropriate, on any new factual evidence submitted after the substantive meeting.  
15. Where the original language of an exhibit is not a WTO working language, the submitting party 
or third party shall submit a translation into the WTO working language of the exhibit at the same 
time.  Where the exhibit is an excerpt from a larger document, of which only the excerpt is referred 
to by e ither party, the larger original document shall be submitted in the original language and the 
relevant excerpt translated and relied on without the need to translate the larger source document.  
Exceptionally, the Panel may grant reasonable extensions of t ime for the translation of such exhibits 
upon a showing of good cause.  
16. Any objection as to the accuracy of a translation should be raised promptly in writing, preferably 
no later than the next filing or meeting (whichever occurs earlier) following the subm ission which 
contains the translation in question. Any objection shall be accompanied by a detailed explanation 
of the grounds of objection and an alternative translation. The other party may comment on the 
objection and alternative translation. If the par ties are unable to agree on a common translation, 
the Panel shall request an appropriate translator to translate the text in question. If the parties are 
still unable to agree on a correct translation, the Panel shall rule on this matter as promptly as 
possible thereafter.  
17. Any public ally available WTO document that is relied on by either party need not be produced 
as an exhibit. Such public ally available WTO documents are deemed to be part of the Panel record. 
The other party, third parties, the Panel, or t he Appellate Body may, at any stage, request a copy 
of the relevant publicly available WTO documents.  WT/DS371/RW2/Add.1  
 
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  18.  Where either party refers to the definition of a word from the New Shorter Oxford English 
Dictionary, that party need not produce excerpts from this dict ionary as exhibits, unless requested 
to do so by the Panel or the other party. However, if a party wishes to provide the relevant excerpt 
as an exhibit, it is permitted to do so. If a party relies on any other dictionary, it is required to 
provide the rele vant excerpts as exhibits. Such definitions of words from the New Shorter Oxford 
English Dictionary are deemed to be part of the Panel record. The other party, third parties, the 
Panel, or the Appellate Body may, at any stage, request a copy of the relevan t dictionary definitions.  
19. In order to facilitate the work of the Panel, each party and third party is invited to make its 
submissions in accordance with the Editorial Guide for English WTO Panel Submissions (electronic 
copy provided).  
20. To facilitate the mai ntenance of the record of the dispute and maximize the clarity of 
submissions, each party and third party shall sequentially number its exhibits throughout the course 
of the dispute. The parties shall continue the exhibit numbering used in the first Articl e 21.5 
proceedings. Thus, e xhibits submitted by the Philippines shall be numbered PHL -234, PHL-235, etc. 
and exhibits submitted by Thailand shall be numbered THA -57, THA -58, etc. If the last exhibit in 
connection with the first submission in these proceedi ngs was numbered, for example, PHL -240, the 
first exhibit of the next submission thus would be numbered PHL -241.  
21. Each party may cross -refer to an exhibit submitted by another party by using the number 
attributed to the exhibit by the party who initially s ubmitted it. If a party submits a document that 
has already been submitted as an exhibit by the other party, it should explain why it is submitting 
that document again.  
22. Each party shall provide an updated consolidated exhibit list with each submission made . 
Questions prior to the substantive meeting  
23. Prior to the substantive meeting, the Panel may pose written questions to the parties and the 
parties shall provide written responses, in accordance with the timetable adopted by the Panel. The 
Panel reserves th e right to send questions to the parties at any time, in particular, after receiving 
the first written submissions and before the second sets of submissions, as well as after receiving a 
request for a preliminary ruling. In the event that the Panel sends q uestions to the parties that are 
not expressly provided for in the Panel's timetable, the Panel shall, to the extent possible, give 
favourable consideration to requests by the parties, in particular joint requests, for modifications to 
the Panel's timetabl e in the light of the Panel's additional questions.  
Substantive meeting  
24. Each party and third party has the right to determine the composition of its own delegation when 
meeting with the Panel. Each party and third party shall have the responsibility for all members of 
its own delegation and shall ensure that each member of suc h delegation acts in accordance with 
the DSU and these Working Procedures, particularly with regard to the confidentiality of the 
proceedings.   
25. The parties and the third parties shall provide a list of the participants of their delegation to the 
Secretary  of the Panel, no later than 5.00 p.m. three working days before the substantive meeting 
commences.  
26. The substantive meeting of the Panel with the parties shall be conducted as follows:  
a. The Panel shall invite the Philippines to make an opening statement to present its case 
first. Subsequently, the Panel shall invite Thailand to present its point of view. The maximum 
length of each opening statement may be fixed by the Panel , after consulting the parties. 
The Panel shall inform the parties of any such time  limit at least four weeks in advance of 
the hearing. Before each party takes the floor, it shall provide the Panel and other 
participants at the meeting with a provisional written version of its statement. Each party 
shall make available to the Panel and the other party the final version of its opening 
statement as well as its closing statement, if any, preferably at the end of the meeting, and WT/DS371/RW2/Add.1  
 
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  in any event no later than 5.00 p.m. on the first working day following the last day of the 
meeting.  
b. After the  conclusion of the statements, the Panel shall give each party the opportunity 
to ask each other questions or make comments . Each party shall then have an opportunity 
to answer these questions orally. Each party shall send in writing, in accordance with th e 
timetable adopted by the Panel, any questions to the other party to which it wishes to receive 
a response in writing. Each party shall respond in writing to the other party's written 
questions in accordance with the timetable adopted by the Panel.  
c. The Panel may subsequently pose questions to the parties. Each party shall then have 
an opportunity to answer these questions orally. The Panel shall send in writing, in 
accordance with the timetable adopted by the Panel, any questions to the parties to which  
it wishes to receive a response in writing. Each party shall respond in writing to such 
questions in accordance with the timetable adopted by the Panel.  
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to 
present a b rief closing statement, with the Philippines presenting its statement first.  
Third parties  
27. Each third party may  transmit to the Panel a written submission prior to the substantive meeting 
of the Panel with the parties, but after the written submissions and  rebuttal submissions of the 
parties, in accordance with the timetable adopted by the Panel.  
28. Each third party may also  present its views orally during a session of the substantive meeting, 
set aside for that purpose. Each third party shall provide to the Panel the list of members of its 
delegation in advance of this session and no later than 5.00 p.m. the previous working  day.  
29. The third party session shall be conducted as follows:  
a. All third parties may be present during the entirety of the session set aside for third 
parties.  
b. The Panel shall first hear the arguments of the third parties in alphabetical order. Third 
parties present at the third party session and intending to present their views orally at that 
session, shall provide the Panel, the parties and other third parties with provisional written 
versions of their statements before they take the floor. Third par ties shall make available to 
the Panel, the parties and other third parties the final versions of their statements, preferably 
at the end of the session, and in any event no later than 5.00 p.m. of the first working day 
following the session.  
c. After the third parties have made their statements, the parties will be given the 
opportunity  to ask the third parties questions for clarification on any matter raised in the 
third parties' submissions or statements. Each party shall send in writing, in accordance w ith 
the timetable adopted by the Panel, any questions to a third party to which it wishes to 
receive a response in writing. Each third party shall respond in writing to such questions in 
accordance with the timetable adopted by the Panel.  
d. The Panel may subsequently pose questions to the third parties. Each third party shall 
then have an opportunity to answer these questions orally. The Panel shall send in writing, 
in accordance with the timetable adopted by the Panel, any questions to the third parties t o 
which it wishes to receive a response in writing. Each third party shall respond in writing to 
such questions in accordance with the timetable adopted by the Panel.  
Descriptive part  
30. The description of the arguments of the parties and third parties in the  descriptive part of the 
Panel report shall consist of executive summaries provided by the parties and third parties, subject 
to any modifications deemed appropriate by the Panel. The executive summaries shall be annexed WT/DS371/RW2/Add.1  
 
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  as addenda to the report. These exe cutive summaries shall not in any way serve as a substitute for 
the submissions of the parties and third parties in the Panel's examination of the case.  
31. Each party shall submit a consolidated executive summary of the facts and arguments as 
presented to th e Panel in its written submissions and oral statements, in accordance with the 
timetable adopted by the Panel. These summaries may also include a summary of responses to 
questions. Each such executive summary shall not exceed 30 pages. The Panel will not s ummarize 
in the descriptive part of its report, or annex to its report, the parties' responses to questions.  
32. Each third party shall submit an executive summary of its arguments as presented in its written 
submission and statement in accordance with the tim etable adopted by the Panel. This summary 
may also include a summary of responses to questions, where relevant. The executive summary to 
be provided by each third party shall not exceed 6 pages.  If a third -party submission and/or oral 
statement does not ex ceed six pages in total, this may serve as the executive summary of that third 
party's arguments.  
33. The Panel may revise the page limits upon request of a party.  Paragraph 3 7 below shall apply 
to the service of executive summaries.  
Interim review  
34. Following issuance of the interim report, each party may submit a written request to review 
precise aspects of the interim report and request a further meeting with the Panel, in accordance 
with the timetable adopted by the Panel. The right to request such a meeting  shall be exercised no 
later than at the time the written request for review is submitted.  
35. In the event that no further meeting with the Panel is requested, each party may submit written 
comments on the other party's written request for review, in accorda nce with the timetable adopted 
by the Panel. Such comments shall be limited to commenting on the other party's written request 
for review.  
36. The interim report, as well as the final report prior to its official circulation, shall be kept strictly 
confidentia l and shall not be disclosed.  
Service of documents  
37. The following procedures regarding service of documents shall apply:  
a. Each party and third party shall submit all documents to the Panel by filing them with 
the DS Registry.  
b. Each party and third party  shall file its documents with the DS Registry and serve copies 
on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on the 
due dates established by the Panel.  
c.  Each party and third party shall file 1 paper copy of all doc uments it submits to the 
Panel. The DS Registrar shall stamp the documents with the date and time of the filing.  
d. Each party and third party shall also provide an electronic copy of all documents it 
submits to the Panel at the same time as the paper ver sions, preferably in Microsoft Word 
format, either on a CD -ROM, a DVD or as an e -mail attachment. If the electronic copy is 
provided by e -mail, it should be addressed to *****@wto.org  and ***** @wto. org. 
CD-ROMs or DVDs shall be filed with the DS Registry.  The electronic version shall constitute 
the official version for the purposes of the record of the dispute.  
e. Each party shall serve on the other party electronic copies only of any document 
submitted to the Panel. Each party shall, in addition, serve on  all third parties electronic 
copies only of its written submissions in advance of the substantive meeting with the Panel, 
unless a third party requests service of a paper copy.  WT/DS371/RW2/Add.1  
 
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  f. Third parties shall serve on all other parties and third parties electronic  copies only of 
any document submitted to the Panel, unless another third party requests service of a paper 
copy.  
g. Each party and third party shall confirm, in writing, that copies have been served as 
required at the time it provides each document to the  Panel.  
h. The Panel shall provide the parties with an electronic version of the descriptive part, the 
interim report and the final report, as well as of other documents as appropriate. When the 
Panel transmits to the parties or third parties both paper an d electronic versions of a 
document, the electronic version shall constitute the official version for the purposes of the 
record of the dispute.  
Correction of clerical errors in submissions  
38. The Panel may grant leave to a party or third party to correct clerical errors in any of its 
submissions (including paragraph numbering and typographical mistakes). Any such request should 
identify the nature of the errors to be corrected, and should be ma de promptly following the filing 
of the submission in question.  
 
 
 
 
 
 WT/DS371/RW2/Add.1  
 
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  ANNEX A -2 
INTERIM REVIEW  
1  INTRODUCTION  
1.1.  On 4 March 2019, the Panel issued its Interim Report to the parties. On 18 March 2019, the 
Philippines and Thailand each submitted written requests for the Panel to review aspects of the 
Interim Report. On 1 April 2019, each party submitted comments on the other's requests for review. 
Neither party requested an interim review meeting.  
1.2.  In its request for r eview, Thailand made seven substantive comments pertaining to specified 
paragraphs of the Interim Report. Specifically, it requested deletion of one paragraph which in its 
view did not accurately reflect its argumentation; it suggested five relatively mino r changes to the 
wording used in various paragraphs; and it asked the Panel to provide a hypothetical example 
illustrating the manner in which, in the event of suspicion of customs fraud, an authority could make 
an allegation of customs fraud in a way that  neither the constituent elements of the customs fraud 
accusation nor the associated penalty would be covered by the CVA or, alternatively, that both 
aspects would be covered by the CVA but would be adopted in a manner consistent with the CVA.  
1.3.  In con trast to the limited number of substantive comments from Thailand, the Philippines made 
more than 50 substantive comments pertaining to specified paragraphs and subsections of the 
Report. Among other things, its lengthy submission invited reconsideration o f the Panel's approach 
to the following ten issues:  
a. a proposed reformulation of the Panel's articulation of the legal standard under Article 6.2 
of the DSU, along with a proposed restructuring of the Panel's reasoning to consider first 
"the terms of the panel request themselves" before turning to confirm this finding in the 
light of the "attendant circumstances"1;  
b. an extended argument expressing the Philippines' "deep concern" with the Panel's 
statement that "in the light of the presumption of goo d faith on the part of Thailand, the 
Panel accepts the veracity of Thailand's representations that its authorities received the 
pricing and cost information reported by PM Indonesia in the CK -21A forms", as well as its 
disagreement with the Panel's stateme nt to the effect that the parties agree on the factual 
basis for Thailand's measures2; 
c. an extended argument linked to the Panel's statement that it "is inclined to agree with 
Thailand" that the authorities of an importing country can treat information r eceived from 
a foreign government as "presumptively reliable", including a request that the Panel 
ground its reasoning in this subsection more firmly in the relevant elements of the legal 
standards in the CVA 3;  
d. an extended discussion of a series of po ints aimed at revising, expanding and restructuring 
the Panel's analysis to deal more fully with Thailand's "insufficient information" arguments, 
and in particular to draw out and address the differences between Thailand's "insufficient 
information" argume nts in this proceeding, and its "ripeness" argument in the first 
compliance panel proceeding4;  
                                                
1 Philippines' request to review the Interim Report, paras. 16 -24. 
2 Philippines' request to review the Interim Report, paras. 37 -75. 
3 Philippines' request to review the Interim Report, paras. 83 -104. 
4 Philippines' request to review the Interim Report, pa ras. 121 -145. 
 WT/DS371/RW2/Add.1  
 
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  e. a request that the Panel expand and clarify its reasoning on the interpretation of the term 
"customs administration" in the CVA in the light of Thailand's re liance on the definition of 
"Customs" in the Revised Kyoto Convention5;  
f. a reiteration of the Philippines' views on the parallels and differences between the nature 
of the enquiries under Articles 1.1 and 1.2(a) second sentence, aimed at having the Pane l 
revise and expand its discussion of these points6;  
g. an argument as to why the Panel should refrain from stating that the facts are unclear as 
to whether the "actual price" is the "price actually paid or payable" in a way that implies 
a degree of uncer tainty as to the strength of the Panel's finding7, and an argument why 
the Panel should make an affirmative finding as to whether Thailand's measures fall under 
Article 6 or 7 of the CVA, rather than simply making alternative findings8; 
h. a reiteration of  the Philippines' views on why the Panel should find a violation of the 
obligation to adhere the sequential application of customs valuation methods based on the 
lack of an explanation by the Thai authorities, and why the Panel should consider 
Thailand's ex post rationalizations on this issue only as a secondary basis, if at all9; 
i. a request that the Panel make certain revisions or additional statements that would 
facilitate the Appellate Body's ability to complete the analysis under Article XX of the GAT T 
1994 in case it reverses the Panel's finding on the non -applicability of Article XX to the 
CVA, including but not limited to the Panel specifying the factual findings that the Appellate 
Body could rely upon for that purpose10; and  
j. an argument as to wh y the Panel should find that Thailand has failed to meet its burden 
of proving its assertion that the 256 NoAs were withdrawn before the Panel's 
establishment, rather than remaining "agnostic" on this factual issue.11 
1.4.  In its subsequent comments, Thai land stated that the Philippines' requests goes "far beyond 
what is intended or appropriate under the DSU at the interim review stage".12 Thailand noted that 
in the Interim Report the Panel had ruled in the Philippines' favour "on virtually all of its clai ms", and 
"[e]xtraordinarily, however, the Philippines still feels compelled to argue at considerable length – 
over forty pages – with how the Panel has done its job".13 Thailand considered that "[t]he DSU does 
not, however, give the Philippines the right t o continue to litigate the case indefinitely, for whatever 
purpose"14, and continued by noting that "[n]o matter how gratifying it may be to the Philippines to 
continue re -litigating points on which it has already prevailed"15, the Panel cannot indulge the se 
efforts. In Thailand's view, the "kinds of litigation tactics displayed by the Philippines in its comments 
… affect the due process rights of Thailand, which is placed in the invidious position of having to 
choose between respecting the rules or also re -litigating the case".16 Thailand states that in its 
comments it "chooses to respect the rules"17, and that "the fact that Thailand does not address all 
of the Philippines' comments should not be interpreted as Thailand agreeing with those other 
comments".18      
1.5.  In accordance with Article 15.3 of the DSU, this section of the Report sets out the Panel's 
response to the parties' requests for review of precise aspects of the Report made at the interim 
review stage. The Panel discusses the parties' reque sts for substantive modifications below. The 
Panel begins by setting out the general parameters guiding its consideration of the parties' requests 
                                                
5 Philippines' request to review the Interim Report, paras. 148 -153. 
6 Philippines' request to review the Interim Report, paras. 176 -185. 
7 Philippines' request to review the Interim Report, paras. 172 -175. 
8 Philippines' request to review th e Interim Report, paras. 192 -201. 
9 Philippines' request to review the Interim Report, paras. 202 -212. 
10 Philippines' request to review the Interim Report, paras. 216 -223. 
11 Philippines' request to review the Interim Report, paras. 224 -230. 
12 Thailand's  comments on the Philippines' request for review of the Interim Report, para. 1.2.  
13 Ibid. 
14 Thailand's comments on the Philippines' request for review of the Interim Report, para. 1.3.  
15 Thailand's comments on the Philippines' request for review of the  Interim Report, para. 1.8.  
16 Ibid. 
17 Ibid. 
18 Thailand's comments on the Philippines' request for review of the Interim Report, para. 1.1.  WT/DS371/RW2/Add.1  
 
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  for interim review, and then addresses the requests individually, in sequence according to the 
sections and p aragraphs to which they pertain. To assist in the reader's comprehension of the 
changes made, the Panel's discussion of each substantive comment is generally followed by showing 
any substantive revisions in track changes.  
1.6.  In addition to the substanti ve requests that are discussed below, various corrections or 
improvements of a typographical or editorial nature were made to the Report, including but not 
limited to those suggested by the parties in their interim review comments. In the interest of brevi ty 
the Panel will refrain from discussing such changes below.  
1.7.  The discussion below refers to the paragraph numbering in the Final Report (which is 
unchanged from the Interim Report).  
2  GENERAL PARAMETER S GUIDING THE PANEL' S CONSIDERATION OF T HE PAR TIES' 
REQUESTS FOR REVIEW OF THE INTERIM REPOR T  
2.1.  The Panel recalls that the parties have a right to request a review of "precise aspects of the 
interim report" under Article 15.2. As Thailand rightly notes, it is in principle permissible for a panel 
to disregard requests that question "large sections of the interim report".19 In the same vein, past 
panels have declined to consider requests that amounted to a "whole of report review"20, or that 
made "general comments" that were not related to specific paragraphs or footnotes.21 Furthermore, 
a request to change a particular legal or factual finding that is fundamental, and which would have 
the effect of unravelling multiple other key findings, may not qualify as a request to review "precise 
aspects" of t he interim report.22 However, the Panel considers that a request for a specific change 
that is related to one or more identified or readily identifiable paragraphs will in principle constitute 
a request for a review of a "precise aspect" of the Report; fur thermore, as long as a request for 
review is linked to a particular component of a panel's reasoning, it may nonetheless relate to a 
"precise aspect" of the Panel's reasoning without being linked to a particular paragraph. In this case, 
most if not all of the Philippines' requests fulfil the minimal threshold requirement of being related 
to "precise aspects" of the Report in the sense of Article 15.2 of the DSU.  
2.2.  The Panel recalls that Article 15.3 of the DSU mandates that the findings of the panel re port 
"include a discussion of the arguments made at the interim review stage". By directing a panel to 
"include a discussion" in its findings of "the arguments made at the interim review stage", Article 
15.3 presupposes that those same arguments are not al ready clearly addressed in the findings of 
the interim report that the parties' comments are directed at. As Thailand has rightly pointed out, 
several panels have indicated that the interim review stage is not a time to "reargue" or "relitigate" 
issues23, in such a way that would require panels to "defend their findings and conclusions".24 Having 
said that, the Panel agrees with the statement that it should not "exclude a priori from consideration 
any request for review from either party on the sole basis that it would seek reconsideration by the 
Panel of some of its determinations".25 There are instances in which prior panels have changed their 
approach to certain substantive issues, including their conclusions on certain claims, in the light of 
the parties' interim review comments.26 Indeed, in both the original proceeding and in the first 
                                                
19 Thailand's comments on the Philippines' request for review of the Interim Report (referring to Panel 
Report, Japan – Apples (Article 21.5 – US), para. 7.21, and Panel Report, Australia – Salmon , para. 7.3).  
20 Panel Report, Australia – Salmon , para. 7.3.  
21 See e.g. Panel Report s, Japan – Apples (Article 21.5 – US), para. 7.21; Canada – Continued 
Suspension , para. 6.17, and US – Continued Suspension, para. 6.18; Indonesia – Iron or Steel Products 
(Chinese Taipei) , Annex A -3, para. 2.4.  
22 See e.g. Panel Re port, Indonesia — Iron or Steel Products (Chinese Taipei) , Annex A -3, para. 2.4.  
23 See e.g. Panel Reports, Japan – DRAMs (Korea) , para. 6.2; Japan – Apples (Article 21.5 – US), para. 
7.23; US – Poultry (China) , para. 6.32: EU – Energy Package , paras. 6.13, 6.31, 6.36, 6.42, 6.45, 6.47, 6.55.  
24 Panel Reports, Japan – DRAMs (Korea) , para. 6.2;and Indonesia — Iron or Steel Products (Chinese 
Taipei) , Annex A -3, para. 2.3.  
25 Panel Report, US – Tuna II (Mexico) , para. 6.3.  
26 See e.g. Panel Reports, US – Carbon Steel , para. 7.24 and paras. 8.135 -8.145; and EC and certain 
member States – Large Civil Aircraft , paras. 6.230 -6.231.  
 WT/DS371/RW2/Add.1  
 
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  recourse to Article 21.5 in this dispute, the panels' approach to certain substantive issues was 
modified in the light of the parties' comments at the interim revi ew stage.27  
2.3.  The Panel has considered Thailand's statement that the Philippines' request for review of the 
Interim Report "is not a request for review of the Panel's Report", but instead "a request by the 
Philippines to draft itself the report using its preferred structure and language".28 The Panel notes 
that w hile the wording of Article 15.3 does not confine requests for review to typographical, stylistic, 
or editorial changes, those types of changes also fall squarely within the scope of "precise a spects" 
that may be reviewed. For example, a review of Section 6 of the Report in the first recourse to Article 
21.5 affords multiple examples of the Panel making revisions, at the request of the parties, to ensure 
the use of consistent terminology; to use  wording that fairly and accurately characterized the parties' 
arguments on an issue; to avoid ambiguity or unhelpful vagueness; to transform certain unstated 
premises in the Panel's reasoning into explicit statements; and/or to provide a more precise 
articulation of certain premises or steps in the Panel's reasoning. The Panel made such changes 
where it considered them to be objectively warranted and will follow a similar approach in this 
proceeding.  
2.4.  In this proceeding, as with the first recourse to  Article 21.5, the Panel has received requests 
to address certain arguments or issues that, in the Panel's view, are not strictly necessary to 
resolving the dispute in the light of the findings that it has made. In the context of discussing its 
approach to  the parties' interim review comments in the first recourse to Article 21.5, the Panel 
explained that in exercising its judgement on whether to address certain arguments or disputed 
issues that were not strictly necessary to resolve in the light of its oth er findings, it would balance 
considerations of judicial economy against the equally important interests of contributing to the 
clarification of WTO law and assisting the parties in arriving at a prompt settlement of the dispute.29 
The Panel follows the sa me approach in this case.  
3  INITIAL CONSIDERA TIONS  
3.1  General principles of interpretation and standard of review  
3.1.1   Paragraph 7.12  
3.1.  The Philippines suggests the addition of a further point, as a new paragraph following 
paragraph 7.12 , relating to the standard of review. The Philippines recalls that, in both the original 
proceeding and the first recourse to Article 21.5, an issue arose where Thailand's authorities had 
failed to provide a reasoned and adequate explanation for its customs valuation determinations. The 
Philippines recalls that, building on case law from other covered agreements, both the original panel 
and this Panel emphasized that, in that event, "a panel must find that the authority has failed to 
comply with the relevant obligations".30 The Philippines proposes a new paragraph summarizing this 
additional point.  
3.2.  Thailand does not comment on the Philippines' req uest.  
3.3.  The Panel observes that the Philippines' request pertains to the general discussion regarding 
the standard of review in paragraphs 7.11 and 7.12 of this Report. That brief discussion essentially 
corresponds to the general discussion regarding the standard of review found at paragraphs 7.85 to 
7.87 of the Report in the first recourse to Article 21.5. The Panel recalls that certain aspects of the 
                                                
27 In the first recourse to Article 21.5 in this proceeding, the Panel reconsidered its approach to the 
question of whether its findings under Article III:4 of the GATT 1994 should take account of the factual 
circumstances which changed in the course of the proceeding; at Thailand's request, the Panel made arguendo  
findings on the consistency of the VAT notification requirement with Article III:4 taking into account Thai 
competition law as it existed at the date of the issuance of the Report. (Panel Report, Thailand – Cigarettes 
(Philippines) (Article 21.5 – Philippines) , paras. 6.50 and Section 7.4.5.4 ( "Legislative changes in the course of 
the proceeding").) Furthermore, in the original proceeding, the panel was persuaded to modify its decision not 
to make a recommendation in respect of certain MRSP Notices. (Panel Report, Thailand – Cigarettes 
(Philippi nes), footnote 450.)  
28 Thailand's comments on the Philippines' request for review of the Interim Report, para. 1.2.  
29 Panel Report, Thailand – Cigarettes (Philippines) (Article 21.5 – Philippines) , para. 6.8.  
30 Philippines' request to review the Interim  Report, para. 5 (referring to Panel Report, Thailand – 
Cigarettes (Philippines) (Article 21.5 – Philippines) , para. 7.117, citing Appellate Body Report, US – Steel 
Safeguards , para. 303, and also Panel Report, Thailand – Cigarettes (Philippines) , fn 499).  WT/DS371/RW2/Add.1  
 
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  standard of review were subjected to a more detailed analysis at paragraphs 7.108 -7.121 of the 
Report  in the first recourse to Article 21.5, in the context of the Panel's assessment of the BoA's 
"examination of the circumstances of sale" under Articles 1.1 and 1.2(a) of the CVA. It was in the 
context of that more extended discussion that the Panel referre d, at paragraph 7.117 of its Report, 
to the Appellate Body's statement that " where a competent authority has not provided a reasoned 
and adequate explanation to support its determination, the panel is not in a position to conclude 
that the relevant require ment for applying a safeguard measure has been fulfilled … [and] the panel 
has no option but to find that the competent authority has not performed the analysis correctly." 
With the foregoing in mind, t he Panel is wary of selectively incorporating some sta tements made in 
the context of the discussion at paragraphs 7.108 -7.121 of the Report in the first recourse to Article 
21.5 into the brief exposition of the standard of review found in paragraphs 7.11 and 7.12 of the 
present Report. Furthermore, insofar as  the Philippines' request to restate this point is aimed at 
reinforcing its argument that the Panel should modify its reasoning to find a violation of the obligation 
to adhere the sequential application of customs valuation methods based on the lack of an 
explanation by the Thai authorities (see discussion of paragraphs 7.390 to 7.397 below), the Panel 
considers that the revision that it has made to paragraph 7.390 adequately disposes of this issue. 
Accordingly, rather than selectively incorporating the sta tement that was set forth in paragraph 
7.117, which the Philippines requests be reiterated following paragraph 7.112 of this Report, the 
Panel has instead added a more general cross -reference to the more detailed discussion on the 
standard of review found at paragraphs 7.108 -7-121 of its Report in the first recourse to Article 
21.5. The revised text of paragraph 7.12, together with its new accompanying footnote, reads as 
follows:  
7.12. The Panel recalled the original panel's explanation that the standard of  review 
under the CVA requires a panel to " critically  examine a domestic authority's explanation 
'in depth, and in the light of the facts before the panel'", and its reliance on the Appellate 
Body's statement that an "objective assessment under Article 11 of the DSU must be 
understood in the light of the obligations of the particular covered agreement at issue 
in order to derive the more specific contours of the appropriate standard of review." The 
Panel also recalled the original panel's statement that it would therefore make an 
objective assessment of the matter "in light of the relevant obligations" invoked. The 
Panel recalls that it conducted a more detailed analysis of certain aspects of 
its standard of review when assessing the BoA's examination of the  
circumstances of sale under Articles 1.1 and 1.2(a) of the CVA.  [new FN]  
[new FN] Panel Report, Thailand – Cigarettes (Philippines) (Article 21.5 
– Philippines) , paras. 7.108 -7.121. See also paragraphs 7.146 -7.147.  
3.2  Reliance on the Report in the Philippines' first recourse to Article 21.5  
3.2.1   Paragraph 7.13  
3.4.  The Philippines notes that in paragraph 7.13 , the Panel states that there are "certain 
similarities between the challenged measures, the Philippines' claims, and Thailand's defences" i n 
the first and second compliance proceedings, and that in its list of examples of such similarities, the 
Panel mentions that Thailand "once again" argues that the 2002 -2003 Charges "do not contain 
sufficient information for adjudication (an argument that resembles the 'ripeness' argument that it 
raised in the first recourse to Article 21.5 regarding the 2003 -2006 Charges)". The Philippines 
observes that elsewhere in its findings, the Panel correctly notes that, in the first compliance 
proceedings, Thailand  responded to a question in which it stated that, in those proceedings, it was 
not arguing that the 2003 -2006 Charges at issue lacked "sufficient information". Thus, the 
Philippines submits that Thailand is not "once again" arguing that the 2002 -2003 Charg es do not 
contain "sufficient information", because Thailand expressly said that it was not making this 
argument in the first compliance proceedings. In the interest of consistency, the Philippines invites 
the Panel to delete the reference to Thailand's "i nsufficient information" arguments from paragraph 
7.13.   
3.5.  Thailand does not specifically comment on the Philippines' request. However, elsewhere in its 
comments on the Philippines' requests, Thailand objects to the Philippines' proposed changes that 
are partially aimed at ensuring that the Panel more clearly draw out and address the differences 
between Thailand's "insufficient information" arguments in this proceeding, and its "ripeness" WT/DS371/RW2/Add.1  
 
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  argument in the first compliance panel proceeding (see the parti es' comments below on "Existence 
of a challengeable measure").  
3.6.  The Panel has revised the wording of paragraph 7.13 to avoid making the impression that 
Thailand formulated an argument in terms of "insufficient information" in the first recourse to Ar ticle 
21.5. The Panel notes that the Philippines has made other interim review requests regarding the 
Panel's findings on Thailand's "insufficient information" argument, and as with the present request 
these comments reflect the Philippines' view that Thai land's "insufficient information" argument may 
be substantively different from its "ripeness" argument in the first recourse to Article 21.5. The Panel 
addresses this issue in greater detail further below, in the context of addressing the parties' interim 
review comments on the section of the Report addressing that issue. The revised text of paragraph 
7.13 reads as follows:  
7.13. There is a degree of overlap between the issues raised in this proceeding and the 
issues already addressed by the Panel in the fi rst recourse to Article 21.5. This overlap 
is a consequence of certain similarities between the challenged measures, the 
Philippines' claims, and Thailand's defences. Like the 2003 -2006 Charges at issue in the 
Philippines' first recourse to Article 21.5, i t was the Public Prosecutor that filed the 2002 -
2003 Charges, following an investigation and recommendation by the DSI; and like the 
2003-2006 Charges, the 2002 -2003 Charges allege that PMTL violated Section 27 of 
the Thai Customs Act by declaring a "false  price" for Marlboro  and L&M cigarettes 
contrary to the "actual price", with the intention to defraud the government of taxes 
and customs duties. The Philippines claims, as it did in respect of the 2003 -2006 
Charges, that the Pubic Prosecutor has again vio lated Articles 1.1 and 1.2(a) of the CVA 
by rejecting PMTL's transaction values without a valid basis, and that its determination 
of the "actual price" again violates the applicable valuation rules in Articles 2 through 7 
of the CVA. In response, Thailand once again argues that the 2002 -2003 Charges 
do not contain sufficient information for adjudication (an  presents an  argument 
that resembles the "ripeness" argument that it raised in the first recourse to Article 21.5 
regarding the 2003 -2006 Charges ), and o nce again argues  that in any event the CVA 
does not apply to the Charges, and that any inconsistency with the CVA is justified 
under the general exceptions of Articles XX(d) and (a) of the GATT 1994.  
3.3  Thailand's allegations of "illegal acts" by PM Ind onesia  
3.3.1   Paragraphs 7.45, 7.48 and 7.49  
3.7.  The Philippines proposes three sets of changes to section 7.1.3.2 of the Report. These proposed 
changes partially overlap, and for that reason are addressed together below. As elaborated below, 
the Panel h as revised paragraphs 7.45, 7.48 and 7.49  in the light of the Philippines' comments.  
3.8.  First, the Philippines proposes the addition of a new paragraph, to be added at the beginning 
of this section, to reflect how Thailand's argument that the Philippin es "cannot base its claims of 
violation against Thailand on the basis of an admitted illegal act of [PM Indonesia] in a foreign 
jurisdiction" has shifted during the proceeding. The new paragraph proposed by the Philippines would 
indicate that Thailand's de scription of the factual premise of its argument has developed in several 
respects, including with respect to which entity (the importer PMTL as opposed to the producer PM 
Indonesia) purportedly committed the "illegal act", and also with respect to whether  Thailand itself 
is even making any assertion of an "illegal act", and how any such assertion has evolved in the 
course of the proceeding.  
3.9.  Second, and continuing from the first aspect referred to above, the Philippines notes that 
throughout this sec tion spanning paragraphs 7.43 to 7.49, the Panel has not followed a consistent 
approach when summarizing the parties' respective arguments with respect to which entity (the 
importer PMTL as opposed to the producer PTPMI) is implicated by Thailand's asserti on of an "illegal 
act". In this regard, the Philippines submits that although Thailand "shifted position as to which 
entity allegedly committed an illegal act", the Panel has, when describing Thailand's arguments, 
consistently referred to an alleged illega l act by "PM Indonesia", which amounts to "changing" 
Thailand's arguments; however, in describing the Philippines' arguments, the Panel uses the 
different terms "importer", "producer" and "importer and/or the producer".  The Philippines requests WT/DS371/RW2/Add.1  
 
- 16 - 
 
  that the P anel "align the parties' respective arguments to refer consistently to the same Philip Morris 
entity".31 
3.10.   Third, the Philippines requests that the Panel add a sentence to the end of paragraph 7.49, 
cross-referencing the Panel's later conclusion, made in the context of Section 7.2.2 of the Report, 
that there is nothing to suggest that PM Indonesia "engaged in conduct that could be characterized 
as involving an 'illegal act' under Indonesian law, or systematically or intentionally 'decei ved' the 
Indonesian authorities". The Philippines requests this cross -reference to avoid creating the 
misleading impression, in Section 7.1.3.2, that PM Indonesia may have engaged in illegal acts.  
3.11.   Regarding the first request above, Thailand asks the  Panel to reject the Philippines' request 
to insert a new paragraph at the beginning of this section with additional language to "reflect the 
shift in Thailand's arguments". Thailand submits that it is natural and inevitable that both parties' 
arguments wi ll evolve throughout the proceedings, and this is why parties are given various 
opportunities to present arguments in writing and clarify them during oral hearings and in written 
answers to questions. In Thailand's view, it is hardly to be expected, theref ore, that parties will 
articulate their positions in exactly the same way in every submission. Thailand considers that the 
approach proposed by the Philippines would punish a party for exercising its right to develop its 
arguments over the course of a proc eeding, and in effect "become a stick with which the complaining 
Member would be permitted to beat the defending Member".32  
3.12.   Thailand does not specifically comment on the second request above. Regarding the third 
request, Thailand does not specifica lly comment on it either, but makes a point of stating that it 
"agrees only with the Philippines' typographical corrections" in paragraphs 7.49 and 7.163.  
3.13.   The Panel has not included the new paragraph proposed by the Philippines which would 
present a  list, at the beginning of this section, of four selected extracts from Thailand's first written 
submission, second written submission, pre -hearing responses to questions, and post -hearing 
responses to questions. The reason for not including such a paragra ph is that the juxtaposition of 
these statements does not necessarily make clear to the reader what their individual or combined 
relevance is. However, the Panel considers that it would be appropriate to reflect each of the different 
elements of this propo sed paragraph in the discussion that follows, by adding some explanatory text 
to a footnote to paragraph 7.45; by adding an additional sentence and footnote to paragraph 7.48; 
and by adding some additional text to paragraph 7.49. These elements of the part ies' arguments 
are generally presented in terms that remain neutral as to whether there was a "shift" in Thailand's 
argumentation on either of these points. These revisions are discussed sequentially below.  
3.14.   With respect to which entity (the importe r PMTL as opposed to the producer PM Indonesia) is 
implicated by Thailand's assertion of an "illegal act", and the Philippines' view that Thailand's position 
has shifted, the Panel considers that it would be appropriate to reflect this element of the parti es' 
arguments. The Panel notes that it is in paragraph 7.45  that the Panel describes the Philippines' 
arguments with reference to the "importer", "producer" and "importer and/or the producer", which 
contrasts with the reference to "PM Indonesia" throughout  most of the other paragraphs in this 
section. Accordingly, the Panel has added new text to the footnote accompanying the last sentence 
of paragraph 7.45, explaining why there is a degree of misalignment between the parties' arguments 
on which Philip Morri s entity/entities is/are implicated by Thailand's arguments regarding an alleged 
"illegal act". This new text is relegated to a footnote because this issue is immaterial the Panel's 
disposition of the matter before it, and that point is also reflected in t he new text. The additional 
text added to the last footnote to paragraph 7.45 reads:  
7.45. The Philippines responded that this aspect of Thailand's argumentation "does not 
posit a general interpretation of Article 1.2(a) that applies in all cases", but ins tead 
"posits a supposed legal ba r to a WTO claim with the applicability of that legal bar 
premised on the facts of a particular case, i.e., an 'illegal act' by the importer". The 
Philippines indicated that it doubted whether Thailand's proposed legal bar h as any basis 
in WTO law, as it appears to attribute to a WTO Member the legal consequences of an 
"illegal act" allegedly committed by an importer. In any event, the Philippines 
considered that the Panel need not decide whether Thailand's proposed legal bar  has 
                                                
31 Philippines' request to review the Interim Report, para. 12.  
32 Thailand's comments on the Philippines' request to review the Interim Report, para. 2.3.  WT/DS371/RW2/Add.1  
 
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  any basis in WTO law, because Thailand has failed to show that the importer and/or the 
producer committed any "illegal act". [FN] 
[FN] Philippines' second written submission, para. 92. In its first written 
submission, Thailand specified in several places that the illegal acts in 
question were committed by PM Indonesia (see paras. 1.5, 3.47, 3.48, 
3.175, 4.3(c)). However, in its first written submission, Thailand also 
referred to the ille gal act "of the company whose products were valued" 
(paras. 3.79), and of "the entity whose merchandise was valued" (para. 
3.96). Thailand has also occasionally referred more broadly, without 
qualification, to "Philip Morris" (e.g. Thailand's response to P anel 
question No. 164(a), para. 3.13, quoted in paragraph 7.49 below). The 
Panel does not understand Thailand's varying formulations to imply that 
in its view it was the importer, PMTL, that was the entity that engaged in 
the alleged "illegal act". However , the Philippines understood the 
reference to "the company whose products were being valued" to mean 
the PMTL, i.e. the importer (Philippines' second written submission, 
paras. 86 and 98), and thus proceeded to formulate some of its rebuttal 
arguments on t his issue on the premise that Thailand was alleging illegal 
acts by "the importer", or "the importer (and/or the producer)". As a 
result, there is a degree of misalignment between the parties' arguments 
on which Philip Morris entity/entities is/are implica ted by Thailand's 
arguments regarding an alleged "illegal act". However, this issue is 
immaterial the Panel's disposition of the matter before it.  
3.15.   The Panel now turns to the second element of Thailand's argumentation which the Philippines 
requests that the Panel highlight: Thailand's statement, in its pre -hearing responses to questions, 
that "is not alleging anything, [but] simply refer[s] to and describe[s] the Philippines' own arguments 
regarding the Indonesian data". The Panel considers that it w ould also be appropriate to reflect this 
element of the parties' arguments in this section. The Panel notes that it is in paragraph 7.48  that 
the Panel refers to two important clarifications provided by the Philippines in its responses to 
questions. Accord ingly, the Panel has added a new sentence and accompanying footnote to 
paragraph 7.48, reflecting Thailand's argument on this point. This additional sentence and footnote 
have been added with a view to reflecting Thailand's view that it does not consider i tself to be the 
party making any assertion with respect to the existence of an "illegal act", and noting that the 
clarification that Thailand provided in its responses to pre -hearing questions was a reiteration of a 
point it had already made in its second written submission. The revised text of paragraph 7.48, 
together with its new accompanying footnote, reads as follows:  
7.48. The Panel put several questions to Thailand aimed at clarifying the nature and 
relevance of its arguments regarding the alleged "il legal acts" committed by PM 
Indonesia. In its responses to questions, Thailand reiterated that "Thailand is 
not alleging anything", was "simply referring to and describing the Philippines' 
own arguments regarding the Indonesian data", and "uses the term 'i llegal 
act' to paraphrase the Philippines' own argument regarding the content of 
these forms". [new FN]  Thailand made two further  important, interrelated 
clarifications. First, Thailand clarified that this line of argument is not distinct from its 
argument regarding the interpretation of the CVA, which as noted above is basically 
that the authorities of the importing country should have the right to assume that the 
information provided by the exporting country's authority is accurate and truthful. In 
respons e to questions from the Panel, Thailand has clarified that this aspect of its 
argumentation is not to be construed as raising any issue concerning the admissibility 
of the Philippines' claims, whether in terms of the Factory at Chorzów principle, 
estoppel,  the clean hands doctrine , Article  3.10 of the DSU, or otherwise. Second, and 
perhaps most importantly, Thailand clarified that its argumentation regarding the 
proper interpretation of the CVA also "does not hinge on characterizing PM Indonesia's 
actions a s illegal acts under Indonesian law".  
[new FN] Thailand's response to Panel question Nos. 133 and 134, para. 
3.4. In its second written submission, Thailand had already responded to 
the Philippines' contention that Thailand's allegations of "illegal 
conduct" are "wholly unsubstantiated" by stating that "is not the party WT/DS371/RW2/Add.1  
 
- 18 - 
 
  asserting t hese facts", but "is merely citing what the Philippines 
repeatedly and openly states in its submissions before this Panel". 
(Thailand's second written submission, para. 3.58.)  
3.16.   The Panel has made two additions to the text of paragraph 7.49 in the lig ht of the Philippines' 
comments. The second sentence of paragraph 7.49 states, with reference to Thailand's post -hearing 
responses to questions, that the Panel's understanding is that Thailand "continues to be of the view" 
that  what matters "is that the i naccuracy was not caused by some external factor outside the control 
of Philip Morris", but rather "was created knowingly and voluntarily by Philip Morris itself" and that 
the Philippines' is faulting Thailand for "relying on information that suffers from inaccuracies that are 
of Philip Morris' own making". The Panel appreciates that this formulation, and in particular the 
words "continues to be of the view", could be read as the Panel implying that there has been a  
degree of stability and continuity in Th ailand's argumentation, which the Philippines seeks to 
contextualize with its proposed new paragraph setting out how Thailand's arguments have shifted 
and developed throughout the proceeding (and only eventually, at a late stage in Thailand's 
responses to post-hearing questions, culminated in that quoted statement). The Panel has revised 
the second sentence of paragraph 7.49 to express the point of that sentence more clearly.  
3.17.   The second addition to paragraph 7.49 which the Panel has made reflects th e Philippines' 
request that the Panel add a new last sentence to paragraph 7.49 referring to the Panel's later 
conclusion, in Section 7.2.2, that PM Indonesia did not, in any event, engage in any illegal conduct 
under Indonesian law. In the Panel's view, t he more immediately relevant conclusion in Section 
7.2.2 to cross -reference in the context of paragraph 7.49 is the Panel's conclusion that, as result of 
the regulatory constraints mandated by Indonesian excise tax law, the CK -21A forms could not 
represent  PM Indonesia's actual costs and profits, and necessarily erred on the side of overstating 
the actual costs and profits of PM Indonesia and other parties involved in the supply chain. That is 
the more immediately relevant conclusion to cross -reference in t he context of paragraph 7.49 
because Thailand's argument, referred to in the immediately preceding sentence of paragraph 7.49, 
is that what matters is not whether PM Indonesia's conduct is characterized in terms of being an 
"illegal act", but rather that " the inaccuracy was not caused by some external factor outside the 
control of Philip Morris", and "was created knowingly and voluntarily by Philip Morris itself", and that 
the Philippines' is faulting Thailand for "relying on information that suffers from i naccuracies that are 
of Philip Morris' own making". Accordingly, there would be a degree of misalignment if, following 
that exposition of Thailand's remaining argument, the Panel states that it addresses "this argument" 
in the context of Section 7.2, and t hen refers to its conclusion that there is nothing to suggest that 
PM Indonesia committed an "illegal act".  
3.18.   The revised text of paragraph 7.49, reflecting both of the above additions, reads:  
7.49. Based on the foregoing, the Panel considers that it  is sufficiently clear that 
Thailand is not arguing that the Philippines' claims are inadmissible by virtue of any 
alleged "illegal act" on the part of PM Indonesia, and that Thailand's other 
argumentation also does not actually depend on or entail charact erizing PM Indonesia's 
conduct as illegal under Indonesian law. The Panel understands that Thailand , despite 
clarifying that its argumentation regarding the proper interpretation of the 
CVA "does not hinge on characterizing PM Indonesia's actions as illega l acts 
under Indonesian law", continues to be  is of the view  that what matters "is that 
the inaccuracy was not caused by some external factor outside the control of Philip 
Morris", but rather "was created knowingly and voluntarily by Philip Morris itself" and 
that the Philippines is faulting Thailand for "relying on information that suffers from 
inaccuracies that are of Philip Morris' own making". The Panel will address es this 
argument in the context of Section 7.2, when assessing whether the Thai authoriti es 
were entitled to assume that the information reported by PM Indonesia in the CK -21A 
forms was accurate and truthful ., and concludes that as result of the regulatory 
constraints mandated by Indonesian excise tax law (i.e. an external factor 
outside the c ontrol of PM Indonesia), the CK -21A forms could not represent 
PM Indonesia's actual costs and profits, and necessarily erred on the side of 
overstating the actual costs and profits of PM Indonesia and other parties 
involved in the supply chain.  WT/DS371/RW2/Add.1  
 
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  3.4  The Ph ilippines' alternative claims under Article 7.1 of the CVA  
3.4.1   General considerations  
3.4.1.1   Paragraph 7.64  
3.19.   The Philippines notes that in paragraph 7.64 , the Panel recalls at length that the original 
panel found that the Philippines had not ad vanced timely arguments under Article 4 of the CVA, and 
queries whether this lengthy discussion of an opposite finding in the original proceeding facilitates 
the reader's understanding of the issue. The Philippines suggests removing this paragraph or, 
alternatively, moving this discussion to a footnote to the previous paragraph.  
3.20.   Thailand opposes the Philippines' request. In its view, the Panel's description of the situation 
in the original proceeding regarding the Philippines' claim under Article 4 o f the CVA is consistent 
with the Panel's approach in this report of describing similarities and differences between the issues 
that arose in this proceeding and the issues that arose in the original proceeding and in the first 
recourse to Article 21.5. Tha iland submits that there is no basis to remove one of those references, 
simply because it is to a finding by the original panel that was adverse to the Philippines.  
3.21.   The Panel considers that the existing summary in paragraph 7.64 is not unduly long o r detailed 
and serves the useful purpose of facilitating the reader's understanding of how similar issues have 
arisen and been dealt with in the past, including by the panel in the original proceeding in DS371. 
Accordingly, the Panel has not deleted this p aragraph or moved it to a footnote to the previous 
paragraph.  
3.4.2   Article 6.2 of the DSU  
3.4.2.1   Paragraph s 7.67 and 7.71  
3.22.   The Philippines notes that in paragraphs 7.67 and 7.71 , the Panel refers to the degree of 
specificity that could "reasonabl y be expected" from the Philippines in identifying the legal basis for 
the complaint for purposes of Article 6.2 of the DSU. The Philippines queries whether this formulation 
could be misunderstood by some readers to suggest that, in the Panel's view, the l egal standard 
under Article 6.2 for the identification of measures and claims varies according to what can 
"reasonably be expected" of a complainant.  The Philippines understands the Appellate Body to have 
taken the view that a panel request must meet cert ain minimum standards irrespective of the 
circumstances. The Philippines states that a panel request must always meet the basic requirements 
in Article 6.2, and the need to respect these basic requirements cannot be lessened in light of the 
attendant circu mstances; however, if the basic requirements are met, the attendant circumstances 
are relevant in assessing the panel request. Based on the foregoing, the Philippines requests that 
the Panel reformulate the wording to avoid any misunderstanding that the Pa nel considers that the 
legal standard under Article 6.2 varies according to what degree of specificity can "reasonably be 
expected" of a complainant in the circumstances.   
3.23.   Thailand does not comment on this request.  
3.24.   The Panel notes that the third sentence of paragraph 7.67 refers to the requirement in Article 
6.2 of the DSU to identify "the legal basis of the complaint sufficient to present the problem clearly", 
and notes that the final sentence of paragraph 7. 67 then makes clear that "[i]n the Panel's view, 
while a complainant must always  comply with this requirement, regardless of any difficulties it faces 
in obtaining relevant information, such difficulties in obtaining relevant information may be highly 
germane to the appraisal of what is 'sufficient' to present the problem 'clearly' in the circumstances 
of a particular case." (emphasis added) Accordingly, it is clear that the Panel is not suggesting that 
the legal standard under Article 6.2 itself varies acc ording to what can "reasonably be expected" of 
a complainant; this language expressly confirms the opposite. Furthermore, the Panel notes that its 
wording in paragraph 7.67 (what "could reasonably have been expected") is not an original 
formulation. As the  Panel notes in the accompanying footnote, in EC and certain member States – 
Large Civil Aircraft  the Appellate Body stated that, in the circumstances of that case, "it is still not 
clear to us what additional degree of specificity could reasonably have been expected  regarding the 
identification of R&TD funding allocated through the French Government's budgetary process", and 
concluded that "[t]aking into account the public information that existed regarding the French R&TD WT/DS371/RW2/Add.1  
 
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  funding at the time of the United States' panel request", the description set out therein "was 
sufficiently precise" to establish that the funding challenged by the United States was within the 
Panel's terms of reference. Therefore, the Panel does not share the Philippin es' concern that the 
reference to what "could reasonably have been expected" is apt to misconstrued as establishing a 
novel legal standard that is overly permissive, and accordingly sees no need to revise this wording.  
3.4.2.2   Paragraphs 7.71 and 7.72  
3.25.  The Philippines proposes to switch the sequence of the analyses set forth in paragraphs 7.67 -
7.71 and 7.72 -77. As elaborated below, the Panel has revised paragraphs 7.71 and 7.72  in the 
light of the Philippines' comments.  
3.26.   The Philippines unders tands that the Panel, in its analysis of whether the reference to "Article 
7" can be understood as including a claim under Article 7.1, addresses two issues. First, in 
paragraphs 7.67 -7.71, the Philippines understands the Panel to consider the consequences , under 
Article 6.2 of the DSU, of the fact that the Thai authorities never indicated which valuation method 
they had used. The Philippines understands the Panel to conclude here that "given Thailand's lack 
of clarity  … the panel request includes a claim u nder the first paragraph of Article 7" of the CVA.33 
Second, in paragraphs 7.72 -7.77, the Philippines' understands the Panel to address, "on an arguendo  
basis, whether the reference to Article 7 in the Philippines' panel request is sufficient, on its face , to 
include a claim under the first paragraph of that provision".34 Proceeding on the basis of this 
understanding, the Philippines requests that the Panel reverse the order of these two points, because 
the Philippines considers that it is more appropriate to consider first "the terms of the panel request 
themselves", before turning to confirm this finding in light of the "attendant circumstances".35 If the 
Panel decides not to reverse the order of the discussion, the Philippines requests that the Panel not 
address the terms of the panel request on an " arguendo " basis, but as an integral part of its 
reasoning.  
3.27.   Thailand responds that it does not consider it necessary to reverse the order of the analysis 
or to alter the arguendo  approach taken by the Pan el. Thailand recalls that the interim review stage 
is not an opportunity for the parties to seek to restructure the panel's analysis based on their stylistic 
preferences, or to make "general comments" that are not related to specific paragraphs, and 
theref ore considers that the Philippines' request to restructure this section of the report goes beyond 
the scope of interim review. In any event, Thailand recalls that so long as the Panel fulfils its 
obligations under Article 11 of the DSU, the Panel is free t o structure its analysis in any manner it 
sees fit.   
3.28.   In the light of the Philippines' comment, the Panel considers it useful to clarify its reasoning 
as follows. Contrary to the Philippines' understanding, the conclusion reached by the Panel in 
paragraphs 7.67 -7.71 is not that "given Thailand's lack of clarity  … the panel request includes a 
claim under the first paragraph of Article 7" of the CVA.36 The Panel's conclusion as stated in 
paragraph 7.71 is rather that, in the circumstances of this case,  the Philippines was not required in 
its panel request "to specify which one of the different customs valuation methods in Articles 2 
through 7 constituted the basis of its claim", and " [a] fortiori , the Panel is not persuaded that the 
Philippines had to g o even further and specify which of the three subparagraphs and obligations in 
Article 7 it was invoking", in order to satisfy the requirement in Article 6.2 of the DSU to provide a 
"brief summary of the legal basis of the complaint sufficient to present t he problem clearly". 
Furthermore, the conclusion reached by the Panel in paragraphs 7.72 -7.77 is not, as the Philippines' 
states, that "the reference to Article 7 in the Philippines' panel request is sufficient, on its face , to 
include a claim under the fi rst paragraph of that provision".37 The Panel's conclusion as stated in 
paragraph 7.72 is rather that, assuming arguendo  that the Panel request would only satisfy the 
requirement in Article 6.2 of the DSU to provide a "brief summary of the legal basis of t he complaint 
sufficient to present the problem clearly" if it were possible for Thailand to draw a sufficiently clear 
inference that the reference to "Article 7" embraced a claim under Article 7.1, in the circumstances 
of this case it is sufficiently clear  that the Philippines' general reference to "Article 7" in the panel 
request covers a claim under Article 7.1.  In the light of these clarifications, the Panel has not 
                                                
33 Philippines' request to review the Interim Report, para. 17.  
34 Philippines' request to review t he Interim Report, para. 18.  
35 Philippines' request to review the Interim Report, para. 19.  
36 Philippines' request to review the Interim Report, para. 17.  
37 Philippines' request to review the Interim Report, para. 18.  WT/DS371/RW2/Add.1  
 
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  reversed the order of the analysis in paragraphs 7.67 -7.71 and 7.72 -7.7. However, the Pan el has 
revised paragraphs 7.71 and 7.72 to reflect the clarifications set forth above. The revised text of 
paragraphs 7.71 and 7.72 reads:  
7.71. Having said that, in the circumstances of this case it is not clear what additional 
degree of specificity could  reasonably have been expected from the Philippines in terms 
of identifying the "relevant valuation rules" in Articles 2 through 7 with sufficient 
precision, taking into account the limited information that was communicated to it 
regarding the basis for ca lculating the "actual" value/price in the challenged measures. 
Therefore, the Panel is not persuaded that the Philippines was required to specify which 
one of the different customs valuation methods in Articles 2 through 7 constituted the 
basis of its clai m. It sufficed for the panel request to state that the 2002 -2003 
Charges "are inconsistent with … Articles 2, 3, 4, 5, 6 and 7 of the CVA", 
without further specification as to which of one of these different articles was 
applicable.  A fortiori , if such specification was not required at the level of these 
different articles, then the Panel is not persuaded that the Philippines had to go even 
further and specify which of the three subparagraphs and obligations within Article 7 
it was invoking.  
7.72. For the foregoing reasons, the Panel considers that it is unnecessary to 
proceed with an analysis of whether it is sufficiently clear from the panel 
request which obligation(s) in Article 7 would be the one(s) at issue, if the 
"relevant valuation rules"  were those found in Article 7, as opposed to Articles 
2, 3, 5 or 6 of the CVA.  Assuming arguendo  that it is necessary to continue further in 
assessing Thailand's objection that the Philippines failed to identify the specific 
paragraph of Article 7, the Pa nel considers that in the circumstances of this case it is 
sufficiently clear that the Philippines' general reference to "Article 7" in the panel request 
would cover a claim under Article 7.1. The panel request does not identify any specific 
paragraph(s) o f Article 7, but this becomes apparent from a consideration of the 
irrelevance of Article 7.3 in this case, and the nature of the interrelationship between 
Articles 7.1 and 7.2.  
3.4.2.3   Paragraph 7.77  
3.29.   The Philippines notes that in paragraph 7.77 , the Panel seeks to explain why a reference to 
Article 7 of the CVA necessarily encompasses a claim under Article 7.1, regardless of whether or not 
it also encompasses a claim under Article 7.2. The Philippines invites the Panel to reformulate the 
last sent ence of this paragraph for clarity, and also proposes an additional sentence summarizing 
the point of this paragraph.  
3.30.   Thailand does not comment on this request.  
3.31.   The Panel has reformulated what was previously the last sentence 7.77, to align its wording 
to the first sentence of paragraph 7.77 for greater clarity. The Panel has also included the additional 
sentence proposed by the Philippines at the end of paragraph 7.77, because the Panel considers that 
it accurately summarizes the content of this paragraph. The revised text of paragraph 7.77 reads:  
7.77. This conclusion is not altered by certain considerations relating to the concise 
narrative that accompanies the listing of Articles 2 to 7 in the panel request. As indicated 
above, the Philipp ines' panel request states that the Thai authorities acted inconsistently 
with Articles 2 to 7 because they "failed to comply with the relevant valuation rules in 
establishing the alleged 'actual values' of the imported goods". In this respect, Thailand 
contends that the phrase "relevant valuation rules", as used in the panel request, is 
generic and overly vague, and could cover "not only the various sub -paragraphs of 
Article 7, but also all other provisions in Part I of the CVA (that is, Articles 1 – 17)" 
which is titled "Rules on Customs Valuation". The Philippines argues that Article 7.1 is 
the only provision setting forth "affirmative" valuation rules that an authority may use 
in establishing the customs value, and that the phrase "relevant valuation rul es" can 
therefore only refer to that paragraph and no other paragraph. The Panel is not 
persuaded by that argument, and considers that the phrase "relevant valuation rules" 
as used in the Philippines' panel request could reasonably be understood as referri ng WT/DS371/RW2/Add.1  
 
- 22 - 
 
  not only to the valuation rules contained in Article 7.1, but also those contained in Article 
7.2. Having said this, the fact that the language of the Philippines' panel request may 
be read as also referring to Article 7.2 is immaterial to the question of whether  
does not alter the conclusion that  the reference to Article 7 includes a claim under 
Article 7.1. In sum, the Panel considers that, read in light of the accompanying 
narrative, the reference to Article 7 of the CVA necessarily encompasses a 
claim under Article 7.1 of the CVA, whether or not it also encompasses a claim 
under Article 7.2.  
3.4.3   Timeliness of the Philippines' alternative claim  
3.4.3.1   Paragraph 7.81  
3.32.   The Philippines observes that, in paragraph 7.81 , the Panel provides a len gthy statement of 
the evolution of the parties' arguments under Article 7 of the CVA. The Philippines suggests that, to 
assist the reader, the Panel could add a concise summary at the end of paragraph 7.81. The 
Philippines proposes language for such a summ ary.  
3.33.   In Thailand's view, the summary proposed by the Philippines is unnecessary. It considers that 
the Panel's description of the parties' arguments is rather detailed and exhaustive, presumably 
motivated by the Panel's desire to present the reader  with a full account of the circumstances. 
Thailand sees no need to repeat in a final paragraph the Panel's description of the parties' arguments 
or to restate this description using different terminology. Thailand fails to recognize how would this 
assist the reader.  
3.34.   The Panel does not disagree with the content of the summary paragraph which the Philippines 
proposes to add at the end of the detailed chronology set forth in subparagraphs (a) through (h) of 
paragraph 7.81. However, the Panel agrees wit h Thailand that the proposed summary paragraph 
involves a degree of unnecessary repetition. Therefore, the Panel has not added the summary 
paragraph proposed by the Philippines.  
3.4.3.2   Paragraph 7.82  
3.35.   The Philippines observes that, in paragraph 7. 82, the Panel states that the first indication 
that the Thai authorities may have "used Article 7 as the basis" for valuing the imported goods 
appeared in Thailand's first written submission. In the light of the Panel's other statements, and the 
content of  Thailand's first written submission, the Philippines queries this statement and proposes 
that this sentence state that the first indication that the Thai authorities may have "considered Article 
7 as relevant" for valuing the imported goods appeared in Th ailand's first written submission.  
3.36.   Thailand does not comment on this request.  
3.37.   The Panel does not consider it inaccurate to state that Thailand's first written submission was 
the first indication that the Thai authorities " may have used Articl e 7 as the basis for valuing the 
imported goods", because the word "may" appropriately reflects the ambiguity about whether 
Thailand's argument was that Article 7 was "used" as "the basis" for valuing the imported goods. 
However, the Panel considers that i t would be more exact to add the words "or otherwise considered 
Article 7 relevant" as a sub -clause. The revised text of paragraph 7.82 reads as follows:  
7.82 Thus, the first indication that the Thai authorities may have used Article 7 as the 
basis for valuing the imported goods , or otherwise considered Article 7 relevant,  
appeared in Thailand's first written submission. Prior to that point, all that had been 
explained to the importer was that the determination of the actual values was based on 
"the ciga rette cost structure of PT Philip Morris Indonesia". In the Panel's view, it is 
difficult to see in this explanation any indication on the part of the Thai authorities that 
they had resorted to Article 7.1, such that that the Philippines would have been pr ovided 
with a basis for asserting a claim and supporting arguments under that provision, 
separate from its claim and supporting arguments under Article 6. In these 
circumstances, the Philippines cannot reasonably be said to have been in a position to 
asser t a claim and advance arguments under Article 7.1 at the time it submitted its first 
written submission.  WT/DS371/RW2/Add.1  
 
- 23 - 
 
  3.4.3.3   Paragraph 7.87  
3.38.   Thailand requests the Panel to delete paragraph 7.87 . In its view, the Panel's statement 
that there was a "persistent ambiguity" in Thailand's position on whether a determination was made 
under Article 6 or Article 7.1 of the CVA "is plainly at odds" with Thailand's submissions, "which 
clearly noted" that Article 7.1 and its Interpretative Note "do not make cl ear whether Article 7.1 is 
to be considered as a method in itself, separate from Articles 1 -6, or simply an authorization to use 
the methods in Articles 1 -6 with reasonable flexibility".38 Thus, the method used in this case was 
based on the computed method  (Article 6) used with flexibilities (Article 7).  As Thailand made clear 
in its response to a question from the Panel, "[t]he Interpretative Note refers to 'the methods laid 
down in Articles 1 through 6' and envisages 'a reasonable flexibility in the appl ication of such 
methods'".39 According to Thailand, "[i]n these circumstances", Thailand "stated that it was for the 
Panel, as a legal matter, to decide whether the determination was made under Article 6 or Article 
7".40 Thailand explains that, "[i]n other  words, Thailand clearly identified as a legal issue to be 
decided by the Panel whether a determination using one of the methods in Articles 1 -6 of the CVA 
while using flexibilities under Article 7.1 should, as a matter of law, be considered as having been  
made under Article 6 or Article 7".41 In these circumstances, Thailand continues, there was no 
"persistent ambiguity" in Thailand's position; instead, it "repeatedly (and accurately) described the 
determination as having been made using the Article 6 meth od as a base and using the flexibilities 
under Article 7", and "made clear that it was for the Panel to decide whether, as a legal matter, such 
a determination should be characterized as made under Article 6 or Article 7".42 
3.39.   The Philippines submits that the Panel should reject Thailand's request to delete paragraph 
7.87. In its view, this paragraph constitutes an important part of the Panel's assessment of Thailand's 
arguments regarding the applicability of Article 6 and/or Article 7. Thailand's effo rts to show that its 
arguments were not "persistently ambiguous" serve only to reinforce the Panel's conclusion that 
they were. The Philippines states that it is surprised by Thailand's comments, as it had not previously 
appreciated that Thailand did not r egard the "fall back" method as a "separate" valuation method.  
The Philippines states that, based on all Thailand's previous submissions, in all of the proceedings in 
this dispute, the Philippines understood that the parties agreed that Article 7 set fort h a "separate" 
valuation method. The Philippines' considers that Thailand's latest comments merely underscore – 
indeed, deepen – the "persistent ambiguity" in Thailand's position. In addition to inviting the Panel 
to reject Thailand's proposal to delete this paragraph, the Philippines observes that the Panel's 
statements in paragraph 7.87 constitute the Panel's own assessment of Thailand's arguments set 
forth in paragraph 7.81, and for that reason the Philippines considers that these statements should 
prece de the Panel's assessment whether, as a matter of law, the Philippines set forth its arguments 
under Article 7.1 in a timely manner. The Philippines, therefore, proposes elevating this paragraph 
to follow paragraph 7.81.  
3.40.   The Panel recalls that in paragraphs 7.85 and 7.86, the Panel explains why it does not consider 
that Thailand's due process rights would be violated if the Panel were to rule on the Philippines' 
alternative claim under Article 7.1 of the CVA. In paragraph 7.87, the Panel then explai ns that this 
conclusion is reinforced by the fact that it is still not clear whether Thailand is of the view that any 
customs valuation determination made by its authorities was made on the basis of Article 6, or 
instead on the basis of Article 7. The Pane l has retained this paragraph because it constitutes a 
substantive part of the Panel's assessment of whether the Philippines' alternative claim under Article 
7 was raised in a timely manner. Furthermore, the Panel has not moved this paragraph to follow the  
chronology of events at paragraph 7.81, as the Philippines proposes, because the content of 
paragraph 7.87 is linked to the Panel's consideration of due process, which is addressed at 
paragraphs 7.85 to 7.87.  
3.41.   Having decided to retain paragraph 7.8 7, the Panel has revised it to reflect Thailand's 
comments. First, the Panel has added additional text indicating that the persistent ambiguity in 
Thailand's position is apparently linked to its uncertainty as to whether there is any clear binary 
distincti on between the methods under Articles 6 and 7. Second, the Panel has added text indicating 
that, given the way that Thailand's arguments on this issue have unfolded – including its apparent 
                                                
38 Thailand's request to review the  Interim Report, para. 2.1.  
39 Ibid (referring to Thailand's Response to the Panel's Question 155, para. 8.3.)  
40 Ibid (referring to Thailand's Response to the Panel's Question 157, para. 8.4.)  
41 Thailand's request to review the Interim Report, para. 2.1.  
42 Thailand's request to review the Interim Report, para. 2.1.  WT/DS371/RW2/Add.1  
 
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  uncertainty of the existence of any clear binary distinction betwe en the methods under Articles 6 
and 7 – the Panel does not consider that Thailand's due process rights would be violated if the Panel 
were to rule on the Philippines' alternative claim under Article 7.1 of the CVA. The revised text of 
paragraph 7.87 reads:  
7.87.  This conclusion is reinforced by another consideration. There has been a 
persistent ambiguity in Thailand's position , apparently linked to its uncertainty as 
to whether there is any clear binary distinction between the methods under 
Articles 6 and 7, and as a result  it is actually still not clear whether it is of the view 
that any customs valuation determination made by its authorities was made on the 
basis of Article 6, or instead on the basis of Article 7. In its responses to the post -
hearing ques tions sent by the Panel, Thailand formulated its position in terms that 
circled back to the idea that any revised customs value was determined on the basis of 
Article 6, incorporating the reasonable flexibilities of Article 7. It stated that the 
authoritie s "applied the computed method under Article 6, taking advantage of the 
flexibilities allowed under Article 7.1"; and that as it "has previously explained, the 
values were calculated on the basis of the methodology in Article 6, using the flexibilities 
allowed under Article 7.1". In its comments on the Interim Report, Thailand 
stated that it "repeatedly (and accurately) described the determination as 
having been made using the Article 6 method as a base and using the 
flexibilities under Article 7", and "mad e clear that it was for the Panel to decide 
whether, as a legal matter, such a determination should be characterized as 
made under Article 6 or Article 7". [new FN]  Given the way that Thailand's 
arguments on this issue have unfolded – including its apparent  uncertainty of 
the existence of any clear binary distinction between the methods under 
Articles 6 and 7 – the Panel does not consider that Thailand's due process 
rights would be violated if the Panel were to rule on the Philippines' alternative 
claim unde r Article 7.1 of the CVA.  
[new FN] Thailand's request to review the Interim Report, para. 2.12.  
3.5  The Philippines' standing to challenge measures concerning PM Thailand's imports 
from Indonesia  
3.5.1   Paragraph 7.89  
3.42.   The Philippines notes that in the last sentence of paragraph 7.89  the Panel characterizes 
the issue of standing as one of "jurisdiction", but queries whether that characterization is legally 
correct or necessary. The Philippines makes two comments: first, that the panels and the Appellate 
Body in the case law cited by the Panel, including the Appellate Body in EC – Bananas III , do not 
expressly characterize standing as a jurisdictional issue; instead, the issue is characterized as a 
"prerequisite for  requesting a panel", or as a requirement "to bring a case"; second, that the concept 
of standing does not appear explicitly in any of the covered agreements, and the characterization of 
this issue is not essential to the Panel's analysis in this section. In the light of the foregoing, the 
Philippines suggests that the Panel take out the words characterizing the issue of standing as a 
"jurisdictional" matter; alternatively, the Philippines invites the Panel to characterize this as a 
"preliminary issue" rela ting to a Member's right to bring a case.  
3.43.   Thailand does not comment on this request.  
3.44.   The Panel recalls that the Appellate Body has referred to "certain issues of a fundamental 
nature" that a panel must deal with, if necessary on its own motio n, in order to satisfy itself that it 
has the "authority" to proceed.43 The point of the sentence in question was only to convey that this 
is an issue of a fundamental nature that the Panel considers appropriate to consider on its own 
initiative. The Panel  has revised the wording of paragraph 7.89, and its accompanying footnote, 
accordingly. The revised text of paragraph 7.89 reads:  
7.89. While some of the measures at issue in the original proceeding and the first 
recourse to Article 21.5 concerned imports into Thailand from the Philippines, the 
                                                
43 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – United States) , para. 36.  WT/DS371/RW2/Add.1  
 
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  measures at issue in this proceeding relate exclusively to ci garettes that PMTL imported 
from Indonesia. The Panel asked Thailand whether it accepts that the Philippines has 
standing to challenge the measures, notwit hstanding that they pertain exclusively to 
entries that PMTL imported into Thailand from the supplier based in Indonesia. Thailand 
responded that " this is a matter for the Panel to resolve concerning its jurisdiction, in 
light of the existing jurisprudence ". In the light of Thailand's response, and given that 
a panel must  consider on its own initiative  any issues of jurisdiction , and any other 
issues of a "fundamental nature" on its own initiative [FN], the Panel addresses 
this issue below.  
[FN] The Appellate Body has referred to "certain issues of a fundamental 
nature" that a panel must deal with, if necessary on its own motion, in 
order to satisfy itself that it has the "authority" to proceed. (Appellate 
Body Report, Mexico – Corn Syrup (Article  21.5 – United States) , para. 
36.) As the Appellate Body has observed with respect to jurisdictional issues 
in particular , "it is a widely accepted rule that an international tribunal is entitled 
to consider the issue of its own jurisdiction on its own ini tiative, and to satisfy 
itself that it has jurisdiction in any case that comes before it". ( Appellate Body 
Report, US – 1916 Act , footnote 30) See also Decision by the Arbitrator, US – 
COOL (Article 22.6 – United States) , paras. 2.6 -2.7. 
3.5.2   Paragraph 7 .93 
3.45.   The Philippines understands that paragraph 7.93  identifies certain ways in which the 
Philippines' interests are prejudiced by Thailand's measures. The Philippines invites the Panel to add 
a sentence stating that the burden of the 2002 -2003 Charg es and the 1,052 NoAs falls on an 
importer whose revenues are earned through the sale of goods produced in the Philippines.  
3.46.   Thailand asks the Panel to reject the Philippines' request. In its view, by suggesting this 
additional language, the Philipp ines tries to make a point that is already made in paragraph 7.93. 
After explaining that PMTL currently imports substantial volumes of cigarettes into Thailand from the 
Philippines, the Panel states that "any measure that relates to the customs valuation p ractices of 
the Thai importer that now sources from the Philippines has the very real potential to affect future 
exports of cigarettes from the Philippines to Thailand". For this reason, the language proposed by 
the Philippines would not add anything to th e idea already expressed by the Panel in paragraph 7.93.  
3.47.   The Panel agrees with Thailand that the proposed sentence involves a degree of unnecessary 
repetition with what is already expressed in paragraph 7.93. Therefore, the Panel has not added the 
sentence proposed by the Philippines.  
3.6  Good faith Relevance of the presumption of good faith on the part of Thailand and its 
authorities  
3.48.   The Philippines disagrees with the Panel's statement that "in the light of the presumption of 
good faith on the part of Thailand, the Panel accepts the veracity of Thailand's representations that 
its authorities received the pricing and cost information reported by PM Indonesia in the CK -21A 
forms". It submits that "the Panel should conduct an objective assessme nt of the evidence before 
it, based on the usual rules on the burden of proof, without relying on presumptions derived from 
good faith".44 In the Philippines' view, the Panel's reliance on a presumption of good faith to sustain 
an unsupported assertion is at odds with the rules on burden of proof45, and creates risk for how 
respondent's may argue their case in future proceedings.46 The Philippines also argues that the 
earlier decisions referred to in footnote 209 of the Interim Report (now footnote 213 of t he Final 
Report) do not support the Panel's approach to the burden of proof.47 Furthermore, the Philippines 
queries whether Thailand's own actions in seeking and insisting on a non -disclosure order in the 
domestic proceedings – which deprives the Panel of information in these proceedings that is now 
part of the court's record on the factual basis for the Charges - are consistent with the Panel's 
                                                
44 Philippines' request to review the Interim Report, para. 50.  
45 Philippines' request to review the In terim Report, paras. 39 -43. 
46 Philippines' request to review the Interim Report, para. 44.  
47 Philippines' request to review the Interim Report, paras. 45 -49. 
 WT/DS371/RW2/Add.1  
 
- 26 - 
 
  application of a presumption in favour of Thailand's unsupported assertions regarding the basis of 
those measures .48  
3.49.   The Philippines also takes issue with the Panel's statements that the parties agree on the 
factual basis for Thailand's measures. The Philippines accepts that Thailand "had certain pricing and 
cost information reported by PM Indonesia to the In donesian government in CK -21A forms".49 It 
states that "[a]lthough the precise nature of this information is unclear, the evidence shows that 
this information enabled Thailand to construct aggregate production costs, based on the producer's 
HJE retail sell ing price, the Indonesian taxes due on that price, and a standard amount for the costs 
and profits of others in the supply chain".50 However, the Philippines "does not accept, without 
evidence, that Thailand had access to all of the information reported by  the Indonesian producer in 
any CK -21A form from the relevant period".51 The Philippines takes that view on the basis of: the 
exchanges between the DSI and PM Thailand, including the DSI's requests for CK -21A forms; 
Thailand's approach to constructing the producer's aggregate production costs (Exhibit THA -74); 
and, Indonesia's statement that it did not provide Thailand with CK -21A forms (Exhibit PHL -295).52 
Furthermore, the Philippines submits that Thailand has itself never asserted (less proved) that it 
calculated the actual price / actual value using information "on the individual line items reflected in 
a CK-21A form", and "has never asserted that it possesses all of the relevant line -by-line CK -21A 
information".53  
3.50.   The Philippines asks that the Pa nel, in the remainder of its findings, provide consistent 
statements regarding the nature of the factual basis for Thailand's measures, without over - or 
understating the Indonesian cost structure information possessed by Thailand. In the Philippines' 
view,  a finding that Thailand had access to " certain  pricing and cost information" reported by PM 
Indonesia to the Indonesian government in CK -21A forms  would be consistent with the Panel's 
current findings regarding the factual basis for the actual price / actual value, "albeit with reasoning 
premised on evidence rather than presumption".54 To ensure consistency, the Philippines requests 
that the Panel u se a defined term, such as "certain Indonesian pricing and cost information".55 
3.51.   Thailand asks the Panel to reject the Philippines' comments and requests for four reasons. 
First, because the Philippines' comments not only reargue points it made at le ngth during the 
proceedings, but consist of general comments that apply to Section 7.1.4.2 in its entirety, lacking 
any reference to specific paragraphs of the Interim Report of which the Philippines seeks review.56 
The Philippines' detailed challenge agai nst the Panel's references to jurisprudence relating to the 
presumption of good faith amounts to "enter[ing] into a debate with the Panel"57 on the merits of 
the Panel's analysis. Second, because the Philippines' argument incorrectly asserts that Thailand 
refused to provide or allow disclosure of the requested information, whereas Thailand indicated that 
it would be willing to provide all the requested information to the Philippines and to the Panel, on 
the condition that the Panel adopt special procedures to protect the confidentiality of the information. 
Third, because the Philippines previously explained that it did not need access to the CK -21A 
information obtained by Thailand from Indonesian authorities to make its own prima facie case, and 
as noted by the Panel, the Philippines' own claims under the CVA are premised on the understanding 
that Thailand did rely on information reported by PM Indonesia to Indonesian authorities in CK -21A 
forms. Fourth, because acquiescing to the Philippines' request would r aise serious due process 
concerns, as the Panel did not request Thailand to provide the information and could not "now 
                                                
48 Philippines' request to review the Interim Report, paras.  66 -70. 
49 Philippines' request to review the Interim Report, para. 75.  
50 Philippines' request to review the Interim Report, para. 72.  
51 Philippines' request to review the Interim Report, para. 75.  
52 Philippines' request to review the Interim Report, paras. 50 -65. 
53 Philippines' request to review the Interim Report, para. 65.  
54 Philippines' request to review the Interim Report, para. 73.  
55 Philippines' request to review the Interim Report, para. 74 . 
56 According to Thailand, "[the most specific part of the Philippines' request is its assertion that "it 
believes that the Panel could find that Thailand had access to certain pricing and cost information submitted by 
the Indonesian producer to the Indon esian government in CK -21A forms".  The Philippines' statement that it 
'believes that the Panel could find' falls short of being a request that addresses precise aspects of the interim 
report." (Thailand's comments on the Philippines' request to review the Interim Report, para. 2.18.)  
57 Panel Report , Japan – Alcoholic Beverages II , para. 5.2.  
 WT/DS371/RW2/Add.1  
 
- 27 - 
 
  reverse itself on this issue without re -opening the proceedings and requesting Thailand the 
opportunity to provide the information".58 
3.52.  The Panel considers that the Philippines' concerns regarding the Panel's findings justify a 
clarification to ensure that the Panel's finding and reasoning are not misread. The Philippines states 
that it accepts that the Thai authorities "had certain  pricing and cost information reported by PM 
Indonesia to the Indonesian government in CK -21A forms", but stresses that it does not accept that 
"Thailand had access to all of the information reported by the Indonesian producer in any CK -21A 
form from the rel evant period". However, the Panel's findings are not intended to imply otherwise. 
Specifically, the Panel has not made any finding that the Thai authorities received copies of all of 
the CK -21A forms ; nor has the Panel made any finding that the Thai author ities had access "to all 
of the information reported by the Indonesian producer in any CK -21A form from the relevant 
period"; nor has the Panel made any finding that the Thai authorities calculated the actual price / 
actual value using information "on the individual line items  reflected in a CK -21A form". Rather, 
throughout its findings, the Panel has referred more generally to the Thai authorities' reliance on 
"the pricing and cost information reported by PM Indonesia in the CK -21A forms". The Panel does 
not consider that it would bring more clarity, or be an improvement in drafting, to replace references 
to "the" with the word "certain", as the Philippines' suggests, so as to repeatedly refer to " certain  
pricing and cost information reported by PM Indonesi a to the Indonesian government in CK -21A 
forms". The Panel considers it more straightforward to simply delete the definite article "the". The 
Panel has implemented this change throughout the Report, except in those instances where deleting 
the word "the" w ould alter the meaning of the sentence in question.  
3.53.   Additionally, given that the Panel's reasoning at paragraphs 7.100 to 7.105 for accepting the 
veracity of Thailand's representations relies on the fact that Thailand's representations "aligned wit h 
the assumptions underlying the Philippines' own claims", and the Panel's understanding that the 
Philippines' claims under the CVA rest on the premise that "the Thai authorities relied on the pricing 
and cost information reported by PM Indonesia in the CK -21A forms to determine the 'actual price' 
in the 2002 -2003 Charges and the 'actual value' in the 1,052 revised NoAs", the Panel considers 
that it is important to reflect, in the Philippines' own words, what it does and does not accept in this 
regard. The Panel has made the following revision to paragraph 7.100:  
7.100.  The Philippines' claims under the CVA are premised on the understanding that 
the Thai authorities relied on the pricing and cost information reported by PM Indonesia 
in the CK -21A forms to d etermine the "actual price" in the 2002 -2003 Charges and the 
"actual value" in the 1,052 revised NoAs. Thailand has repeatedly represented to the 
Panel that this understanding is correct its authorities did indeed rely on the 
pricing and cost information re ported by PM Indonesia in the CK -21A forms to 
determine the "actual price" in the 2002 -2003 Charges and the 1,052 revised 
NoAs . However, i In the course of the proceeding the Philippines raised doubts about 
whether Thailand had actually received all the inf ormation contained in CK -21A forms 
from Indonesia.  However, the Philippines accepts that Thailand "had certain  
pricing and cost information reported by PM Indonesia to the Indonesian 
government in CK -21A forms", and that "[a]lthough the precise nature of t his 
information is unclear, the evidence shows that this information enabled 
Thailand to construct aggregate production costs, based on the producer's HJE 
retail selling price, the Indonesian taxes due on that price, and a standard 
amount for the costs and  profits of others in the supply chain". [new FN]  
[new FN] However, the Philippines "does not accept, without evidence, 
that Thailand had access to all of the information reported by the 
Indonesian producer in any CK -21A form from the relevant period". 
(Philippines' request to review the Interim Report, paras. 72 and 75.)  
3.54.   Having made these revisions, the Panel does not consider it necessary to separately address 
the Philippines' extended argument relating the appropriateness of relying on a presumptio n of good 
faith. As the Panel understands it, the Philippines' argument is aimed at establishing the 
impermissibility of relying on a presumption of good faith to support a factual finding that leads to 
a conclusion on a disputed issue that is at odds with  the evidence. The conclusion that the Philippines 
accepts, and which it considers to be consistent with the evidence, is that Thailand had access to 
                                                
58 Thailand's comments on the Philippines' request to review the Interim Report, para. 2.23.  WT/DS371/RW2/Add.1  
 
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  "certain  pricing and cost information" reported by PM Indonesia to the Indonesian government in 
CK-21A for ms. As explained above, that is simply another way of expressing the conclusion which 
the Panel has reached. Accordingly, and with the further clarification noted above (in particular, the 
deletion of the word "the"), the Philippines' concerns relating to the Panel's reliance on the 
presumption of good faith do not relate to a live issue. Furthermore, the Panel recalls that its reliance 
on the presumption of good faith – along  with the circumstances set forth at paragraphs 7.107 and 
7.108 of the Report – together comprise only one of the two independent, alternative bases that the 
Panel has relied upon to arrive at the conclusion that the Thai authorities had access to, and reli ed 
upon, pricing and cost information reported by PM Indonesia in the CK -21A forms, and determined 
the "actual price" in the 2002 -2003 Charges and the "actual value" in the 1,052 revised NoAs on 
that basis. The first basis, as explained above, is the parti es' agreement on this point , i.e. that 
Thailand's representations aligned with the assumptions underlying the Philippines' own claims .  
4  THE THAI AUTHORIT IES' RELIANCE ON THE  INFORMATION IN THE CK-21A FORMS  
4.1  The nature of the cost information reporte d in the CK -21A forms  
4.1.1   Paragraphs 7.129 and 7.340  
4.1.  The Philippines notes that in the first sentence of paragraph 7.340 , the Panel describes certain 
factual aspects underpinning the Philippines' claims as "fundamental premises" of the Philippine s' 
claims. To describe the same factual aspects, the Panel previously used the words "essential factual 
premises" in paragraph 7.129 .  In the interest of consistency, the Philippines invites the Panel to 
use the term "essential factual premises" in both pa ragraphs.   
4.2.  Thailand does not comment on this request.  
4.3.  The Panel agrees that the same expression should be used in the interest of consistency and 
has revised the wording of paragraphs 7.129 and 7.340 to consistently refer to the "fundamental 
factual premises" of the Philippines' claims. This terminology aligns to the terminology used in 
paragraphs 7.152, 7.213 and 7.237 of the Report, each of which refers to "fundamental" premises 
of a party's arguments. It also aligns more closely to paragraph s 7.794 and 7.800 of the Report in 
the first recourse to Article 21.5, where the Panel observed that "the Philippines' claims under 
Article  X:1, X:3(a) and III:4 rest on a number of factual premises", which the Panel characterized 
as "fundamental factual i ssues". Furthermore, the Panel wishes to avoid any suggestion that three 
premises referred to in paragraph 7.340 are "essential premises" in the sense that all three premises 
would necessarily have to be established, i.e. cumulatively, in order to uphold a ny of the Philippines' 
legal claims.   
4.1.2   Footnotes accompanying paragraphs 7.132 -7.139  
4.4.  The Philippines notes that at paragraphs 7.132 -7.139, in its analysis of the Indonesian 
regulatory requirements  regarding the pricing and cost information rep orted in CK -21A forms, the 
Panel refers to the Philippines' and Indonesia's submissions; and at the end of this analysis, in 
paragraph 7.140, the Panel refers to exhibits containing relevant Indonesian regulations. To highlight 
the evidentiary basis for it s analysis, the Philippines requests that the Panel move its references to 
the exhibits to the footnotes accompanying paragraphs 7.132 -7.139.  The Philippines has proposed 
citations.   
4.5.  Thailand does not comment on this request.  
4.6.  The Panel has ad ded the footnote citations proposed by the Philippines.  
4.1.3   Paragraph 7.139  
4.7.  Thailand notes that in paragraph 7.139 , "the Panel explains that the costs and profits 
reported by PM Indonesia in the CK -21A form to Indonesian authorities could not represent the 
actual costs and profits of the producer and other parties in the supply chain". Thailand states that, 
"[a]s indicated by the Panel, this stems from the requirement that the figures reported in CK -21A 
form had to add up to the total HJE being  requested, coupled with the requirement that the proposed WT/DS371/RW2/Add.1  
 
- 29 - 
 
  HJE had to exceed certain regulatory thresholds".59 In the light of these particular regulatory aspects 
of Indonesian law, Thailand considers that it would be appropriate to add language reflecting  the 
Philippines' own description of how producers in Indonesia derived the costs and profits that were 
reported to Indonesian authorities in CK -21A form. Thailand proposes to add a sentence which reads, 
"[t]he Philippines explains that, to fulfill these r egulatory requirements, 'the producer had to 
'reverse -engineer'  the figures that it reported in form CK -21A, working backwards  from the level of 
the requested HJE, and fabricating a series of arithmetical 'plugs' designed to serve the Indonesian 
regulatory purpose of adding up to the requested HJE".  
4.8.  The Philippines sees no reason for the Panel to add Thailand's proposed sen tence to paragraph 
7.139. In this paragraph, the Panel presents a summary of several aspects of the Philippines' 
arguments regarding Indonesia's regulatory requirements governing the completion of the CK -21A 
forms. Thailand proposes to add a single sentenc e, quoting just one aspect of the Philippines' 
arguments. However, that aspect of the Philippines' arguments is already expressed in the existing 
formulation of paragraph 7.139. Furthermore, even if the Panel rejects Thailand's request to add an 
additional  selective and redundant quote from the Philippines' arguments in paragraph 7.139, the 
Panel's report would in any event explain in paragraph 7.141 (if the Panel makes the corresponding 
addition suggested by both parties) that the numbers in the CK -21A for ms were arithmetic "plugs", 
relying on an uncontested expert statement as supporting evidence.  
4.9.  The Panel notes that, contrary to what is suggested by Thailand's comment, paragraph 7.139 
is by its own terms a statement of what the Philippines asserts,  not an explanation on the part of 
the Panel. Furthermore, the Panel agrees with the Philippines that the sentence Thailand proposes 
to add involves a degree of unnecessary repetition with both the existing content of paragraph 7.139, 
and with the addition  made to paragraph 7.141(a) as discussed below. Therefore, the Panel has not 
added the sentence proposed by Thailand.  
4.1.4   Paragraph 7.141(a)  
4.10.   The Philippines notes that, in paragraph 7.141(a) , the Panel summarizes the content of Dr. 
Joko Wiyono's expert statement on the operation of the Indonesian regulatory requirements 
regarding CK -21A forms. In the interest of completeness, the Philippines suggests adding the 
following uncontested points made by Dr. Wiyono in his expert statement that are pertin ent to the 
analysis: Dr. Wiyono noted that CK -21A forms "clearly lacked sufficient detail to allow verification 
against a company's GAAP compliant accounts"; that the DGCE had "no procedure or methodology" 
to verify the reported information; and that the i nformation in form CK -21A did not account for 
"differences" in costs and profits as between goods sold domestically and for export.  
4.11.   Thailand also suggests some additions to paragraph 7.141(a). First, to fully and accurately 
reflect the content of t he statement by Dr. Wiyono, Thailand suggests quoting his statement that "it 
was common knowledge at the DGCE that manufacturers would 'plug -in' numbers to show their 
justification for a proposed HJE above the 'minimum HJE' required by the DGCE". Second, T hailand 
also suggests adding a footnote indicating that the terms "estimates" and "approximations" used in 
connection with form CK -21A derive from the Philippines' witness statements rather than from 
Indonesia's laws or regulations.  
4.12.   The Philippines does not object to Thailand's request that the Panel include additional material 
from the Wiyono statement in paragraph 7.141(a) of its report and recalls that it has likewise 
requested the inclusion of additional material from this expert report in the sa me paragraph. The 
Philippines does, however, object to Thailand's request that the Panel add a footnote to paragraph 
7.141 stating that Indonesian law does not expressly refer to "estimates" or "approximations", the 
two terms used by Mr. Wiyono and Ms. Sis wani, respectively, to describe the operation of the CK -
21A requirements in practice. The Philippines sees no need for this proposed footnote, because 
neither the Panel, nor the two experts, suggest that the terms in question are expressly reflected in 
Indonesian law. Further, an expert statement addressing municipal law is not confined to using 
terms that are expressly reflected in municipal law; indeed, if an expert statement on municipal law 
were so confined, the statement would serve no purpose beyond m erely repeating the terms of 
municipal law. Instead, the purpose of such an expert statement is to explain the meaning and 
operation of municipal law, which the Wiyono and Siswani statements do in detail.  
                                                
59 Thailand's request to review the Interim Report, para. 2.3.  WT/DS371/RW2/Add.1  
 
- 30 - 
 
  4.13.   The Panel has revised paragraph 7.141(a) to  quote the additional uncontested points made 
by Dr Wiyono, as identified by the parties in their comments on paragraph 7.141. The Panel has not 
added the footnote suggested by Thailand, because such clarification is unnecessary for the reasons 
stated by t he Philippines. The revised text of paragraph 7.141(a) reads:  
a. The Wiyono statement characterizes these figures as "the manufacturer's 
estimated  values of the components" which constituted the proposed retail selling price. 
The statement explains that th ere was no requirement that the DGCE consider "the 
estimated costs, profit and taxes" listed in the CK -21A form, and that it was well aware 
that the form did "not consist of actual costs". The statement indicates that "it was 
common knowledge at the DGCE t hat manufacturers would 'plug -in' numbers 
to show their justification for a proposed HJE above the 'minimum HJE' 
required by the DGCE". [new FN]  The statement contrasts "actual costs" with "the 
approximate values" in the form. In the context of explaining w hy the figures cannot be 
relied upon to compute a revised customs value, the statement again states that the 
data in the form "is based on estimates". The statement noted that CK -21A forms 
"clearly lacked sufficient details to allow verification against a company's 
GAAP compliant accounts" [new FN] and the DGCE had "no procedure or 
methodology" to verify the reported information. [new FN] Further, the 
statement also explains that the information in form CK -21A did not account 
for "differences" in costs and pr ofits as between goods sold domestically and 
for export. [new FN]  
[new FN] Witness statement of Dr. Joko Wiyono, p. 4, para. 5.5(a)(iii).  
[new FN] Witness statement of Dr. Joko Wiyono, p. 4.  
[new FN] Witness statement of Dr. Joko Wiyono, p. 3.  
[new FN] Witn ess statement of Dr. Joko Wiyono, p. 4.  
4.1.5   Paragraph 7.142  
4.14.   The Philippines notes that the information set out in paragraph 7.142  is also based on a 
witness statement from Dr. Joko Wiyono.  Accordingly, the Philippines suggests including a refere nce 
to Dr. Wiyono's statement in the footnote to this paragraph.  
4.15.   Thailand does not comment on this request.  
4.16.   The Panel has added the reference to the footnote accompanying paragraph 7.142 as 
proposed by the Philippines.  
4.1.6   Paragraphs 7.14 7 and 7.148  
4.17.   The Philippines requests two changes to paragraph 7.148 . First, the Philippines recalls that 
in this paragraph, the Panel addresses Thailand's arguments that the Philippines is, in effect, 
asserting that Indonesia's tax system violates Article X:3(a) of the GATT 1994. The Philippines states 
that it has been at  pains to emphasize that it makes no such assertion and would welcome a 
statement by the Panel that the Panel does not understand the Philippines to assert, implicitly or 
otherwise, that Indonesia violates WTO law. Second, the Philippines queries the need for the Panel's 
obiter dicta  in the second sentence of this paragraph to the effect that Indonesia's excise tax system 
would violate Article X:3(a), if it imposed regulatory requirements that were impossible for PM 
Indonesia to meet. Although the Philippin es agrees with the legal logic of the Panel's obiter dicta , 
there is no apparent need for the Panel to make a statement about hypothetical circumstances in 
which Indonesia – which is not a party to this dispute – might violate WTO law.  In the interests of  
comity, and to avoid potential misunderstandings, the Philippines requests that the Panel delete this 
sentence.   
4.18.   Thailand considers that this deletion should not be made.  Paragraph 7.148 reflects correctly 
the nature and consequences of the Phili ppines' legal strategy in this dispute. The Philippines 
structured its argumentation against Thailand's measures in such a way that required it to state that 
Indonesia's tax system imposes requirements on importers with which it is impossible to comply.  
As found by the panel in the first compliance proceedings, a legal system with these characteristics 
could be inconsistent with the obligation under Article X:3(a) of the GATT 1994 to administer trade WT/DS371/RW2/Add.1  
 
- 31 - 
 
  measures in a reasonable ma nner. Thailand, therefore, co nsiders that paragraph 7.148 must be left 
as it is. Thailand states that "[i]t is clear, in any event, that Indonesia's measures are outside the 
Panel's terms of references and that the Panel is not competent to pronounce, one way or the other, 
on their WT O consistency".60 Thailand submits that, for similar reasons, the Panel should also reject 
the Philippines' request to add a sentence saying that the Panel "does not perceive the Philippines' 
description of Indonesia's tax system to be an assertion that th is system violates Article X:3(a) of 
the GATT 1994". In Thailand's view, the Panel's report "must include an objective description of the 
Philippines' assertions and their consequences", and Thailand states that had the Philippines been 
concerned about thi s possible perception of its arguments, "it could have chosen not to structure its 
arguments in the manner" that it did.61 
4.19.   The Panel considers it appropriate to reflect the Philippines' strong rejection of Thailand's view 
that the Philippines has as serted, implicitly or otherwise, that Indonesia violates WTO law. The Panel 
does not consider that the Philippines' view should be reflected in paragraph 7.148 however, as this 
paragraph contains the Panel's own assessment and reasoning. Instead, the Panel  has reflected the 
Philippines' position on this issue by adding a new sentence at the end of the preceding paragraph, 
given that paragraph 7.147  sets forth the arguments of Thailand (and, as revised, the response of 
the Philippines). The Panel declines th e Philippines' request to delete the second sentence of 
paragraph 7.148 on the basis that there is "no  apparent  need for the Panel to make a statement 
about hypothetical circumstances in which Indonesia … might violate WTO law", because the Panel 
considers  doing so would undermine the clarity of the reasoning in this paragraph. Furthermore, the 
Panel sees no potential for this paragraph to be misread as suggesting that Indonesia's measures 
might have violated WTO law, given the Panel's statement that its re asoning in this paragraph relies 
"on the presumption that Indonesia would not impose impossible legal requirements in violation of 
Article X:3(a)". Accordingly, the Panel has made no change to paragraph 7.148. The revised text of 
paragraphs 7.147 reads:  
7.147.  First, Thailand submits that the Philippines' assertion that the information 
reported by manufacturers in form CK -21A was necessarily inaccurate as a result of the 
operation of Indonesia's tax system should not be "considered or accepted" by the 
Panel, because that assertion implies that Indonesia's tax system was in violation of 
Article X:3(a) of the GATT 1994, and the Panel "cannot make findings that would call 
into question the WTO -consistency of Indonesia's laws or how they are administered". 
Thailand suggests that the Panel is not in a position to make findings on the regulatory 
requirements identified by the Philippines, "unless and until they have been properly 
challenged and found to be inconsistent in WTO dispute settlement proceedings". In 
response to a question from the Panel, Thailand reiterates the idea that because "the 
Philippines has not challenged Indonesia's method of determining the tax base of 
cigarettes in the WTO", it follows that "Indonesia's method, and reporting requirements, 
enjoy a presumption of WTO consistency". The Philippines responds by stating that 
with "this absurd argument, Thailand seems to be engaged in an effort to 
distract attention from the shortcomings in its own measures", and clarifying 
that "[f]or the record, t he Philippines makes no such allegations about 
Indonesian law". [new FN]  
 [new FN] Philippines' second written submission, para. 107.  
4.2  The circumstances surrounding the Thai authorities' reliance on the CK -21A forms  
4.2.1   Paragraphs 7.174 -7.175  
4.20.   The Philippines proposes three sets of changes to section 7.2.3 of the Report. These proposed 
changes partially overlap, and for that reason are addressed together below.  
4.21.   First, the Philippines observes that in section 7.2.3, the  Panel treats the question whether 
Thailand could presume that the relevant CK -21A information was accurate and reliable as a 
threshold issue, to be addressed before it analyses specific CVA provisions, and "tackles this 
threshold issue without any structu red discussion of the applicable CVA provisions".62 The Philippines 
                                                
60 Thailand 's comments on the Philippines' request to review the Interim Report, para. 2.27.  
61 Thailand's comments on the Philippines' request to review the Interim Report, para. 2.28.  
62 Philippines' request to review the Interim Report, para. 84.  WT/DS371/RW2/Add.1  
 
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  observes that, in its analysis, the Panel does occasionally mention elements of the legal standard 
under the CVA; in particular, the Panel makes reference to an authority's examination of the 
circumstances of sale under Article 1.2(a) of the CVA. The Philippines states that the Panel's 
reference to elements of the legal standard is to be expected, as the "reliability" of given information 
"cannot be assessed in the abstract but must be cons idered in light of the applicable legal 
requirements".63 It states, for example, that "whereas CK -21A information is acceptable in light of 
Indonesia's regulatory requirements, it is not acceptable under the CVA". The Panel notes that later 
in its reasonin g with respect to Article 6, the Panel indicates that an authority is obliged, under that 
provision, to "verify" cost information, which the Philippines understands would suggest that "the 
Panel considers that the presumption of reliability does not apply under Article 6".64 Given the 
relationship between the reliability of information, and the relevant legal standards, the Philippines 
"requests that the Panel ground its reasoning on this point more firmly, and in more detail, in the 
relevant elements of th e legal standards in the CVA".65 
4.22.   Concerning the Philippines' first comment, Thailand observes that the Philippines, once again, 
is making a general comment that does not address any specific paragraphs of the Interim Report. 
The Philippines requests  that "the Panel ground its reasoning on this point more firmly, and in more 
detail, in the relevant elements of the legal standards in the CVA".66 The Philippines fails to identify 
any "precise aspects of the interim report" as required by Article 15.2 of  the DSU. It appears that 
the Philippines' comment addresses generally Section 7.2.3 of the Interim Report. As noted above, 
parties cannot use the interim review stage to "question[] large sections of the interim report".67 
Hence, the Panel must dismiss th e Philippines' general comment as it does not fall within the scope 
of the interim review.  
4.23.   The Panel is not persuaded by the Philippines' request that the Panel should, in this section 
of the Report, "ground its reasoning on this point more firmly, and in more detail, in the relevant 
elements of the legal standards in the CVA". As a general principle, panels have a degree of discretion 
to structure the order of their analysis as they see fit, subject to the requirements of Article 11 of 
the DSU.68 The Report already explains the Panel's reasons for structuring its Report as it has: (i) at 
paragraph 7.127, the Panel notes that the Philippines considers that the Thai authorities' reliance on 
the CK -21A forms violate fundamental CVA principles over an "o verarching nature" regarding the 
required "nature and quality of cost and profit information used for customs valuation purposes 
[that] apply equally to determinations made under Articles 1.1, 1.2(a), 6 and 7", and the Panel 
observes that "its distinct cla ims under these provisions are all founded on essentially the same 
objections to the Thai authorities' reliance on the information in the CK -21 forms"; (ii) the Panel 
then explains, at paragraph 7.129, that "[t]he Panel will address the [fundamental] factu al premises 
of the Philippines' legal claims below, before turning to those specific legal claims", and that "[t]he 
Panel will refer back to these findings later in the context of its analysis of the Philippines' specific 
legal claims". The Panel further n otes that there is nothing unique in a Panel making findings on 
fundamental disputed factual issues in one section of its Report, and then proceeding to link those 
findings to the applicable legal standards under the relevant WTO provisions at issue in one  or more 
subsequent subsections of its Report. That is, for instance, the manner in which the Panel presented 
its findings on the VAT notification requirement in the Report in the first recourse to Article 21.5: 
after first addressing a series of "fundamen tal factual issues" regarding the operation of the VAT 
notification requirement in subsection 7.4.2 of its Report, then Panel then proceeded to relate those 
factual findings to the applicable legal standards in Articles X:1, X:3(a) and III:4 of the GATT 19 94. 
Finally, while the Panel accepts that the assessment of certain types of questions of a partially factual 
nature "cannot be assessed in the abstract but must be considered in light of the applicable legal 
requirements", the question addressed in this s ection is not one of them. The Panel recalls that 
section 7.2.3 of its Report address the question of whether "the Thai authorities knew, or should 
have known, that the information in the CK -21A forms was inaccurate".  
4.24.   Second, the Philippines notes that in the last sentence of paragraph 7.154 , the Panel states 
that it "is inclined to agree with Thailand" that the authorities of an importing country can treat 
                                                
63 Philippines' r equest to review the Interim Report, para. 85.  
64 Philippines' request to review the Interim Report, para. 103.  
65 Philippines' request to review the Interim Report, para. 86.  
66 The Philippines' comments on the Panel's Interim Report, para. 86.  
67 Panel R eport, Japan – Apples (Article 21.5 – US), para. 7.21 (referring to Panel Report, Australia – 
Salmon , para. 7.3).  
68 Appellate Body Report, Colombia – Textiles , para. 5.20.  
 WT/DS371/RW2/Add.1  
 
- 33 - 
 
  information received from a foreign government as "presumptively reliable". The Philippines n otes 
that the Panel seems inclined to accept that this "presumption" applies when a customs authority is 
examining "the circumstances of sale" under Article 1.2(a) of the CVA. The Philippines queries 
whether it is helpful for the Panel to make "apparently sweeping obiter  statements"69 in the abstract 
that a customs authority can, in general, presume that information received from a foreign 
government is "presumptively reliable". If Panel decides to retain its broad obiter  pronouncements, 
the Philippines req uests that the Panel address this aspect of its findings through a careful textual 
assessment of the relevant provisions of the CVA, taking account, for example, of the Panel's own 
prior findings that the duty to "examin[e]", under Article 1.2(a) of the CV A, requires an "active, 
critical review" of all information before an authority. The Philippines is also concerned that the 
Panel's "broad pronouncements"70 may not adequately address the many factual scenarios that could 
arise in the future, bearing in mi nd the many different kinds of information that could be provided.  
4.25.   Thailand disagrees with the Philippines that the second sentence of paragraph 7.154 is 
unnecessary. It is in the interest not only of Thailand, but of WTO Members at large, to obtain  a full 
explanation by the Panel as to the correct interpretation of obligations under the covered 
agreements. Additionally, Thailand does not share the Philippines' characterization of the Panel's 
remarks as obiter . As the first words of paragraph 7.154 m ake clear, the Panel's statement responds 
directly to the argument put forward by Thailand that a government is entitled to rely on information 
provided by fellow governments by saying that, while generally the Panel would agree with the 
proposition, it di sagrees with Thailand on certain points. Thus, the Panel's statement is directly on 
point. Finally, the Philippines omits to mention that, in the paragraphs and pages that follow 
paragraph 7.154, the Panel qualifies its statement about the authorities' rig ht to assume the 
accuracy of information provided by foreign authorities. The Panel elaborates in detail why this does 
not entitle an authority to deem information to be accurate without taking into account explanations 
offered by the importer. Hence, far from being "sweeping" statements, the Panel's remarks are 
tempered by explanations on the limits of authorities' right to assume the accuracy of this type of 
information, again directly in response to Thailand's arguments.  
4.26.   As to the Philippines' sec ond comment, the Panel does not consider the statement made at 
paragraph 7.154 to be a statement that is either gratuitous or sweeping. As Thailand observes in its 
comments, the Panel's statement responds directly to the argument put forward by Thailand. A nd 
as Thailand observes in the paragraphs and pages that follow paragraph 7.154, the Panel qualifies 
its statement about the authorities' right to assume the accuracy of information provided by foreign 
authorities, and elaborates in detail why this does no t entitle an authority to deem information to be 
accurate without taking into account explanations offered by the importer. Accordingly, the Panel is 
not persuaded that any change is warranted.  
4.27.   Third, the Philippines states that even if the Panel c onsidered that a "presumption of 
reliability" were appropriate under Article 1.2(a) and other CVA provisions, the Panel appears to find, 
in paragraph 7.155 , that a customs authority is entitled to presume that information obtained from 
a foreign government  is reliable, unless the importer rebuts that presumption . The Philippines 
considers that the Panel may draw too narrowly the grounds on which a presumption may be 
rebutted. For example, if information that an authority receives from a foreign government i s 
doubtful on its face, then the authority must critically review the information under Article 1.2(a), 
irrespective of the views of the importer. Additionally, an importer may not be given access to 
information obtained by the customs authority from a for eign government, and might be unable to 
alert an authority to factors creating doubts about the reliability of information. If the information in 
question is not shared with the importer in a transparent communication of grounds, the importer 
will be unabl e to identify a shortcoming in the information that the authority should see for itself. 
Therefore, should the Panel decide to retain its "broad pronouncements" about the presumptive 
reliability of information received from a foreign government, the Philip pines requests "that the Panel 
make clear that this presumption may be rebutted in a variety of ways, including, but not limited to, 
the provision of information by an importer".71   
4.28.   Thailand does not specifically comment on the third comment above.   
                                                
69 Philippines' request to review the Interim Report, para. 91.  
70 Philippines' req uest to review the Interim Report, para. 93.  
71 Philippines' request to review the Interim Report, para. 102.  WT/DS371/RW2/Add.1  
 
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  4.29.   The Panel observes that it did not state or imply that, in all cases in which the authorities of 
the importing country receive information from a foreign government, rebuttal by the importer is 
the exclusive and narrow ground upon which presumptiv e reliability may be rebutted. Rather, 
paragraph 7.155 merely states that "such an assumption can only operate as that, i.e. rebuttable 
presumption, and does not entitle an authority to deem information to be accurate without taking 
into account relevant e xplanations subsequently provided by the importer". This statement, and 
those which follow in this paragraph and subsection, reflect the particular focus of the Panel's 
analysis in this case, and the particular factual configuration of this case (i.e. a ca se in which the 
record of communications from PMTL to the DSI and the Public Prosecutor shows that PMTL 
repeatedly informed the DSI and Public Prosecutor that the pricing and cost information reported in 
the CK -21A forms did not represent PM Indonesia's ac tual costs and profits, and could not be relied 
upon for customs valuation purposes without violating the CVA). The Panel has not purported to 
articulate, in the abstract, any general legal framework governing the use, for customs valuation 
purposes, of in formation received from a foreign government.  
4.2.2   Paragraphs 7.161 and 7.177  
4.30.   The Philippines notes that, in paragraphs 7.161 and 7.177 , the Panel states that "the DSI 
issued a Memorandum of Allegations ('MoA') against PMTL and certain of PMTL's former and current 
employees". The Philippines notes that the DSI, in fact, issued two MoAs with respect to the 2002 -
2003 Charges. The Panel's st atement refers to the first MoA, which was issued only to PMTL. The 
DSI issued a second MoA, on 7 October 2016, to a former employee of PMTL. In the interests of 
accuracy, the Philippines requests that the Panel adapt its reasoning accordingly.   
4.31.   Thailand does not comment on this request.  
4.32.   The Panel has revised paragraphs 7.161 and 7.177 to reflect the fact that the DSI issued the 
MoA against PMTL on 22 September 2016 and then separately issued an MoA against a former 
employee separately on 7 O ctober 2016. The revised text common to paragraphs 7.1 61 and 7.177 
reads in relevant part as follows:  
On 22 September 2016, i.e. a decade after launching its initial investigation and 13 -16 
years after the entries at issue  cleared Thai Customs , the DSI iss ued a Memorandum of 
Allegations ("MoA") against PMTL  and certain of PMTL's former and current 
employees . One former employee of PMTL was informed of the allegations by 
way of a second Memorandum of Allegations, dated 7 October 2016.  … 
4.2.3   Paragraph 7.16 3 
4.33.   The Philippines notes that the Panel's language in paragraph 7.163  may be read to 
incorrectly imply that PMTL was in possession of the CK -21A information that the Indonesian 
government allegedly provided to the Thai authorities. PMTL was not granted access to the 
Indonesian pricing and cost information in question by the  DSI, the Public Prosecutor, or the Customs 
Department. The Philippines requests that the Panel make this point clear. Further, the Panel notes, 
in the last sentence of this paragraph, that an importer may change its mind with respect to 
submissions made t o a customs authority. Although the Philippines agrees, this quote may be read 
to incorrectly suggest that the importer changed its mind in some respect regarding the Indonesian 
pricing and cost information apparently obtained by Thailand. The Philippines requests that the Panel 
delete this sentence.   
4.34.   Thailand does not comment on this request, beyond making the point that it "agrees only 
with the Philippines' typographical corrections" in paragraphs 7.49 and 7.163.  
4.35.   The Panel has revised parag raph 7.163 to avoid wording that could be read as implying that 
PMTL (as opposed to PM Indonesia alone) was in possession of the CK -21A information that the 
Indonesian government allegedly provided to the Thai authorities. In the same vein, the Panel 
deleted the last sentence of this paragraph to avoid implying that PMTL (or PM Indonesia) "changed 
its mind" in some respect regarding the CK -21A forms and the information contained therein. The 
Panel has revised the final sentence to draw out the point more cl early. The revised text of paragraph 
7.163 reads:  WT/DS371/RW2/Add.1  
 
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  7.163.  First, the fact that PM Indonesia itself provided the CK -21A information to the 
Indonesian tax authorities does not, in the light of the explanations provided by PMTL 
and its experts to the Thai aut horities, sustain an assumption that the figures reported 
therein are correct. To the contrary, the fact that the figures were provided by PM 
Indonesia itself means that that PM Indonesia and PMTL, the affiliated importer, would 
have been uniquely well pos itioned to explain to the Thai authorities whether and if so 
why the information reported was inaccurate. Insofar as Thailand's arguments are to 
be taken as suggesting that PM Indonesia or PMTL were somehow estopped from 
subsequently disputing the accuracy  of the information because that information 
originated from them PM Indonesia , there is nothing in the CVA or the findings of the 
original or first compliance panel to sustain the suggestion that an importer is somehow 
barred from pointing out errors or i naccuracies in the information that it previously 
submitted or, as in the case with respect to the CK -21A information, that an 
affiliated company/producer previously submitted to another government for 
purposes unrelated to customs valuation . To the contra ry, in the first recourse 
to Article 21.5, the Panel noted that, subject to the requirement to act in good 
faith, "a declaration by an importer that it does not intend to claim or 
substantiate a particular deduction does not necessarily preclude an importe r 
from changing its mind and subsequently requesting the relevant deduction".   
4.2.4   Paragraph 7.170  
4.36.   The Philippines notes that in paragraph 7.170 , the Panel responds to Thailand's arguments 
that the Wiyono and Siswani expert reports "do not explai n how, in these circumstances, could Thai 
authorities have overcome the problem of the alleged inaccuracy [in the CK -21A information]" and 
"do not provide the accurate information on costs and profits that would be necessary for Thailand 
to properly apply the 'cost plus profit' benchmark". In paragraph 7.170, the Panel explains that 
Thailand's argument "appears to assume" wrongly that its authorities were entitled to rely on the 
computed value method. The Philippines agrees fully with the Panel's reasoning.  For the sake of 
completeness, the Philippines requests that the Panel add three additional sentences clarifying that, 
even if a customs administration has properly determined that it can resort to a computed value 
method, that method may not be suitable i n the circumstances, for example, because reliable cost 
and profit information is not available. In that respect, Article 6.2 of the CVA clarifies that a foreign 
producer cannot be compelled to provide its accounting records.  
4.37.   Thailand does not comme nt on this request.  
4.38.   The Panel considers that the additional text proposed by the Philippines is relevant to the 
point being made in paragraph 7.170 and has revised this paragraph accordingly. The revised text 
of paragraph 7.170 reads:  
7.170.  In the  Panel's view, the principal difficulty with this argument is that it appears 
to assume that the Thai authorities were entitled to rely on the computed value method 
of customs valuation for purposes of examining the circumstances of sale, and/or 
determinin g a revised customs value. It is thus worth recalling that the primary basis 
for determining the customs value is the transaction value; that the fact that the buyer 
and seller are related is not in itself grounds for regarding the transaction value as 
unacceptable; that it is only where the authorities determine, on the basis of a proper 
examination of the circumstances of sale, that the relationship influenced the price that 
they may proceed to determine the customs value on an alternative method; and tha t 
those methods must then be applied sequentially, such that the determination of a 
revised customs value on the basis of the computed value method is only permissible 
where the customs value cannot be determined on the basis of any of the preceding 
method s. Further, even if a customs authority determines that the customs 
value cannot be determined under Articles 2 -5, recourse to Article 6 may raise 
difficulties. For example, Article 6.2 of the CVA clarifies that a foreign producer 
cannot be compelled to pr ovide its accounting records. If Article 6 is not 
available, an authority can resort to the fall -back method under Article 7.  Thus, 
the Thai authorities could have overcome the problem of the alleged inaccuracy of the 
costing information reported in the CK -21A forms by accepting PMTL's transaction 
values, or if they had other grounds for doubting the acceptability of those values, by 
determining the customs value on the basis of a different method of customs valuation.  WT/DS371/RW2/Add.1  
 
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  5  THE 2002 -2003 CRI MINAL CHARGES  
5.1  General  
5.1.1   Paragraph 7.175  
5.1.  The Philippines notes that paragraph 7.175  provides that "[t]he customs values of the 780 
entries were all assessed by other Thai government  agencies". The Philippines suggests clarifying 
that the Thai agency which assessed the 780 entries in the first place is the DSI, and that the 
agencies being referred to here are those "other than the DSI". Additionally, the Philippines suggests 
two chang es to the table in paragraph 7.175 to improve comprehension of the table for its purposes 
in the Panel's report. First, the Philippines suggests adding a sentence to the first column in rows 3 -
4 to explain which of the entries mentioned in these rows are s ubject to the 2002 -2003 Charges. 
Second, with regard to the second bullet in the second column of row 2, the Philippines suggests 
explaining, in a footnote, that the Panel found that the BoA Ruling of 16 November 2012 was 
inconsistent with several provisio ns of the CVA.   
5.2.  Thailand does not comment on this request.  
5.3.  The Panel has revised the first sentence of paragraph 7.175 as per the Philippines' suggested 
clarification, so as to read, "The customs values of the 780 entries were all assessed by Thai 
government agencies other than the DSI , based either on those agencies' acceptance of PMTL's 
declared transaction values, or based on the application of the deductive method pursuant to Article 
5 of the CVA." The Panel has also added language to the t able, and one of accompanying footnotes, 
reflecting the second and third points above. In the Panel's view, these additions aid in facilitating 
the reader's comprehension of the information in the table.  
5.1.2   Paragraph 7.187  
5.4.  The Philippines notes that in paragraph 7.187 , the Panel states that "[t]here is no information 
before the Panel on whether PMTL sought any further explanation following the issuance of the 
Charges in January 2017". As the Panel indicates in paragraph 7.191, on 24 July 2017, th e Public 
Prosecutor successfully obtained a court order preventing information regarding the 2002 -2003 
Charges from being shared with the Philippines and, hence, the Panel. The Philippines states that 
due to this far -reaching non -disclosure order, the Phil ippines was unable to provide the Panel with 
information on any additional efforts made by PM Thailand to clarify the basis for the determination 
of the "actual price" in the 2002 -2003 Charges. Nor can the Philippines indicate whether, if such 
efforts were  made, they were successful. Given that Thailand has prevented the Philippines from 
placing this information before the Panel, the Philippines requests that the Panel delete this 
sentence; alternatively, should the Panel wish to retain the sentence, the Ph ilippines requests that 
the Panel make clear that the Philippines was unable to provide the information in question because 
of the court's non -disclosure order.  
5.5.  Thailand does not comment on this request.  
5.6.  The Panel has retained the sentence in q uestion because even accepting what the Philippines 
states about the effect of the non -disclosure order, it remains the case that "there is no information 
before the Panel" on this point. However, the Panel has added an accompanying footnote stating 
that t he Philippines may have been unable to provide the information in question because of the 
court's non -disclosure order. Paragraph 7.187 with its accompanying footnote reads:  
7.187.  On 14 November 2016, PMTL addressed the same questions to the Public 
Prose cutor, with respect to the MoA. PMTL received no response. There is no information 
before the Panel on whether PMTL sought any further explanation following the issuance 
of the Charges in January 2017. [new FN]  
[new FN] In its comments on the Interim Report, the Philippines states 
that "As the Panel indicates in paragraph 7.191, on 24 July 2017, the 
Public Prosecutor successfully obtained a court order preventing 
information regarding the 02 -03 Charges from being shared w ith the 
Philippines and, hence, the Panel. Due to this far -reaching non -disclosure WT/DS371/RW2/Add.1  
 
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  order, the Philippines was unable to provide the Panel with information 
on any additional efforts made by PM Thailand to clarify the basis for the 
determination of the "actu al price" in the 02 -03 Charges. Nor can the 
Philippines indicate whether, if such efforts were made, they were 
successful." (Philippines' request to review the Interim Report, para. 
117.)  
5.1.3   Paragraph 7.188  
5.7.  The Philippines suggests adding a trans itional sentence to the beginning of paragraph 7.188 , 
stating that "[a]lthough the 2002 -2003 Charges do not provide any indication of the factual basis 
for the 'actual price', certain information can be gleaned from the Customs Department's explanation 
regarding the basis used to determine the "actual value" set out in the 1,052 NoAs."  
5.8.  Thailand does not comment on this request.  
5.9.  The Panel considers that this transitional sentence is useful and has therefore added it.  
5.2  Existence of a challeng eable measure  
5.10.   The Philippines considers that the Panel's findings in this proceeding might be read to imply 
that the Panel sees no meaningful differences between Thailand's "insufficient information" 
arguments in this proceeding, and its "ripeness"  arguments in the first compliance proceeding, which 
Thailand said did not include "insufficient information" arguments. Based on the content of Thailand's 
submissions, the Philippines understands that there is a difference between Thailand's arguments 
on this issue in the first and second compliance proceedings. Based on this understanding, the 
Philippines invites the Panel to expand its reasoning in addressing the "insufficient information" 
arguments in sub -section 7.3.2.3.5; to restructure the analysis s o that this expanded sub -section 
precedes the Panel's earlier findings in sub -sections 7.3.2.1 -7.3.2.4; to explain why the Panel 
decides to use the same analytical framework to address the "insufficient information" arguments 
that it used to address "ripen ess" arguments in the first compliance proceeding; to make various 
amendments to the manner in which the Panel summarizes and describes Thailand's arguments, 
including at paragraphs 7.203 -7.205, 7.215, 7.217, and 7.218; and to quote from Thailand's 
submiss ions in both the first and second compliance proceedings in a manner that would more clearly 
reveal the differences in its arguments. The Philippines also invites Thailand to confirm, in its 
comments on the Philippines' request for review of the Interim Re port, that the Panel has properly 
understood, and reflected, Thailand's arguments in paragraph 7.217.  
5.11.   Thailand submits that the Philippines' comments and suggestions should be rejected, for the 
following five reasons. First, Thailand states that th e Philippines' set of comments on this section of 
the Panel's reasoning "reflects (the Philippines' own view of) Thailand's appellant's submission to the 
Appellate Body" in the context of the first recourse to Article 21.5, and suggests that this "stretch[ es] 
the bounds of propriety by relying on confidential submissions to the Appellate Body as the basis for 
arguments to this Panel". Second, because the Philippines is once again making "general comments" 
that apply to "large sections of the interim report" . Third, because the Philippines' request that "the 
Panel explain why" its framework is more appropriate than the Philippines' suggested framework is 
an invitation for the Panel to "defend [its] findings and conclusions during the interim review stage", 
and the Panel need not engage in the debate suggested by the Philippines nor defend its conclusions 
regarding the analytical approach it followed. Fourth, because the Philippines is seeking major 
structural changes to the interim report with a view to aligni ng the Panel's reasoning with the 
Philippines' arguments in an ongoing appeal, which the Panel is not obliged to assist the Philippines 
with. Finally, Thailand adds that the Panel cannot consider these arguments without re -opening its 
proceedings and allow ing both parties an opportunity to defend their interests fully.   
5.12.   Before turning to the substance of the Philippines' comments, the Panel addresses Thailand's 
statement that this set of comments "reflects (the Philippines' own view of) Thailand's a ppellant's 
submission to the Appellate Body" in the context of the first recourse to Article 21.5, which according 
to Thailand "stretch[es] the bounds of propriety by relying on confidential submissions to the 
Appellate Body as the basis for arguments to t his Panel".72 The Panel considers that insofar as a 
                                                
72 Thailand's comments on the Philippines' request for review of the Interim Report, footnote 71 and 
para. 2.49.  WT/DS371/RW2/Add.1  
 
- 38 - 
 
  party suggests changes to precise aspects of the Report, and insofar as a party's suggested changes 
are based on objectively justifiable reasons, the party's motivation in suggesting those particular 
changes is more or less irrelevant. In the context of this second recourse to Article 21.5, neither 
party has disclosed the contents of the parties' submissions in the ongoing appeal in the first 
recourse to Article 21.5.  
5.13.   Turning to the substance of th e Philippines' comments, the Panel has carefully reviewed its 
reasoning and findings in this section of its Report in the light of the Philippines' comments, and 
concludes that no changes are necessary. The basic thrust of the Philippines' comments on this  
section seems to be that the Panel has not correctly understood Thailand's core argument, and that 
as a result, the Panel has not properly addressed that argument. In the Panel's view, as elaborated 
in detail in this section, a careful examination of Thai land's argument that the 2002 –2003 Charges 
do not contain "sufficient factual" information to allow the Philippines to make a prima facie  case of 
inconsistency raises in essence the same issues raised by the "ripeness" argument advanced by 
Thailand in rela tion to the 2003 –2006 Charges, and already addressed – in considerable detail – by 
the Panel in the first recourse to Article 21.5. As the Panel observes at paragraph 7.212 of its Report, 
it "does not consider that Thailand has developed a substantively no vel legal argument different in 
substance from its 'ripeness' argument made in the first recourse to Article 21.5". The Panel has 
carefully considered the Philippines' view, i.e. there is a meaningful difference between Thailand's 
"insufficient information " arguments in these proceedings and its "ripeness" arguments in the first 
compliance proceedings, but for the reasons elaborated in detail in this section of the Report, the 
Panel is not convinced that it has misunderstood Thailand's argument. As a conseq uence, the Panel 
sees no need to expand, restructure, or revise its reasoning in the ways proposed by the Philippines.  
5.3  Applicability of the CVA to the Charges  
5.3.1   Paragraphs 7.245, 7.247, and 7.287  
5.14.   Thailand requests the addition of the wor d "intentionally" in paragraphs 7.245, 7.247 and 
7.287 , to describe Thailand's arguments concerning the customs fraud allegation contained in the 
2002-2003 Charges. This would reflect that customs fraud accusations, including in the case of the 
2002-2003 C harges, concern situations in which the importer "intentionally" declares a price that is 
not the price actually paid. Thailand submits that this would also be consistent with its proposed 
change to paragraph 7.254 (discussed further below).  
5.15.   The Phi lippines objects to Thailand's requested addition of the word "intentionally" in the cited 
paragraphs. It notes that in paragraph 7.245, the Panel addresses the CVA characterization of the 
term "actual price", as used in Thailand's measure. Specifically, t he Panel considers whether the 
"actual price" is the "price actually paid or payable" under Article 1.1 of the CVA, as Thailand asserts.  
Although "intention" to "defraud" is an element of the offense under Section 27 of Thailand's Customs 
Act, the "intent ion" element does not relate to the characterization of the "price actually paid or 
payable" under the CVA. An importer's intention is not relevant, under the CVA, to the 
characterization of an authority's determination, here, of the "actual price". Nothin g in the treaty 
text of the CVA incorporates the "intention" of an importer into the assessment of the "price paid or 
payable". There is, therefore, no basis under the legal standard in the CVA to add the word 
"intentionally" to the Panel's assessment. The  same is true in paragraphs 7.247 and 7.287(b) of the 
Interim Report.  In these paragraphs, the Panel summarizes Thailand's arguments that the CVA does 
not apply to the Public Prosecutor's determination.  Again, the applicability of the CVA does not turn 
on an importer's alleged intentions, but on the nature and content of an authority's determination. 
Finally, the Philippines notes that there is no evidence before the Panel to suggest that the importer 
had any intention to engage in customs fraud.  
5.16.   The Panel considers that inserting the word "intentionally" in these three paragraphs has the 
potential to invite confusion. Paragraph 7.245  lists Thailand's four main lines of argument as to 
why the CVA is not applicable to the Charges. The last of the fou r listed arguments in this paragraph 
already states Thailand's argument that "the Appellate Body's findings in US -1916 Act  do not 
support the conclusion that the CVA applies to measures that have, as their core element, the 
'intention to defraud' the gove rnment". If the word "intentionally" were also added to the second of 
the four listed arguments in paragraph 7.245, as Thailand proposes, it would summarize Thailand's 
second main line of argument as being that " the 2002 -2003 Charges do not satisfy the fir st element 
of the definition of 'customs valuation' in Article 15.1(a) of the CVA, because the reference to the 
'actual price' in the 2002 -2003 Charges is to be understood as merely establishing an approximate WT/DS371/RW2/Add.1  
 
- 39 - 
 
  value of the goods made in the context of sett ing out the accusation that PMTL intentionally  declared 
a price that is not  the price actually paid, and merely identifying a possible benchmark for a fine". 
The addition of the word "intentionally" in the context of this second line of argument does not a id 
in understanding Thailand's argument. The same considerations lead the Panel to decline to add the 
word "intentionally" in paragraph 7.287(b) , which refers to the same argument. Finally, if the 
word "intentionally" were inserted in paragraph 7.247 , the relevant sentence would read, "Thailand 
argues that in this case, the 2002 -2003 Charges accuse PMTL of intentionally  declaring an import 
value that is not the price actually paid b y the buyer to the seller, and therefore constitute the kind 
of 'customs fraud' that the Panel in the first recourse to Article 21.5 said, at paragraph 7.649 of its 
Report, that it was inclined to agree fell outside of the scope of application of the CVA." Such a 
formulation, with the second sub -clause being introduced with the word "therefore", could be 
misunderstood to suggest that, at paragraph 7.649 of its Report, the Panel considered the importer's 
"intention" relevant to the applicability of the CVA. For these re asons, the Panel declines Thailand's 
request.  
5.17.   The Philippines notes that in paragraph 7.247,  the Panel summarizes Thailand's arguments 
that "the 2002 -2003 Charges do not determine 'the value of goods' imported by PMTL in the sense 
of the first elem ent of Article 15.1(a)". For the sake of completeness, the Philippines invites the 
Panel to add a sentence to this paragraph, summarizing the repeated shifts in Thailand's position on 
how the reference to the "actual price" in the 02 -03 Charges is to be un derstood. The Philippines 
recalls that these shifts in position are analysed, at great length, in paragraphs 7.286 -7.287.   
5.18.   Thailand does not comment on that request.  
5.19.   The Panel notes that the brief summaries of the parties' arguments that it  has included under 
the subheadings "Main arguments of the parties" are not meant to be exhaustive. Having said this, 
as currently drafted, the summary of Thailand's argument presented in paragraph 7.247 does not 
completely align to the Panel's analysis at  paragraphs 7.286 -7.287. Accordingly, the Panel has added 
a brief indication that the summary in paragraph 7.247 reflects Thailand's argument as it was 
presented in its first written submission, which then evolved in the course of the proceeding. The 
revised text of paragraph 7.247 reads:  
7.247.  Thailand argues that the 2002 -2003 Charges do not determine "the value of 
goods" imported by PMTL in the sense of the first element of Article 15.1(a). Thailand 
recalls that at paragraph 7.649 of its Report in the first recourse to Article 21.5, the 
Panel stated, in the context of determining whether the 2003 -2006 Charges involved a 
determination of "the value of goods" imported by PMTL, that the Panel would have 
been inclined to agree with Thailand and answer that question in the negative if Thailand 
had been able to substantiate "its interrelated assertions that the Charges allege 
customs fraud based on a determination that the price that PMTL declared  to have paid 
to PMPMI was not the actual  price that was paid to  PMPMI, and that the references to 
King Power's prices in the Annex merely serve as a possible benchmark for the purposes 
of a fine and not as a basis for determining the actual customs value of PMTL's imported 
goods". In its first written submission,  Thailand argues that in this case, the 2002 -
2003 Charges accuse PMTL of declaring an import value that is not the price actually 
paid b y the buyer to the seller, and therefore constitute the kind of "customs fraud" 
that the Panel in the first recourse to Artic le 21.5 said, at paragraph 7.649 of its Report, 
that it was inclined to agree fell outside of the scope of application of the CVA. In the 
course of the proceeding, Thailand also developed other arguments on the first 
element of Article 15.1(a), as elaborat ed below in paragraphs 7.286 -7.287.   
5.3.2   Paragraph 7.254  
5.20.   Thailand notes that in paragraph 7.254 , the Panel recalls the definition of "customs fraud" 
that it previously articulated in its report of the first Article 21.5 proceedings. According to the Panel's 
definition of "customs fraud", the notion of deception is a central element of "customs fraud". The 
Panel observed that, pursuant to Article 1(c) of the WCO's International Convention on Mutual 
Administrative Assistance for the Prevention, Inve stigation and Repression of Customs Offences (the 
Nairobi Convention), "customs fraud" is defined as "a Customs offence by which a person deceives 
the Customs [Department] and thus evades, wholly or partly, the payment of import or export duties 
and taxes […]". The Panel further noted that "[t]he general definition of 'customs fraud' contained 
in Article 1(c) does not elaborate on the kinds of 'deception' that are embraced by this concept, but WT/DS371/RW2/Add.1  
 
- 40 - 
 
  examples of 'customs fraud' reiterated in the Nairobi Convention  are 'forgery, falsification or 
counterfeiting'". For these reasons, Thailand suggests certain modifications to paragraph 7.254 to 
incorporate the element of deception into the Panel's observations regarding its previous definition 
of "customs fraud".  
5.21.  The Philippines objects to Thailand's requested additions in paragraph 7.254. In the sentence 
that Thailand proposes to alter, the Panel is simply describing its own earlier explanation of the 
concept of "customs fraud", set forth in paragraph 7.631 of the Panel Report in the first compliance 
proceedings. In so doing, the Panel faithfully describes its earlier explanation of the concept of 
"customs fraud". Thailand's comments, therefore, effectively seek to change the Panel's earlier 
statements about the  concept of "customs fraud". It is not appropriate for Thailand to use the interim 
review in the second compliance proceedings to seek revision of the Panel's findings from the first 
compliance proceedings. The Panel should, therefore, reject Thailand's re quest.  
5.22.   The Panel recalls that in paragraph 7.631 of the Report in the first recourse to Article 21.5, 
which contains the statement which the Panel refers to in paragraph 7.254 of its Report, the Panel 
stated that "[w]e understand both parties to agree that , in the context of customs valuation, the 
concept of customs fraud concerns the situation in which 'the customs value declared by the importer 
does not represent the price actually paid'." The quoted phrase reproduced the wording used by a 
previous panel,  and which had been quoted in paragraph 7.630 of the Report. The purpose of this 
sentence, and of paragraph 7.631 more generally, was to distinguish an essential element of the 
concept of "customs fraud", i.e. a difference between the declared  price and th e price actually  paid. 
It sought to make clear that an importer does not commit "customs fraud" simply "by declaring a 
transaction value that a customs authority subsequently decides was influenced by the importer's 
relationship with the supplier, as this situation merely reflects the anticipated operation of Articles 1 
to 7 of the CVA". The point of paragraph 7.631 was thus to identify this essential  element of the 
concept. The point was not to provide a complete  definition of all of the requisite elements  of the 
concept of customs fraud, such as the existence of deception, intention, or the other elements that 
Thailand has stressed in its arguments (likewise, and for the same reason, paragraph 7.631 does 
not allude to other forms of customs fraud, such as under -declaring the quantities of imported 
products, or mispresenting the nature of the imported goods, or falsely declaring the country of 
origin). Accordingly, while it would not be incorrect to state that the concept of customs fraud 
concerns the situat ion in which the importer "deceives" (or even "intentionally deceives") the 
customs authorities by declaring a customs value that does not represent the price actually paid of 
payable, those elements are not germane to the point that the Panel was making i n paragraph 7.631 
of its Report. Accordingly, the Panel does not consider it appropriate to revise the wording of 
paragraph 7.254 of this Report, and by extension paragraph 7.631 of the Report, in the manner 
proposed by Thailand.  
5.3.3   Paragraph 7.266  
5.23.  The Philippines notes that in paragraph 7.266 , the Panel explains that Thailand's argument 
regarding the definition of "Customs" in the Revised Kyoto Convention is moot, because "the Panel 
did not take a position on the meaning of the terms 'customs a dministration' in the CVA, but instead 
simply rejected the underlying premise that the CVA obligations invoked by the Philippines apply 
only to those state organs that are a part of the 'customs administration'". In the interest of assisting 
the reader, th e Philippines requests that the Panel clarify why Thailand's argument relating to the 
definition of the term "Customs" was rendered moot. The Philippines understands that the Panel's 
response is that, whatever the meaning of the defined term "Customs" in t he Revised Kyoto 
Convention, that defined term does not change the Panel's understanding that the term "customs 
administration" in the CVA applies to State entities that are not part of the domestic customs 
administration. The Philippines considers that it  would be helpful to clarify and expand this aspect 
of the Panel's reasoning.   
5.24.   Thailand does not comment on this request.  
5.25.   The Panel notes that, contrary to what is suggested by the Philippines' comment, the Panel 
does not state that the term  "customs administration" in the CVA "applies to State entities that are 
not part of the domestic customs administration". What the Panel found in the first recourse to 
Article 21.5, and reiterated in paragraphs 7.257, 7.266, and 7.269, is more precisely t hat "the Panel 
took no definite position on the precise meaning of the term 'customs administration'," because the 
Panel "rejected the underlying premise that the substantive CVA obligations invoked by the WT/DS371/RW2/Add.1  
 
- 41 - 
 
  Philippines apply only to those state organs that are a part of the 'customs administration'". In the 
interest of ensuring maximal clarity on this point, which has now been subject to extensive 
arguments by the parties in the first recourse to Article 21.5 and reargued again this proceeding, 
the Panel has  added additional text in paragraph 7.266 restating the same point in other words, 
drawing upon existing text in the Report in the first recourse to Article 21.5 that is referenced in 
paragraph 7.257. The revised text of paragraph 7.266 reads:  
7.266.  Howe ver, even assuming arguendo  that Thailand is correct that the definition 
of "Customs" contained in the Revised Kyoto Convention is relevant to the interpretation 
of the term "customs administration" in the context of the CVA, and even assuming 
further that  this definition supports a restrictive interpretation of the terms "customs 
administration" in the CVA, this would still not alter the Panel's existing conclusion or 
analysis. As recalled above at paragraph 7.257 , the Panel did not take a position on 
the meaning of the terms "customs administration" in the CVA, but instead simply 
rejected the underlying premise that the CVA obligations invoked by the Philippines 
apply only to those state organs that are a part of the "customs administration". 
Specifically,  the Panel concluded that the substantive CVA obligations invoked 
by Philippines "apply to any organ of the state that makes a 'customs 
valuation' determination", and was therefore "unable to agree with Thailand 
that the CVA is inapplicable to the Charges on the grounds that they were 
issued by the Public Prosecutor, which is not a part of the 'customs 
administration'". [new FN] This reasoning, i.e. that the substantive CVA 
obligations at issue apply to any organ of the state that makes a "customs 
valuation"  determination irrespective of whether that organ forms part of the 
"customs administration" , rendered moot Thailand's argument regarding the 
definition of "Customs" in the Revised Kyoto Convention and obviated any reason for 
the Panel to specifically addr ess that definition in the reasoning. The Panel sees no 
reason to go further than the Panel in the first recourse to Article 21.5 did in seeking to 
define the term "customs administration" in the context of the CVA. There is no 
obligation upon a panel to m ake findings on every argument put forward by the parties 
in support of their respective cases, insofar as acceptance or rejection of an argument 
would not alter the conclusion arrived at.   
[new FN] Panel Report, Thailand – Cigarettes (Philippines) (Article 21.5 
– Philippines) , para. 7.644.  
5.3.4   Paragraphs 7.286 and 7.287  
5.26.   The Philippines notes that in paragraph 7.286 , the Panel seeks to give an overview of the 
repeated shifts in Thailand's position on how the reference to the " actual price" in the 2002 -2003 
Charges is to be understood.  The Philippines agrees that this is a worthwhile, if challenging, exercise. 
To facilitate the reader's ability to follow Thailand's shifting arguments, the Philippines suggests that 
the Panel cla rify, at each step, its understanding of Thailand's position on the interpretation of the 
term "actual price" at that moment in the proceedings. The Panel may also wish to simplify the 
current version of its summaries to improve readability – the detail mi ght be included in footnotes. 
In some sub -paragraphs, the Panel adds a parenthetical statement that attempts to distil Thailand's 
arguments, and in others it does not. The Philippines suggests that the Panel adopt a consistent 
approach in all sub -paragraph s. In making the Panel's summaries consistent across sub -paragraphs, 
the Philippines suggests that the Panel delete the parenthetical remarks in favour of a more direct 
statement of the Panel's understanding. Additionally, the Philippines queries whether t he Panel's 
reasoning in the passages preceding the parenthetical remarks is uniformly sufficient to support the 
implication drawn in the parenthetical (e.g., sub -paragraph (a)).  
5.27.   For its part, Thailand also suggests additional language in the Panel' s description of Thailand's 
arguments on the reference to "actual price" in the 2002 -2003 Charges in paragraph 7.286. 
Specifically, Thailand requests the Panel to clarify that it argued that the CVA does not apply to the 
2002-2003 Charges because this meas ure constitutes an allegation of customs fraud. Thailand also 
proposes language clarifying that its arguments under Articles 1.1 and 1.2(a) of the CVA were 
presented in the alternative, that is, assuming arguendo  that the CVA applies to the 2002 -2003 
Charg es. Finally, in relation to the Panel's observations at the end of sub -paragraphs (a) and (b), 
Thailand proposes language explaining that these observations are based on the Panel's 
interpretation of Thailand's argument rather than on Thailand's own descri ption of its arguments.  WT/DS371/RW2/Add.1  
 
- 42 - 
 
  5.28.   In addition to its substantive comments, the Philippines identified what it considered to be a 
typographical error in paragraph 7.286(b). In this paragraph, the Panel describes Thailand's 
argument, stated in Thailand's first  written submission, that the Charges reflect a revised customs 
value computed consistently with "Article 7.1 of the CVA"; the Philippines proposes changing this so 
that it reads "Article 6.1". In its comments, however, Thailand states that it "does not ag ree with 
this suggested change as it does not represent the argument made by Thailand in its submissions".73 
5.29.   The Panel observes that the parties have provided almost a dozen comments to improve the 
clarity of paragraph 7.286 and its subparagraphs (a ) to (e), which are aimed at giving an overview 
of Thailand's position on how the reference to the "actual price" in the 2002 -2003 Charges has 
unfolded in the course of the proceeding. Given the number of comments, and the fact that most 
speak for themselv es and pertain to stylistic issues, the Panel will not discuss them individually. The 
Panel agrees with many of these comments of the parties and has implemented them accordingly. 
The revised text of paragraph 7.286 reads:  
7.286.  Thailand disagrees with b oth aspects of this understanding of the Charges. 
Thailand's position on how the reference to the "actual price" is to be understood in the 
context of the 2002 -2003 Charges has unfolded in the course of the proceeding, as 
follows:  
a. In the context of arg uing that the CVA does not apply to the Charges as 
this measure constitutes an allegation of customs fraud , Thailand argued 
in its first written submission that PMTL's declared value was not the price that 
PMTL actually paid to PM Indonesia for the goods . The Panel notes that this 
argument (which  implies that the reference to the higher "actual price" in the 
Charges was "the price actually paid or payable " in the sense of Article 1.1 of 
the CVA ). 
b. Also in its first written submission, Thailand presented a lternative 
arguments assuming arguendo  that the CVA applies to the Charges. As 
part of these alternative arguments,  Thailand responded to the Philippines' 
claims under Articles 1.1 and 1.2(a) by arguing that the Thai authorities were 
justified in rejecting  the price PMTL paid to PM Indonesia as the basis for valuing 
the goods because the authorities found that this price was influenced by the 
relationship between PM Indonesia and PMTL, and by suggesting that the Charges 
reflect a revised customs value compu ted consistently with Article s 6.1 and/or 
7.1 of the CVA . The Panel notes that this argument (which presupposes that 
the Thai authorities assumed that the declared price was the price actually paid 
or payable, and that the "actual price" in the Charges refers to the revised 
customs value determined in accordance with Article s 6.1 and/or 7.1), and 
does not represent "the price actually paid or payable" .   
c. In its second writ ten submission, in the context of arguing that the CVA 
does not apply to the Charges, Thailand clarified that "the reference to 'actual 
value' [in the 2002 -2003 Charges] refers to the price actually paid or payable for 
the goods in question" and not to "al ternative" values as alleged by the 
Philippines, and explained that its contradictory assertions made in the context 
of rebutting the Philippines' claims under Article s 1.2(a) and 6 were to be 
construed as arguments in the alternative. The Panel notes that  this 
clarification implies that the reference to the higher "actual price" in the 
Charges was "the price actually paid or payable" in the sense of Article 
1.1 of the CVA, and that the authorities never proceeded to examine the 
circumstances of sale under Article 1.2(a), or to determine a revised 
customs value under Articles 6.1 and/or 7.1.   
d. In its response to Panel question No. 139, Thailand confirmed that "the 02 -
03 Charges allege that the transaction value declared by PMTL was not the price 
actually p aid", but Thailand then submits that the Charges do not determine the 
"price actually paid or payable" for the goods in the sense of Article 1.1 of the 
                                                
73 Thailand's comments on the Phi lippines' request to review the Interim Report, para. 3.1, second bullet 
point.  WT/DS371/RW2/Add.1  
 
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  CVA, or any other revised customs value, because the Charges are an accusation 
of customs fraud, and in cases of customs fraud the authorities are not necessarily 
required to determine "the correct customs value" and "need not calculate exactly 
the price actually paid" . The Panel notes that this implies  (implying that the 
"actual price" does not refer to eit her the transaction value or a revised customs 
value, but without specifying what the "actual price" refers to ).  
e. In its opening oral statement at the meeting of the Panel, Thailand stated 
that in cases where penalties for customs fraud are determined b y reference to 
the value of the goods, the value of the goods "is a simple benchmark for a 
penalty" and not "a customs valuation determination"; and in response to Panel 
question Nos. 166 and 167, Thailand stated that its position is that the reference 
to the "actual price" in the 2002 -2003 Charges refers to a determination by Thai 
authorities of a possible benchmark for the imposition of a fine that does not 
represent any determination by Thai authorities of the price actually paid or 
payable by PMTL to PM  Indonesia, or of the revised value that was determined 
after concluding that the price actually paid or payable was influenced by the 
relationship between PMTL and PM Indonesia. The Panel notes that this 
argument implies that the "actual price" does not r eflect a determination 
of the "price actually paid or payable", or a revised customs value 
determined pursuant to Articles 6.1 and/or 7.1.  
5.30.   The Philippines further proposes, as a complement to the sub -paragraphs, that the Panel add 
a concise summary  of Thailand's shifting arguments at the end of paragraph 7.286. The Philippines 
also suggests a revision to the first sentence to the chapeau of paragraph 7.287 , to replace " In 
the light of Thailand's clarifications, the Panel understands Thailand's posit ion to be …" with 
"Although Thailand's position has shifted during the course of the proceedings, the Panel 
understands Thailand to argue …".  
5.31.   Thailand does not specifically comment on this request.  
5.32.   The Panel does not see the need for the ad ditional summary paragraph, as it would involve a 
degree of repetition with what would immediately precede it in subparagraphs (a) through (e) of 
paragraph 7.286. Furthermore, the Panel is not persuaded that it adds to the clarity of paragraph 
7.287 or wha t follows to revise its first sentence. In the Panel's view, it makes no difference to the 
remainder of paragraph 7.287 if Thailand's position is characterized as "shifting", or the subject of 
"clarifications", or having "unfolded in the course of the proc eeding" (the latter expression having 
been used in the chapeau of paragraph 7.286). Accordingly, the Panel declines to make this change.  
5.3.5   Paragraph 7.298  
5.33.   The Philippines notes that in paragraph 7.298 , the Panel explains that there are 
"circum stances in which a determination of customs fraud could  be made without ever seeking to 
determine the customs value of the importer's goods"; and to illustrate how that could be, the Panel 
recalled that it had already given an example of a particular set of circumstances in which that might 
be the case at para graph 7.659 of the Report in the first recourse to Article 21.5. To assist the 
reader, the Philippines suggests adding additional examples of such instances. The Philippines 
provided this list of relevant examples: (1) the importer fails to declare the imp ortation of the goods 
to the customs administration (i.e., smuggling); (2) the importer fraudulently declares the number 
of units of the goods entering the customs territory; (3) the importer fraudulently declares the type 
(classification) of the goods; or , (4) the importer fraudulently declares the origin of the goods.  
5.34.   Thailand makes a related request, stating that "in the interest of providing security and 
predictability concerning the scope of the CVA, it would be extremely useful if the Panel could provide 
a hypothetical example illustrating the manner in which, in the event of suspicion of customs fraud, 
an authority could make an allegation of customs fraud in a way that neither the constituent 
elements of the customs fraud accusation n or the associated penalty would be covered by the CVA 
or, alternatively, that both aspects would be covered by the CVA but would be adopted in a manner 
consistent with the CVA."74 Thailand submits that "WTO Members in general would welcome the 
                                                
74 Thailand's request to review the Interim Report, para. 2.14.  
 WT/DS371/RW2/Add.1  
 
- 44 - 
 
  Panel's clar ification in this respect in order to fully understand the manner in which customs fraud 
accusations could be made and consequent penalties imposed without infringing WTO obligations".75 
Thailand suggests that this example be included by the panel as a new  paragraph after paragraph 
7.316.     
5.35.   In its comments on the Philippines' request, Thailand states that the examples suggested by 
the Philippines do not illustrate the Panel's point. That is because the Philippines' examples constitute 
types  of cust oms fraud, whereas the Panel's point addresses the circumstances  in which an 
accusation of customs fraud, regardless of the type, could be made without seeking to determine 
the customs value of the imported merchandise. In this context, the relevant circum stances  would 
cover aspects such as the availability of evidence of the price actually paid by the buyer.  These 
particular circumstances  could be present in any type of customs fraud, including those indicated by 
the Philippines. Conversely, it is possibl e that, even in the types of customs fraud listed by the 
Philippines, the circumstances  could allow authorities to make a customs fraud accusation and also 
determine the price actually paid by the buyer. Hence, providing examples of types  of customs fraud 
in no way illustrates the Panel's statement concerning the circumstances  that customs authorities 
could encounter in import operations. In fact, Thailand considers that the Philippines' examples 
would obfuscate, rather than clarify, the Panel's explanation . 
5.36.   In its comments on Thailand's request, the Philippines notes that it is "common ground that 
the parties would appreciate such additional examples". The Philippines submits that its proposed 
examples address Thailand's request for examples of situa tions in which an allegation of customs 
fraud would not be subject to the CVA and encourages the Panel to include these examples in its 
report. Recalling that Thailand also asks for an example of a fine that would not be subject to the 
CVA, the Philippines  states that "[e]xamples would include any fine where the base for the fine is 
not set relative to the customs value, for instance, when the fine is based on: the importer's annual 
sales revenue; a fixed amount; or the maximum retail price."76 Recalling th at Thailand also requests 
that the Panel provide an example of a situation in which the CVA would apply to an allegation of 
customs fraud and the calculation of the associated fine, and in which the domestic authority would 
be able to comply with the CVA, the Philippines suggests the following example: (1) an importer 
declares that the price of an imported machine is CHF 10,000; (2) upon examination of the 
circumstances of sale, the customs authority ascertains that the importer had received two receipts 
from the related seller, one for CHF 10,000 and a second for CHF 3,000 (a so -called "hidden" 
receipt77); (3) the authority verifies the importer's bank records, which show a total payment of CHF 
13,000 to the seller; (4) the authority determines that the "pr ice actually paid" by the importer was 
CHF 13,000, pursuant to Article 1.1 of the CVA; (5) the public prosecutor issues charges alleging 
that the importer intentionally under -declared the customs value to evade the payment of ad 
valorem customs duties; and  (6) municipal law requires a fine of four times the actual customs value 
determined by the authority (i.e., 4 x CHF 13,000 = CHF 52,000). Thailand submits that the 
authority's determination and the fine are consistent with Article 1.1 of the CVA, because the price 
actually paid was CHF 13,000, with no adjustments required under Article 8 of the CVA.  
5.37.   The Panel recalls that at paragraph 7.6 59 of the Report in the first recourse to Article 21.5, 
the Panel offered a simple hypothetical to illustrate the  point that in cases of customs fraud, the 
authorities may not know the price actually paid : 
We agree with Thailand that in cases of customs fraud, the authorities may not know 
the price actually paid. We further agree with Thailand that an allegation of c ustoms 
fraud could be made without ever seeking to determine the  customs value of the 
importer's goods, and the making of such an accusation does not necessarily 
presuppose that the authorities would have engaged in a customs valuation 
determination in ord er to reach the conclusion that the declared transaction value was 
not "truthful or accurate". Using Thailand's example, if an importer presents an invoice 
                                                
75 Thailand's request to review the Interim Report, para. 2.15.  
76 Philippines' comments on Thailand's request f or review of the Interim Report, para. 31.  
77 The Philippines notes that the "hidden invoice" was mentioned by Thailand, during the first 
compliance proceedings, as a situation in which fraudulent under -declaration of the customs value might arise.  
See first compliance Panel Report, para. 7.659.  In the second compliance proceedings, Thailand has expressly 
accepted that it has no "direct" evidence, such as hidden invoices, suggesting that the importer committed 
fraud.  Instead, Thailand described the Indon esian pricing and cost information that it allegedly possesses as 
"indirect" evidence of fraud.  See Thailand's first written submission, para. 3.150 and the Philippines' second 
written submission, para. 282.  WT/DS371/RW2/Add.1  
 
- 45 - 
 
  indicating a purchase price of 100 for the imported merchandise, but the customs 
authorities find in  the importer's luggage a second invoice of 50 for that same 
merchandise, the necessary conclusion is that the declared value of 100 is not the price 
actually paid by the importer, but the authority may never discover the totality of the 
invoices related t o this purchase and, hence, may never have conclusive evidence of 
the price actually paid by the importer.  
5.38.   The Panel recalls that in paragraph 7.298 of this Report, the Panel explains that there are 
"circumstances in which a determination of customs  fraud could  be made without ever seeking to 
determine the customs value of the importer's goods"; and to illustrate how that could be, the Panel 
recalled that it had given the above example of a particular set of circumstances in which that might 
be the c ase at paragraph 7.659  of the Report in the first recourse to Article 21.5. The Panel is not 
persuaded providing additional hypothetical examples is a useful exercise.  
5.3.6   Paragraph 7.303  
5.39.   The Philippines recalls that in this section, the Panel addresses the parties' positions on the 
correct understanding of the term "actual price" in the 2002 -2003 Charges. In paragraph 7.290, the 
Panel explains that, in the subsequent sub -sections of its analysis, it will first address whether the 
"'actual price ' [] fixes or determines the actual and exact monetary value of PMTL's imported 
cigarettes, as the Philippines contends, or is instead merely an 'approximate' value included for other 
purposes, as Thailand contends" (Section 7.3.3.3.3.3). The Panel indicat es that, in a second sub -
section, it will address the second disputed issue, which is "whether the 'actual price' is to be 
understood as a revised customs valuation following the rejection of the transaction value, as the 
Philippines contends, or instead r efers to the 'price actually paid or payable' as Thailand contends" 
(Section 7.3.3.3.3.4). In paragraph 7.302, the Panel concludes the first part of its analysis. The 
Panel then turns to the second part, starting in paragraph 7.303. For clarity, the Philip pines suggests 
inserting a transitional sentence in paragraph 7.303, reminding the reader that it now turns to the 
second part of its analysis of the term "actual price". Additionally, the Philippines suggests 
explaining, in paragraph 7.303, that the Panel  is addressing an alternative argument made by 
Thailand.  
5.40.   Thailand does not comment on this request.  
5.41.   The Panel considers that the transitional sentence proposed by the Philippines would add 
clarity, in helping to more clearly distinguish the t wo different parts of the Panel's analysis of the 
term "actual price". The Panel also considers that it would add to the clarity of its analysis to recall 
that this second part of its analysis relates to an argument that Thailand has made in the alternativ e. 
The Panel has revised the text of paragraph 7.303 accordingly, to read:  
7.303.  Having found that the reference to the "actual price" in the 2002 -2003 
Charges fixes or determines the actual and exact monetary value of PMTL's 
imported cigarettes, t The Pa nel will now turns to  assess the question of whether 
the references to the "actual price" in the Charges and their Annex refer to the "price 
actually paid or payable" for the imports at issue, as Thailand maintains, or whether 
they refer instead to a revis ed customs value that does not call into question the price 
actually paid or payable by PMTL, as the Philippines maintains. The Panel recalls that 
Thailand made this argument in the alternative.  
5.3.7   Paragraphs 7.308 to 7.310  
5.42.   The Philippines notes  that in paragraphs 7.308 to 7.310 , the Panel finds that Thailand's 
use of certain Indonesian pricing and cost information "suggests that [the Thai authorities] were 
constructing a benchmark value, and not attempting to discover the 'price actually paid or payable'". 
The Philippines believ es that it would be helpful if the Panel were to state, explicitly, that a 
constructed benchmark value, based on a maximum domestic retail selling price used as the excise 
tax base, is not apt to reveal the "price actually paid or payable". The Philippines  also points out 
that, in its reasoning in these paragraphs, the Panel refers to the relevant (but unknown) Indonesian 
pricing and cost information as "meta -data". The Philippines queries whether the term "meta -data" 
captures the relationship between this Indonesian information and the transaction price. The WT/DS371/RW2/Add.1  
 
- 46 - 
 
  Philippines understands that, broadly speaking, "meta -data" is a set of data that describes and gives 
information about another set of data.   
5.43.   Thailand does not comment on this request.  
5.44.   The Panel agrees that a constructed benchmark value would not be apt to reveal the "price 
actually paid or payable", insofar as it was based on a maximum domestic retail selling price used 
as the excise tax base. However, this point is not directly relevant to the reasoning at paragraphs 
7.308 to 7.310 of the Report. In this sub -section of the Report, the Panel is addressing the question 
of whether the references to the "actual price" in the Charges and their Annex refer to the "price 
actually paid or payable " for the imports at issue, as Thailand suggests, or whether the references 
to the "actual price" refer instead to a revised customs value that does not call into question the 
price actually paid or payable by PMTL, as the Philippines maintains. As the Pan el's findings 
elsewhere in its Report make clear, the Thai authorities' reliance on pricing and cost information 
reported by PM Indonesia to the Indonesian tax authorities in the CK -21A forms was equally inapt 
to reveal whether the relationship between the  buyer and seller influenced the price in the context 
of Article 1.2(a) second sentence, or to reveal the "price actually paid or payable". Accordingly, 
stating that a constructed benchmark value would not be apt to reveal the "price actually paid or 
payab le", insofar as it was based on a maximum domestic retail selling price used as the excise tax 
base, does not shed any light on the question being addressed in this sub -section of the Report. 
Therefore, the Panel has not made this revision.  
5.45.   The Pan el agrees that "meta -data" is not the ideal word to use to describe a company's pricing 
and cost information. In the first sentences of paragraph 7.309, the word appears in a direct quote 
from the European Union's third -party submission, and therefore the Panel has not modified it. The 
Panel has replaced "meta -data" with the word "data" in the first and second sentences of paragraph 
7.310, which set forth statements by the Panel.  
5.4  Claims under Articles 1.1 and 1.2(a), second sentence, and Articles 6 an d 7 
5.4.1   Introduction  
5.4.2   Claim under Article 1.2(a), second sentence  
5.4.2.1   Paragraph 7.353(b)  
5.46.   The Philippines observes that in paragraph 7.353(b) , the Panel summarizes the Philippines' 
arguments regarding the relevance of Article 6 of the C VA and its Interpretative Notes to the 
interpretation of Paragraph 3 of the Interpretative Notes to Article 1.2. The Philippines argued that 
Article 6 and its Interpretive Notes are "important context" for how a cost -plus benchmark must be 
determined under  Article 1.2(a) of the CVA. In the interests of accuracy, the Philippines asks that 
the Panel amend this passage.   
5.47.   Thailand does not comment on this request.  
5.48.   The Panel has amended paragraph 7.353 as proposed by the Philippines, in the interest of 
accuracy. The revised text of paragraph 7.353 reads:  
b.  the "detailed rules" of Article 6 of the CVA and its Interpretative Notes, which 
regulate the construction of a cost -plus value also known as the "computed value", are 
important context i n interpreting and  apply ing to Paragraph 3 of the Interpretative 
Note to Article 1.2;  
5.4.2.2   Paragraphs 7.359, 7.362, 7.368 and 7.375  
5.49.   The Philippines finds the Panel's use of the term "insofar as" in the conclusions in paragraphs 
7.368 and 7.375  to be unclear. Earlier in its Report, the Panel found that Thailand used certain 
Indonesian pricing and cost information as the basis for its determination of the alternative customs 
value of PM Thailand's cigarettes. However, the addition of the term "inso far", in paragraphs 7.368 
and 7.375, casts doubt on the Panel's earlier finding that Thailand used Indonesian pricing and cost WT/DS371/RW2/Add.1  
 
- 47 - 
 
  information as the basis for its determination.  The Philippines, therefore, invites the Panel to resolve 
this doubt by deleting,  or further clarifying, the term "insofar as".   
5.50.   Thailand does not comment on this request.  
5.51.   The Panel notes that the wording in paragraphs 7.368 and 7.375 was not intended to cast 
doubt on the Panel's earlier finding that Thailand relied on pricing and cost information reported by 
PM Indonesia in the CK -21A forms to determine the "actual price". Rather, the wording of these 
paragraphs was intended to make a conditional statement about the nature of the determination 
that the Thai authorities made on the basis of that information. More specifically, and as stated in 
the Panel's overall conclusion in paragraph 7.376, the Panel finds that it was improper for the DSI 
and the Public Prosecutor to rely on pricing and cost information reported by PM Indonesia to the 
Indonesian tax authorities in the CK -21A forms for purposes of determining the customs value of 
PMTL's imports into Thailand, regardless of whether said information was relied upon for the purpose 
of determining: (1) whether the transactio n value was influenced by the relationship between the 
buyer and the seller pursuant to Article 1.2(a), second sentence, of the CVA; or (2) the "price actually 
paid or payable" within the meaning of Article 1.1 of the CVA; and/or (3) a revised customs valu e 
based on Article 6 of the CVA; or (4) a revised customs value based on Article 7 of the CVA. Having 
offered the foregoing clarification, the Panel does not consider it necessary to revise the wording of 
these paragraphs (or the conditional conclusions se t forth in paragraphs 7.359 and 7.362 ).  
5.4.3   Alternative claim under Article 1.1  
5.4.3.1   Paragraph 7.360  
5.52.   The Philippines observes that, in the second sentence of paragraph 7.360 , the Panel recalls 
its earlier finding that the Philippines has ma de a prima facie  case that the "actual price" refers to a 
revised customs value, and not the "price actually paid or payable" as Thailand asserted. In the third 
sentence of the paragraph, the Panel explains its decision, in this part of its findings, to ma ke 
alternative findings under Article 1.1 and Article 1.2(a) of the CVA. The Panel suggests that it makes 
alternative findings because "the facts are not entirely clear" on whether the "actual price" is a 
revised customs value or the "price actually paid o r payable". The Philippines considers that the 
Panel's remarks that "the facts are not entirely clear" may be read to indicate a degree of uncertainty 
on the Panel's part as to the strength of its own earlier findings that the "actual price" refers to a 
revised customs value, and not the "price actually paid or payable". The Philippines invites the Panel 
to reconsider the remarks in question, which do not appear to be necessary. The Philippines notes 
that the Panel is entitled to make alternative findings, for the sake of completeness, to address 
positions taken by Thailand, including in view of a potential appeal.  
5.53.   Thailand does not comment on this request.  
5.54.   The Panel notes that the Philippines' comment concerns the Panel's statement at paragra ph 
7.360 that "the facts are not entirely clear" as to whether the "actual price" in the 2002 -2003 
Charges reflects the Thai authorities' determination of a revised customs value that was calculated 
using the computed value methodology under Article 6 and/ or 7 of the CVA following a determination 
that the transaction value was influenced by the relationship between the parties, or reflects  instead 
a determination of the "price actually paid or payable" for the goods in question. The Panel notes 
that the Phi lippines has made a similar comment in relation to the Panel's overall conclusion, at 
paragraph 7.377, that "it is impossible to say with any certainty which of these determinations was 
made". The Panel addresses the comment on paragraph 7.377 further belo w.  
5.55.   With respect to paragraph 7.360, the Panel notes that its acknowledgement that the "the 
facts are not entirely clear" is indeed meant to indicate a degree of uncertainty, on the Panel's part, 
as to whether the "actual price" refers to a revised customs value, or instead the "price actually paid 
or payable". The Panel acknowledges this uncertainty again at paragraph 7.377, when it states that 
"it is impossible to say with any certainty which of these determinations was made". The Panel also 
acknow ledges this uncertainty in its earlier analysis of this issue, when it states at paragraph 7.305 
that the circumstances surrounding the 2002 -2003 Charges "suggest" that "the 'actual price' in the 
2002-2003 Charges refers to a revised customs value calculat ed using the computed value 
methodology under Article 6 and/or 7 of the CVA" and not "a determination of the 'price actually 
paid or payable' for the goods in question", but acknowledges that "the 2002 -2003 Charges are not WT/DS371/RW2/Add.1  
 
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  free of ambiguity on this point".  The Panel does not consider it problematic to acknowledge 
uncertainties where they exist.  
5.56.   Furthermore, it is clear from the Panel's reasoning and findings that, while acknowledging the 
lack of certainty on this point, the Panel concludes (by opera tion of the rules on burden of proof) 
that the "actual price " in the 2002 -2003 Charges refers to the revised customs value that was 
calculated using the computed value methodology under Article 6 and/or 7 of the CVA, and not, as 
Thailand suggests, a determination of the "price actually paid or payable" for the goods  in question. 
The Panel's earlier reasoning set forth in paragraphs 7.303 to 7.317 leads the Panel to conclude, in 
paragraph 7.317, that the "actual price" does not refer to the "price actually paid or payable", as 
Thailand maintains, so as to make clear t hat the Panel's findings under Article 1.1 are thus being 
made on an arguendo  basis. In paragraph 7.360, the Panel introduces its findings on the Philippines' 
alternative claim under Article 1.1 by recalling that conclusion, and stating  that it "makes the 
following alternative finding under Article 1.1, based on the arguendo  assumption that the 2002 -
2003 Charges determine the 'price actually paid or payable'".  
5.57.   For these reasons, the Philippines' comments on the Panel's reasoning do not persuade the 
Panel that there is any need to revise the Report in this regard.  
5.4.3.2   Paragraph 7.361  
5.58.   The Philippines observes that in paragraph 7.361 , the Panel draws certain parallels between 
Articles 1.1 and 1.2(a) of the CVA. The Panel correctly notes that , in both cases, a customs 
administration enjoys a margin of discretion in determining an appropriate method of enquiry.  
Further, in both cases, the method of enquiry must be fit for its particular treaty purposes.  However, 
the nature of the respective t reaty purposes differs in each case.  Thus, under Article 1.1, the enquiry 
must be apt to reveal whether the declared value is the price actually paid or payable ; whereas, 
under Article 1.2(a), the enquiry must be apt to reveal whether the transaction valu e is influenced 
by the relationship between the buyer and seller . The Philippines is concerned that the Panel's 
reasoning in paragraph 7.361 does not adequately address these differences in purpose between 
the two provisions, and the implications of these differences for the enquiry to be undertaken under 
the respective provisions. A reader of the paragraph may mistakenly understand, from the 
parallelism drawn by the Panel, that the methods of enquiry used under Article 1.2(a) are equally 
appropriate under Article 1.1. This point is important because the calculation of a computed value – 
such as that at issue – is an appropriate method of enquiry under Article 1.2(a) to test whether the 
transaction value is influenced by the relationship between the buyer an d seller. However, it is not 
apt to reveal whether the declared value is the price actually paid or payable under Article 1.1.  
Indeed, the Panel itself explains, in paragraphs 7.308 to 7.310, why the determination of a cost -
based benchmark value is not ap t to shed light on the price actually paid or payable. In the light of 
the above, the Philippines invites the Panel to revise, and expand, its reasoning in paragraph 7. 361.   
5.59.   Thailand does not comment on this request.  
5.60.   The Panel considers tha t, in the light of the Philippines' comment, it would be useful to add a 
sentence to paragraph 7.361 clarifying that the existence of certain parallels in the minimum 
requirements for each provision does not mean that the methods of enquiry used under Arti cle 
1.2(a) are equally appropriate under Article 1.1. The Panel recalls that the Philippines' comments 
reiterate some of the comments that it made in response to a question from the Panel on this issue; 
and that the European Union also provided relevant co mments in response to a related question to 
the third parties. The Panel has added a reference to these comments in a footnote accompanying 
the sentence which has been added to paragraph 7.361.    
7.361.  The Panel considers that an authority enjoys a marg in of discretion in how it 
determines the "price actually paid or payable" within the meaning of Article 1.1, just 
as the authority enjoys a margin of discretion in how it conducts its "examination of the 
circumstances of sale" in the context of Article 1. 2(a). The existence of certain 
parallels in the minimum requirements for each provision does not mean that 
the methods of enquiry used under Article 1.2(a) are equally appropriate under 
Article 1.1. [new FN] However, the obligations in Article s 1.1 and 1.2( a), second 
sentence, are interrelated in a way that makes it illogical for an investigating authority 
to be free to disregard the minimum requirements of the examination under Article WT/DS371/RW2/Add.1  
 
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  1.2(a) when seeking to determine the "price actually paid or payable" un der Article 1.1. 
In this regard, it bears recalling that Article 1.2(a) and Article 1.1 not only comprise 
part of the same article, but are interrelated such that a violation of Article 1.2(a) 
necessary implies a violation of Article 1.1. Thus, the Panel c onsiders that the chosen 
means or methodology must be capable of, and suitable for, revealing whether the 
declared transa ction price corresponds to the "price actually paid or payable". 
Accordingly, the Panel's reasoning above regarding the claim under Art icle 1.2(a) 
second sentence applies mutatis mutandis . 
[new FN] See Philippines' response to Panel question No. 142; the 
European Union's response to Panel question No. 15 to third parties.    
5.4.4   Claim under Article 6.1  
5.4.4.1   Paragraph 7.365  
5.61.   The Philippines observes that in paragraph 7.365 , the Panel explains why it finds it 
unnecessary, in these proceedings, to engage in a comprehensive interpretation of the requirements 
of Article 6 as relevant to an examinati on of the circumstances of sale under Article 1.2(a). As 
justification, the Panel refers to the parties' agreement that the examination of the circumstances 
must "be based on the producer's actual costs , and that when applying Article 6, the authority … is  
under an obligation to verify the accuracy  of those costs". The Panel does not give citations to 
submissions setting forth the parties' respective positions on this issue.  Nor does the Panel indicate 
its own agreement with the parties' stated positions. The Philippines makes three comments. First, 
the Philippines invites the Panel to cite passages in the parties' respective submissions where they 
made the relevant statements on which the Panel relies. To assist, the Philippines has added relevant 
cites to its own submissions in the annotated versi on. Second , the Philippines invites Thailand  to 
confirm its agreement with the Panel's characterization of its arguments in paragraph 7.365. Third, 
in order to provide an appropriate basis for the Panel's findings going beyond the parties' agreement, 
the P hilippines requests that the Panel adds wording to the second sentence of paragraph 7.365, 
marking its own agreement with the parties' stated positions.  
5.62.   Thailand does not comment on this request.  
5.63.   The Panel notes that its analysis of the Phil ippines' claim under Article 6.1 is developed in 
paragraphs 7.363 to 7.368, and the points developed in paragraphs 7.365, 7.366 and 7.367 are 
interrelated. Paragraph 7.365 states in general terms that both parties seem to agree that an 
authority's examinat ion of the circumstances of sale under Article 1.2(a) must, at minimum, be 
based on the producer's actual costs, and that when applying Article 6, the authority in the importing 
country is also under an obligation to verify the accuracy of those costs, and  that in the 
circumstances of this case, the nature of the CK -21A information and the Thai authorities' 
examination of that information clearly did not meet that minimum standard, regardless of whether 
other detailed requirements of Article 6 were complied  with. Paragraphs 7.366 and 7.367 then 
elaborate, with paragraph 7.366 articulating more precisely the Panel's view on the minimum 
standards that apply under Article 6, and paragraph 7.367 explaining that the logical implication of 
Thailand's argumentation  is that it accepts that, but for the "reasonable flexibility" in Article 7 that 
Thailand seeks to rely on, the subsequent verification in terms of the accuracy of the information 
would have been required pursuant to Article 6. Given the relation between t hese paragraphs, the 
Panel does not consider it necessary to revise paragraph 7.365 in the manner proposed by the 
Philippines.  
5.4.5   Conclusion  
5.4.5.1   Paragraph 7.377  
5.64.   The Philippines observes that in paragraph 7.377 , the Panel finds that "it is  impossible to 
say with any certainty" whether Thailand's authorities made a determination that falls under Article s 
6 or 7 of the CVA, and finds it unnecessary to decide this issue because "ultimately it makes no 
difference to the Panel's  assessment". The  Philippines notes that the Panel is able to reach this 
conclusion because it has found that the Philippines has properly made and argued a claim under 
Article 7 of the CVA; however, if the Appellate Body were to reverse the Panel's findings that the WT/DS371/RW2/Add.1  
 
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  Philippines has properly made and/or argued a claim under Article 7, the question whether Thailand's 
measures fall under Article 6 or Article 7 becomes important to the Appellate Body's  assessment, in 
particular its ability to resolve this aspect of the dispute . The Philippines, therefore, requests that 
the Panel make an affirmative finding as to whether Thailand's measures fall under Article 6 or Article 
7. As for the Panel's statement that it finds it difficult to resolve the question whether Thailand's 
measur es fall under Article 6 or Article 7 "in the absence of any contemporaneous explanation from 
the Thai authorities", the Philippines submits that if there is no contemporaneous indication that the 
Thai authorities resorted to Article 7 – as the Panel rightl y finds – the Panel must find that Article 6 
applies. The Philippines submits that this follows from the rules in Articles 6 and 7, the applicable 
standard of review, considerations of transparency, and the procedural requirement in Article 7.3.78 
Having s aid this, the Philippines submits that the Panel "should also make an alternative finding, 
under Article 7, to address the eventuality that the Appellate Body disagrees with the Panel's finding 
that Article 6 applies".79 
5.65.   Thailand does not comment on  this request.  
5.66.   The Panel considers it may be useful to provide several clarifications in response to the 
Philippines' comments and request pertaining to paragraph 7.377, to ensure that there is no 
misunderstanding as to what consequence the Panel's  decision to make conditional, alternative 
findings has in terms of Thailand's implementation of the DSB recommendations and rulings arising 
from this proceeding.    
5.67.   The Panel recalls that paragraph 7.376 sets out its overall conclusion that it was improper for 
the DSI and the Public Prosecutor to rely on pricing and cost information reported by PM Indonesia 
to the Indonesian tax authorities in the CK -21A forms for purposes of determining the customs value 
of PMTL's imports into Thailand, regardless of whether it was relied upon for the purpose of 
determining: ( 1) whether the transaction value was influenced by the relationship between the buyer 
and the seller pursuant to Article 1.2(a), second sentence, of the CVA; or (2) the "price actually paid 
or payable" within the meaning of Article 1.1 of the CVA; and/or (3) a revised customs value based 
on Article 6 of the CVA; or (4) a revised customs value based on Article 7 of the CVA. The Panel 
observes that when it states in paragraph 7.377 that " it is imp ossible to say with any certainty which 
of these determinations was made", the words "these determinations" refer back to the alternative 
determinations listed in (1) through (4), and not simply (3) and (4).  In other words, the uncertainty 
referred to in paragraph 7.377 does pertain to, but is not limited or specific to, the question of 
whether Thailand's authorities made a determination that falls under Article 6 or 7 of the CVA; the 
meaning of paragraph 7.377 is that it is also impossible to say with any  certainty whether the Thai 
authorities determined a revised customs value under either of those provisions, as opposed to 
determining the "price actually paid or payable" within the meaning of Article 1.1 of the CVA. With 
this clarification, the Panel tur ns below to the Philippines' comments on this paragraph, which invite 
the Panel to reconsider its statement that it is "impossible to say with certainty" whether the Thai 
authorities made a determination under Article 6 or Article 7, and instead make an af firmative finding 
that Article 6 applies, and then proceed to make an alternative finding under Article 7 on an arguendo  
basis.  
5.68.   The Panel recalls that it has already explained, in paragraph 7.377, that while " it is impossible 
to say with any certai nty which of these determinations was made", it "ultimately makes no 
difference to the Panel's assessment". That is so, the Panel continues, because "[r]egardless of which 
of these types of alternative determinations the 'actual price' is supposed to repre sent, the Panel 
reaches the same conclusion of WTO -inconsistency, for essentially the same reasons" and 
"[t]herefore, the Panel considers it unnecessary to rule on which of these alternative determinations 
the 'actual price' represents in the context of th e 2002 -2003 Charges". In the accompanying 
footnote, the Panel recalls that it "followed a similar course in the first recourse to Article 21.5, when 
it found that the 2003 -2006 Charges reflected a revised customs value that was inconsistent with 
Articles 2  and/or 3 of the CVA", observing that "[a]lthough that revised customs value could only be 
based on one of these provisions, the Panel considered it unnecessary to rule on whether the Public 
Prosecutor used the method in Article 2, or instead Article 3. Th us, the Panel made alternative 
findings." In its comment, the Philippines notes that the Panel is able to reach this conclusion because 
it has found that the Philippines has properly made and argued a claim under Article 7 of the CVA, 
but that if the Appel late Body were to reverse the Panel's findings that the Philippines has properly 
                                                
78 Philippines' request to review the Interim R eport, paras. 195 -200. 
79 Philippines' request to review the Interim Report, para. 201.  WT/DS371/RW2/Add.1  
 
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  made and/or argued a claim under Article 7, then the question whether Thailand's measures fall 
under Article 6 or 7 becomes important to the Appellate Body's assessment, in pa rticular its ability 
to resolve this aspect of the dispute.  
5.69.   The Philippines' has not elaborated on why the possibility of a finding by the Appellate Body 
that no claim under Article 7 was properly before the Panel makes it important for the Panel t o make 
a more definitive finding that the Thai authorities applied Article 6; and it is not self -evident why it 
would make any difference, let alone be important, given that the Panel has made the finding that,  
insofar as it was for the purpose of determi ning a revised customs value using the computed value 
method under Article 6 that the Thai authorities relied on pricing and cost information reported by 
PM Indonesia to the Indonesian tax authorities in the CK -21A forms, this was inconsistent with Article  
6 of the CVA. The Panel understands the Philippines' concern could be that such a conditional finding 
under Article 6 can only be made and continue to stand if a corresponding conditional finding under 
Article 7 is also made and also continues to stand , such that if the latter is declared moot and of no 
legal effect, the conditional finding under Article 6  somehow collapses  too. Alternatively, the 
Philippines' concern could be that because the Panel has made conditional findings under Articles 
6.1 and 7.1 of the CVA, without making a definitive ruling on which of these two provisions and 
methods the Thai authorities actually used, a finding by the Appellate Body that the claim under 
Article 7.1 was outside of the Panel's terms of reference could lea d to a scenario in which all that 
remains is a conditional finding of inconsistency under Article 6.1, which Thailand might then seek 
to evade implementation of by maintaining that the determination was actually made pursuant to 
Article 7.1 (and not Articl e 6.1), and taking the position that in the absence of any finding under 
Article 7.1, the remaining DSB recommendations and rulings would mean that if it maintained that 
the measure was taken pursuant to Article 7.1, it would be under no obligation to modi fy or withdraw 
the measure.  
5.70.   Insofar as the Philippines' request for an affirmative finding that Article 6.1 was applied is 
motivated by such concerns, it is important and relevant to recall that the Panel's conditional findings 
under the CVA extend  as well to Article 1.1 and Article 1.2(a), second sentence, of the CVA. The 
nature of the Panel's conditional findings under those provisions – which raise no terms of reference 
issues – means that even if there were no findings under Article 6.1 or 7.1, this would have no 
practical consequences in terms of implementation. Specifically, the Panel has found that it was 
improper for the DSI and the Public Prosecutor to rely on pricing and cost information reported by 
PM Indonesia to the Indonesian tax author ities in the CK -21A forms for purposes of determining the 
customs value of PMTL's imports into Thailand, regardless of whether it was relied upon for the 
purpose of determining: (1) whether the transaction value was influenced by the relationship 
between t he buyer and the seller pursuant to Article 1.2(a), second sentence, of the CVA; or (2) the 
"price actually paid or payable" within the meaning of Article 1.1 of the CVA. As a consequence, 
even if there were no findings under either Articles 6.1 or 7.1 reg arding the manner in which the 
Thai authorities determined a revised value, the 2002 -2003 Charges would have to be modified or 
withdrawn because  of the Panel's findings that the Public Prosecutor's rejection of PMTL's declared 
transaction values based on p ricing and cost information reported by PM Indonesia in the CK -21A 
forms constitutes a failure to conduct a proper "examination of the circumstances surrounding the 
sale", and/or a proper determination of "the price actually paid or payable".  
5.71.   As th e Panel stated at paragraph 7.76 of the Report in the first recourse to Article 21.5, 
"[w]here a customs authority improperly rejects the transaction value, inconsistently with the 
requirements of Article 1 of the CVA, it becomes a moot point whether the c ustoms authority's 
determination of a  revised customs value was conducted in accordance with the requirements of 
Articles 2 to 7." The Panel nonetheless made findings on the BoA's determination of a revised 
customs value under Article 5, and the Public Pro secutor's determin ation of a revised customs value 
under Articles 2 and/or 3, instead of simply exercising judicial economy, on account of the Philippines 
having urged the Panel to do so and considering that doing so was in the interest of assisting the 
parties in resolving their dispute. The Panel has followed the same approach in this case. However, 
the Panel does not consider it necessary to go further and make a definitive finding on whether the 
Thai authorities determined a revised value and, if so, wh ether it was determined pursuant to Article 
6.1 or instead Article 7.1. For these reasons, the Philippines' comments on the Panel's reasoning do 
not persuade the Panel that there is any need to revise the Report in this regard.  WT/DS371/RW2/Add.1  
 
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  5.5  Claim regarding sequent ial application of valuation methods  
5.5.1   Paragraphs 7.390 to 7.397  
5.72.   The Philippines observes that in paragraph 7.390 , the Panel begins by noting that "there is 
no direct, contemporaneous or documentary evidence as to whether the Thai authorities s ought to 
apply the methods of customs valuation sequentially", and states that "the question arises as to how 
the Panel can assess whether one or more of the customs valuation methods in Articles 2, 3 or 5 of 
the CVA could have been used to value PMTL's im ports, without engaging in a de novo  review beyond 
the scope of its mandate." In the very last sentence of the section, at paragraph 7.397 , the Panel 
observes that "it is not inconceivable that the Thai authorities could provide a reasoned explanation 
as to why the methods in Articles 2, 3 and 5 (and/or 6 itself) are not applicable to value PMTL's 
imports. In this case, however, that kind of reasoned explanation is missing". In the Philippines' 
view, the answer to the question posed by the Panel in paragrap h 7.390 is found in the standard of 
review: if Thailand's authorities have failed to offer any kind of explanation for not sequentially 
applying the customs valuation methods in Articles 2, 3 or 5 of the CVA, the Panel can – and must 
– find, on this object ive basis, that Thailand has failed to comply with the sequential ordering 
obligations in the CVA. In the light of the standard of review, the Philippines suggests that the Panel 
structure its reasoning by elevating its discussion in the last sentence of p aragraph 7.397 by noting 
that no explanation has been given and conclude on that basis that Thailand has violated its 
sequential ordering obligations. The Philippines submits that the Panel could then dismiss Thailand's 
ex post  rationalizations to justify its authorities' conduct in relation to the sequential ordering 
obligations, such as the alleged "special circumstances" referenced in paragraph 7.395, or address 
them on a secondary basis, noting that these explanations cannot cure the violation.  
5.73.   Thailand does not comment on this request.  
5.74.   The Panel notes that the Philippines' comment reiterates the arguments it expressed in 
response to a question from the Panel, and which were not clearly addressed in the Interim Report. 
The Panel has amende d paragraph 7.390 to make more explicit how the applicable standard of 
review bears on the issue before the Panel in relation to this particular claim. The revised text of 
paragraph 7.390 and new accompanying footnote reads:  
7.390.  In this case, there is no direct, contemporaneous or documentary evidence as 
to whether the Thai authorities sought to apply the methods of customs valuation 
sequentially. Under the applicable standard of review, it is not for a panel to 
decide which of the six recognized custom s valuation method(s) should have 
been used in relation to a particular set of imports.  Accordingly, the question 
arises as to how  However,  the Panel considers that in the circumstances of this 
case, it  can assess whether one or more of the customs valuati on methods in Articles 
2, 3 or 5 of the CVA could have been used to value PMTL's imports, without engaging 
in a de novo  review beyond the scope of its mandate. [new FN]  
 [new FN] In a case involving the review of a customs valuation 
determination by the domestic authorities, the applicable standard of 
review may confine the scope of a panel's analysis to the reasons 
communicated to the importer in the contemporaneous explanation(s) 
provided to the importer, and/or to the information f orming part of the 
record of the determination. In such cases, if the written determination 
fails to adequately explain how the authority addressed an issue that it 
was required to consider, that may compel a panel to find that the issue 
in question was no t properly examined and refuse to consider an y ex 
post rationalizations. (Panel Report, Thailand – Cigarettes (Philippines) 
(Article 21.5 – Philippines) , paras. 7.108 -7.121. See also paragraphs 
7.146 -7.147.) However, neither the MoA nor the 2002 -2003 Charg es 
purport to provide any explanation of the customs valuation 
methodology that was applied to determine the "actual price". For this 
reason, the Panel is not persuaded by the Philippines' argument that 
under the applicable standard of review, the absence of any direct, 
contemporaneous or documentary evidence as to whether the Thai 
authorities sought to apply the methods of customs valuation 
sequentially in relation to the 2002 -2003 Charges compels the Panel to WT/DS371/RW2/Add.1  
 
- 53 - 
 
  conclude that the Thai authorities failed to c omply with the obligation to 
apply the methods of customs valuation sequentially.  
5.75.   With respect to paragraph 7.397, the Panel considers it useful to clarify that, contrary to what 
may be suggested by the Philippines' comment above, the Panel did not find that Thailand's 
authorities "have failed to offer any kind of explanation for not sequentially applying the customs 
valuation methods in Articles 2, 3 or 5 of the CVA". The Panel stated that its finding and reasoning 
"does not imply that the Customs D epartment and the BoA's longstanding practice of applying the 
deductive method in Article 5 to value PMTL's imports of Marlboro  and L&M cigarettes precludes any 
Thai authority from ever having recourse to the computed value method in Article 6, or making u se 
of the reasonable flexibilities in Article 7", and that "it is not inconceivable that the Thai authorities 
could provide a reasoned explanation as to why the methods in Articles 2, 3 and 5 (and/or 6 itself) 
are not applicable to value PMTL's imports". S uch an explanation as to why the methods in Articles, 
2, 3 and 5 (and/or 6 itself) "are not applicable to value PMTL's imports" would not be an explanation 
"for not sequentially applying the customs valuation methods" in those provisions; it would be an 
explanation of why an authority had, in discharging its obligation to apply those methods 
sequentially, concluded that these methods could not be used in the circumstances. Such a reasoned 
explanation would constitute proof that the authorities had discharge d the obligation to apply the 
customs valuation methods sequentially, and not, as the Philippines' comment may suggest, 
constitute some kind of excuse for not sequentially applying those methods.  
5.6  Claim under Article 1.2(a), third sentence, of the CVA 
5.6.1   Paragraph 7.403  
5.76.   The Philippines observes that, in this paragraph, the Panel notes that "[t]he Philippines 
accepts that the DSI informed PMTL that it had obtained copies of the CK -21A forms  and had doubts 
or suspicions based on these forms to  the effect that the importer had under -declared the customs 
values on entries in 2001 -2003". The Philippines requests that the Panel amend this statement, 
which does not accurately reflect the Philippines' position. The Philippines has encouraged the Pane l, 
above, to assess objectively Thailand's asserted factual basis for its measures, on the basis of the 
available evidence on record in these proceedings, and not on the presumption of good faith. The 
Philippines has also offered its views on what that evi dence does and does not show. The Philippines 
contests that the evidence shows that the DSI "obtained copies of the CK -21A forms"; rather, the 
evidence shows that the DSI has access to certain  pricing and cost information submitted by the 
Indonesian produc er to the Indonesian government in CK -21A forms; the precise nature of that 
information is not, however, clear.  
5.77.   Thailand does not specifically comment on this request. However, the Panel recalls that 
Thailand objected to the Philippines' related req uest, and extended argument, that the Panel modify 
the reasoning in paragraphs 7.104 and 7.105 of the Report (concerning the two bases for the Panel's 
acceptance of the veracity of Thailand's representations that its authorities received the pricing and 
cost information reported by PM Indonesia in the CK -21A forms).  
5.78.   The Panel notes that the wording of the first sentence of paragraph 7.403 does accurately 
reflect the Philippines' statements in paragraphs 95 and 96 of its first written submission, whic h 
respectively state that "the DSI informed PM Thailand that it had obtained, from the Government of 
Indonesia, copies of certain Indonesian administrative forms, known as CK -21A forms", and that 
"[o]n the basis of information in the CK -21A forms obtained from the Government of Indonesia, the 
DSI informed the importer of suspicions that the importer had under -declared customs values on 
entries in 2001 -2003." Having said that, the Panel considers it appropriate to reflect the fact that 
the Philippines' view on this issue has evolved since its first written submission. The revised footnote 
includes a cross -reference to paragraph 7.100, where the Panel addresses this issue directly. The 
Panel has revised the first sentence of paragraph 7.403 and its accompanyin g footnote as follows:  
7.403.  In its first written submission, t The Philippines accepts that the DSI 
informed PMTL that it had obtained copies of the CK -21A forms and had doubts or 
suspicions based on these forms to the effect that the importer had under -declared the 
customs values on entries in 2001 -2003. [FN] … WT/DS371/RW2/Add.1  
 
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  [FN]  Philippines' first written submission, paras. 95 -96. In its subsequent 
submissions, the Philippines argued that the evidence casts doubt on its 
earlier understanding that the DSI had obtaine d copies of those forms, 
but nonetheless shows that the DSI had access to certain pricing and 
cost information submitted by the Indonesian producer to the 
Indonesian government in CK -21A forms. See paragraph 7.100 above.  
5.7  Article XX of the GATT 1994  
5.7.1   Paragraphs 7.454 and 7.455  
5.79.   The Philippines observes that the Panel's conclusion in paragraph 7.455  is styled in the 
negative: "the disputed issues under Article XX do not raise the kinds of factual issues on which 
further findings by the  Panel would be a necessary precondition for the Appellate Body to complete 
the analysis". To eliminate misunderstandings and disagreement before the Appellate Body as to the 
meaning of the Panel's findings, the Philippines requests that the Panel add a se ntence at the end 
of this paragraph to clarify the Panel's conclusion in a positive  manner. In particular, the Philippines 
invites the Panel to explain that: there is no need for the Panel to make any additional findings to 
enable the Appellate Body to com plete the analysis of Thailand's Article XX defence s, because the 
Panel's earlier findings are already sufficient to address the factual matters that would be necessary 
for the Appellate Body to complete the analysis. Additionally, to eliminate misundersta ndings and 
disagreement before the Appellate Body, the Philippines requests that, in paragraph 7.454 , the 
Panel cite and describe in a footnote – in a very specific manner – its own earlier findings on which 
the Appellate Body could rely if it finds it nec essary to complete the analysis under Article XX of the 
GATT 1994.  
5.80.   Thailand does not comment on this request.  
5.81.   The Panel considers that the sentence which the Philippines proposes to add at the end of this 
paragraph is useful in clarifying th e meaning of this paragraph and has therefore added it. On the 
other hand, the Panel does not consider it necessary or appropriate to specify the findings on which 
the Appellate Body could rely if it finds it necessary to complete the analysis. It is doubt ful that doing 
so would actually assist the Appellate Body, given that it would necessarily be confined to repeating 
a handful of the findings elaborated at length earlier in the Report. Furthermore, it would be difficult 
to conduct such an exercise – i.e., specifying the key findings that would enable the Appellate Body 
to complete the analysis of the merits of Thailand's defence – without that exercise quickly 
transforming itself into an actual assessment of the merits of Thailand's defences under Article  XX, 
which the Panel considers there is no practical reason for it to proceed with. Therefore, the Panel 
declines this aspect of the Philippines' request. The revised text of paragraph 7.454 reads:  
7.454.  The Panel sees no distinguishing circumstances. Th ailand's defences under 
Article XX(d) and XX(a) of the GATT 1994 in this second recourse to Article 21.5, 
concerning the 2002 -2003 Charges, reiterate essentially the same arguments that the 
Panel has already addressed in the context of addressing whether t he Charges contained 
insufficient information and the applicability of the CVA, and in the context of addressing 
the CVA -consistency of the Charges. Specifically, Thailand reiterates its argument that 
the Charges are a mere allegation of customs fraud and not a final determination, an 
argument that the Panel has already addressed in the context of examining Thailand's 
argument concerning the "insufficient information" contained in the Charges. Thailand 
reiterates its argument that "it was reasonable to susp ect", and the Public Prosecutor 
"had reasonable grounds to assume", that PMTL had engaged in customs fraud on the 
basis of the cost information reported in form CK -21A, an argument that the Panel has 
already thoroughly addressed in the context of assessing  the CVA -consistency of the 
Thai authorities' reliance on the cost information reported in the CK -21A forms. Thailand 
reiterates its argument that the procedural obligations in Article 1.2(a), third sentence, 
of the CVA cannot be applied in the context of criminal investigations, an argument that 
it is not necessary to consider in the context of Article XX because the Panel has found 
that the DSI discharged any obligation arising under that provision in respect of the 
2002-2003 Charges. In sum, the Panel co nsiders that it need not make any 
additional factual findings to enable the Appellate Body to complete the 
analysis under Article XX(d) and (a) of the GATT 1994, because its earlier WT/DS371/RW2/Add.1  
 
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  findings, set out in the previous Sections of this Report, are sufficient for those 
purposes.  
6  THE 1,052 REVISED  NOTICES OF ASSESSME NT (NOAS)  
6.1  The termination of the measures  
6.1.1   Paragraphs 7.481 and 7.489  
6.1.  The Philippines expresses concern that the Panel has not applied the usual rules on the burden 
of proof in ma king its findings, in paragraphs 7.481 and 7.489 , that "it is unclear exactly when 
the 256 revised NoAs were terminated" and the evidence "casts a reasonable doubt on the exact 
date of revocation" of the 256 NoAs; and that "it is clear that the 256 NoAs we re terminated no later 
than 30 August 2018". The Philippines states that the rules on the burden of proof are designed to 
address the consequences of the facts being "unclear", and serve "to allocate to one party or the 
other the legal consequences of cert ain facts not being established with sufficient clarity".80 In the 
Philippines' view, the rules on the burden of proof are, therefore, "intended to avoid a panel leaving 
open or undecided whether a fact occurred as asserted", such as whether a measure was withdrawn 
in municipal law before panel establishment.81 In the Philippines' view, a panel cannot simply remain 
"agnostic" in the face of doubts or uncertainties in the evidence; rather, if a party does not meet its 
burden of proof, the panel must treat th e event as not having occurred as asserted. In this case, 
Thailand is the party asserting that the NoAs were withdrawn before  the Panel was established, and 
as the party asserting this fact, Thailand bears the burden of proving it. The Philippines requests  
that the Panel address the factual question of the date of the withdrawal of the 256 NoAs on the 
basis of the usual rules regarding the burden of proof and, if the facts are "unclear" or shrouded in 
"reasonable doubt", conclude that Thailand has failed to  meet its burden of proving its assertion that 
these measures were withdrawn before the date of the Panel's establishment.  
6.2.  Thailand does not comment on this request.  
6.3.  The Panel agrees with the Philippines that the rules on the burden of proof are designed to 
address the consequences of facts being unclear, in the sense that those rules serve "to allocate to 
one party or the other the legal consequences of certain facts not being established with sufficient 
clarity". However, the Panel does not agree that it follows from this that the rules on the burden of 
proof are necessarily "intended to avoid a panel leaving open or undecided whether a fact occurred 
as asserted ", in the sense that the rules on burden of proof would preclude the possibility of a panel 
leaving a factual issue undecided. As a general principle a panel is not required to rule on arguments 
or issues that are not strictly necessary to resolving the di spute in the light of the findings that it 
has made. That principle applies equally to questions of fact and to questions of law and legal 
interpretation. In Section 7.4 of the Report, the Panel addresses the question of whether it should 
decline to rule o n the 1,052 revised NoAs. At paragraph 7.468, the Panel explains that when dealing 
with expired, terminated, revoked or repealed measures, Panels have attached importance to 
several different considerations, including most notably (1) whether the measure a t issue was 
withdrawn prior to, or only after, the establishment of the panel by the DSB; (2) whether there was 
a risk of reintroduction of the same or materially similar measure; and (3) whether findings on the 
withdrawn measure would have any practical v alue for implementation in the light of other findings 
on materially similar measures. The Panel then explains that "[n]one of these three considerations 
is decisive in and of itself". The Panel then proceeds to apply that framework to the evidence and 
arguments before it, and makes the intermediate conclusions that: (i) the Thai Customs Department 
terminated at least 796 of the 1,052 revised NoAs before DSB established the Panel; (ii) the Thai 
Customs Department may have also withdrawn the remaining 256 re vised NoAs prior to the Panel's 
establishment, and in any event terminated them no later than 30 August 2018; (iii) there is no 
reason to consider that any future NoAs which the Thai Customs Department may issue, whether to 
implement the Supreme Court Ruli ng which modifies the November 2012 BoA Ruling or otherwise, 
would use either the same valuation methodology, or the same CK -21A information, as was used in 
the withdrawn NoAs; (iv) even if Thai Customs did reintroduce some or all of the NoAs using that 
same methodology and information, separate findings by the Panel concerning the WTO -consistency 
of the withdrawn NoAs would provide no guidance beyond the findings that the Panel has already 
made on the Philippines' identical substantive claims in relation t o the 2002 -2003 Charges; and 
                                                
80 Philippines request for review of the Interim Report, para. 226.  
81 Philippines request for review of the Interim Report, para. 227.  WT/DS371/RW2/Add.1  
 
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  (v) in the light of those findings, the issues raised by the Philippines' procedural claims in relation to 
the revised NoAs are rendered largely academic. At paragraph 7.506, the Panel concludes that 
"[t]aken together", the for egoing considerations "lead the Panel to decline to rule on the 1,052 
revised NoAs that have now all been terminated". It is evident from the Panel's reasoning that a 
definitive ruling on whether the 256 revised NoAs were withdrawn before or after the esta blishment 
of the Panel is not necessary to arrive at an overall conclusion and would not alter that conclusion 
one way or the other. Accordingly, the Panel makes no definitive ruling on that issue. For these 
reasons, the Philippines' comments on the Panel' s reasoning do not persuade the Panel that there is 
any need to revise the Report in this regard.  
 
 
_______________  
 
 
 
 
 WT/DS371/RW2/Add.1  
 
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ANNEX  B 
ARGUMENTS OF THE PAR TIES 
 
Contents  Page  
Annex  B-1 Integrated Executive summary of the arguments of the Philippines  58 
Annex  B-2 Integrated Executive summary of the arguments of Thailand  81 
 WT/DS371/RW2/Add.1  
 
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ANNEX  B-1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE PHILIPPINES  
I. INTRODUCTION  
1. The Philippines initiated this dispute in 2008 because Thailand had consistently subjected 
Philip Morris (Thailand) Limited ("PM Thailand") – an importer which sources virtually all of its 
cigarettes from the Philippines – to prejudicial and protectionist regulatory conduct, in order to  
protect the monopoly of a Thai producer of cigarettes, the Thailand Tobacco Monopoly.1  The original 
panel and Appellate Body found that the Thai measures at issue violated the CVA and the GATT 
1994. Following the original proceedings, the situation for t he Philippines' export interests only grew 
worse, forcing the Philippines to initiate the first compliance proceedings in June 2016. The Panel in 
the first compliance proceedings found that the measures at issue, again, violated Thailand's 
obligations unde r the CVA and the GATT 1994.  
2. Despite the findings of the Panel in the first compliance proceedings, the situation for PM 
Thailand continues to worsen. Thailand recently took two further WTO -inconsistent measures 
regarding imported cigarettes, which re -assess the customs values of some of the very same entries  
that were at issue in the original and first compliance proceedings. These two measures are: first, 
Notices of Assessment ("NoAs"), which re -assess the customs value of 1,052 entries imported 
between 2 001-2003 and demanded payment of approximately USD 800 million within 30 days; and, 
second , criminal charges that allege under -declaration of PM Thailand's transaction values in respect 
of 780 entries from 2002 -2003, and seek fines of approximately USD 13. 6 million and the 
imprisonment of one of PM Thailand's former employees ("02 -03 Charges"). Under Thailand's official 
scheme of "bribes" and "rewards", the officials and informants responsible for bringing the 02 -03 
Charges would share in a substantial port ion of any fines levied.  
3. At the time of these entries, PM Thailand imported cigarettes from a related supplier in 
Indonesia, PT Philip Morris Indonesia ("PTPMI"). In 2003, PM Thailand switched supply from 
Indonesia to the Philippines, and it continues to s ource virtually all of its cigarettes from a Philippines 
producer. Hence, although the entries at issue in these proceedings are historical, the measures 
threaten the viability  of PM Thailand now, and – because PM Thailand now sources its imports from 
the Philippines – the Philippines' exports.  
II. THE 1,052 NOTICES OF  ASSESSMENT ARE INCO NSISTENT WITH THE CVA 
4. On 29 November 2017, Thailand issued 1,052 NoAs covering customs entries imported 
between January 2001 and July 2003. The Customs Department did not info rm PM Thailand that it 
was conducting this reassessment and, therefore, entirely failed to consult  the importer before 
issuing the notices. The only explanation that the Customs Department provided for the basis of its 
valuation was that it rejected the de clared transaction value based on "actual values", which were 
calculated using information related to the "cigarette cost structure" of the producer, PTPMI. The 
Customs Department then established the "actual values" as the alternative customs values.  
5. The importer was – to say the least – surprised to be suddenly presented with new 
assessments for goods that were imported some 15 years earlier, along with a demand for payment 
of approximately USD 800 million, payable within 30 days. Moreover, the customs va lues of many 
of the 1,052 entries covered by the NoAs had already been definitively assessed by the Customs 
Department or its Board of Appeals ("BoA") many years ago, with taxes and duties definitively 
collected at that time.  
6. On 14 December 2017, followin g the receipt of the 1,052 NoAs, PM Thailand sent a letter to 
the Customs Department requesting an explanation of the customs valuation determinations in the 
NoAs. In a letter of 10 January 2018, the Customs Department responded to this request by simply 
referring the importer to the Department of Special Investigation ("DSI"), because the latter was in 
possession of information relating to the customs valuation determinations made in the 1,052 NoAs. 
On 25 January 2018, PM Thailand wrote again to the Custom s Department, repeating its request for 
an explanation. The Customs Department did not respond.  
                                                
1 In 2018, the Thailand Tobacco Monopoly changed its name to “Tobacco Authority of Thailand”.  WT/DS371/RW2/Add.1  
 
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  7. In sum, the Customs Department failed to provide even basic information on its methodology 
for examining the circumstances of sale, or the basis for rejecting the transactions values and for 
determining alternative "actual" customs values.  
8. In this section, the Philippines explains, first, that the 1,052 NoAs constitute a "measure taken 
to comply". Second , the Philippines demonstrates that, contrary to Thailand's  assertions, not all 
1,052 NoAs have been withdrawn before the establishment of this Panel, and there is a risk of 
reintroduction for certain of the withdrawn entries. Third, the Philippines explains that the Customs 
Department violated various provisions of the CVA. 
A. The 1,052 Notices of Assessment constitute "measures taken to comply"2 
9. The Philippines challenges the 1,052 NoAs as "measures taken to comply" under Article 21.5 
of the DSU. A measure constitutes an undeclared measure taken to comply if it has a "close nexus" 
in terms of nature , timing  and effects  with the DSB's recommendations and rulings in the original 
proceedings, and with the declared measures taken to comply. A panel must undertake a holistic 
examination of the substantive connections, in order to prevent a responding Member of "negating" 
steps towards compliance through adoption of further measures.3   
10. The 1,052 NoAs have the requisite nexus with the DSB's recommendations and rulings, and 
with Thailand's declared measures taken to comply. Thailand has not contested that the 1,052 NoAs 
are a measure taken to comply.  
11. Regarding timing , the 1,052 NoAs post -date both the expiry of the reasonable period of time 
for implementation of the DSB's recommendations and rulings (which ended in May 2012), and 
Thailand's adoption of two declared measures taken to comply (two rulings of the BoA dating from 
November 2012 and September 2012).4  Accordingly, the timing of the NoAs is such that they are 
capable of undermining Thailand's compliance.  
12. With r espect to nature , the 1,052 NoAs share a close nexus with the November 2012 BoA 
Ruling, which is a declared measure to comply. In particular, the 1,052 NoAs involve: (i) the same 
importer and exporter (PM Thailand and PTPMI); (ii) the same importing and ex porting country 
(Thailand and Indonesia); (iii) the same product, brands and producer ( L&M / Marlboro cigarettes  
and PTPMI); (iv) the same transaction values, imported under the same supply contract; (v) the 
same type of legal determination; and (vi) the s ame grounds for doubting the declared customs 
values.  
13. The 1,052 NoAs also share a further connection with the dispute: 208 of the entries subject 
to the NoAs are the subject of the DSB's recommendations and rulings and the 2012 November BoA 
Ruling, a decla red measure taken to comply, both of which addressed a series of 210 entries from 
2002.5  Further , the entries covered by the 1,052 NoAs and the entries covered by the 03 -06 Charges 
– which the Panel found is a WTO -inconsistent measure taken to comply in t he first compliance 
proceedings – are contiguous. There is, therefore, a "chronological ‘connection' and ‘link'" stretching 
from the entries covered by the 1,052 NoAs, through the 03 -06 Charges, to the entries covered by 
the September 2012 BoA Ruling.6 
14. With respect to effects , the 1,052 NoAs involve, just like the 03 -06 Charges, "PMTL -specific 
determinations" relating to the "valuation of goods for purposes of levying ad valorem  duties on 
PMTL's imports of Marlboro and L&M cigarettes".7  For the 208 NoA ent ries that overlap with the 210 
entries subject to the November 2012 BoA Ruling, the NoAs have the effect of superseding and 
replacing the BoA's own assessment.  
                                                
2 The Philippines’ first written submission, Section IV.A; the Philippines’ response to Panel Q uestion 127.  
3 First Compliance Panel Report, para. 7.510, citing Appellate Body Report, US – Softwood Lumber IV 
(Article 21.5 – Canada) , para. 71. This statement has been repeated by panels and the Appellate Body in several 
subsequent cases ( see, e.g. Ap pellate Body Report,  US – Zeroing (EC) (Article 21.5 – EC), para. 250).  
4 The Philippines refers to the rulings as the “September 2012 BoA ruling” and the “November 2012 BoA 
ruling”.  
5 These same 20 6 entries are also subject to the 02 -03 Charges.  
6 See First Compliance Panel Report , para. 7.543.  
7 First Compliance Panel Report , para. 7.549.  
 WT/DS371/RW2/Add.1  
 
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  15. In essence, in all of the same circumstances, Thailand continues to engage in the very conduct 
that the DSB's recommendations and rulings are intended to address.  
B. Thailand's alleged withdrawal of the 1,052 Notices of Assessment8 
16. Thailand requests the Panel to find that all 1,052 NoAs are excluded from its terms of reference 
on the grounds that these NoAs were "revoked or terminated" prior to the Panel's establishment on 
27 March 2018. The Customs Department has consistently divided the 1,052 NoAs in two groups: 
one covering  256 NoAs, and the other the remaining 796 NoAs. The Philippines does the same for 
purposes of the analysis below.  
1. The 256 Notices of Assessment  
17. Shortly before the establishment of this Panel, the Customs Department sent two letters to 
the importer, statin g that it would not "proceed" to enforce payment of the 256 NoAs. In response 
to clarifications requested by the importer and the Philippines, respectively, the Customs Department 
sent two letters, one to the Philippines and one to the importer, each conta ining a statement from 
the Director -General of the Customs Department ("DG Statement"), indicating that the 256 NoAs 
themselves had been " terminated ". However, both cover letters stated that the importer is prohibited 
from relying on the DG Statement in an y Thai domestic proceedings or before any Thai government 
agencies.  
18. On 30 August 2018 , the BoA issued a ruling regarding the 1,052 NoAs, addressing them in 
two groups, just as the Customs Department had consistently done. For the 256 NoAs, the BoA said 
it was " revoking  the assessments" in its ruling, and did not mention any prior communication to the 
importer by which these NoAs had already been cancelled, terminated, or revoked.  
19. The Customs Department had never  previously communicated to the importer that the 256 
NoAs had been cancelled, terminated, or revoked, except in the DG Statement, on which the 
importer was prohibited from relying. Instead, the Customs Department consistently expressed its 
commitment not to enforce payment  of the 256 NoAs, without ac tually nullifying the 256 NoAs 
themselves, or the customs value determination on which they were based.  
20. In light of the 30 August 2018  BoA Ruling, the Philippines accepts that the 256 NoAs have 
been definitively revoked. However, that BoA ruling was issued several months after the Panel's 
establishment.  
21. The timing of withdrawal is legally significant for the scope of the Panel's jurisdi ction to rule 
on the 256 NoAs. It is well -established that a panel is entitled to make findings  on any measures 
that exist at the time of a panel's establishment, even if that measure is withdrawn during the 
proceedings.9 
2. The 796 Notices of Assessment  
22. The Philippines accepts Thailand's factual assertion that the 796 NoAs were withdrawn on 21 
March 2018, shortly before establishment of the Panel. However, the Panel must take into account 
additional facts relating to 208 out of these 796 NoAs .  
23. In November 20 12, the BoA issued a ruling regarding the customs value of these 208 import 
entries. The importer successfully appealed this ruling to the Thai Tax Court. The Customs 
Department then appealed the Tax Court decision to the Thai Supreme Court.  
24. In November 2 017, when the 208 NoAs were issued by the Customs Department, the Supreme 
Court was still considering the Customs Department's appeal. On 7 May 2018, the Supreme Court 
overturned the November 2012 BoA Ruling ("Supreme Court Ruling"), without calculating 
replacement values.  
                                                
8 See the Philippines’ second written submission, Section III.A; the Philippines’  opening statement, 
Section II; the Philippines’ responses to Panel Questions 128, 129, 161 and 162; the Philippines’ comments on 
Thailand’s responses to Panel Questions 161 and 162.  
9 Appellate Body Report, EU – PET (Pakistan),  para. 5.28, and paras. 5.38 -5.40, citing Appellate Body 
Report, EU – Fatty Alcohols (Indonesia) , para. 5.179; Panel Report, EU – PET (Pakistan) , para. 7.13 and fn 35 
(referring to Panel Reports, Dominican Republic – Import and S ale of Cigarettes , para. 7.343; Indonesia – 
Autos , para. 14.9; China – Electronic Payment Services , para. 7.227; EC – Approval and Marketing of Biotech 
Products , paras. 7.1307 -7.1308).  
 WT/DS371/RW2/Add.1  
 
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  25. In implementing the Supreme Court Ruling, the Customs Department must now re -assess the 
entries, including  the 208 entries already covered by the 1,052 NoAs. Hence, although these 208 
NoAs have been withdrawn, there is a risk that the Cu stoms Department will adopt a new  valuation 
measure for the 208 entries in question that relies on the "cost -plus" methodology underlying the 
208 NoAs.   
26. The withdrawal of a measure at issue, before panel establishment, does not automatically  
exclude the m easure from a panel's jurisdiction. When a measure has been withdrawn – either 
before or after panel establishment – a panel must determine whether, notwithstanding withdrawal, 
there remains a "prospect of reintroduction".10  Importantly, contrary to Thailand's argument, the 
issue is not, therefore, the risk that the exact same measure , in formal terms, would be reintroduced. 
Rather, the issue is whether there is a risk that a new and distinct measure, with substantive 
simila rities to the challenged measure, would be introduced. This is, in substantive terms, a 
reintroduction of the withdrawn measure .11 
27. Hence, in assessing jurisdiction over these 208 NoAs, the Panel must take into account the 
Customs Department's impending re -assessment of the value of the 208 entries addressed in these 
NoAs, pursuant to the Supreme Court Ruling.  
C. The Philippines' claims regarding the 1,052 Notices of Assessment  
28. In these proceedings, the Philippines claims that the 1,052 NoAs are inconsistent wit h:  
• Articles 1.1 and 1.2(a) of the CVA, because the Customs Department failed to properly 
examine the circumstances of sale and improperly rejected the transaction value;  
• Articles 2 to 7 of the CVA, because the Customs Department failed to respect the 
sequential ordering of valuation methods;  
• Article 6 of the CVA, because the Customs Department determined alternative  customs 
values through an improper "cost -plus" or computed value methodology;  
• Article 7 of the CVA, because the Customs Department determin ed alternative customs 
values through "unreasonable" flexibilities;  
• Article 1.2(a) (third sentence) of the CVA, because the Customs Department failed to 
communicate grounds, and to provide the importer with a reasonable opportunity to 
respond; and  
• Article 16 of the CVA, because the Customs Department failed to provide, upon written 
request, a written explanation as to how the customs values of the imported goods were 
determined.  
1. Standard of review12 
29. Before turning to the substance of its claims, the Philippines recalls the appropriate standard 
of review for the Panel's assessment of these claims, by recalling the Panel's own findings:  
Regarding the CVA specifically, [t] he original panel [] explained that the 
standard of review under the CV A requires a panel to "critically examine a 
domestic authority's explanation ‘in depth, and in the light of the facts 
before the panel '"13 
30. Thus, a customs administration's explanation is central to a panel's assessment of whether 
the administration has comp lied with its CVA obligations.  
31. Further, both the original panel and this Panel emphasized that, in the event an authority fails 
to provide a reasoned and adequate explanation for its customs valuation determinations, a panel 
                                                
10 Panel Report, US – Gasoline , 6.19. See also the Philippines’ comments  on Thailand’s response to 
Panel Q uestion 161, para. 29.  
11 Appellate Body Report, EU – PET (Pakistan) , paras. 5.47 -5.48. The Philippines’ comments on 
Thailand’s response to Panel Question 161, para. 30.  
12 The Philippines’ first written submission, Section IV.B.2.b.i; the Philippines’ second written 
submission, paras. 140 -141.  
13 First Compliance Panel Report, paras. 7.85 and 7.86 (emphasis added, footnotes omitted).  
 WT/DS371/RW2/Add.1  
 
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  must find that the authority h as failed to comply with the relevant obligations. Recalling the Appellate 
Body's approach in other instances where a panel was called on to review the determination of a 
domestic authority, the original panel and the Panel explained that:  
[W]here a compet ent authority has not provided a reasoned and adequate 
explanation  to support its determination, the panel is not in a position to 
conclude that the relevant requirement for applying a safeguard measure 
has been fulfilled … [and] the panel has no option bu t to find that the 
competent authority has not performed the analysis correctly .14 
32. In other words, if a Member rejects transaction value without proper explanation, the Panel 
has "no choice" but to find a violation of Articles 1.1 and 1.2(a) of the CVA. Sim ilarly, if a Member 
establishes an alternative customs value without proper explanation, the Panel has "no option" but 
to find a violation of the obligation in the CVA to base the alternative customs value on one of the 
methodologies in Articles 2 -7.    
2. The Customs Department violates Articles 1.1 and 1.2(a) (second 
sentence) of the CVA by failing to properly examine the 
circumstances of sale and improperly rejecting the transaction 
values  
33. In this section, the Philippines demonstrates that the Customs Depar tment's rejection of PM 
Thailand's declared transaction values is inconsistent with Articles 1.1 and 1.2(a) of the CVA. 
a. Legal standard15 
34. The primary and preferred basis of customs valuation under the CVA is the "transaction value", 
defined as the "price act ually paid or payable" by the buyer to the seller, adjusted in accordance 
with Article 8 of the CVA. The term "price actually paid or payable for the goods" is further defined 
in Paragraph 1 of the Interpretative Note  to Article 1 as "the total payment mad e or to be made by 
the buyer to or for the benefit of the seller for the imported goods".  
35. Article 1.1(d) of the CVA recognizes that a relationship between the buyer and the seller may 
influence the "price paid or payable". To this end, Article 1.2(a) of t he CVA sets forth rules that allow 
a customs administration to examine the circumstances of sale  to establish whether the parties' 
relationship influenced the "price actually paid or payable".  
i. CVA requirements regarding the examination of the 
circumstances  of sale under Article 1.2(a)  
36. The original panel found that, under Article 1.2(a), the terms "examination of the 
circumstances of sale" require "an active, critical review and consideration  of the information before 
[the customs administration]".16   
37. Accord ing to Thailand however, there is a carve -out that applies when an authority is relying 
on information officially provided by a foreign government. Thailand argues that, in these 
circumstances, a customs administration is entitled to assume that informatio n is reliable, without  
taking any steps to verify the information. However, Thailand fails to point to any relevant treaty 
language to support its interpretation.  
38. Contrary to Thailand's argument, the obligation to review information critically, when 
exami ning the circumstances of sale, flows directly  from the wording of Article 1.2(a) (second 
sentence). Further, there is nothing in the text of Article 1.2(a), or related context, that limits or 
qualifies this obligation, depending on the source or nature of  the information in question. Nor is 
there any basis in a "good faith" interpretation to suspend an obligation that flows directly from the 
treaty terms.  
                                                
14 First Compliance Panel Report, para. 7 .117, citing Appellate Body Report, US – Steel Safeg uards , 
para. 303  (emphasis added). See also Original Panel Report, fn 499 (emphasis added).  
15 The Philippines’ first written submission, Section IV.B.2.a; the Philippines’ second written submission, 
Section III.B.1.b; the Philippines’ responses to Panel Questions 148, 164 and 170;  the Philippines’ comments 
on Thailand’s responses  to Panel Questions 164 -165 and 169 . 
16 Original Panel Report, para. 7.171 (underlining added); see also First Compliance Pa nel Report, paras. 
7.104 -7.106.  WT/DS371/RW2/Add.1  
 
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  39. In short, it is never  permissible under Article 1.2(a) for a customs administration, when 
examining t he circumstances of sale, to take no steps  whatsoever to review the suitability of 
information used for customs valuation purposes.  
ii. CVA requirements for an "examination" using a cost -
plus benchmark  
40. The Customs Department explained that it calculated the "actual values" at issue on the basis 
of information relating to the "cigarette cost structure" of the producer, PTPMI. Thus, the Customs 
Department rejected transaction values on the basis of a compa rison with a "cost -plus" customs 
benchmark value.  
41. The Philippines accepts that a comparison between transaction value and a "cost -plus" 
benchmark is, in theory, a valid method of examining whether the parties' relationship influenced 
the price. Indeed, th is method is listed in Paragraph 3 of the Interpretative Note as an example of 
how an examination of the circumstances of sale may be conducted.  
42. However, to be "apt to reveal" whether the parties' relationship influenced the price, a cost -
plus benchmark m ust be properly constructed. To this end, Article 6 provides context, as it sets out 
the rules for properly determining a cost -plus customs value. In sum, the CVA imposes the following 
requirements when applying a cost -plus benchmark for the purpose of exa mining the circumstances 
of sale:  
43. First, a "cost -plus" benchmark value calculated under Article 1.2(a) must be read in light of 
the related obligations under Article 6. Article 6 provides for three components to be included in a 
"cost-plus" customs value: (1) the cost of producing the imported goods, which is calculated from 
individual cost elements; (2) an amount for profit and general expenses; and (3) the cost or value 
of all other expenses necessary to reflect the valuation option chosen by the Member u nder 
paragraph 2 of Article 8.17   
44. Further, in addition to the overarching requirements in the CVA relating to the nature and 
quality of information, Article 6 requires that information relating to "costs" and "profits" must be: 
(1) related to the "goods be ing valued"; (2) provided "by or on behalf of the producer"; and (3) 
"based on the commercial accounts" of the producer.  
45. Second , an administration must adhere to the overarching CVA obligations to use information 
that is " objective ", "accurate ", "truthful ", "quantifiable ", "complete " and " correct ", and prepared 
consistently with Generally Accepted Accounting Principles ("GAAP"), so that the result is " fair", 
"neutral " and " equitable ". 
46. The CVA recognizes that, due to these requirements, Article 6 poses particular challenges to 
customs administrations seeking to rely on the computed value methodology.    
b. Application to the facts: the Customs Department failed to 
properly examine the circumstance s of sale18  
47. In this section, the Philippines demonstrates that the Customs Department violates Articles 
1.1 and 1.2(a) (second sentence) by rejecting PM Thailand's transaction values in the 1,052 NoAs, 
without conducting a proper examination of the circums tances of sale and without valid basis.  
i. The basis for the Customs Department's customs 
valuation determination is entirely unsubstantiated  
48. In its first written submission, the Philippines understood that, in making the customs 
valuation determinations at issue, Thailand relied on certain information reported in 2002 -2003 by 
the producer in an Indonesian regulatory form called "CK -21A" ("CK -21A information"). This 
understanding was based on certain representations from Thailand to the importer. However, the  
Thai authorities never provided the CK -21A information itself, or confirmed that it was, in fact, the 
basis for the customs valuation determinations at issue. Nonetheless, the Philippines' first written 
submission explained that, if CK -21A information was  indeed the basis, it was not fit for customs 
                                                
17 The Interpretative Note  to Article 6 provides further detail on the costs that must be included in a 
computed value, including those mentioned in Article 8.1 . 
18 The Philippines’ first written submission, Section IV.B.2.b; the P hilippines’ second written submission, 
Section III.B.1.v; the Philippines’ opening statement, Section IV; the Philippines’ responses to Panel Questions 
143-146 and 148 -149; the Philippines’ comments on Thailand’s responses to Panel Questions 164(a) and (b) , 
165 (a) -(c) and 169.  WT/DS371/RW2/Add.1  
 
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  valuation purposes, because the information was inaccurate, given its role in the Indonesian 
regulatory system. These arguments are summarized in Section II.C.2.b.ii below.   
49.  In its first written submission, T hailand asserted that it relied on CK -21A information, and 
agreed that the information was, in fact, inaccurate. Thailand's defense was based on an assertion 
that its authorities were entitled to assume that the CK -21A information was accurate, because it 
had been provided officially by the Indonesian government. Thailand failed to provide the CK -21A 
information in question, or any communications from Indonesia providing the information.  
50. As the Panel proceedings unfolded, evidence came to light that raises  a prima facie  case that 
the Thai authorities have never received  the producer's CK -21A information for the relevant period.  
51. First, on 17 October 2018, the Philippines became aware of an official statement from 
Indonesia's Ministry of Law and Human Rights  relating to Thailand's request for CK -21A 
information.19  The statement explains that Indonesia could not provide Thailand with the producer's 
CK-21A information because the documents had been "destroyed" pursuant to Indonesia's 10 -year 
record -keeping requ irements. Despite asserting that its authorities used the producer's CK -21A 
information, Thailand has provided no evidence  to show that it ever received that CK -21A 
information from Indonesia.  
52. Second , in response to Panel Question 143, Thailand submitted Exhibit THA -74, purportedly 
a "sample calculation" showing how it determined the "actual value" used in the 1,052 NoAs and the 
02-03 Charges. The "sample calculation" shows that Thailand constructed alleged costs of production 
indirectly, through a deducti ve calculation, working backwards "from the [Indonesian] retail price". 
This is puzzling, because, in form CK -21A, the Indonesian producer purportedly provides figures for 
each element of its costs, meaning that there is no need to calculate the costs indi rectly using a 
deductive calculation based on the Indonesian retail price. Had Thailand relied upon the producer's 
CK-21A information, the Philippines would have expected Thailand to provide a calculation based on 
this CK -21A information.  
53. Thailand has fail ed to provide any evidence to substantiate what information  it relied on in 
adopting its measures, or any evidence as to the source  of that information. Thailand instead asserts 
that it relies on the Philippines' arguments, in the Philippines' first writte n submission, that CK -21A 
information underlies the valuation determinations at issue. However, as noted, the evidence now 
suggests that the Philippines had been misled in its initial understanding.  
54. The Panel cannot allow Thailand to escape the consequenc es of its choice not to provide 
evidence by accepting an unsubstantiated assumption that Thailand relied on CK -21A information 
provided by Indonesia, when that assumption is contradicted by evidence on the record. It is for 
Thailand to substantiate the bas is for its customs valuation determinations, and it has not done so.  
55. Consistent with the standard of review, where Thailand has failed to provide an explanation 
of the basis of its customs valuation determinations, the Panel has "no option" but to find it  has not 
performed its obligations correctly. Nonetheless, to assist the parties in resolving this ongoing 
dispute effectively, the Philippines urges the Panel to address the Philippines' arguments that CK -
21A information is not a proper basis for customs valuation, which is addressed next.  
ii. Even if the Customs Department relied on CK -21A 
information from the Indonesian government, it failed 
to properly examine the circumstances of sale as 
required by Article 1.2(a) (second sentence) of the 
CVA 
56. In the Philip pines' first written submission – when it understood that the customs valuation 
determinations at issue were based on CK -21A information – the Philippines explained why 
Thailand's reliance on CK -21A information violated the CVA.  
57. Form CK -21A was an Indones ian regulatory form, in which cigarette producers had to report 
certain "costs" and "profits". However, due to Indonesian regulatory requirements, these figures 
bore no genuine relationship to the producer's actual  costs and profits. Thus, to the extent th at 
Thailand relied on CK -21A information, it violates Articles 1.1 and 1.2(a), because:  
58. First, the Customs Department compared the declared value with a benchmark value that was 
improperly constructed, and "inapt to reveal whether the relationship influenc ed the price" . In 
                                                
19 Official Statement from the Indonesian Ministry of Law and Human Rights dated 13 May 2016 (English 
translation), (Exhibit PHL -295-B).  WT/DS371/RW2/Add.1  
 
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  examining the circumstances of sale, the Customs Department compared the declared values with 
a benchmark value based on CK -21A information which, due to Indonesian regulatory requirements, 
had no genuine relationship to the producer's ac tual costs and profits. The benchmark value did not 
adhere to the overarching requirements in the CVA regarding the nature and quality of information 
relied on for customs valuation purposes; and it did not adhere to the requirements in Article 6 for 
calculating a cost -plus value. In sum, the benchmark value reveals nothing about whether the 
parties' relationship influenced the price.  
59. Second , the Customs Department failed to conduct its examination with the required rigor . 
The Customs Department failed to take active steps to gather the relevant information, and, by 
Thailand's admission, took no steps  to review critically the information before it. This is 
notwithstanding that it was on notice, due to expert statements submitted by the importer, that the 
CK-21A information was inaccurate.  
60. In response, Thailand admits that its authorities did not critically review the information 
underlying the customs valuation determinations at issue. Thailand has also not contested that CK -
21A information is inaccurate, a nd does not confirm to the standards in the CVA generally, and 
Article 6 specifically.  
61. As noted above, Thailand's argument is that its authorities were, in the circumstances, entitled 
to assume the information in question was accurate. Thailand also submits Exhibit THA -74, which it 
argues demonstrates a CVA-consistent "cost -plus" valuation d etermination, based on CK -21A 
information. Below, the Philippines addresses both points.  
(1) There was no basis for the Customs 
Department to assume the CK -21A information 
was accurate  
62. Thailand argues that its authorities were entitled, under Article 1.2(a), to assume that the 
alleged CK -21A information was accurate for its customs valuation purposes, because it was 
provided officially by the Indonesian government.  
63. Hence,  Thailand pleads for an assumption of reliability, even though it accepts that the alleged  
CK-21A information was not accurate, and acknowledges that the Thai authorities did not take steps 
"to confirm the veracity of the information in the tax forms".20  According to Thailand, the Thai 
authorities were nonetheless entitled to rely on the allege d CK-21A information, because the 
information was "supposed to be accurate" and the inaccuracies were of PTPMI's "own making".  
64. As explained above, Thailand's arguments are wrong as a matter of law: interpretatively, 
there are no circumstances in which it is permissible to do nothing  when reviewing information under 
Article 1.2(a).  
65. Thailand's arguments are also wrong as a matter of fact. The Philippines has explained, with 
supporting evidence, that the inaccuracies in the CK -21A information were a necessar y consequence 
of Indonesia's regulatory requirements.  
66. Specifically, in 2002 -2003, the producer was required to report information in form CK -21A in 
order to obtain a figure known as the "HJE", which served as the tax base for the domestic sale of 
cigarett es, and the maximum retail selling price. The "cost" and "profit" reported in form CK -21A 
had to add up to the producer's requested HJE. However, the HJE had to exceed a mandated 
regulatory threshold, which was regularly increased, in order to meet Indones ia's revenue collection 
targets. It was understood, in the context of this system, that the figures reported in the CK -21A 
form were  "plugs" that did not represent accurate, GAAP -consistent costs and profits from the 
producer's own "commercial accounts". Indeed, the producer was required to report CK -21A 
information before even beginning production. Indonesia also never verified whether the CK -21A 
information was accurate – in fact, it had no system to do so. The Philippines' description21 of the 
Indonesian regulatory system was confirmed in Indonesia's third party submission.22  
                                                
20 Thailand’s first written s ubmission, paras. 3.96, 3.29, 3.37 and 1.4 .  
21 See the Philippines’ first written submission, Sections IV.A.2.b and IV.B.2.b.ii; the Philippines’ 
responses to Panel Questions 144, 145 and 164; the Philippines’ comments on Thailand’s response to Question 
165.  
22 See Indonesia’s third party submission; the Philippines’ respo nse to Panel Question 145.  
 WT/DS371/RW2/Add.1  
 
- 66 - 
 
  67. Thus, although the CK -21A information was suitable for its limited Indonesian regulatory 
purposes, it was not suitable for Thailand's customs valuation purposes. Th ailand has entirely failed 
to engage with the Philippines' arguments and evidence on this point.  
(2) Thailand's own evidence demonstrates that its 
customs valuation methodology was 
inconsistent with the CVA  
68. The Panel requested that Thailand provide "actual exa mples to illustrate how the benchmark 
for a given entry was calculated on the basis of the information in CK -21A".23  Prior to the Panel's 
question, Thailand had never provided any information or calculations underlying its customs 
valuation determinations.   
69. In response to the Panel's question, Thailand submitted Exhibit THA -74 ("THA -74"), which it 
described as "a sample calculation based on information reported in form CK -21A of a constructed 
CIF price for Marlboro cigarettes".24 
70. As noted above, this "sample  calculation" shows that Thailand constructed alleged costs of 
production indirectly, through a deductive calculation, working backwards "from the [Indonesian] 
retail price". The "retail price" corresponds to the HJE, or maximum retail selling price.  
71. First, THA -74 does not substantiate that Thailand relied on CK -21A information. In fact, for 
the reasons described above, THA -74 suggests that Thailand did not rely on CK -21A information. 
The CK -21A information consisted of line -items for individual "costs" an d "profits". THA -74 does not, 
however, show any individual line -item figures for costs or profits.  
72. Thailand contends that it "sought to use the computed method but did not have cost 
information from the company's books."25  Instead of information from the company's books, 
Thailand claims it "relied on the information provided by the Indonesian authorities, based on which 
it was able to identify a cost of production, in part by adjusting the sales price in the country of 
exportation (Indonesia)".26  In other words, Thailand admits that the Thai authorities did not use 
the producer's GAAP -consistent "commercial accounts", which violates the CVA requirements that 
apply to the calculation of a cost -plus value.  
73. Second , leaving aside the information used, Thailand' s "sample calculation" reveals that 
Thailand has applied two valuation methodologies that are prohibited under Article 7.2 of the CVA.  
74. The first prohibited methodology is Article 7.2(c). Article 7.2(c) prohibits a valuation based on 
the retail selling pri ce in the exporting country's domestic market. Thailand's sample calculation is 
expressly based on Indonesia's maximum retail selling price, which is a form of domestic retail selling 
price under Article 7.2(a). As Thailand itself says, the Thai authoritie s calculated the "actual values" 
by "subtracting [certain amounts] from the [Indonesian] retail price" in order to "obtain[] the cost 
of production".27 
75. The second prohibited methodology is Article 7.2(d). Article 7.2(d) prohibits a valuation based 
on a comp uted value that is not calculated in accordance with Article 6. Article 6 requires, at a 
minimum, that a computed value be based on a "bottom -up" calculation which addresses each 
element of costs incurred, and profits earned, in producing the relevant good s. However, as revealed 
in THA -74, Thailand did not calculate PTPMI's costs of production based directly on the producer's 
various costs of producing and selling the goods, such as the costs of raw materials, labor, utilities, 
and transport. Instead, Thail and constructed alleged costs of production indirectly , through a 
deductive  calculation, working backwards "from the retail price".28   
76. Thus, Thailand constructed a single aggregate amount for the producer's costs, general 
expenses and profits, by subtracti ng, from the Indonesian retail price, domestic taxes and a margin 
for distributors/retailers. The resulting value is simply a residual amount left at the end of this 
deductive calculation, which Thailand calls the "cost of production".  
77. This approach masks the figures used for each of the myriad cost elements that must make 
up a computed value under Article 6. Thailand's proposed approach also entirely fails to calculate 
                                                
23 Panel Question 143.  
24 See Thailand’s response to Panel Question 143, para. 5.1; the Philippines’ opening statement, para. 
66. 
25 Thailand’s comments on the Philippines’ response to Panel Question 171, para. 5.14.  
26 Thailand’s comments on the Philippines’ response to Panel Questi on 171, para. 5.14.  
27 Thailand’s response to Panel Question 143, para. 5.2.  
28 See Thailand’s response to Panel Question 143, para. 5.2.  WT/DS371/RW2/Add.1  
 
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  the costs, general expenses and profits based on the producer's GAAP -consistent "commerc ial 
accounts".  
78. The Philippines relies on Article 7.2 as context  for its claims under other CVA provisions. A 
customs administration cannot resort to valuation methods prohibited under Article 7.2  when it 
makes valuation determinations under any provision o f the CVA, including when undertaking an 
"examination of the circumstances of sale" contemplated by Article 1.2(a).  
3. The Customs Department violates Articles 2 to 7 of the CVA by failing 
to respect the sequential ordering of valuation methods29  
79. If the trans action value is properly rejected under Article 1 of the CVA, a customs 
administration must proceed sequentially through the subsequent provisions, seeking first to use 
Article 2 (transaction value of identical goods), before turning to Article 3 (transact ion value of 
similar goods), through Article 5 (deductive value), Article 6 (computed value), and, finally, Article 
7 ( "reasonable flexibility").  
80. The Customs Department calculated the "actual" customs values in the 1,052 NoAs using the 
computed value met hodology set out under Article 6, or the fallback method under Article 7.30  The 
Customs Department failed, however, to provide any explanation as to why it could not use the 
methodologies in Articles 2 to 6, and made no mention, at any stage, of its sequen tial valuation 
obligations.  
81. The only explanation provided by Thailand related to the methodologies required under 
Articles  2, 3 and 5. However, this explanation was provided ex post  by Thailand in its submissions. 
As this Panel noted in the first compliance proceedings, citing to the Appellate Body, "a Member may 
not rely on ex post  rationalizations of an authority's conduct in WTO dispute settlement".31   
82. Further, in the event the Panel finds that the Customs Department applied Article 7, it failed 
to provide any explanation as to why it could not resort to Article 6. 
83. Since the Thai authorities have not provided a "reasoned and adequate explanation" to supp ort 
its decision to determine an alternative customs value under Article 6 and/or 7, or its decision to 
dispense with any consideration of the methodologies in Articles 2, 3, 5 or 6, the Panel "has no 
option but to find that the competent authority has not  performed the analysis correctly".32 
4. The Customs Department violates Article 6 of the CVA by 
determining alternative customs values through an improper "cost -
plus" or computed value methodology33  
84. Turning to its claims in respect of Thailand's determination  of an alternative customs value, 
the Philippines explains, first, that the Customs Department relied on Article 6 of the CVA, not Article 
7, in its customs valuation determination. Second , the Philippines demonstrates that the Customs 
Department violates Article 6 by determining the new "actual" customs value of the goods through 
an improper "cost -plus" methodology. Third, even if the Panel finds that the Customs Department 
relied on Article 7 instead, or if the Panel wishes to make alternative findings, t he Philippines explains 
that the Customs Department nevertheless violates Article 7.1 by determining the new "actual" 
customs values through "unreasonable" flexibilities not permitted by Article 7.  
                                                
29 The Philippines’ first written submission, Section IV.B.3; the Philippines’ second written submission, 
Section III.B .2; the Philippines’ responses to Panel Questions 152 and 153.  
30 The Philippines’ primary position is that the Thai authorities relied on Article 6. See Section II.C.4.a 
below.  
31 First Compliance Panel Report, para. 7.121, citing Appellate Body Reports, Japan – DRAMs (Korea) , 
para. 159; and US – Tyres (China) , para. 329.  
32 First Compliance Panel Report, para. 7.117, citing Appellate Body Report, US – Steel Safeguards , 
para. 303 (emphasis added). See also Original Panel Report, fn 499.  
33 The Philippines’ first written submiss ion, Section IV.B.4; the Philippines’ second written submission, 
Section III.B.3; the Philippines’ responses to Panel Questions 149, 155 and 170; the Philippines’ comments on 
Thailand’s response to Panel Question 169.  
 WT/DS371/RW2/Add.1  
 
- 68 - 
 
  a. Correct characterization of the measure under the CVA34 
85. In determining which WTO obligations apply to a measure, a panel should focus on the 
"content and substance" of the measure, examined in light of relevant evidence.35  Further, a 
respondent's own characterization of its measure is not determinative.36  In other  words, a 
respondent cannot decide for itself which WTO obligations apply to its measure.  
86. In these proceedings, Thailand contended that its determinations were consistent  with Article 
6. In defending its determinations under Article 6, Thailand also made confusing arguments that 
sought to read Article 6 in light of the flexibilities in Article 7: it argued that its authorities complied 
with Article 6, because they "applied the computed value method with a ‘reasonable flexibility'" 
under Article 7.37  Thus, Thailand appeared to argue that it adopted its measures under Article 6 
using the flexibilities in Article 7.  
87. Late in the proceedings, namely in its responses to the Panel's pre -hearing questions , Thailand 
asserted, for the first time, that "the WTO -consistency of the valuation [methodology at issue] must 
be assessed under Article 7.1, not Article 6".38  
88. However, Article 7 applies solely when a customs administration attempts to apply Articles 2 
through 6, but is unable to do so. Thailand has presented no e vidence at all to prove that its 
authorities considered  affirmatively whether they could apply Article 6, and concluded  that they 
could not do so. Indeed, Thailand argued, in these proceedings, that its authorities could not rely on 
the methodologies requi red under Articles 2, 3 and 5 of the CVA, without  even mentioning that its 
authorities had been unable to apply Article 6.  
89. The evidence, therefore, shows that the Thai authorities calculated computed customs values 
using the producer's purported "costs" and "profits", without any evidence that they could not use 
Article 6 and had used, instead, Article 7. Absent any such evide nce, the Panel must assess the CVA-
consistency of Thailand's customs valuation determination under Article 6.  
b. The Customs Department violates Article 6 of the CVA by 
determining the new "actual" customs value through an 
improper "cost -plus" methodology  
90. In Section II.C.2.a.ii above, the Philippines summarizes the legal standard, under Article 6, 
for the calculation of a cost -plus customs value. In sum, Article 6 of the CVA provides for three 
components to be included in a "cost -plus" customs value: (1) the cost of producing the imported 
goods; (2) an amount for profit and general expenses; and (3) the cost or value of all other expenses 
necessary to reflect the valuation option chosen by the Member under paragraph 2 of Article 8. 
Further, in addition to the overarching requirements in the CVA relating to the nature  and quality  of 
information used for customs valuation purposes, Article 6 requires that "cost" and "profit" 
information used for a computed value must: (1) relate to "the goods being valued"; (2) b e provided 
"by or on behalf of the producer"; (3) be "based upon the commercial accounts" of the producer; 
and, (4) be "prepared" in a manner consistent with GAAP.  
91. For the reasons explained above, Thailand has failed to provide any evidence to substantiate  
its assertion that it relied on CK -21A information, or any evidence as to the source of that 
information.39  Further, evidence has come to light suggesting that the Thai authorities never 
received  CK-21A information from Indonesia.40    
                                                
34 The Philippine s’ response to Thaila nd’s communication of 2 November, Section III (“the Philippines’ 
response to Thailand’s communication”); the Philippines’ reply to Thailand’s comments on the Philippines’ 
response to Thailand’s communication of 2 November, Section II (“the Philippines’ rep ly to Thailand’s 
comments”). This issue arose in the context of Thailand’s communication requesting the Panel to decline to 
rule on the Philippines’ claims under Article 7.1 (“Thailand’s objection of 2 November 2018”). The Philippines 
addresses the two grounds for Thailand’s request in Section II.C.5, below.  
35 See Appellate Body Report, US – Softwood Lumber IV , para. 65; Appellate Body Report, Colombia – 
Textiles , para. 5.18.  
36 See Appellate Body Report, Indonesia – Iron or Steel Products , para. 65; Appellate Body Report, 
China –Auto Parts , fn. 244; Appellate Body Report,  US – Corrosion -Resistant Steel Sunset Review , fn. 87 to 
para. 87.  
37 Thailand’s first written submission, paras. 3.104 -3.111; Thailand’s second written submission, paras . 
3.78-3.81. The quoted passage refers to the Public Prosecutor . However, consistent with  Thailand’s arguments, 
it has been amended mutatis mutandis  to reflect that the Customs Department adopted the 1,052 NoAs.  
38 Thailand’s response to Panel Question  156, para. 8.1.  
39 See Section II.C.2.b.i.  
40 See para. 8 above.  WT/DS371/RW2/Add.1  
 
- 69 - 
 
  92. In the absence of an  explanation of how Thailand calculated its computed values, including 
the information on which it relied, the Panel has "no option" but to find that Thailand has not 
complied with the obligations in Article 6.  
93. Moreover, even if Thailand substantiated that  its authorities relied on CK -21 information, the 
Philippines explained in Section II.C.2.b.ii above that (i) CK -21A information is not suitable for 
customs valuation purposes, and (ii) Thailand's own evidence demonstrates that its customs 
valuation method ology is inconsistent with Article 6.  
94. Thailand argues that its methodology was "not inconsistent" with Article 6, because the 
Customs Department relied on the reasonable flexibilities in Article 7. In other words, Thailand seeks 
to import the "reasonable f lexibility" allowed under Article 7 into Article 6 as a basis to excuse its 
measure from a finding of violation under Article 6.  
95. However, the six valuation methodologies provided for in Articles 1 to 7 of the CVA must be 
applied in a sequential order. Art icle 7 is a "fallback" to be used only in the event that an authority 
cannot  make a proper determination under the five prior valuation methods set forth in "Articles 1 
through 6". To permit an authority to import "reasonable flexibility" into Articles 1 t hrough 6 would 
fundamentally alter the architecture of the valuation methods in the CVA, making Article 7 a 
permanent exception to the other valuation rules.  
96. Finally, even if Thailand could have recourse under Article 6 to "reasonable flexibility" allowed  
for under Article 7, it would not justify the flaws in the Customs Department's customs valuation 
determination under Article 6 because, for the reasons explained in the next section, the 
determination does not respect the "reasonable flexibility" in Arti cle 7.   
5. The Customs Department violates Article 7 of the CVA by 
determining alternative customs values through "unreasonable" 
flexibilities41  
97. In this section, the Philippines explains that, if the Thai authorities did rely on Article 7.1 of 
the CVA, the c ustoms valuation determinations at issue are not consistent with the "reasonable 
flexibility" allowed for under that provision. The Philippines  first addresses Thailand's request that 
the Panel decline to make findings on the Philippines' claim under Artic le 7.1. Second, the Philippines 
summarizes its prima facie  case under Article 7.1.  
a. Thailand's objection to the Philippines' Article 7.1 claims is 
without grounds  
98. Following the substantive meeting between the parties, Thailand made a belated request that 
the Panel decline to make findings under Article 7.1, on the grounds that: (1) the Philippines' claims 
under Article 7.1 are outside the Panel's terms of reference; and (2) the Philippines failed to make 
a prima facie  case of inconsistency with Article 7.1 ("Thailand's objection").  
99. At the outset, the Philippines emphasizes that Thailand's objection is moot , because, as 
explained in Section II.C.4.a above, the evidence demonstrates that the Thai authorities calculated 
computed customs values under Article 6, and did not rely on Article 7.1. If the Panel agrees with 
the Philippines, it need not consider Thailand's objection, because its objection is premised on 
Thailand's self -serving and incorrect contention that its authorities applied Article 7.1.  
100.  Should th e Panel disagree, or wish to make alternative findings under Article 7.1, this section: 
(1) explains that the Philippines' claims under Article 7.1 are within the Panel's terms of reference, 
because the Philippines' panel request clearly identifies claims under Article 7.1; and (2) explains 
that the Philippines made a timely, prima facie  case of inconsistency with Article 7.1.  
                                                
41 The Philippines’ second written submission, Section III.B.3; the Philippines’ responses to Panel 
Questions 155 and 157; the Philippines’ response to Thailand’ s communication; the Philippines’ reply to 
Thailand’s comments.  
 WT/DS371/RW2/Add.1  
 
- 70 - 
 
  i. The Philippines' claims under Article 7.1 are within 
the Panel's terms of reference42  
101.  The Philippines' panel request narrates that each of the measures is inconsistent with:  
Articles 2, 3, 4, 5, 6 and 7 of the CVA because, among others, Thailand 
failed to comply with the relevant valuation rules in establishing the "actual 
values" of the r elevant goods.  
102.  Thailand argues that this does not sufficiently identify a claim under Article 7.1 specifically, 
because Article 7 contains multiple subparagraphs. Thailand accepts that a panel request need not 
identify a specific subparagraph using numbers  but can do so using words. However, Thailand 
maintains that the Philippines' panel request is "overly vague", because the narrative is broad  
enough to cover other  paragraphs of Article 7, besides Article 7.1. Thailand's argument misses the 
point. The refe rence to Article 7 in the panel request, read with the narrative language, clearly 
presents a claim under Article 7.1.  
103.  Under the CVA, a Member is required to establish  the customs value  of imported goods by 
complying  with the valuation rules  under one of the six valuation methods set forth in Articles 1 
through 7. Article 7.1 evidently sets forth "relevant valuation rules". Indeed, it is the only paragraph 
in Article 7 that sets forth affirmative valuation rules that may be used "in establishing" the custo ms 
value of goods. Thus, the words in the panel request necessarily  identify, and establish a connection 
to, the "valuation rules" in Article 7.1.  
104.  Thailand has not responded to the Philippines' argument that the reference to Article 7 in the 
panel request , coupled with the narrative language, clearly – indeed necessarily – presents a claim 
under Article 7.1.  
105.  If the Philippines' panel request includes a claim under Article 7.1, Thailand cannot exclude 
this claim by showing that the language in the panel req uest may be broad enough to include an 
additional  claim under Article 7. As long as the panel request clearly identifies, at a minimum, Article 
7.1, it need not do so to the exclusion of claims under other paragraphs in Article 7. In any event, 
the Philipp ines' panel request was not formulated to cover claims under Articles 7.2 or 7.3, and the 
Philippines makes no claims under those provisions.  
ii. The Philippines made a timely, prima facie case of 
inconsistency under Article 7.143  
106.  Thailand argues that the Phil ippines has failed to make a prima facie  case in a timely manner, 
because the Philippines did not pursue its claim under Article 7.1 in its first written submission. In 
Thailand's view, Thailand's due process rights would be compromised if the Panel were t o rule on 
the Philippines' Article 7.1 claims in these circumstances.  
107.  As this Panel explained, "ensuring due process requires a balancing of interests of both parties, 
and not merely the interests of the responding party".44  Thus, in assessing Thailand's due process 
objections regarding the timely submission of arguments under Article 7 of the CVA, the Panel must 
weigh the Philippines' right to pursue its case, on the one hand, against Thailand's right to pursue 
its defense,  on the other, in light of the relevant circumstances.  
108.  The circumstances are as follows. As explained, the evidence demonstrates that the Thai 
authorities calculated computed customs values under Article 6, and did not rely on Article 7.1. 
Absent any indic ation from the Thai authorities that they could not use Article 6, it was neither 
necessary, nor appropriate, for the Philippines to burden the Panel with alternative arguments under 
Article 7.1 in its first written submission.  
109.  As soon as Thailand asserte d that its authorities had used the flexibilities in Article 7.1, the 
Philippines' second written submission presented a prima facie  case of inconsistency with the 
"reasonable flexibility" in Article 7.1. Thailand's due process rights would not be violated  if the Panel 
were to address these arguments. Thailand had five submissions  to respond to these arguments, 
and did, in fact, respond in its second written submission.45   
                                                
42 The Philippines’ response to P anel Question 157; the Philippines’ response to Thailand’s 
communication, Section IV; the Philippines’ reply to Thailand’s comments, Section III.  
43 The Philip pines’ response to Thailand’s communication, Section V; the Philippines’ reply to Thailand’s 
comm ents, Section IV.  
44 First Compliance Panel Report, para. 150.  
45 See Thailand’s second written submission, paras. 3.79 -3.80.  WT/DS371/RW2/Add.1  
 
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  110.  By contrast, the Philippines'  due process rights to pursue its case would be compromi sed if 
the Panel accepted Thailand's objection. The timing of the Philippines' arguments under Article 7 is 
due entirely to the failure by Thailand and its authorities to explain in timely fashion that their 
customs valuation determinations were made under  Article 7, because Article 6 could not be used.  
b. The Customs Department's determination of "actual" values 
is not "reasonable" under Article 7.1  
111.  Turning now to the substance under Article 7, Thailand states that "[t]he specific flexibility is 
that the [Th ai authorities] relied on information" which "was not subsequently verified in terms of 
its accuracy".46  In other words, Thailand argues that the failure to take any steps to review the 
alleged CK -21A information is within the "reasonable flexibility" allo wed under Article 7.  
112.  However, there is nothing "reasonable" about a customs administration using inaccurate 
information, without taking any steps to review the information critically. Article 7 states that the 
customs value shall be determined "consistent with the principles and general provisions of this 
Agreement and of Article VII of the GATT 1994 for its customs valuation determination".  
113.  One of the fundamental principles flowing from the provisions of the CVA is that the customs 
value must be determine d on the basis of " objective ", "accurate ", "truthful ", "quantifiable ", 
"complete " and " correct " information. In that respect, it is a general principle that the customs 
administration "shall utilize information" prepared consistently with GAAP. Furthermore , customs 
valuation must be " fair", "neutral " and " equitable ", and not lead to " arbitrary " or " fictitious " values. 
A second principle is that the CVA requires "active" conduct, through which the authority must satisfy 
itself that the information it uses is  fit for its specific customs valuation purposes.  
114.  As a result, it is never  "reasonable" under Article 7 for a customs administration to rely on 
inaccurate information; it is also never "reasonable"  for a customs administration simply to do 
nothing by way o f critical review of the reliability of information before it.  
6. The Customs Department violates Article 1.2(a) (third sentence) of 
the CVA by failing to communicate grounds, and failing to provide a 
reasonable opportunity to respond 47 
115.  Article 1.2(a) (third sentence) embodies a "due process" objective relating to the manner in 
which the customs administration conducts its examination: the administration is required to 
communicate its grounds for considering that the parties' relationship influenced the price,  and to 
give the importer a reasonable opportunity to respond.48  This process must take place before  a 
decision to reject transaction value is reached.49  
116.  The Customs Department failed  to inform PM Thailand altogether that it was conducting an 
examination of the circumstances of sale. In so doing, the Customs Department failed to inform PM 
Thailand of its grounds for doubting PM Thailand's declared transaction values, prior to making its 
determination. Since there was no communication of grounds , PM Thailand was further deprived of 
the opportunity to provide a response.  
117.  Moreover, Article 1.2(a) (fourth sentence) states that, if the importer so requests, the customs 
administration shall communicate the grounds "in writing". This obligation presupposes that a 
customs administration informs an importer that its examination o f the circumstances of sale is 
ongoing. Hence, the Customs Department's secretive conduct of the examination of the 
circumstances of sale also deprived PM Thailand of the opportunity to request a statement of 
grounds.   
118.  Thailand accepts that the Customs De partment did not perform the obligations in Article 1.2(a) 
(third sentence). According to Thailand, the Customs Department was effectively relieved of these 
obligations because "the DSI and the Public Prosecutor, not the Customs Department, were the 
releva nt Thai agencies that would have been in a position to communicate" grounds.50  Yet, Thailand 
also argues that the Public Prosecutor and the DSI were not subject to the obligations in Articles 
1.2(a).  
                                                
46 Thailand’s first written submission, para. 3.110.  
47 The Philippines’ first written submission, Section IV.B.5.b; the Philippin es’ second written submission, 
Section III.B.4; the Philippines’ responses to Panel Questions 150, 151 and 171; the Philippines comments on 
Thailand’s response to Panel Question 163.  
48 Original Panel Report, para. 7.191.  
49 Original Panel Report, para. 7.15 5. 
50 Thailand’s response to Panel Question 163, para. 2.12.  WT/DS371/RW2/Add.1  
 
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  119.  Thus, in Thailand's view, no government agency bears an y responsibility, under Article 1.2(a) 
of the CVA, for the procedural failings of two sets of identical customs valuation determinations, in 
the 1,052 NoAs and the 02 -03 Charges. Thailand's argument also highlights the absurdity of 
Thailand's position, add ressed in Section III.B.2, that the DSI and the Public Prosecutor were not 
involved in customs valuation.  
7. The Customs Department violates Article 16 of the CVA by failing to 
provide, upon written request, a written explanation as to how the 
customs values  of the imported goods were determined51 
120.  Article 16 requires a customs authority to provide "an explanation" of its customs valuation 
determination upon written request. The original panel held that this explanation must " make clear 
and give details  of how the customs value of the importer's good was determined, including the 
basis for rejecting the transaction value ", and " how the [alternative valuation] method [used] was 
applied  in reaching the final customs value".52 
121.  In this regard, the Philippines explain ed that Article 6 provides useful context as to the nature 
of the required explanation under Article 16 in circumstances where an authority used Article 6 to 
value the imported goods.  
122.  With regard to the interpretation  of the obligation under Article 16, a lthough Thailand agrees 
that, to some extent, the valuation method used is relevant for this examination, it claims that the 
Philippines' interpretation goes too far, because it asks the Panel "to transpose verbatim specific 
obligations in an interpretativ e note to an Article [6] into another Article [16]".53 
123.  This is incorrect. The obligation in Article 16 is functional  – that is, it must fulfill the functional 
objectives set forth in Article 16. In particular, the explanation must serve the transparency and  due 
process objectives in Article 16.54  To this end, the Philippines explained that the written explanation 
must provide sufficient detail so as to enable the importer to decide whether to appeal the decision, 
and if so, on what grounds.55  As a result, th e nature of the explanation must take into account the 
valuation method used.  
124.  Accordingly, where a customs administration uses a cost -plus value – both to reject 
transaction value under Article 1 and to determine an alternative value under Article 6 – the 
authority's explanation must be tailored to provide a full understanding of how the cost -plus value 
was calculated, taking account of the obligations in Article 6 and its associated Interpretative Notes , 
including the requirements in Paragraph 6 regarding  the source  of the information used to calculate 
costs and profits, the data used, and the calculations  based upon such data.56 
125.  Applying Article 16 to the facts , the Customs Department failed to provide an adequate 
explanation of its determination, followin g the importer's written request.  
126.  Thailand argues that the Customs Department satisfied its obligation under Article 16, 
because: (1) it pointed PM Thailand to the 02 -03 Charges, which "make clear that the basis for 
rejecting the declared transaction value  was the suspicion that PMTL had engaged in customs fraud", 
and (2) the 1,052 NoAs state that the "‘correct' customs values were ‘calculated from the cigarette 
cost structure of PT Philip Morris Indonesia obtained from the Indonesian government'".57 
127.  The Phi lippines disagrees. Communicating in general terms that the customs valuation was 
based on an investigation by another government agency does not explain, in any way, how and 
why the transaction values were rejected by the Customs Department, and how the C ustoms 
Department determined alternative values.  
III. THE 02 -03 CHARGES AR E INCONSISTENT WITH THE CVA 
126.  On 26 January 2017, the Thai Public Prosecutor filed criminal charges against PM Thailand 
and one of its former employees, concerning 780 entries of cigarette s that cleared Thai customs in 
                                                
51 The Philippines’ first writt en submission, Section IV.B.5.c; the Philippines’ second written submission, 
Section III.B.5.  
52 First Compliance Panel Report, para. 7.416 (emphasis added), citing Original Panel Report, para. 7.238.  
53 Thailand’s second written submission, para. 2.35.  
54 First Compliance Panel Report, paras. 7.382 and 7.432; Original Panel Report, paras. 7.234 -7.237.  
55 Original Panel Report, para. 7.234. The explanation must also enable domestic courts and WTO panels 
to understand an authority’s determination for the purposes of scrutinizing it.  
56 Paragraph 6 of the Interpretative Note  to Article 6.  
57 Thailand’s first w ritten submission, para. 2.49.  
 WT/DS371/RW2/Add.1  
 
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  the period 2002 -2003 ("02 -03 Charges"). The 02 -03 Charges embody a determination that PM 
Thailand's declared transaction values are lower than the correct customs value, in violation of 
Section 27 of Thailand's Customs Act. T he 02 -03 Charges reject the importer's declared transaction 
values inconsistently with Articles 1.1 and 1.2(a) of the CVA, and determine alternative values 
inconsistently with Article 6 or, in the alternative, Article 7 of the CVA.58 
127.  In defending the 02 -03 Charges, Thailand repeats a number of arguments that were rejected 
by this Panel in the first compliance proceedings. In response to Thailand's arguments, the 
Philippines summarizes below why: (1) the CVA is applicable to the 02 -03 Charges; (2) the 
Philippines is able to make – and has made – a prima facie  case with respect to the 02 -03 Charges; 
(3) the 02 -03 Charges violate the CVA; and (4) the 02 -03 Charges are not justified by Article XX of 
the GATT 1994.  
A. The 02 -03 Charges constit ute a "measure taken to comply"59 
128.  The Philippines challenges the 02 -03 Charges as "measures taken to comply" under Article 
21.5 of the DSU. In Section II.A, the Philippines described the legal standard for determining whether 
a measure constitutes an undecl ared measure taken to comply, and is thus within the scope of 
compliance proceedings. To recall, this legal standard requires a "close nexus" between the measure 
at issue and the recommendations and rulings of the DSB in the original proceedings, or with 
declared measures taken to comply.  
129.  The 02 -03 Charges have the requisite nexus with the DSB's recommendations and rulings 
and declared measures taken to comply. Again, Thailand does not contest that the 02 -03 Charges 
are a "measure taken to comply" under Art icle 21.5 of the DSU.  
130.  The Philippines recalls that this Panel in the first compliance proceedings found that the 03 -
06 Charges were a "measure taken to comply".60  The 02 -03 Charges share the same "set of 
connections" in terms of their timing, nature and ef fects with the DSB's rulings and 
recommendations, and Thailand's declared measures taken to comply, as the 03 -06 Charges.61 
131.  In addition, and unlike the 03 -06 Charges, the 02 -03 Charges also cover 206 entries that 
overlap  with entries covered by measures wit hin the scope of the DSB's recommendations and 
rulings, and which also overlap with the November 2012 BoA Ruling, a declared measure taken to 
comply.62  This additional connection strengthens the "close nexus" between the recommendations 
and rulings and the  measure taken to comply. Further, the entries covered by the 02 -03 Charges 
and the 03 -06 Charges are contiguous. There is, therefore, a "chronological ‘connection' and ‘link'" 
stretching from the entries covered by the 02 -03 Charges, through the 03 -06 Cha rges, to the 06 -
07 entries covered by the September 2012 BoA Ruling.63  
132.  In sum, just like the 03 -06 Charges, the 02 -03 Charges "aggravate the WTO -inconsistencies" 
that Thailand was instructed to resolve, and "potentially undermine compliance and circumvent the 
DSB's recommendations and rulings".64  
B. The CVA applies to the 02 -03 Charges65 
133.  Article 15.1(a) provides that the CVA applies whenever a Member: (1) determines the value 
or monetary worth of imported goods; and (2) does so for the purposes of levying ad va lorem  
customs duties. In the first compliance proceedings, the Panel found that the second limb of the test 
under Article 15.1(a) is not limited to the actual levying  of ad valorem  customs duties at the border, 
                                                
58 The Philippines’ first written submission, Sections I and V.A.1.c.  
59 The Philippines’ first written submission, Section V.B.1; the Philippines’ comments on Thailand’s 
response to Panel Question 1 27.   
60 First Compliance Pan el Report, para. 7.556.  
61 See paras. 10 -13 above.  
62 For a detailed explanation, see the Philippines’ first written submission, para. 373.  
63 First Compliance Panel Report, para. 7.543.  
64 First Compliance Panel Report, para. 7.549 . 
65 The Philippines’ first written submission, Section V.B.2; the Philippines’ second written submission, 
Section IV.A; the Philippines’ responses to Panel Questions 137, 140 and 141; the Philippines’ opening 
statement, Section III; the Philippines’ commen ts on Thailand’s responses to Panel Questions 163(a) and (b), 
166, 167 and 171.  
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  but "embrace[s] any determination of the valu e of imported goods for the purposes of determining 
the amount of ad valorem  duties due on those imported goods".66   
134.  First, the 02 -03 Charges determine the monetary value of PM Thailand's imported cigarettes, 
because they establish the alleged "actual price" for each of the 780 entries. Second , the 02 -03 
Charges do so for the purposes of levying ad valorem customs duties, bec ause they rely on the 
"actual price" as the base for rejecting the declared transaction value, and for calculating the 
"amount of tax and [ ad valorem  customs] duty under customs law" that the importer was "liable to 
pay".67  Thus, the 02 -03 Charges constitu te a customs valuation determination under Article 15.1(a) 
of the CVA.  
135.  Thailand makes two counter -arguments. First, Thailand argues that the CVA does not apply 
to the Public Prosecutor, because the Public Prosecutor is not part of Thailand's "customs 
administration". Second , Thailand argues that the 02 -03 Charges do not entail a customs valuation 
determination under Article 15.1(a), because they e ntail an accusation of "customs fraud". Below, 
the Philippines explains why these arguments are unavailing.  
1. The CVA applies to the Public Prosecutor  
136.  Thailand argues that the CVA obligations are limited to a Member's "customs administration", 
which, accord ing to Thailand, constitutes only those entities formally tasked with customs 
administration matters. Because the Public Prosecutor is not formally tasked with customs 
administration, Thailand argues that the procedural and substantive obligations in the CVA are 
inapplicable to the 02 -03 Charges.  
137.  In the first compliance proceedings, the Panel rejected these same arguments. The Panel 
found that the term "customs administration" is essentially functional , and focuses on the substance  
of a measure, namely whe ther the measure entails a customs valuation determination. More 
specifically, the Panel found that the references to the term "customs administration" in the CVA do 
not include "a clear and explicit indication" "limiting [the CVA's ] applicability to a nar row subset of 
government officials".68  Thus, the CVA applies to any state organ that engages in the determination 
of the monetary worth of goods for the purposes of levying ad valorem  customs duties.  
2. The 02 -03 Charges determine the monetary worth of goods  for the 
purposes of levying ad valorem  customs duties  
138.  Thailand argues that the 02 -03 Charges do not determine the monetary value of goods for 
the purposes of levying ad valorem  customs duties, because they allege "customs fraud". According 
to Thailand, "t o substantiate an accusation of customs fraud in the form of fraudulent under -
declaration of the customs value, the authorities need only establish that the declared customs value 
is not the price actually paid or payable".69  Specifically, Thailand contend s, finding that the declared 
value was less than the "actual price" gave rise to "grounds to suspect that the declared transaction 
value may not reflect the price actually paid".70   
139.  Thailand argues that this finding does not "require a determination of the  price actually paid 
or payable [under Article 1.1 of the CVA ], nor a determination of a revised value [under Articles 2 -
7]. 71   On this basis, Thailand asserts that CVA does not apply to the 02 -03 Charges.  
140.  Thailand's characterization of the 02 -03 Charges bears no relation to the terms of the 
measure itself. The terms of the 02 -03 Charges demonstrate that the "actual prices" constitute: (1) 
a benchmark to reject the importer's declared transaction values on t he grounds that the parties' 
relationship influenced the price under Article 1.2(a) of the CVA; and (2) alternative customs values 
under Article 6 of the CVA.  
141.  To explain, the Philippines: first sets out the legal standard governing the applicability of 
Articles 1.1, 1.2(a) and/or 2 -7 of the CVA; second , demonstrates that the 02 -03 Charges fall under 
Articles 1.2(a), and 6, of the CVA; and, third, explains that, even if Thailand were correct that the 
02-03 Charges determine only that the declared value did not reflect the "price actually paid or 
                                                
66 First Compliance Panel Report, para. 292.  
67 The Criminal Court, Case Black No. OR. 232/2560, 26 January 2017 (English Translation) (Exhibit 
PHL-14-B); see also the  Philippi nes’ first written submission, paras. 404 -410. 
68 First Compliance Panel Report, para. 7.641.  
69 Thailand’s response to Panel Question 167(a), para. 4.5 (emphasis added).  
70 Thailand’s first written submission, para. 3.21; Thailand’s second written submission, p ara. 3.4.  
71 Thailand’s response to Panel Question 167(a), para. 4.5.  WT/DS371/RW2/Add.1  
 
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  payable" ( quod non ), the 02 -03 Charges would still be subject to the CVA, namely Article 1.1 of the 
CVA. 
a. Legal standard for determining the applicability of Articles 
1.2(a) and/or 2 -7 of the CVA  
142.  In this subsection, t he Philippines sets out the legal standard for determining the applicability 
of Articles 1.1, 1.2(a) and 6 of the CVA. In determining which, if any, CVA provisions are applicable, 
a panel should focus on the "content and substance" of the relevant measure,  considered in light of 
surrounding evidence.  
143.  As it applies to related -party transactions, the CVA may involve a series of three steps  in 
the customs valuation process, each disciplined by different legal provisions. The distinction between 
each step is i nstructive in understanding which, if any, provisions of the CVA are applicable to a 
given measure. The Philippines summarizes these steps below.  
144.  Step 1 is governed by Article 1.1 of the CVA. At Step 1, a customs administration may assess 
whether the impo rter's declared value is, indeed, the "price actually paid or payable" by the buyer 
to the seller, i.e., the "transaction value". The CVA defines the "price actually paid or payable" as an 
amount that exists in the real world : it is the "total" amount of f inancial consideration, in all forms, 
given by the buyer to the seller, for the goods.  
145.  Given this definition, a customs administration does not have freehand to decide, using any 
method/evidence it chooses, the "price actually paid or payable". Instead, t he legal standard has 
important implications for the evidence that a customs administration can use to discover the "price 
actually paid or payable". A customs administration could discover that "price" using, for example, 
the following evidence: contracts  between the buyer and seller, such as licensing and distribution 
agreements; purchase orders; and invoices.72   
146.  Step 2 is governed by Article 1.2(a) . At Step 2, the administration has established the "price 
actually paid or payable" and now assesses whethe r this figure is acceptable  as the customs value, 
in a related -party transaction. Step 2 involves an examination of the circumstances of sale to 
establish whether the "price actually paid or payable" is consistent with normal commercial 
principles. At Step  2, an authority may  construct benchmark values  to answer this question, for 
example by computing the producer's costs and profits.  
147.  Importantly for present purposes, a constructed benchmark value under Article 1.2(a) (Step 
2) does not represent the "price actually paid or payable" under Article 1.1 (Step 1). This is because 
the "price actually paid or payable" is the real -world price actually agreed between buyer and seller, 
which may not be an amount of consideration that the customs authority deems to be an appropriate 
sales price for the goods being valued. This holds especially true in a related -party transaction, which 
is precisely why the CVA provides, in Article 1.2(a), for a proces s to test the acceptability of the 
transaction value, through an examination of the circumstances of sale.  
148.  Step 3 is governed by Articles 2 -7. At Step 3, the administration has rejected the "price 
actually paid or payable" as the customs value, and it must  now determine an alternative customs 
value using the methods in Articles 2 through 7.     
149.  The "price actually paid or payable" under Article 1.1 (Step 1) may be contrasted with a 
customs value determined under Articles 2 -7 (Step 3). At Step 3, the customs  administration is not 
interested in discovering  or verifying  the "price actually paid or payable". Instead, the methodologies 
in Articles 2 -7 each involve the construction  of a value that is deemed , under the CVA to be an 
appropriate  customs value for the  goods being valued.   
150.  With this framework in mind, the Philippines explains which CVA provisions apply to the 02 -
03 Charges.  
b. The 02 -03 Charges are subject to Articles 1.2(a) and 6 of the 
CVA 
151.  In the 02 -03 Charges, the "actual price" is a constructed bench mark value under Article 
1.2(a) ( Step 2 ); and a constructed cost -plus value under Article 6 ( Step 3 ).  
                                                
72 Other appropriate evidence could include accounting records from the buyer and seller, including from 
their internal financial systems or ledgers; bank statements; letters of credit; ne gotiable instruments, and 
evidence of indirect transfers.  WT/DS371/RW2/Add.1  
 
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  152.  In establishing the "actual price", the Public Prosecutor engaged in the exercise under Step 
2/Article 1.2(a). Specifically, the Public Prosecutor constr ucted a benchmark value, based on the 
producer's purported "costs" and "profits", in an effort to reveal whether the parties' relationship 
influenced the price. As a "cost -plus" benchmark value, the "actual price" purportedly indicated that 
the transaction  value was inconsistent with usual commercial principles in an unrelated transaction. 
Having rejected the declared value on this basis, the Public Prosecutor then engaged in the exercise 
under Step 3/Article 6, replacing the rejected declared value with th e "actual price" as a constructed 
cost-plus customs value.  
153.  As a constructed value, the "actual price" does not purport to be the real -world "price actually 
paid or payable" under Article 1.1. A producer's costs and profits do not provide evidence of the 
actual selling price, because there is no necessary relationship between a producer's costs and 
profits, and its selling price.  
154.  Thailand admits  that the Public Prosecutor did not rely on evidence that reveals the real -
world "payment made or to be made" by the buyer. Nothing indicates that the Public Prosecutor 
assessed the "total payment" through evidence such as contracts, purchase orders, invoices, 
accounting records, banks statements, etc. To the contrary, Thailand acknowledges that the Public 
Prosecutor  has no "direct evidence of customs fraud, such as hidden invoices between the related 
parties".73  Thailand has failed to point to any evidence to suggest that PM Thailand paid (or was 
liable to pay) more to PTPMI than the declared value.  
155.  The Public Prose cutor's actions mirror those of the Customs Department in issuing the 1,052 
NoAs. Indeed, the same calculation underlies  the two measures. For the 1,052 NoAs, Thailand 
accepts that these measures are subject to Articles 1.2(a) and 6/7 of the CVA. However, Thailand 
maintains that the 02 -03 Charges are not subject to these provisions, because they allege "customs 
fraud". It is absurd for Thailand to accept that the "actual prices" constitute customs values in the 
NoAs, but that the identical "actual prices" d o not constitute customs values in the 02 -03 Charges.  
156.  Thailand cannot reconcile its characterization of the "actual price" with the content and 
substance of the 02 -03 Charges. Indeed, as explained in the next subsection below, Thailand has 
given shifting and contradictory explanations of the "actual price" during the proceedings, which fail 
to ascribe the proper meaning to the term "actual price", as used i n the measures.  
c. Even if Thailand's characterizations of the "actual price" 
were correct, the CVA still applies to the 02 -03 Charges  
157.  Thailand provides a variety of explanations of the role of the "actual price" in the 02 -03 
Charges, in an attempt to escape  the applicability of the CVA. These explanations are, for the reasons 
explained above, not consistent with the way the term "actual price" is used in the measure itself. 
However, even if Thailand's characterizations were accurate, the legal consequence th at Thailand 
draws – that the CVA is inapplicable – is incorrect.  
158.  First, Thailand stated in its second written submission that "the reference to ‘actual [price]' 
refers to  the ‘price actually paid or payable' for the goods in question".74  In its responses to 
questions, Thailand shifted position, stating that the "actual price" does not refer to the "price 
actually paid or payable", but is a benchmark to reject the declared "price actually paid or payable". 
Thailand contends that a determination that the dec lared value is not the price paid or payable is 
not subject to the CVA.  
159.  Article 1.1 of the CVA necessarily applies to the exercise of deciding, at the first step of the 
process, whether the declared value is – or is not  – the "price actually paid or payab le". The "price 
actually paid or payable" is a defined treaty term and determinations regarding that "price" must be 
consistent with the treaty. The treaty definition applies as much to a determination that a given 
amount is the "price actually paid or payable" as it does to a determination that a given amount is 
not the "price actually paid or payable". Both constitute a determination as to what ad valorem  the 
importer is – or is not – liable to pay.   
160.  If this exercise were not subject to the CVA, a customs administration could choose whatever 
means it wished, however spurious, to reject the importer's declared transaction value, easily 
circumventing the principle that "[t]he primary basis for customs value under this Agreeme nt is 
‘transaction value' as defined in Article 1", that is, the "price actually paid or payable". The Ministerial 
                                                
73 Thailand’s first written submission, para. 3.150.  
74 Thailand’s second written submission, para. 3.14.  
 WT/DS371/RW2/Add.1  
 
- 77 - 
 
  Decision  confirms that, contrary to Thailand's argument, the CVA applies where the "truth or 
accuracy" of the declared value is doubted.75 
161.  Second, in its opening statement, Thailand again shifted its position, stating that the "actual 
prices" served only as a benchmark to calculate the penalty. Section 27 of the Customs Act provides 
for a fine up to "four times of the duty additionally payable".  Thus, the basic building block of the 
fine is an alternative "actual value", determined for the purpose of calculating the alleged duty 
shortfall, i.e. the correct amount of customs duties due, multiplied by four. Therefore, in substance, 
the fine incorpo rates – and collects – the ad valorem  customs duties allegedly due on an alternative 
customs value.  
C. The Philippines is able to make – and has made – a prima facie  case that 
the 02 -03 Charges are inconsistent with the CVA76 
162.  In its second attempt to escape s crutiny of the 02 -03 Charges, Thailand argues that "the 
02-03 Charges do not contain sufficient factual information to allow the Philippines to make a prima 
facie case of inconsistency under the CVA".77  According to Thailand, this is because: (1) the "prec ise 
content" of the 02 -03 Charges is unknown, so to make findings on the 02 -03 Charges would require 
the Panel to make a de novo review;78 and (2) the 02 -03 Charges are merely an allegation of 
customs fraud, and the Panel cannot "engag[e] in speculation on future measures or events".79  Both 
arguments are unavailing.  
163.  First, the "precise content" of the 02 -03 Charges is clear. The Public Prosecutor: (1) rejected 
the importer's declared transaction value for 780 entries; and (2) determined alternative "actual"  
customs values for each of these entries. Consistent with the standard of review, the Panel must 
critically examine the domestic authority's explanation in depth, and in light of the facts before the 
panel. In the absence of a proper explanation of Thaila nd's customs valuation determination, the 
Panel has, in the words of the original panel, "no option to find but that the competent authority has 
not performed the analysis correctly".80  This does not require the Panel to make a de novo  review, 
because the Panel is not making its own  determination under Article 1.2(a). There is ample 
information for the Panel to conclude that the Public Prosecutor's customs valuation determination 
is CVA-inconsistent.  
164.  Second , Thailand's argument that the 02 -03 Charges are a  mere "allegation of customs 
fraud" simply repackages Thailand's unsuccessful "ripeness" argument from the first compliance 
proceedings. To recall, the Panel found that the 03 -06 Charges involved a "‘final' decision" by the 
Public Prosecutor, had "legal st atus in and of themselves", and could be ruled upon "without 
engaging in speculation on future measures or events".81   Thailand does not explain, in relation to 
these aspects, how the 02 -03 Charges are substantively different from the 03 -06 Charges, such t hat 
these findings do not apply.  
D. The Philippines' claims regarding the 02 -03 Charges  
165.  As the Philippines has explained, a single calculation underlies the customs valuation 
determinations in both the 02 -03 Charges and the 1,052 NoAs. Therefore, in claiming that the 02 -
03 Charges are inconsistent with Articles 1.1, 1.2(a) (second sentence), and 6 and/or 7, the 
Philippines makes the same arguments as it does with respect to the 1,052 NoAs. Rather than repeat 
these arguments, the Philippines provides a brief su mmary, and cross -references to the relevant 
sections above.  
1. The Public Prosecutor violates Articles 1.1 and 1.2(a) (second 
sentence) of the CVA by failing to properly examine the 
                                                
75 The Ministerial Declaration  Regarding Cases Where Customs Administrations Have Reasons to D oubt 
the Truth or Accuracy of the Declared Value . 
76 The Philippines’ second written submission, Section IV.B.  
77 Thailand’s first written submission, paras. 3.31 and 3.33.  
78 Thailand’s first written submission, paras. 3.29.  
79 Thailand’s first written subm ission, paras. 3.31 and 3.33.  
80 First Compliance Panel Report, paras. 7.85 and 7.86 (emphasis added, footnotes omitted).  
81 First Compliance Panel Report, para. 7.605.  
 WT/DS371/RW2/Add.1  
 
- 78 - 
 
  circumstances of sale and improperly rejecting the transaction 
values82 
166.  In Section II.C.2 above, the Philippines first explains that Thailand has failed to provide any 
evidence to substantiate what information the Public Prosecutor relied on in adopting its measures, 
or any evidence as to the source of that information. Consis tent with the standard of review, in the 
absence of any evidence, the Panel has "no option" but to find it has not performed its obligations 
correctly.  
167.  Second, even if Thailand had substantiated the factual basis of its customs valuation 
determination ( quod non ), Thailand's reliance on CK -21A information would have violated the CVA. 
The Philippines also explains that Thailand's argument that there is a carve -out under Article 1.2(a) 
(second sentence), which allows a customs administration to "assume" that information provided by 
authorities is reliable for customs valuation purposes, is erroneous. Finally, the Philippines indicates 
that even Thailand's own evidence demonstrates that its customs valuation methodology was 
inconsistent with the CVA. 
2. The Public  Prosecutor violates Articles 2 to 7 of the CVA by failing to 
respect the sequential ordering of valuation methods83 
168.  In Section II.C.3 above, the Philippines explains that, if the transaction value is rejected 
under Article 1 of the CVA, the authority must,  in calculating an alternative customs value, respect 
the sequential ordering of the alternative valuation methods in Articles 2 to 7.  
169.  The Public Prosecutor has failed to respect the sequential valuation obligation. Thailand 
asserts in its submissions tha t "none of the alternative methods in Articles 2 -5 could be used to 
determine customs value".84  However, Thailand's explanation constitutes an improper and 
unsubstantiated ex post  justification of the Public Prosecutor's actions.  
170.  Additionally, in the event  the Panel finds that the Public Prosecutor relied on the methodology 
under Article 7, instead of Article 6 of the CVA, neither Thailand nor its authorities even mentioned  
whether Article 6 was available.  
3. The Public Prosecutor violates Article 6 of the CVA by determining 
the alternative customs values through an improper "cost -plus" or 
computed value methodology85  
171.  In Section II.C.4 above, the Philippines, first, sets out the legal standard for the correct 
characterization of a measure. Further, the Philippines indicates that Thailand has presented no 
evidence at all to support its belated assertion that the Public Prosecutor relied on Article 7. The 
Philippines, by contrast, has explains, with accompanying e vidence, that the Public Prosecutor relied 
on Article 6, not Article 7.  
172.  Second , the Philippines sets out the legal standard, under Article 6, for the calculation of a 
cost-plus customs value. In the application of the legal standard under Article 6, the P hilippines 
explains that, even if  Thailand had substantiated that the alleged CK -21A information was the basis 
for the Public Prosecutor's determination, that information is not suitable for customs valuation 
purposes, and Thailand's own evidence demonstra tes that its customs valuation methodology was 
inconsistent with Article 6 of the CVA. 
4. The Public Prosecutor violates Article 7 of the CVA by determining 
alternative customs values through "unreasonable" flexibilities86  
173.  In Section II.C.5 above, the Philippines explains that even if the Public Prosecutor used 
Article 7, the flexibilities exercised were not "reasonable" under Article 7.1. Specifically, the 
Philippines: first explains that Thailand's request that the Panel d ecline to make rulings under Article 
7 is without grounds; and second summarizes the Philippines' prima facie case as to why the 
                                                
82 The Philippines’ first written submission, Section V.B.3; the Philippines’ second writ ten submission, 
Section IV.C.1; see also above, Section II.C.2.  
83 The Philippines’ first written submission, Section V.B.4; the Philippines’ second written submission, 
Section IV.C.2; see also above, Section II.C.3.  
84 Thailand’s first written submission, para. 3.102; Thailand’s second written submission, para. 3.74.  
85 The Philippines’ first written submission, Section V.B.5; the Philippines’ second written submission, 
Section IV.C.3;  see also above, Section II.C.4.  
86 The Philippines’ second written submission, Section IV.C.3; see also above, Section II.C.5.c.   
 WT/DS371/RW2/Add.1  
 
- 79 - 
 
  Customs Department did not use "reasonable flexibility" when determining the alternative "actual" 
customs values.     
5. The Publi c Prosecutor violates Article 1.2(a) (third sentence) of the 
CVA by failing to communicate grounds, and failing to provide a 
reasonable opportunity to respond87 
174.  In Section II.C.6 above, the Philippines set out the legal standard applicable under Article 
1.2(a) (third sentence). This provision sets forth two connected obligations: (1) the customs 
administration must, during the course of its examination, communicate to the importer its 
"grounds" for considering that the parties' relationship influenced the pr ice, and (2) it must allow a 
"reasonable opportunity" for the importer to respond to those grounds.  
175.  The Public Prosecutor never communicated its grounds for considering the parties' 
relationship influenced the price. By failing to provide any indication o f the "grounds" for considering 
the relationship influenced the price, the Public Prosecutor also necessarily failed to provide PM 
Thailand with an opportunity to address those grounds in a response.  
176.  Thailand does not dispute that the Public Prosecutor fai led to perform the obligations in 
Article 1.2(a) (third sentence). Thailand argues, however, that if the CVA applies to the Public 
Prosecutor, only the substantive obligations apply, and the procedural  obligations do not.  
177.  The Philippines disagrees. As expl ained above, the first compliance Panel found that the CVA 
– including Article 1.2(a) – applies to the Public Prosecutor in the context of criminal proceedings. 
The Panel found no treaty basis to limit the application of any of the CVA obligations to a "na rrow 
subset of government officials".88   
178.  There is also no basis in the text to apply the substantive CVA obligations to all government 
officials engaged in customs valuation, but to apply the procedural  obligations to only a subset  of 
them. The text of Article 1.2(a) reveals the fallacy of this distinction. In successive sentences, Article 
1.2(a) imposes closely entwined procedural and substantive obligations. The procedural obligations 
in the third sentence (to communicate grounds/ provide an opportunity to respond) arise during, and 
as an integral part of, the examination of the circumstances of sale under the second sentence. 
Further, the procedural obligations are relevant in assessing whether an administration has 
conducted a pro per examination of the circumstances of sale under the second sentence.  
179.  As the procedural and substantive obligations in the CVA are closely entwined, failure to 
perform one has consequences for the other. As a result, the procedural obligations in Articl e 1.2(a) 
(third sentence) cannot be artificially cleaved from the substantive obligations in Article 1.2(a) 
(second sentence).  
E. The 02 -03 Charges are not justified by Article XX of the GATT 199489 
180.  In the first compliance proceedings, Thailand argued that th e 03-06 Charges could be 
justified under Article XX(a) or Article XX(d) of the GATT 1994. The Panel found that Article XX was 
not available as a defense to violations of the CVA, because there is no textual basis in the CVA to 
apply Article XX to that Agreement . Thailand repeats the same arguments with regard to the 02 -03 
Charges. Thailand does not invoke this defense with regard to the 1,052 NoAs. Below, the Philippines 
explains that: (1) Article XX does not apply to the CVA; and (2) in any event, the 02 -03 Charges 
are not provisionally justified under Article XX.  
1. Article XX of the GATT 1994 does not apply to the CVA 
181.  Article XX is not available as a defense to violations of the CVA. The Appellate Body has 
explained, as noted by this Panel, that there must be "a clear and sufficient textual link between 
provisions of the GATT 1994, especially Article XX, and the agreement to which Article XX applies".90  
No such link exists in the CVA.  
                                                
87 The Phi lippines’ first written submission, Section V.B.6; the Philippines’ second written submission, 
Section IV.C.4; the Philippines’ comments on Thailand’s response to Panel Question 163 (a) and (b);  see also 
above, Section  II.C.6.  
88 First Compliance Panel Repo rt, para. 7.641.  
89 The Philippines’ second written submission, Section IV.D; the Philippines’ comments on Thailand’s 
response to Panel Question 163(c).  
90 First Compliance Panel Report, para. 7.750, citing, inter alia , Appellate Body Report, China – Raw 
Materials , paras. 270 -307. 
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  182.  Thailand again argues that the application of Article XX to the CVA is the only way to 
"balance" Members' obligations with their right to regulate. However, the Panel has already rejected 
this argument, finding that this balance is already achieved in "the relatively limited scope of the 
substantive and procedural obligations" in the CVA, including in the "degree of discretion accorded 
to the customs authority in implementing those obligations".91  Thailand has not identified any basis 
for the Panel to change course, and find that Article XX applies to the CVA.  
2. The 02 -03 Charges  are not provisionally justified under either Article 
XX(d) and/or Article XX(a) of the GATT 1994  
183.  Even if Article XX were applicable to the CVA, the 02 -03 Charges could not be justified under 
either Article XX(d) or Article XX(a) of the GATT 1994.  
184.  If the  Panel were to reach Thailand's argument under Article XX, it would have already 
determined that the rejection of PM Thailand's declared transaction values is inconsistent with 
Articles 1.1 and 1.2(a) of the CVA, and the determination of alternative custom s values is 
inconsistent with Articles 6 and/or 7 of the CVA.  
185.  It is well established that the aspect of a measure that must be "necessary" in order for a 
measure to be justified under Article XX is the aspect that gives rise to the finding of WTO 
inconsis tency .92  Accordingly, the specific element  of a measure that is found to be WTO -
inconsistent, and that is sought to be justified under Article XX, must be "necessary" to secure 
compliance with WTO -consistent domestic laws or regulations.  
186.  Thailand has, how ever, offered nothing to support its view that a WTO -inconsistent customs 
valuation is "designed" and "necessary" to ensure that PM Thailand pays the correct amount of 
customs duties. In fact, the opposite is true: a customs valuation determination that is  inconsistent 
with the substantive obligations of the CVA cannot be justified as a measure necessary to secure 
enforcement of customs laws or protect public morals  under Article XX of the GATT 1994. Rather, 
the proper enforcement of customs laws requires a  WTO-consistent  customs valuation, and not a 
WTO-inconsistent one.  
3. Assuming that the 02 -03 Charges are provisionally justified under 
Articles XX(d) and/or XX(a), they are not consistent with the 
chapeau  of Article XX  
187.  The chapeau  of Article XX provides that  GATT -inconsistent measures are permitted as long 
as they "are not applied in a manner which would constitute a means of arbitrary or unjustifiable 
discrimination between countries where the same conditions prevail, or a disguised restriction on 
internatio nal trade". In the Philippines' view, the 02 -03 Charges constitute a disguised restriction on 
international trade.  
188.  In determining whether a measure is applied consistently with the chapeau  to Article XX, 
ultimately the question is whether the measure "is i n fact only a disguise to conceal the pursuit of 
trade -restrictive objectives".93  Thailand argues that "a fine may or may not be imposed, and the 
amount of that potential fine is still to be determined by the Court" and that, therefore, "it cannot 
be said that the 02 -03 Charges ‘are applied' as a disguised restriction on international trade".94  
189.  The Philippines disagrees. The 02 -03 Charges threaten significant criminal fines, and the 
imprisonment of a former PM Thailand employee. In this way, the 02 -03 Charg es create legal 
consequences for PM Thailand. Further, if the 02 -03 Charges were ultimately to lead to a fine of the 
magnitude sought by the Public Prosecutor, that fine would threaten the very survival of PM Thailand, 
and hence the Philippines' exports of  cigarettes to Thailand.  
190.  These facts demonstrate that the 02 -03 Charges are being applied as a "disguised restriction 
on international trade" in the sense of the chapeau. For this reason also, the 02 -03 Charges cannot 
be justified under Article XX of the GATT 1994.  
 
 
 
                                                
91 First Compliance Panel Report, para. 7.756.  
92 See Appellate Body Report, EC – Seals , para. 5.185.  
93 Panel Report, EC – Asbestos , para. 8.236; Panel Report, Brazil – Retreaded Tyres , para. 7.330.  
94 Thailand's first written submiss ion, para.3.171.  WT/DS371/RW2/Add.1  
 
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  ANNEX B -2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THAILAND  
1  INTRODUCTION  
1.1.  This integrated executive summary contains the arguments presented by Thailand in its written 
submissions, oral statements, responses to questions and comments thereto.  
1.2.  In this dispute, the Philippines challenges the Notices of Assessment (NoA s) issued by 
Thailand's Customs Department on 10 November 2017 and the Criminal Charges issued by the Public 
Prosecutor on 26 January 2017 (02 -03 Charges). In Thailand's view, the Philippines' claims against 
the NoAs and the 02 -03 Charges are without legal  merit. With respect to the NoAs, Thailand submits 
a procedural ruling request that the Panel exercise its discretion to not rule on the Philippines' claims 
under the Customs Valuation Agreement (CVA) because the NoAs were withdrawn before the 
establishmen t of this panel and there is no evidence that they will be reintroduced.     
1.3.  With respect to the 02-03 Charges , Thailand submits that the CVA is not applicable as these 
charges constitute an accusation against Philip Morris (Thailand) Limited (PMTL) of "customs fraud", 
which, as the first compliance panel suggested, is not covered by the CVA. In Thailand's view, the 
Philippines' claims are a clear attempt to use WTO dispute settlement proceedings to undermine or 
prejudge the on -going legal proceedings  before the Thai Criminal Court. Rather than letting the 
domestic criminal proceedings run their course, the Philippines is seeking to use WTO dispute 
settlement proceedings to pre -empt the court's eventual ruling. This is fundamentally not the 
purpose for  WTO dispute settlement.  
1.4.  In any event, the Philippines has failed to make a prima facie  case of WTO -inconsistency in 
relation to the 02 -03 Charges because the precise content of the 02 -03 Charges simply does not 
show any WTO inconsistency. The factua l matters on which the Philippines bases its claims, the 
alleged unreliability of information provided by Philip Morris' Indonesian subsidiary, have not been 
fully addressed or resolved by any Thai governmental agency or Thai court. Therefore, the Panel 
should dismiss the Philippines' claims because, at this point in time, there is insufficient clear 
information concerning the 02 -03 Charges to establish that any WTO violation has taken place.  
1.5.  Despite these circumstances, if the Panel were to examine the substance of the Philippines' 
claims, the Panel must reject the Philippines' contentions as they are premised on interpretations of 
the CVA that are not in accordance with the general rule of interpretation under Article 31 of the 
Vienna Convention. A correct interpretation of the CVA provisions invoked by the Philippines 
indicates that authorities must be entitled to rely in good faith on information furnished by authorities 
of the exporting country.   
1.6.  In the event that the Panel nonetheless find s that the 02 -03 Charges are inconsistent with 
certain provisions of the CVA, the 02 -03 Charges are justified under Articles XX(a) and XX(d) of the 
GATT 1994. WTO Members' criminal enforcement authorities must retain appropriate policy space 
to investigate  and prosecute alleged customs fraud. This requisite policy space must be found in 
Article XX of the GATT 1994, which, by reason of Article VII, was clearly intended to apply to customs 
valuation matters. Any departure from the rules in the CVA was necessa ry to secure compliance with 
Thai customs laws by allowing the Public Prosecutor to prosecute customs fraud effectively. It was 
also necessary to protect public morals, as it contributed to fight smuggling and contraband by 
prosecuting customs fraud effici ently.  
1.7.  Moreover, in its opening statement at the substantive meeting, the Philippines referred to the 
alleged claims of inconsistencies under Article 7 of the CVA, arguing that Thailand used valuation 
methods that are prohibited under those provisio ns. However, the Philippines had not ever put 
forward such claims before, either in its Panel request or its first and second written submissions.            
In Thailand's view, i t is too late, and the Panel should not make any findings under Article 7 of t he 
CVA. In any event, the Philippines' claims under Article 7 are outside the Panel's terms of reference 
because the Philippines' vague reference to Article 7 in its request for the establishment of a panel 
does not meet the basic standards of Article 6.2 of the DSU.  WT/DS371/RW2/Add.1  
 
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  2  THE NOTICES OF ASSES SMENT  
2.1.  This section concerns 1,052 NoAs issued by Thailand's Customs Department on 10 November 
2017. The NoAs requested the importer, which is PMTL, to pay additional taxes and duties, a penalty 
and a surcharge in re lation to 1,052 entries that were imported from Indonesia between January 
2001 and July 2003. On 14 March 2018, the Philippines filed a request for the establishment of a 
panel, including the claims relating to these NoAs.  
2.2.  On 21 and 23 March 2018, t he Thai Customs Department sent two letters to PMTL explaining 
that 756 of the 1,052 NoAs had been revoked on 21 March 2018 and the remaining 256 NoAs had 
been terminated on 22 March 2018. Furthermore, during bilateral discussions that took place at the 
WTO on 26 March 2018 between the Permanent Mission of Thailand and officials from the 
Government of the Philippines, Thailand informed that the NoAs had been withdrawn and also 
provided a copy of the letters to PMTL dated 21 and 23 March 2018 to the Philippi nes' officials.  
2.3.  On 27 March 2018, the Panel was established with standard terms of reference during the 
Dispute Settlement Body (DSB) meeting. In its statement to the DSB, Thailand explained that the 
NoAs had been withdrawn prior to the establishment  of the Panel. Subsequently, on 13 June 2018, 
Thailand sent to the Philippines a statement from the Director -General of the Customs Department 
confirming that the NoAs had ceased to have any legal effect as of the dates of their revocation and 
termination (21 and 22 March 2018).1  
2.4.  Thailand requests the Panel to make procedural ruling regarding the Philippines claims against 
the 1,052 NoAs issued by the Thai Customs Department, which were revoked or terminated by 
Thailand before the establishment of th e Panel. Even if the Panel were to rule on the NoAs, Thailand 
considers that the Philippines' claims under the CVA against the NoAs are without merit.  
2.1 Request for a procedural ruling   
2.5.  Thailand requests that the Panel exercise its discretion and  find that it cannot rule on the 
Philippines' claims regarding the NoAs because the measures at issues were withdrawn before the 
establishment of the Panel. In doing so, Thailand will first explain that all the NoAs were withdrawn 
prior to the establishmen t of the Panel and ceased to have legal effect under Thai law. Thailand will 
thereafter proceed to confirm that a ruling on the NoAs would not contribute to a positive solution 
to the dispute and that there was no evidence that Thailand would reintroduce t hem.  
2.1.1   Thailand withdrew all the NoAs before the establishment of the Panel  
2.6.  On 21 March 2018, the Customs Department revoked 796 of the 1,052 NoAs because the 
customs value for these entries was already assessed by the Thai Customs Board of App eals (BoA) 
in previous rulings. According to Section 47 of the Thai Customs Act B.E. 2560 (2017), decisions of 
the BoA shall be considered final. These NoAs should not thus have been issued in the first place. 
The 18 May statement by the Director -General o f the Customs Department sent to the Philippines 
further confirms that they ceased to have any legal effect as from the date of their revocation. In 
addition, according to Section 21 of the Customs Act B.E. 2560 (2017), there is a limitation period 
of 10 y ears from the date of importation for civil actions in customs matters.  As these 796 entries 
had been imported in 2001 -2002, the 10 -year statute of limitation had already been expired when 
the NoAs were issued in November 2017.2 
2.7.  On 22 March 2018, the Thai Customs Department terminated the remaining 256 NoAs because 
of the 10 -year statute of limitations contained in Section 21 of the Customs Act B.E. 2560 (2017). 
Since the entries covered by the 256 NoAs were imported in 2003, the 10 -year stat ute of limitation 
had already passed when the NoAs were issued in November 2017. The statement by the director -
General of the Customs Department further makes clear that the 256 NoAs thereby ceased to have 
any legal effect under Thailand.3   
                                                
1 Thailand’s first written submission, paras. 2.3 -2.9. 
2 Thailand’s first written submission, paras. 2.11 -2.12. 
3 Thailand’s first written submission, para. 2.13.  WT/DS371/RW2/Add.1  
 
- 83 - 
 
  2.8.  Nonethel ess, the Philippines remains questioning the withdrawal of the remaining 256 NoAs. 
In the Philippines' view, the various communications from the Thai Customs Department to PMTL 
and to the Philippines were not entirely consistent. The statement by the Direc tor-General of the 
Customs Department addressed to the Philippines provides that the NoAs were "terminated". In 
contrast, the letters from the Thai Customs Department to PMTL of 23 March 2018 and 28 May 2018 
provide that the Customs Department has ordered "not to proceed" with the civil law lawsuit with 
respect to the NoAs, which, according to the Philippines, fails to clarify whether the 256 NoAs were 
terminated or whether they continue to exist but would not be enforced.4 
2.9.  In Thailand's view, the Phi lippines' arguments essentially depend on quibbling about the 
meaning of a variety of synonyms. The Philippines' translation of the 23 March 2018 letter sent to 
PMTL differs from Thailand's own translation of that letter. According to the translation provi ded by 
Thailand, the relevant communications to PMTL and the Philippines consistently explain that the 
NoAs were "terminated". This was further confirmed in a statement by the Director -General of the 
Customs Department, which clearly states, in English thi s time, that the 796 NoAs were "revoked", 
and the 256 NoAs were "terminated". Thailand also sent this statement both to the Philippines and 
to PMTL, in June and August, respectively in an effort to avoid any remaining doubt on the status of 
the NoAs. 5 
2.10.  In any event, the fact that the Customs Department ordered "not to proceed" with the 256 
NoAs implies that the civil action regarding those NoAs was, as Thailand's translation indicates, 
terminated. As the Customs Department explained to PMTL in its 28  May 2018 letter, "the action for 
collecting duties of the 256 notices of assessment was terminated".6 This further confirms that the 
256 NoAs were indeed withdrawn. Even the Philippines' own translation of that letter makes clear 
that the statute of limitation "resulted in the cessation of the proceedings to collect taxes and 
duties".7 Therefore, as from the date that the Customs Department decided not to proceed with or 
to terminate the 256 NoAs, the Customs Department had no legal basis to collect a ny duties or taxes 
that PMTL was required to pay under these NoAs.8  
2.11.   Furthermore, the Philippines mentions that the cover letter to the statement by the Director -
General of the Customs Department indicated that the statement could not be used in the  context 
of Thai domestic proceedings. Thailand notes that this clause was specifically destined to the 
Philippines, to prevent any use of confidential documents by the Philippines without Thailand's 
express consent. It is not meant to undermine the Direct or-General's statement that all the NoAs 
were withdrawn and ceased to have legal effect under Thai law.9 Thailand wished solely to ensure 
that the confidentiality of its bilateral discussions would be respected.10  
2.12.   With respect to the statement of t he Director -General of the Customs Department transmitted 
to PMTL on 21 August 2018, the accompanying letter did not contain any similar caveat with that of 
the cover letter sent to the Philippines, but the document transmitted to PMTL was stamped 
"confide ntial". This is because the Director -General's statement was issued following bilateral 
discussions between Thailand and the Philippines in the context of confidential WTO dispute 
settlement proceedings, to which PMTL is not a party. Therefore, Thailand wa nted to ensure that 
any document circulated to a non -party to the WTO proceedings would be treated as confidential, in 
accordance with the DSU. 11 Thailand notes that the letters directly sent to PMTL by the Customs 
Department do not have the "confidential " mark and do not contain language similar to that used in 
the cover letter accompanying the documents transmitted to the Philippines. The essence of the 
letters that were sent to PMTL and to the Philippines is the same, i.e. that all the NoAs had been 
withdrawn.12 
                                                
4 Thailand’s second written submission, para. 2.10; See The Philippines’ second written submission, 
paras. 22 -23. 
5 Thailand’s opening statement at the substantive meeting, para. 4.3.; See also Thailand’s second 
written submission, para. 2.11.  
6 Letter from the Thai Customs Department to PMTL, 28 May 2018, Exhibit THA-66-B. 
7 Letter from the Customs Department to PM Thailand, 28 May 2018, Exhibit PHL -293-B. 
8 Thailand’s second written submission, para. 2.12.  
9 Thailand’s second written submission, para. 2.16.  
10 Thailand’s response to Panel Question 130(a), para. 2.6.  
11 Thailand’s response to the Panel’s question 130(a), para. 2.7.  
12 Thailand’s second written submission, para. 2.16.  
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- 84 - 
 
  2.13.   In any event, it is clear by now that whether one considers that the NoAs were "revoked", 
"terminated", or that the Customs Department "would not proceed" to collect the duties, the fact 
remains that all the NoAs had indeed been withdrawn before the establishment of the Panel. A recent 
ruling by the BoA confirms this. This ruling was issued on 30 August 2018, further to PMTL's appeal 
dated December 2017 contesting the legality of the NoAs. In that ruling, sent to PMTL on 3 
September 2018, t he BoA confirmed the withdrawal of 256 NoAs at issue, for the same reasons the 
Customs Department explained to PMTL.13   
2.14.   For the reasons mentioned above, Thailand submits that all the 1,052 NoAs challenged by the 
Philippines were withdrawn before th e establishment of the Panel and ceased to have any legal effect 
as of the date of their withdrawal (21 March 2018 for 796 NoAs and 22 March 2018 for 256 NoAs).   
2.1.2   There is no evidence that the NoAs will be reintroduced  
2.15.   Article 7.1 of the DSU establishes that the terms of reference of panels are to "examine, in 
the light of the relevant provisions […] the matter referred to the DSB […] and to make such findings 
as will assist the DSB in making the recommendations or in giving the rulings provid ed for in 
that/those agreement(s). In cases where a measure is no longer in effect at the time of the 
establishment of the panel, however, panels have a margin discretion in deciding whether to make 
findings with respect to expired measures.14 On several o ccasions, panels have used this discretion 
to decide not to rule on a measure that was withdrawn before the establishment of the panel.15 In 
doing so, previous panels have considered (i) whether a ruling would contribute to secure a positive 
solution to th e dispute and (ii) whether there was a risk of re -introduction of the measure at issue.16 
In some limited instances, panels considered whether the measure at issue had any "lingering 
effects".1718  
2.16.   Applying this legal standard to the present case, T hailand finds none of the grounds mentioned 
above that previous panels have used to decide whether they should rule on expired measures would 
support a decision to rule on the NoAs. First, ruling on these NoAs would do nothing to further a 
positive solutio n to the dispute. The NoAs have been withdrawn and cannot be reintroduced under 
Thai law. PMTL requested the revocation of the NoAs and obtained that outcome prior to the 
establishment of the Panel. The importer/the Philippines cannot thus credibly argue t hat further 
action by the Panel is required to achieve a positive solution to this aspect of the dispute. The NoAs 
have also no lingering effects under Thailand. A ruling on the NoAs would not impose any 
implementation obligation on Thailand and could not be the basis for any claim of nullification or 
impairment by the Philippines. Moreover, to the extent that the legal and factual arguments put 
forward by the Philippines regarding the NoAs mirror very closely those regarding the 02 -03 Charges, 
a decision n ot to rule on the NoAs would not materially limit the Philippines' case.19  
2.17.   Based on certain conditions, The Philippines seems to agree with Thailand that the Panel 
should not rule on the NoAs as it "invites the Panel to confirm Thailand's represent ations to this 
Panel regarding the [] NoAs and, in that event, not to rule on the [] NoAs on the basis that: first, 
Thailand has withdrawn them; and, second , there is no risk that Thailand will reintroduce these [] 
NoAs, or the customs valuation methodolog y in these [] NoAs, through subsequent actions to apply 
                                                
13 Board of Appeal Ruling, No. KorOrRor.12/2561/Por3/2561 (3.3), 30 August 2018 , Exhibit THA -83-B; 
See Thailand’s opening statement at the substantive meeting, para. 4.4. 
14 Appellate Body Report, EU – PET (Pakistan) , para.5.13; Panel Report, EU – PET (Pakistan) , para. 
7.13, referring to Appellate Body Reports, EC – Bananas III (Arti cle 21.5 – Ecuador II) / EC – Bananas III 
(Article 21.5 – US), para. 270; and China – Raw Materials , para. 263; and Panel Reports, US – Poultry (China) , 
para. 7.54; and EC – IT Products , para. 7.165.  
15 See e.g. Panel Reports, China – Electronic Payment Se rvices , paras. 7.221 – 7.229; EC – Approval 
and Marketing of Biotech Products , paras. 7.1648 -7.1654; Argentina - Textiles and Apparel , paras. 6.12 -6.14; 
US – Gasoline , paras. 6.18 -6.19. 
16 See e.g. Panel Reports, China – Electronic Payment Services , paras.  7.224 – 7.229; EC – Approval 
and Marketing of Biotech Products , paras. 7.1648 -7.1654; Argentina - Textiles and Apparel , paras. 6.12 -6.14. 
See also Thailand – Cigarettes (Philippines) , where the original panel in this dispute referred to the criteria 
used in Argentina - Textiles and Apparel . Panel Report, Thailand – Cigarettes (Philippines) , paras. 7.64 -7.65. 
17 See Panel Report, US – Upland Cotton , paras. 7.104 -7.122; Panel Report, EC – Poultry , paras. 250 -252. 
18 Thailand’s first written submission, paras. 2.16 -2.28. 
19 Thailand’s first written submission, paras. 2.32 -2.33. 
 WT/DS371/RW2/Add.1  
 
- 85 - 
 
  or enforce them".20 In response to a question posed by the Panel, the Philippines clarified that it 
considers that the Panel must conduct its own objective assessment to determine whether and when 
the NoAs were withdrawn, and whether there is any risk of reintroduction, and based on this 
assessment, whether to make findings and recommendations with respect to the NoAs.21 Thailand 
considers that this assessment must be based on the arguments and evidenc e presented by both 
parties in the proceedings. As the Member imposing the measure at issue, the Panel should accord 
particular weight to Thailand's description of the legal status of the NoAs, and to Thailand's factual 
description of how all the NoAs were  withdrawn before the establishment of the Panel.22 
2.18.   Thailand recalls that panels have proceeded with caution in determining that a measure that 
was withdrawn before the establishment of the panel would be reintroduced. A finding that the 
measure cou ld be reintroduced must be based on "clear evidence". To Thailand's knowledge, the 
only case where a panel found that there was a risk of reintroduction of a measure that expired 
before panel establishment was in EEC – Apples (Chile I) , because the measure s was a seasonal 
measure.23 In the present case, the nature of the NoAs simply does not warrant a similar 
conclusion.24 There is no evidence that the NoAs will or even could be reintroduced by Thailand as 
the Customs Department is legally barred under Thai  law from reintroducing the NoAs for the same 
reasons they were withdrawn. As explained above, the totality of the 1,052 NoAs should not have 
been issued and cannot be re -introduced in light of the statute of limitation of 10 years under Section 
21 of the Customs Act B.E. 2560 (2017). Moreover, 796 of the NoAs should not have been issued at 
the first place because they were already subject to decisions by the BoA, which is considered as 
final under Section 47 of the Thai Customs Act B.E. 2560 (2017). Theref ore, there is no legal basis 
under Thai law by which Thailand could reintroduce the withdrawn measures. 25 The fact that the 
BoA ruling of 30 August clearly states that all the NoAs are revoked further supports this, because, 
pursuant to Section 47 of the Thai Customs Act B.E. 2560 (2017) this ruling constitutes a final 
decision that the Customs Department must follow.26 
2.19.   In addition, as the panel in the original proceedings explained, citing to the panel in Argentina 
– Textiles and Apparel , a panel " must assume that WTO Members would perform their treaty 
obligations in good faith, as they were required to do by WTO Agreement and by international law 
pursuant to Article 3.10 of the DSU and Article 26 of the Vienna Convention on the Law of Treaties 
(Pacta Sunt Servanda )".27 This approach  was confirmed by the Appellate Body stating that the 
"terms of a treaty are not to be interpreted based on the assumption that one party is seeking to 
evade its obligations and will exercise its rights so as to cause in jury to the other party".28 
Accordingly, the risk of reintroduction must be clearly shown by the complainant.29 In this respect, 
the Philippines has failed to do so. The Philippines' argument that "Thailand has a long history of 
WTO-inconsistent customs va luation actions"30 cannot thereby constitute credible evidence that 
Thailand will reintroduce the specific measure at issue.31  
2.20.   Furthermore, the Philippines asserts that the Customs Department must implement the 
Supreme Court ruling of 7 May 2018 co ncerning a subset of the 796 NoAs (208 entries that are also 
subject to the November 2012 BoA ruling). However, the fact that the 796 NoAs were revoked means 
that the Customs Department cannot reintroduce any of them, and the fact that they exceeded the 
statute of limitation further confirms this. Any action that the Customs Department might take to 
implement the Supreme Court ruling must be considered as a new and distinct measure from the 
NoAs, with a different customs valuation determination.32 In this c ase, the Customs Department 
                                                
20 The Philippines’ second written submission, pars. 35, 42; See Thailand’s second written submission, 
para. 2.18.  
21 The Philippines’ respons e to the Panel question 129, para. 12.  
22 Thailand’s opening statement at the substantive meeting, para. 4.6.  
23 GATT Panel Report, EEC – Apples (Chile I).  
24 Thailand’s response to Panel question 161(b), para. 2.7.  
25 Thailand’s first written submission, para. 2.34.  
26 Thailand’s response Panel question 161(a), paras. 2.2 -2.4. 
27 Panel Report , Thailand – Cigarettes (Philippines) , footnote 448, citing to Panel Report, Argentina – 
Textiles and Apparel , para. 6.14.  
28 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 326.  
29 Thailand’s opening statement at the substantive meeting, para. 4.5.  
30 The Philippines’ second written submission, para. 34.  
31 Thailand’s second written submission, para. 2.20.  
32 Thailand’s second written submission, para. 2.23.  
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- 86 - 
 
  shall send an official letter to PMTL informing of the changes to the calculation of the customs value, 
thereafter which PMTL would need to file a request for a refund for the amount of duties paid in 
excess.33 Therefore, the im plementation of the Supreme Court ruling does not depend on the 
reintroduction of the NoAs by the Customs Department.34 
2.21.   In any event, the factor of the risk of reintroduction should be seen as being of limited use in 
this context. As the United Stat es pointed out during the meeting with the Panel, "any measure 
would seem to be capable of being reintroduced". 35 However, this does not mean that there is clear 
evidence that a particular measure will be reintroduced. In these circumstances, Thailand con siders 
that the Panel should accord limited weight to this factor.36  
2.22.   In light of the foregoing, it is clear that Thailand withdrew all the NoAs that are the subject of 
the Philippines' claims in this dispute. In addition, a ruling on the NoAs would  do nothing to further 
a positive solution to this dispute and there is no evidence, let alone any "clear evidence", that 
Thailand will reintroduce any of these NoAs. For these reasons, Thailand requests that the Panel 
exercise its discretion and find that  it cannot rule on the Philippines' claims with respect to all the 
NoAs.  
2.2  The Philippines has failed to demonstrate that the NoAs are inconsistent with the CVA  
2.23.   For the reasons stated above, Thailand is of the view that the Panel should decline to rule on 
the Philippines' claims regarding the NoAs because they were withdrawn before the establishment 
of the Panel and there is no evidence that they will be reintroduced. However, in the event that the 
Panel nonetheless decides to rule on the NoAs, T hailand's arguments in respect to the Philippines' 
claims on the 02 -03 Charges also apply mutatis mutandis  to the Philippines' corresponding claims 
on the NoAs.37 This is so because the NoAs are linked to the 02 -03 Charges. As such, they were 
issued in the  context of the same criminal proceedings of which the 02 -03 Charges form part.38  
2.24.   It bears emphasizing that, if the Panel were to make findings on the WTO consistency of the 
02-03 Charges, this would not have any implications on the WTO-consistency of the NoAs because 
the findings of a panel apply to a specific measure.39 Article 6.2 of the DSU provides that a panel 
request must identify the specific measures at issue and provide a brief summary of the claims. 
These two elements form the matter referred to the DSB, which forms the basis of a panel's terms 
of reference.40 In the present dispute, the NoAs and the 02 -03 Charges are distinct measures, 
identified by the Philippines separately under Sections A and B of its panel request, res pectively, in 
respect of which the Philippines brought separate claims. Thailand also notes that, in case the Panel 
rules that the measures at issue are WTO -inconsistent, the consequences in terms of implementation 
would be different for both measures. Thi s is so because the NoAs and the 02 -03 charges were 
issued in two different contexts, by different Thai agencies.41 
2.25.   Consequently, if the Panel were to decide to rule on the NoAs notwithstanding their 
withdrawal, the Panel would be required to make s eparate findings in respect of each measure. 
Moreover, if the Panel were to rule on the Charges but not the NoAs, its ruling would have no bearing 
on the WTO consistency of the NoAs, irrespectively of any similarity that they may share.42 The 
Panel's reaso ning with respect to one measure cannot and should not apply automatically to the 
other.43   
                                                
33 Thailand’s comment on the Philippines’ response to Panel question 160, para. 1.3.  
34 Thailand’s second written submission, para. 2.23.  
35 Third part oral statement by the United States at the substantive meeting with the Panel, p ara. 9.  
36 Thailand’s response to Panel question 161(b), para. 2.8.  
37 Thailand’s first written submission, para. 2.38; Thailand’s second written submission, 2.27.  
38 Thailand’s second written submission, 2.27. (footnote omitted)  
39 Thailand’s response to Panel Question 128, para. 2.1. 
40 Appellate Body Report, EU - PET (Pakistan) , para. 5.13, referring to Appellate Body Reports, US - 
Countervailing Measures (China) , para. 4.6; US - Carbon Steel , para. 125: Guatemala - Cement I , paras. 69 -76. 
41 Thailand’s response to Panel Question 128, para. 2.2.  
42 Thailand’s response to Panel Question 128, para. 2.3.  
43 Thailand’s opening statement at the substantive meeting, para. 4.7.  WT/DS371/RW2/Add.1  
 
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  2.2.1   The Philippines' claim under Article 16 of the CVA  
2.26.   Thailand now turns to the Philippines' claim under Article 16 of the CVA, which the Philippines 
made with respect only to the NoAs. For the reasons explained above, Thailand considers that the 
Panel should decline to examine the consistency of the NoAs with the CVA. In any event, Thailand 
submits that the Philippines has failed to demonstrate that Thai land acted inconsistently with Article 
16 of the CVA. In effect, the Philippines submits that the obligation in Article 16 of the CVA should 
be read together with paragraph 6 of the Interpretative Note to Article 6, which provides that the 
authorities shal l provide, upon request, the source of the information, the data used and the 
calculation based upon such data. Based on this legal standard, the Philippines asserts that the 
response provided to the importer by the Thai Customs Department does not satisfy  these 
requirements.44 
2.2.1.1   The legal standard put forward by the Philippines is not supported by the text of 
Article 16  
2.27.   The Philippines attempts to add legal obligations to the standard developed by the panel in 
the original proceedings in this dispute by importing into Article 16 the requirements found in 
paragraph 6 of the Interpretative Note to Article 6. To recall, in the original proceedings in this 
dispute, the panel explained that Article 16 sets forth two elements: a w ritten request for explanation 
by the importer and the customs authority's obligation to provide a written explanation of how the 
customs value of the good at issue was determined.45 More specifically, the customs authorities' 
explanation must include the basis for rejecting transaction value, what method was used and how 
it was applied.46 
2.28.   In the Philippines' view, the authority also has an obligation under Article 16 to explain "the 
source of the information, the data used, and the calculation based  upon such data", even though 
these requirements are included in the Interpretative Note to Article 6 and not in Article 16, and that 
no reference whatsoever is made to Article 6 or its Interpretative Note in Article 16. Article 16 simply 
provides that the  importer shall have the right to an explanation of how the customs value of the 
goods was determined. Therefore, there is no textual basis to justify adding obligations put forward 
by the Philippines to Article 16.47 
2.29.   The Philippines further asserts  that Thailand is proposing to analyse the content of the 
Customs Department's explanation "in the abstract".48 Thailand disagrees with the Philippines' 
assertion. Thailand understands that to some extent, the valuation method used is relevant for this 
examination: it is part of identifying the method used and explaining how it was applied, as the 
original panel clearly stated. However, the Philippines' attempt to add to Article 16 the requirements 
of Paragraph 6 of the Interpretative Note to Article 6 goes  beyond taking into account the 
methodology used in assessing the explanation from the customs authority. The Philippines would 
like the Panel to transpose verbatim  specific obligations in an interpretative note to an Article into 
another Article.49 This s hould not be accepted by the Panel as it is well established that a treaty 
interpreter may not impute into a treaty "words that are not there" nor "concepts that were not 
intended".50 However, this is exactly what the Philippines is trying to do by reading  additional 
requirements in Article 16 that are simply not there.51 
2.30.   In light of the above, Thailand considers that the Panel should dismiss the Philippines' attempt 
to expand the scope of the obligation of Article 16 by adding to it the requirements  under paragraph 
6 of the Interpretative Note to Article 6. Instead, the Panel should follow the approach taken by the 
panels in the original proceedings in this dispute and in the first compliance proceedings that under 
                                                
44 Thailand’s first written submission, para. 2.40.  
45 Panel Report, Thailand – Cigarettes (Philippines) , para. 7.231; See Thailand’s first written submission, 
para. 2.43.  
46 Panel Report, Thailand – Cigarettes (Philippines) , para. 7.238: Panel Report in the first compliance 
proceedings, para. 7.416; See Thailand’s second written submission, para. 2.32.  
47 Thailand’s second written submission, para. 2.32.  
48 The Philippines’ second written submission, para. 215.  
49 Thailand’s second written submission, paras. 2.34 -2.35. 
50 Appellate Body Report, India – Patents (US) , para. 45; Appellate Body Report, India – Quantitative 
Restrictions , para. 94. 
51 Thailand’s first written submission, para. 2.44.  
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  Article 16, the customs authorities ' explanation must include the basis for rejecting transaction 
value, what method was used and how it was applied.52    
2.2.1.2   The Customs Department did not act inconsistently with Article 16 of the CVA  
2.31.   The Philippines argues that the Thai Custom s Department's explanation is not sufficiently 
clear as to the reason why the transaction value was rejected and how the alternative value were 
determined. In effect, in its response dated 10 January 2018 to PMTL's letter requesting "an 
explanation as to t he basis for sending the NoAs, rejecting the company's declared transaction 
values, and calculating the alleged alternative values"53, the Customs Department informed PMTL 
that the NoAs were issued in connection with the Department of Special Investigation s (DSI) 
investigation that led to the prosecution order black case No. Or.232/2560, i.e. the 02 -03 Charges. 
It added that the DSI prepared a "table summarizing the CIF prices of Marlboro and L&M cigarettes 
for the Customs Department to assess the value and  calculate the taxes and duty which were not 
fully paid". Finally, it suggested PMTL to contact the DSI directly for more information.54  
2.32.   Therefore, the Customs Department clearly explained that the NoAs were based on the DSI 
investigation and the r esulting Charges. To recall, at the time the NoAs were issued, PMTL already 
had access to the 02 -03 Charges and its Annex. These make clear that the basis for rejecting the 
declared transaction value was the suspicion that PMTL had engaged in customs fraud . The NoAs, in 
turn, indicate that the "correct" customs values were "calculated from the cigarette cost structure 
of PT Philip Morris Indonesia obtained from the Indonesian government".55 In these circumstances, 
it was perfectly acceptable for the customs  authorities to explain that the basis was the DSI 
investigation that led to the 02 -03 Charges, and to refer PMTL to the DSI for more information. 56 
However, to Thailand's knowledge, PMTL did not subsequently contact the DSI to ask for more 
information.57    
2.33.   Moreover, the Philippines claims that the Customs Department did not provide the information 
required under the Interpretative Note to Article 6, including "the source of the information, the data 
used, and the calculation based upon such data".  Thailand reiterates that the requirements under 
the Interpretative Note to Article 6 should not be read into Article 16. In any event, Thailand notes 
that customs authorities must provide the information under the Interpretative Note to Article 6 at 
the request of the importer. None of these was explicitly requested by PMTL, which simply asked for 
"an explanation as to the basis for sending the Notices of Assessment, rejecting the company's 
declared transaction values, and calculating the alleged alternati ve values".58  
2.34.   In response, the Philippines argues that, under Article 16, the importer is not obliged to 
identify the precise aspects of the required information.59 In other words, the Philippines would like 
the Panel to add to Article 16 the oblig ations under the Interpretative Note to Article 6, but to ignore 
the fact that this obligation is triggered by the importer's request to the customs authority for that 
information. This "picking and choosing" of obligations cannot be accepted by the Panel and the 
customs authorities cannot be held accountable for not providing specific information that the 
importer failed to request.60 
2.35.   In light of the above, Thailand submits that the Philippines has failed to demonstrate that the 
Thai Customs Departm ent acted inconsistently with the requirements under Article 16 of the CVA.     
                                                
52 Thailand’s second written submission, para. 2.36.  
53 Letter from PM Thailand to the Director General of the Customs Department, 1 4 December 2017, 
Exhibit PHL -247-B. 
54 Letter from the Customs Department to PM Thailand, 10 January 2018, Exhibit PHL -250-B; See 
Thailand’s first written submission, paras. 2.47 -2.48.; Thailand’s second written submission, para. 2.39.  
55 Sample Notices of Assessment, Exhibit PHL -240-B; See Thailand’s first written submission, para. 
2.49.; Thailand’s second written submission, para. 2.39.  
56 Thailand’s first written submission, para. 2.49.  
57 Thailand’s second written submission, para. 2.3 9. 
58 Letter from PM Thailand to the Director General of the Customs Department, 14 December 2017, 
Exhibit PHL -247-B; See Thailand’s first written submission, para. 2.50.  
59 The Philippines’ second written submission, paras. 231 -233. 
60 Thailand’s second w ritten submission, para. 2.41.  
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  3  THE 02 -03 CHARGES  
3.1.  This section concerns criminal Charges that were issued by the Public Prosecutor in January 
2017 and relating to 780 entries of cigarettes imported b y PMTL. In the Philippines' view, in bringing 
these charges, the Public Prosecutor effectively engaged in customs valuation and did so in a manner 
inconsistent with the CVA. Relying on the Panel's findings in the first compliance proceedings, the 
Philippin es asserts that the CVA applies to the 02 -03 Charges. The Philippines then argues that, by 
relying on cost and profit information contained in certain tax forms submitted by PT Philip Morris 
Indonesia (PTPMI) to Indonesian authorities as a basis for suspec ting possible fraud, the Public 
Prosecutor incorrectly rejected PMTL's declared transaction value and improperly established 
alternative customs values.61 
3.2.  The Philippines' claims are without merit. First, the 02 -03 Charges concern an allegation of 
customs fraud which is a matter not covered by the CVA. Second, the Philippines cannot make a 
prima facie  case that the 02 -03 Charges are CVA -inconsistent because the information available at 
this point does not permit the identification of the precise conte nt of a conduct that can be declared 
WTO-inconsistent. Even if the Panel were to examine the merits of the Philippines' claims, the 02 -
03 Charges are not inconsistent with the CVA. In the event that the Panel were to find that the 02 -
03 Charges are inconsi stent with certain provisions of the CVA, these Charges are justified under 
Articles XX(a) and XX(d) of the GATT 1994. Therefore, Thailand requests that the Panel dismiss ab 
initio the Philippines' claims regarding the 02 -03 Charges. 62  
3.3.  Furthermore,  in its opening statement at the substantive meeting, the Philippines referred to 
the alleged claims of inconsistencies under Article 7 of the CVA, arguing that Thailand used valuation 
methods that are prohibited under those provisions.63 However, the Phil ippines had not ever put 
forward such claims in either its Panel request or its first and second written submissions. To the 
extent that the Philippines attempts to correct this deficiency in its opening statement or 
subsequently in this proceeding, Thaila nd submits that the Philippines failed to make prima facie  
case in timely fashion and the Panel should not make any findings under Article 7 of the CVA. In any 
event, the Philippines' claims under Article 7 are outside the Panel's terms of reference becaus e the 
Philippines' vague reference to Article 7 in its request for the establishment of a panel does not meet 
the basic standards of Article 6.2 of the DSU.  
3.4.  It is worth to stress at this point that while the issues in the two compliance proceedings may 
be similar, they are by no means identical, especially with respect to the facts. They concern different 
measures, with different factual backgrounds, with respect to which different legal arguments were 
presented, and separate panels were established by the DSB. A panel's duty under Article 11 of the 
DSU is to "make an objective assessment of the matter before it, including an objective assessment 
of the facts of the case and the applicability of and conformity with the relevant covered 
agreements". Th e Panel's duty under Article 11 of the DSU applies even – or perhaps even especially 
– where it is considering issues similar to those addressed in the first compliance proceeding. In 
other words, the Panel is required under Article 11 of the DSU to examin e separately and specifically 
the measures at issue in this proceeding in light of the claims and arguments presented by the 
parties.64 It would, therefore, be incorrect to conclude that the Philippines has made a prima facie  
case only because the issues a ddressed in these compliance proceedings are similar to those in the 
first compliance proceedings.65  
3.5.  Moreover, Thailand fully agrees with the European Union's view that the fact that the Panel 
Report in the first compliance proceedings is still unadopted and might be subject to an appeal is of 
great relevance.66 In particular, if this Panel incorporates the findings or reasoning by the Panel in 
the first compliance proceedings, it risks relying on an unadopted Panel Report that may later be 
rever sed by the Appellate Body. This could give rise to a situation where contradictory panel and 
Appellate Body reports would be issued and, thus, raise serious concerns about the validity and 
legitimacy of the panel's reasoning and findings. This would also r aise serious problems with respect 
                                                
61 Thailand’s first written submission, para. 3.1.  
62 Thailand’s first written submission, para. 3.2.  
63 The Philippines’ opening statement at the substantive meeting, paras. 59 -60, 66 -89. 
64 Thailand’s opening statement at t he substantive meeting, para. 2.4.  
65 Thailand’s first written submission, para. 3.3.  
66 The European Union’s response to Panel question 10, paras. 5 -7. 
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  to how the responding Member would implement any contradictory findings. This situation would 
thus be detrimental to the security and predictability of the dispute settlement system, and should 
be avoided.67  
3.1  The CVA  does not apply to the 02 -03 Charges  
3.1.1   The Public Prosecutor is not part of Thailand's "customs administration"  
3.6.  Thailand reiterates its argument made in the first compliance proceedings that the disciplines 
of the CVA apply only to WTO Members' "customs administration". The revised Kyoto Convention of 
the World Customs Organization (WCO) defines "customs" as a government agency which is 
responsible for (i) the administration of customs law; (ii) the collection of duties and taxes; and (iii) 
application for other laws and regulations relating to importation, exportation, movement or storage 
of goods.68 The WCO's definition confirms that entities responsible for enforcing criminal offences, 
such as the Public Prosecutor as in this dispute, are not c onsidered part of "customs".69 
3.7.  For these reasons and Thailand's arguments made in the first compliance proceedings70, 
Thailand requests the Panel to find that the CVA does not apply to the 02 -03 Charges.  
3.1.2   The accusation contained in the 02 -03 Charges constitutes "customs fraud"  
3.8.  The 02 -03 Charges contain an accusation of customs fraud pursuant to Section 27 of Thailand's 
Customs Act B.E. 2469 (1926), which falls within the definition of "customs fraud" articulated by the 
panel in the first compliance proceedings. To recall, the first compliance panel clarified that "customs 
fraud" concerns a situation in which the importer, by means of deception, declares a transaction 
value that does not correspond to the amount actually paid or payable to the seller.71 In arriving at 
this definition, the Panel first found that "customs fraud" relates to the truth of any statement, 
document or declaration presented for customs valuation.72 The Panel then confirmed that the bench 
mark for determining the trut h of the declared value is the price actually paid or payable for the 
imported goods. In other words, customs fraud occurs when the importer declares a value that is 
not truthful in relation to the price actually paid or payable. The element of "price actu ally paid or 
payable is, thus, an important component of "customs fraud", as determined by the panel.73  
3.9.  In this dispute, the 02 -03 Charges allege that PMTL committed an offence under Section 27 of 
Thailand's Customs Act B.E. 2469 (1926) with respect to 780 entries that cleared customs during 
the period 2002 -2003. This provision makes it a criminal offence to evade, or attempt to evade, the 
payment of duties with the intention to defraud the Thai Government. The 02 -03 Charges accuse 
PMTL of dec laring an import value that is not the price actually paid by the buyer to the seller in 
Indonesia74, and that was done with the intention to defraud the Thai Government.75 In effect, where 
the transaction value reported by the importer into Thailand appea rs to reflect very different values 
than might be expected based on the exporter's declarations of its costs and profits to the Indonesian 
government, there are reasonable grounds to suspect that the declared transaction value may not 
reflect the price act ually paid and any reasonable authority would have grounds to suspect that the 
importer might have committed customs fraud.76 This is precisely what occurred with the 02 -03 
Charges. Therefore, the accusation presented in the Charges constitutes "customs fr aud" in 
accordance with the first compliance panel's definition.  
                                                
67 Thailand’s opening statement at the substantive meeting, para. 2.5.  
68 See Kyoto Convention on the S implification and Harmonization of Customs Procedures, Chapter 2, 
Exhibit THA -55. 
69 Thailand’s first written submission, para. 3.6.  
70 See Thailand’s first written submission in the first compliance proceedings, para. 6.29; Thailand’s 
response to Panel qu estion 48.  
71 Panel report in the first compliance proceedings, paras. 7.625 -7.631; See Thailand’s opening 
statement at the substantive meeting, para. 3.3.  
72 Panel Report in the first compliance proceedings, paras. 7.624; See Thailand’s opening statement at 
the substantive meeting, para. 3.3.  
73 Thailand’s opening statement at the substantive meeting, para. 3.3.  
74 Thailand’s first written submission, para. 3.19; Thailand’s second written submission, para. 3.4.  
75 Thailand’s opening statement at the substantive meeting, para. 3.4.  
76 Thailand’s first written submission, para. 3.21.  
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  3.10.   It bears emphasizing that although the Charges and the customs determination in the sense 
of Article 1.1 of the CVA refer to the same term "price actually paid or payable", these are t wo very 
different uses of the term. One pertains to a criminal offence of customs fraud, and another one to 
a determination of the customs value for purposes of levying customs duties.77 To substantiate an 
accusation of customs fraud in the form of fraudul ent under -declaration of the customs value, the 
authorities need only establish that the declared customs value is not the price actually paid and 
that this was carried out by means of deception. Consequently, in cases of suspected customs fraud, 
authoriti es need to answer a threshold question (whether the declared value represents the price 
actually paid). However, this does not require a determination of what is the price actually paid or 
payable for the purposes of levying ad valorem duties. As the first  compliance panel acknowledged78, 
there are cases where the authority may never know the price actually paid, something which does 
not prevent the authority from answering the binary question of whether the declared value 
represents the price actually paid .79 Therefore, Thailand reiterates that the references to "price 
actually paid" in the Charges pertain to the context of customs fraud, not customs valuation under 
Article 1.1 or any other provisions of the CVA.  
3.11.   Once it is established that the 02 -03 Charges are an allegation of "customs fraud", the next 
question is: what are the legal consequences under the CVA for the Charges? In the first compliance 
proceedings, the panel stated that it ""would be inclined to agree with Thailand that the Charges fa ll 
outside the scope of the CVA" should Thailand be able to demonstrate that Charges allege customs 
fraud as previously defined by the Panel.80 Thailand understands the formulation "fall outside the 
scope of the CVA" to mean that allegations of customs fra ud are not covered by the CVA.81 This 
clarification by the panel is of utmost importance as it provides guidance on the possible limits of 
the scope of application of the CVA. More specifically, the panel did not foreclose the possibility that, 
in certain circumstances, the CVA would not apply to allegations of customs fraud.82 
3.12.   In most jurisdictions, the investigations into customs fraud conducted by law enforcement 
agencies follow a separate track from the normal customs formalities conducted by cus toms 
agencies, including customs valuation. These two tracks have fundamentally different natures. While 
the customs valuation track seeks to answer a question of "how much" is the customs value of the 
merchandise, the customs fraud track seeks to answer a  separate, distinct question – "whether" the 
importer declared a different import value than the price actually paid with a view to defrauding the 
government. While both investigative exercises are related to act of importation, they address 
different cond ucts, one of which pertains to the administrative sphere and the other one pertains to 
the criminal sphere.83   
3.13.   In this respect, an analogue can be drawn to the concepts of tax evasion and tax avoidance. 
While both concepts refer to actions taken by  the taxpayer to reduce his tax liability, tax avoidance 
involves using only legal means, while tax evasion involves using illegal means, which explains why 
it is a crime in all jurisdictions. Governments normally address tax avoidance matters through civi l 
or administrative laws, whereas tax evasion is addressed through criminal law.84 The fact that these 
two different tracks may have common features does not mean that they can be conflated. Applied 
to the present dispute, the fact that some features of bo th tracks are not incompatible cannot be 
interpreted to mean that an investigation into customs fraud has the same legal nature as an 
assessment of the customs value of imported merchandise.85 It would, therefore, be erroneous to 
conflate these two notions .  
3.14.   In effect, to state that customs fraud accusations are subject to the CVA would effectively 
blur the distinction between customs value determination and customs fraud determination. It would 
mean that, once the customs official has completed the customs valuation procedure, authorities 
would be prevented from conducting a separate investigation into possible customs fraud. In other 
                                                
77 Thailand’s opening statement at the substantive meeting, para. 3.4.  
78 Panel report in the first compliance proceedings, para. 7.659.  
79 Thailand’s response to Panel que stion 167(a), para. 4.5.; See also Thailand’s response to Panel 
question, 139, para. 4.5.  
80 Panel Report in the first compliance proceedings, para. 7.649.  
81 Thailand’s opening statement at the substantive meeting, para. 3.7.  
82 Thailand’s first written s ubmission, para. 3.17.  
83 Thailand’s opening starting at the substantive meeting, parap.3.28  
84 Thailand’s opening statement at the substantive meeting, para. 3.10.  
85 Thailand’s opening statement at the substantive meeting, para. 3.10.  
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  words, the only way to address customs fraud would be by applying the CVA, an instrument that 
provides no disciplines  for these situations.86 For these reasons, Thailand considers that a customs 
fraud accusation, including the associated penalty that is based on the value of the goods, is not 
covered by the CVA.  
3.15.   The scope of the CVA covers only "customs valuation " determinations. Following the 
precedent in Colombia – Ports of Entry , the first compliance panel established that Article 15.1(a) of 
the CVA, which provides the definition of "customs value of imported goods", sets forth the legal 
standard for determinin g the measures that qualify as "customs valuation" that are subject to the 
CVA.87 Based on Article 15.1(a) of the CVA, the concept of customs valuation comprises two 
elements: (i) the measure must determine the value of the goods; and this must be used (ii ) for the 
purposes of levying ad valorem  duties.88  
3.16.   With respect to the second element, the panel in Colombia – Ports of Entry  ensured that the 
term "levy" was interpreted and applied narrowly by clearly distinguishing between valuation of 
goods use d for the collection of customs duties (which constitutes customs valuation), and measures 
such as guarantees that consist of valuation of goods to secure the collection of customs duties 
(which do not constitute customs valuation).89 Thailand agrees with the panel's reasoning. The scope 
of the term "for the purposes of levying ad valorem  duties of customs on imported goods" cannot 
be extended to every valuation of imported goods but must cover only valuation determinations that 
have a direct repercussion o n the amount of ad valorem  customs duties collected from the 
importer.90 Thailand thus contends that it is incorrect to assert that the concept for the purposes of 
levying ad valorem  duties encompasses any valuation determination used to ascertain the amou nt 
of ad valorem  duties "due" on imported goods.91  
3.17.   Therefore, some measures that entail a valuation of imported goods, even if they are part of 
enforcement actions adopted by customs administrations to secure the collection of ad valorem  
duties, cannot be regards as "customs valuation" because they are not used for the purpose of 
levying ad valorem  duties. These measures include the use of reference prices as a risk assessment 
tool to detect fraud, which is routinely used by countries aro und the world, including the 
Philippines92, and even recommended by the World Customs Organization. Although this measure 
involves a determination of the value that importers should declare for certain imported goods, it is 
not subject to the CVA rules on customs valuation to the extent that it is used solely for purposes of 
risk assessment.93 
3.18.   Another measure that does not constitute customs valuation is the guarantee that customs 
authorities require when importers wish to withdraw the goods pending a decision on the customs 
value pursuant to Article 13 of the CVA. Because this guarantee is required at a moment in time 
when the customs value examination has not concluded, authorities cannot be expected to base the 
guarantee on a value of those goods t hat follows Articles 1 through 7.94 A panel in a recent dispute 
Colombia – Textiles (21.5)  confirmed this, indicating that in the case of suspected under -invoicing, 
"the amount of the guarantee is understandably calculated on the basis of an approximate re ference 
value".95 This rationale would appear to apply equally in this case where, in the case of alleged 
                                                
86 Thailand’s openi ng statement at the substantive meeting, para. 3.14.  
87 Panel report in the first compliance proceedings, para. 7.647; See Thailand’s response to 171(a), 
para. 6.2.  
88 Thailand’s opening statement at the substantive meeting, para. 3.15; Thailand’s response  to Panel 
question 171(a), para. 6.4.  
89 Thailand’s response to Panel question 171(a), para. 6.8.  
90 Thailand’s opening statement at the substantive meeting, para. 3.16.  
91 The Philippines’ first written submission, para. 274; see also the Philippines’ opening statement at the 
substantive meeting with the Parties, para. 37; See Thailand’s response to Panel question 171(a), para. 6.9.  
92 Memorandum from the Commissioner of th e Philippines' Bureau of Customs, 2018 -06-18, 14 June 
2018 (available at: http://customs.gov.ph/wp -content/uploads/2018/07/mem -2018-
06018_ReferenceValuesforShipmentsunderChap10_12_13_16_19_29_and_40 -2.pdf), Exhibit THA -85. 
93 Thailand’s opening statement a t the substantive meeting, para. 3.17; Thailand’s response to Panel 
question 171(a), para. 6.12.  
94 Thailand’s opening statement at the substantive meeting, para. 3.18; See also Thailand’s response to 
Panel request 171(a), paras. 6.14 -6.15. 
95 Panel Report , Colombia – Textiles (Article 21.5) , para. 7.609.  
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  customs fraud, the potential fine may "understandably" be calculated on the basis of an 
"approximate" value.96  
3.19.   In this dispute, the charges of  customs fraud do not meet the second element of Article 15(a) 
of the CVA because neither the accusation itself nor the related penalty has a direct repercussion on 
the amount of ad valorem duties that were levied. The 02 -03 Charges contain an allegation t hat 
PMTL engaged in fraudulent behaviour that resulted in the declaration of an import value that does 
not represent the price actually paid or payable. As explained above, the Thai Public Prosecutor need 
not establish the exact amount of the price actuall y payable but only prove that the declared price 
is not the price actually paid, for which purpose it is unnecessary to quantify the exact amount of 
the price actually paid. In fact, there are many instances in which authorities will never be able to 
deter mine conclusively the price actually paid because the importer can refuse to disclose all relevant 
information about the payments made for the imported goods.97 
3.20.   In this context, Thailand asserts that the accusation itself of customs fraud does not m eet the 
definition of "customs valuation" under Article 15.1(a) of the CVA. Indeed, this accusation does not 
even meet the first element of Article 15.1(a), as there is no valuation of imported goods, let alone 
the second element.98 This assertion remains valid even in the scenario that the fine imposed on 
customs fraud is calculated on the basis of the value of the goods. In effect, the 02 -03 Charges are 
not a re -assessment of the customs value previously determined by the Customs Department. Even 
if the 0 2-03 Charges were this type of determination, this determination was not made for the 
purposes of calculating the amount of ad valorem  duties that must be collected from the importer. 
The references to the "actual price" in the 02 -03 Charges serve to estab lish a benchmark for a 
possible fine for the purposes of punishing and deterring customs fraud, thereby enforcing customs 
laws. Therefore, Thailand maintains that the 02 -03 Charges do not constitute "customs valuation" 
within the meaning of the CVA. 99 
3.21.  This is why it is not uncommon for countries to expressly stipulate in their legislation that 
penalties for customs fraud shall be determined on the basis of the value of the goods which is 
calculated not in accordance with CVA rules.100 This is the ca se, for example, of the United States 
legislation, which stipulates that, in the case of customs fraud, there shall be a penalty in an amount 
not exceeding the domestic value of the merchandise, that is, the value in the country of 
importation.101 The same  applies in Spain, where the penalties for customs fraud are based, 
depending on the product, on the maximum general public sale price, the value determined by an 
expert appointed by the court, the medium value for similar goods, or the official price.102103    
3.22.   Finally, it is worth recalling that throughout these proceedings, the Philippines has not pointed 
to a single textual basis in the CVA, or even its negotiating history, to suggest that the CVA was 
intended to govern criminal enforcement of cus toms laws. In the absence of such a textual basis, 
the Panel should not read obligations into the CVA that are simply not there. This is confirmed by a 
reading of Article 6.3 of Section I of the Trade Facilitation Agreement (TFA), titled "penalty 
disciplin es". This Article establishes very general rules regarding penalties imposed in connection 
with breaches of Member's customs laws, regulations, or procedural requirements.104 In Thailand's 
view, these disciplines were intended to cover civil penalties, rat her than criminal penalties.105 Even 
if the wording is considered broad enough to apply also to criminal penalties, however, nowhere in 
Article 6.3 of Section I or in any other provision of the TFA did WTO Members suggest that the 
                                                
96 Thailand’s response to Panel question 171(a), para. 6.15.  
97 Thailand’s response to Panel question 171(a), para. 6.22.  
98 Thailand’s response to Panel question 171(a), para. 6.24.  
99 Thailand’s response  to Panel question 171(a), paras. 6.25 -6.28. 
100 Thailand’s response to Panel question 171(a), para. 6.30.  
101 See 19 U.S. Code, Section 1952(c)(1),  Exhibit THA -77. 
102 See Article 10 of Ley Orgánica de Represión del Contrabando 12/1995 (Organic Act on the  
Repression of Smuggling 12/1995), Exhibit THA -78. 
103 See Thailand’s opening statement at the substantive meeting, paras. 3.11 -3.12; Thailand’s response 
to Panel question 171(a), para. 6.30.  
104 For example, Article 6.3.3 provides that penalties “shall depend on the facts and circumstances of 
the case and shall be commensurate with the degree and severity of the breach”.  
105 Thus, in discussing the penalty disciplines under Article 6.3, the Prepa ratory Committee on Trade 
Facilitation’s “self -assessment guide” for Members describes these disciplines as regulating the “assessment of 
civil or administrative penalties for violations of the customs law”. TN/TF/W/143/Rev.8, 17 November 2014, p. 44.  
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  determination of penaltie s for criminal offences related to customs fraud was governed by the CVA. 
Instead, Members stipulated only that penalties must be reasonably related to the violation. This is 
a very different standard than the Philippines seeks to have the Panel read into the CVA.106  
3.23.   For these reasons explained above, Thailand reiterates that the CVA does not apply to the 
02-03 Charges as this measure concerns an accusation of customs fraud and thus falls outside the 
scope of the CVA.  
3.2  The Philippines has failed  to make a prima facie  based on the insufficient information 
contained in the 02 -03 Charges  
3.24.   In the event that the Panel were to find that the CVA applies to the 02 -03 Charges, Thailand 
argues that the 02 -03 Charges do not contain sufficient factual information to allow the Philippines 
to make a prima facie  case of inconsistency under the CVA. To recall, the panel in the first compliance 
proceedings indicated that panels must follow the standard of review of Article 11 of the DSU. This 
means that "a p anel may not conduct a de novo  review of the evidence or substitute its judgement 
for that of the competent authorities".107 This standard of review has direct bearing on the 
complaining party's ability to make a prima facie case of violation. Because the panel cannot conduct 
a de novo review and must critically examine the authority's explanation in depth, a complaining 
party can make a prima facie case only if the precise content of the measure, at the time of the 
panel's examination, reflects a conduct t hat is inconsistent with the CVA.108  
3.25.    If a panel were to examine the CVA -consistency of a conduct whose "precise content" has 
not yet materialized or of facts not yet confirmed, that panel would risk conducting a de novo 
examination. This is because the panel would effectively be substituting its own judgement for the 
authority's judgement with respect to the facts. Furthermore, a panel would not be in a position to 
critically examine an authority's explanation in depth based on facts whose ve racity has not yet been 
confirmed. In such circumstances, a panel would also risk making predictions about events or 
measures taken subsequent to the adoption of the challenged measure. 109 Thailand notes that the 
first compliance panel also reaffirmed the  principle that "panels should refrain not only from making 
speculative findings on future measures, but also from making speculative findings on future events 
that may have a bearing on the specific measure being challenged."110  
3.26.   However, this is w hat precisely occurs in this dispute where the factual circumstances 
surrounding the 02 -03 Charge do not allow the Philippines to identify the precise content of a 
measure that could be the object of a WTO -consistent analysis. In particular, the Philippine s' claims 
are prominently premised on the allegation that the cost information provided by PTPMI to the 
Indonesian government is inaccurate and unreliable. The Philippines explains at length that the 
Indonesian excise tax system forced manufacturers to rep ort figures that were "fabricated 
'plugs'"111, "arbitrary"112 and "fictitious"113. In this regard, the Philippines' position is unusual as it 
seems to argue that  it is inappropriate for the Thai authorities to harbour suspicions regarding 
declarations made  to them by Philip Morris because the declarations to another government on which 
those suspicions were based were indeed "arbitrary" and "fictitious".114 
3.27.   Moreover, t he veracity and reliability of the arguments now put before this Panel by the 
Philippines regarding the information provided by the Indonesian government is a factual matter 
that has not yet been fully addressed or resolved by any Thai governmental agency or Thai court.115 
Pursuant to section 158(5) of Thai Criminal Code, the Public Pros ecutor's function, when issuing the 
criminal charges, is limited to bring forward the acts alleged to have been occurred, and the reasons 
why those facts may amount to a criminal offence. The final decision as to whether the alleged acts 
                                                
106 Thailand’s response to Panel questions 171 (a) and (b), paras. 6.21 and 6.33.  
107 Appellate Body Report, US – Steel Safeguards , para. 299, quoting Appellate Body Report, Argentina 
– Footwear (EC) , para. 121.  
108 Thailand’s first written submission, para. 3 .29. 
109 Thailand’s first written submission, para. 3.30.  
110 Panel report in the first compliance, para. 7.601 (footnote omitted).  
111 The Philippines’ first written submission, para. 116.  
112 The Philippines’ first written submission, para. 446.  
113 The Philippines’ first written submission, para. 110.  
114 Thailand’s first written submission, para. 3.36.  
115 Thailand’s first written submission, para.3.36.  
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  took place as desc ribed in the criminal charges, and whether those acts amount to a criminal offence 
rests with the Criminal Court, not the Public Prosecutor.116 Thailand has merely initiated a process 
to determine whether customs fraud took place. Therefore, just as the Pu blic Prosecutor's suspicions 
remain unconfirmed, the assertions made by the Philippines on behalf of PMTL before this Panel also 
remain unexamined and unconfirmed.117 
3.28.   Therefore, at present, there is not enough information to identify the precise con tent of any 
conduct that could be declared WTO -inconsistent. In the event that the Panel were to rule on the 
Philippines' claims concerning the 02 -03 Charges, the Panel would necessarily engage in an 
impermissible de novo  review of these facts, thereby dep arting from the correct standard of review 
under Article 11 of the DSU insofar as it would "conduct[] its own assessment, relying on its own 
judgement" of the facts before the Thai criminal court.118 The Panel would also inappropriately pre -
empt the analys is to be conducted by the criminal court because by the time the Criminal Court 
issues its ruling, these issues will have already been decided by the Panel.119 
3.29.   However, the Philippines alleges that the Panel does not risk conducting a de novo  review  
because the precise content of the 02 -03 Charges is clear.120 In the Philippines' view, the 02 -03 
Charges "involve customs valuation determinations with two distinct elements", namely that the 
Public Prosecutor rejected the importer's declared transaction  values for 780 entries and that the 
Public Prosecutor determined alternative "actual" customs values for those entries.121 
3.30.   The premise of the Philippines' allegation is erroneous. As explained in the previous section, 
the accusation contained in th e Charges refers to customs fraud.  The reference to "actual value" in 
the 02 -03 Charges refers to the price actually paid or payable, not to "alternative" values as alleged 
by the Philippines. Hence, the accusation that PMTL declared an import value that i s lower than the 
actual value means that PMTL is accused of declaring a value that is lower than the price actually 
paid or payable. This constitutes customs fraud in accordance with the definition of this concept 
provided by the panel in the first complia nce proceedings.122  
3.31.   Moreover, the nature of the accusation contained in the 02 -03 Charges (customs fraud) and 
the extent of the information underlying that accusation are two separate issues. That the accusation 
concerns customs fraud does not alte r the fact that the circumstances surrounding this allegation - 
which include the Philippines' concerns about the reliability of information contained in Indonesian 
tax forms – have not yet been fully examined by Thailand's Criminal Court. Consequently, co ntrary 
to the Philippines' assertions, while it is clear that the allegation is of customs fraud, the evidence 
regarding that allegation has not been tested in court.123  
3.32.   Finally, Thailand wishes to emphasize that the factual circumstances in these proceedings 
contrast with the factual circumstances in the first compliance proceedings, where the Panel found 
that the 03 -06 Charges contained sufficient information to be adjudicated under the CVA.124 This is 
not the case in these proceedings for the rea sons just explained above. Therefore, the Panel cannot 
simply transpose the reasoning of the panel in the first compliance proceedings to these 
proceedings.125 In addition, under Article 11 of the DSU, the Panel is required to make an objective 
assessment of the arguments and evidence in this case, and cannot merely rely on its prior findings 
in a separate proceeding with a separate record.126   
3.33.   In light of the foregoing, Thailand requests the Panel to find that the Philippines cannot make 
a prima fa cie case under the CVA given that the quantity and clarity of information concerning the 
                                                
116 Thailand’s first written submission, para. 3.37.  
117 Thailand’s first written submission, para. 3.36.  
118 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 190.  
119 Thailand’s first written submission, paras. 3.39 -3.40. 
120 The Philippines’ second written submission, para. 295.  
121 The Philippines’ second written submission, para. 295.  
122 Thailand’s second written submission, para. 3.43.  
123 Thailand’s second written submission, para. 3.44.  
124 Thailand’s first written submission, para. 3.33.  
125 Panel report in the first complia nce proceedings, para. 7.604; Thailand’s opening statement, para. 
3.28.; Thailand’s response to Panel question 135, para. 3.11.  
126 Thailand’s response to Panel question 135, para. 3.12.  WT/DS371/RW2/Add.1  
 
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  02-03 Charges do not permit at this point the identification of a precise content of this measure that 
could be found to be WTO -inconsistent by this Panel.  
3.3  The Ph ilippines failed to demonstrate that the 02 -03 Charges are inconsistent with 
the CVA  
3.34.   The Philippines contends that, in issuing the 02 -03 Charges, the Public Prosecutor acted 
inconsistently with various provisions of the CVA by improperly rejecting PMTL's declared transaction 
value, failing to respect the sequential order of valuatio n methods, improperly applying the 
computed method, and failing to respect the procedural obligations for rejecting PMTL's declared 
transaction value.  
3.35.   As explained above, Thailand has requested the Panel to dismiss the Philippines' claims under 
the CVA on the ground that the CVA does not apply to the 02 -03 Charges. However, in the event 
that the Panel decides to examine the merits of the Philippines' claims, Thailand considers that the 
Philippines' claims are without legal foundation as they rely on  interpretations of the CVA that lack 
textual support. The Philippines' claims are even more troubling because they all rest upon its open 
admission that PMTL deliberately provided false information to Indonesian authorities when filing 
tax forms. In Thail and's view, the Philippines cannot base its claims of violation on this basis.127   
3.3.1   The Public Prosecutor did not act inconsistently with Article 1.2(a), second 
sentence, of the CVA  
3.36.   The Philippines alleges that in issuing the 02 -03 Charges, t he Public Prosecutor failed to 
examine the circumstances of the sales as required by Article 1.2(a), second sentence, of the CVA 
because the Public Prosecutor's chosen means of examining the circumstances of the sales were 
based on a cost -plus value report ed by PTPMI to Indonesian authorities in tax form CK -21A, which 
Indonesia subsequently provided to Thai authorities. The Philippines contends that the figures in 
forms CK -21A reported by PTML are "fabricated as arithmetical ‘plugs'" which are admittedly 
"arbitrary" and "fictitious". Therefore, the examination of the circumstances of the sales is "inapt to 
reveal whether the relationship influenced the price". Furthermore, the Philippines asserts that the 
Public Prosecutor failed to review "actively and crit ically the Indonesian ‘cost' information taken from 
form CK -21A".128    
3.37.   In support its argument, the Philippines proposes a series of elements that would inform the 
interpretation of the clause "all cost plus a profit" found in the last sentence of Paragraph 3 of the 
Interpretative Note to Article 1.2, which provides that if the declared transaction value is adequate 
to ensure recovery of all cost plus a representative profit, this would demonstrate that the 
relationship between the buyer and the sel ler did not influence the price. In doing so, the Philippines 
incorporates into the clause "all cost plus a profit" of Paragraph 3 of the Interpretative Note to Article 
1.2 the disciplines of a number of CVA provisions. This includes Articles 2.1(b), 3.1(b ), 6, 7.2, 8, 17, 
Paragraph 5 of the Interpretative Note to Article 5, Paragraphs 2 and 5 of the Interpretative Note to 
Article 6, Paragraph 1 of the Interpretative Note to Article 8.1(b)(iv), Paragraph 1 of the 
Interpretative Note to Article 8.3, Paragrap h 6 of Annex III of the CVA, and an overarching obligation 
to use only information that complies with the Generally Accepted Accounting Principles (GAAP).129 
3.38.   However, in constructing its desired legal standard, the Philippines fails to mention that its 
expansive interpretation has absolutely no textual support in Paragraph 3 of the Interpretative Note 
to Article 1.2. As indicated the Appellate Body, a treaty interpreter may not impute into a treaty 
"words that are not there" nor "concepts that were n ot intended".130 However, the Philippines' 
proposed interpretation would involve inserting into Article 1.2 not only words that are not there, 
but entire provisions of the CVA, along with their interpretative notes. The mere fact that the term 
"cost" in Pa ragraph 3 of the Interpretative Note to Article 1.2 is also used in other CVA provisions 
                                                
127 Thailand’s first written submission, paras. 3.45 -3.48. 
128 Thaila nd’s first written submission, paras. 3.51 -3.52; See The Philippines’ first written submission, 
paras. 446 and 447.  
129 Thailand’s first written submission, paras. 3.55 and 3.57.; See the Philippines’ first written 
submission, paras. 164 -168, 182 -188, 189 -194, 195 -205, 206 -212, 213 -215. 
130 Appellate Body Report, India – Patents (US) , para. 45; See also, Appellate Body Report, India – 
Quantitative Restrictions , para. 94.  
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  does not permit a wholesale incorporation of a number of disciplines that are nowhere mentioned or 
even implied in the text of Paragraph 3. Had the negotiators of the CVA intended to incorporate into 
Paragraph 3 of the Interpretative Note to Article 1.2 all of the provisions suggested by the 
Philippines, they would have done so explicitly as they had done with various CVA provisions, which 
contain explicit cross -referen ces to other provisions. Moreover, it follows that where negotiators did 
not include similar cross -references, that "omission must have some meaning".131 
3.39.   In addition to this error of legal interpretation, Thailand also submits that the Philippines failed 
to interpret Paragraph 3 of the Interpretative Note to Article 1.2 under the rules of Article 31 of the 
Vienna Convention. To recall, according to Article 3.2 of the DSU, the WTO covered agreements 
must be interpreted "in accordance with  customary rules of interpretation of public international 
law". The Appellate Body has held that Article 31 of the Vienna Convention is part of those customary 
rules of interpretation of public international law.132 Hence, the WTO covered agreements must be 
interpreted in accordance with the rules of interpretation contained in Article 31 of the Vienna 
Convention.133  
3.40.   Article 31 of the Vienna Convention requires the treaty terms to be interpreted in "good faith" 
in accordance with their ordinary mea ning in their "context" and in light of their object and purpose. 
Applying these interpretative rules to the present case, Thailand submits that it cannot be assumed 
that in calculating a cost plus profit under Paragraph 3 of the Interpretative Note to Art icle 1.2, the 
authority will use information that is arbitrary or unreliable with the intention to reject the declared 
transaction value of related parties. On the contrary, it should be assume that the authority of the 
importing country will do everything  possible to rely on accurate information for purposes of 
calculating the costs plus profit. Moreover, a good faith interpretation must not allow parties to claim 
a CVA violation based on an illegal act of the company whose products were valued. This would  
happen if the interpretation would impose excessive restrictions on the authority's ability to gather 
information on the producer's costs and profits. It is imperative for authorities of the importing 
country should be allowed to assume that the informati on is accurate and truthful134 and be able to 
rely in good faith on the information furnished by authorities of the exporting country on the 
producer's costs and profits. 135 
3.41.   In this dispute, the Philippines' claim under Article 1.2(a), second sente nce, of the CVA focuses 
specifically on Thailand's alleged failure to verify the accuracy of the information on costs and profits 
derived from form CK -21A that was provided by Indonesia. Interpreting Article 1.2(a), second 
sentence, of the CVA in the manne r proposed by the Philippines would entail detrimental 
consequences for cooperation efforts between governments, which is crucial to customs valuation 
exercises, particularly when the companies in question are related parties. In fact, the cost and profit 
information furnished by Indonesian authorities was provided by PTPMI itself. Under Indonesian law, 
PTPMI had a legal obligation to provide truthful and accurate information. Further, Indonesian 
authorities had already processed and relied on this informat ion for collecting local taxes. In these 
circumstances, Thailand had every reason to treat this information as accurate and truthful.136 The 
interpretation proposed by the Philippines that the authorities must presume that information 
provided by foreign g overnments is not accurate, or even worse, that producers knowingly submitted 
fabricated information, would render meaningless any possible cooperation between the authorities 
of the importing country and those of the exporting country.137 In this situatio n, the authorities in 
Thailand would face a roadblock to the extent that the information provided by the exporting country, 
which is based on tax filings of the related company, is inherently inaccurate because the company 
itself intentionally submitted in accurate information.138   
3.42.   For these reasons, Article 1.2(a), second sentence, of the CVA should be interpreted in a way 
that gives authorities of the importing country sufficient flexibility to rely on presumptively reliable 
                                                
131 Appellate Body Report, Japan – Alcoholic Beverages II , p. 18.; See Thailand’s first  written 
submission, paras. 3.58 -3.63. 
132 Appellate Body Report, US – Gasoline , p. 17.  
133 Thailand’s response to Panel question 164(a), para. 3.6.; Thailand’s first written submission, paras. 3.69.  
134 Thailand’s response to Panel question 164(a), para.  
135 Thailand’s first written submission, para. 3.79.  
136 Thailand’s second written submission, para. 3.65.  
137 Thailand’s first written submission, paras. 3.79, 3.97.  
138 Thailand’s response to Panel que stion 164(a), para. 3.14.  
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  information obtained fr om foreign governments.139 This also corresponds to the interpretation of 
Paragraph 3 of Interpretative Note to Article 1.2 in the context of Article 1.2. Following the Panel's 
observation of Article 1.2 in its final report to the parties, authorities enjo y discretion in choosing 
the means for examining whether the relationship influenced the price – neither specific principles 
nor methodologies apply. Even minor flaws or shortcomings would not invalidate the examination. 
The only requirement is that the ch osen method is apt to reveal whether the relationship influenced 
the prince. This understanding of Article 1.2(a) informs the interpretation of Paragraph 3 of the 
Interpretative Note to Article 1.2.140  
3.43.   Applied to the facts of this dispute, the fact  that Thai authorities relied on the cost and profit 
information provided by Indonesia, which, in turn, obtained from the tax form submitted by PTMPI 
under Indonesian law is a method perfectly apt to reveal whether the relationship between PMTL 
and PTPMI i nfluence the price. Furthermore, the fact that Thai authorities proceeded on the basis 
that such information would be accurate and did not take any additional steps to confirm the veracity 
of the information in tax forms is not a flaw or shortcoming that r enders the examination inapt to 
reveal whether the relationship influenced the price. More concretely, Thai authorities should not be 
put in a position where, every time they seek cooperation from foreign governments, they must 
second -guess the veracity of  the information contained in declarations to those governments 
because of the possibility that the company might have knowingly provided "fabricated plugs".141  
3.44.   For these reasons, Thailand rejects the Philippines' interpretation of Paragraph 3 of t he 
Interpretative Note to Article 1.2 whereby a producer can intentionally submit fabricated information 
to authorities of the exporting country and, on that basis, later claim that the authority of the 
importing country acted arbitrarily by relying on tha t same information.             
3.3.2   The Public Prosecutor did not act inconsistently with Articles 2 to 6 of the CVA  
3.45.   The Philippines argues that the Public Prosecutor determined the customs value of PMTL's 
entries by using the computed value unde r Article 6 of the CVA. However, in the Philippines' view, 
the Public Prosecutor did so without following the sequential order of customs valuation methods in 
Articles 2 to 6 of the CVA.   
3.46.   The present case involves special circumstances, in which no ne of the alternative methods in 
Articles 2 -5 could be used to determine a customs value. The fact that PMTL is the only major 
cigarette importer in Thailand places the authorities in the unusual situation of not having sufficient 
previously determined cus toms values for identical or similar goods. Moreover, the fact that declared 
value is insufficient to ensure the recovery of costs plus a reasonable profit means that the deductive 
method under Article 5 is not appropriate either because it would simply re sult in determining the 
same CIF price that was previously determined to have been affected by the relationship between 
the exporter and the importer. As the first compliance proceedings panel's ruling made clear, it is 
virtually impossible to identify an appropriate amount for profit and general expenses in the Thai 
market other than PMTL's own ratio. Using the deductive method, therefore, would result in 
deducting PMTL's profit and general expense ratio, its taxes and transportation costs, and other 
expen ses from PMTL's price for the first sale to an unrelated party. This results in PMTL's own CIF.  
In these circumstances, the deductive value cannot reasonably be used to determine the customs 
value.142  
3.47.   For the reasons stated above, Thailand submits  that there can be no violation of Articles 2 -6 
of the CVA given that, in the particular circumstances of PMTL, the customs valuation methods in 
Articles 2 - are not available.  
3.3.3   The Public Prosecutor did not act inconsistently with Article 6 CVA  
3.48.   The Philippines claims that the Public Prosecutor violated Article 6 of the CVA by determining 
alternative customs values through improper use of a cost -plus or computed method. As with its 
                                                
139 Thailand’s response to Panel question 164(a), para. 3.15.  
140 Thailand’s first written submission, paras. 3.81 -3.86. 
141 Thailand’s first written submission, paras. 3.94 -3.97. 
142 The Philippines’ first written submission, par a. 3.102.  
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- 99 - 
 
  other legal claims, the Philippines' claim under Article 6 is re lated to Thailand's use of information 
taken from form CK -21A which The Philippines considers inaccurate.143  
3.49.   Thailand states that the 02 -03 Charges are not inconsistent with Article 6 of the CVA because 
the Public Prosecutor relied on a valuation m ethod that falls under Article 7 of the CVA. Read 
together, Article 7.1 and Paragraph 2 of the Interpretative Note to Article 7 stipulate that the customs 
value may be determined using "reasonable means", which can include the valuation methods laid 
down i n Articles 1 through 6 applying "a reasonable flexibility". The original panel defined 
"reasonable" as "in accordance with reason", "not irrational or absurd", "proportionate", "sensible", 
and "within the limits of reason", "not greatly less or more than m ight be thought likely or 
appropriate".144145   
3.50.   In this dispute, the Public Prosecutor applied the computed value method with a reasonable 
flexibility that consists of relying on information provided by Indonesian authorities without 
subsequently ve rifying its accuracy. In this respect, This flexibility is "in accordance with reason" 
and "not irrational or absurd" because this information was provided by the Indonesian authorities 
which, in turn, had received it from PTPMI. It is thus within reason a nd not irrational for the Public 
Prosecutor to assume that PTPMI provided truthful information because it had been provided in 
compliance with Indonesian law and the Indonesian government itself had relied on it for collecting 
taxes.146 
3.51.   Furthermore,  in its response to post -hearing question, the Philippines explains that a 
computed value under Article 6 is based on a "bottom up approach" that "adds up separate amounts 
for each element of the producer costs, general expenses, and profits".147 On the co ntrary, a "top -
down"148 approach is used in the deductive method under Article 5. As Thailand understands, the 
starting point, which is the sales price in the country of importation to the first independent buyer, 
is located at the "top", from which the au thority then moves "down" by making certain permissible 
deduction, until arriving at a final amount that constitutes the deductive value. Based on this 
interpretation and Thailand's sample of calculation of CIF price, the Philippines asserts that Thailand 
used an impermissible "top -down" approach to calculate a computed value under Article 6. The 
Philippines alleges that "[t]here is no flexibility in article 6 to depart from [the ‘bottom -up' approach] 
by, for example, using a deductive method (a so -called ‘ top-down' approach)".149   
3.52.   The Philippines' understanding of the calculation methods under Articles 5 and 6 is erroneous. 
The terms "bottom -up" and "top -down" are not treaty terms of the CVA. They may be useful as 
superficial descriptions to visuall y illustrate the differences between the deductive method and the 
computed method. But it would be erroneous to assume that the two methods involve the same 
calculation done in two different ways. In fact, the two methods are very different. Under Article 5, 
the deductive method seeks to work back from the retail price in the importing country to arrive at 
a CIF import price. The cost of production in the exporting country is simply irrelevant for the 
calculation. As for Article 6, the computed method seeks  to work up from the cost of production in 
the exporting country to arrive at a CIF import price in the importing country. For this, the retail 
price in the importing country is irrelevant.150  
3.53.   The Philippines' assertion that Thailand used a deducti ve method to calculate a computed 
value under Article 6 is therefore incorrect. Thailand sought to use the computed method but did 
not have cost information from the company's books. Instead, it replied on the information provided 
by Indonesia, based on wh ich it was able to identify a cost of production, in part by adjusting the 
sales price in the country exportation. Thailand did not use the sales price in the country of 
importation, as would be used in the Article 5 deductive method. Moreover, Thailand di d not use the 
sales price in the country of exportation as the basis of its calculation, it simply used it to get to the 
                                                
143 The Philippines’ first written submission, para. 494.  
144 Panel Report, Thailand – Cigarettes (Philippines) , para. 7.919.  
145 Thailand’s first written submission, paras. 3.105 -3.108; Thailand’s second written submission, para. 
3.79. 
146 Thailand’s first written submission, para. 3.110; Thailand’s second written submission, para. 3.80.  
147 The Philippines’ response to Panel question 170, para. 34.  
148 The Philippines’ response to Panel question 170, para. 49.  
149 The Philippines’ response to Panel question 143, para. 5.1 -5.4; See Thailand’s comments on the 
Philippines’ responses to Panel question 170, paras. 5.7 -5.9. 
150 Thailand’s comments on the Phil ippines’ responses to Panel question 170, paras. 5.10 -5.12. 
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  starting point required for the computed method under Article 6 – the cost of production. In effect, 
Thailand relied on the Indonesian retail price to obtain the cost of production by subtracting 
Indonesia's taxes and profits for agents and distributors. However, the mere fact that this involved 
a subtraction, arithmetically speaking, does not make it a deductive method under Article 5. O nce 
the starting point of the cost of production was obtained. Thailand added an amount for freight and 
insurance, which gave CIF price per pack in Indonesian currency. This amount was then converted 
to Thai baht using the applicable exchange rates.151 Therefore, Thailand reiterates that Thailand's 
sample calculation shows a constructed CIF price calculated using the methodology/flexibilities 
envisaged in Article 7.1, based on the computed method in Article 6.  
3.54.   In light of the above, Thailand argues t hat, by acting consistently with Article 7.1 of the CVA, 
the Public Prosecutor did not act inconsistently with Article 6 of the CVA.   
3.3.4   The Public Prosecutor did not act inconsistently with Article 1.2(a), third sentence, 
of the CVA by failing to com municate the grounds to the importer or failing to give an 
opportunity to respond  
3.55.   The Philippines claims that the Public Prosecutor acted inconsistently with Article 1.2(a), third 
sentence, of the CVA, which states that authorities must communicate to the importer the grounds 
for considering that the parties' relationship influenced the price and must give the importer an 
opportunity to response. Thailand argues that the obligation in this Article is of a procedural nature. 
Hence, even if the CVA wer e applicable to the 02 -03 Charges, this procedural obligation of the CVA 
would not apply as there are certain features of criminal procedures which prevent the application 
of the CAV procedural obligations. This is the case, for example, of the obligation to consult with the 
importer, which would be incompatible with the principle in criminal law that the accused has the 
right to remain silent. Therefore, even if criminal authorities would be obliged to follow the 
substantive rules of the CVA, the practical  realities of criminal proceedings make it impossible to 
follow CVA procedural rules.152 
3.56.   For the reasons stated above, the Panel should reject the Philippines' claim under Article 
1.2(a), third sentence, of the CVA as this provision does not apply t o the Public Prosecutor.  
3.4  The 02 -03 Charges are justified under Articles XX(d) and XX(a) of the GATT1994  
3.57.   In Thailand's view, the Panel should find that the 02 -03 Charges are not inconsistent with the 
provisions of the CVA invoked by the Philippines for the reasoned explained above. However, in the 
event that the Panel finds that the 02 -03 Charges are i ndeed inconsistent with the CVA, Thailand is 
of the view that Members' criminal enforcement authorities must be able to retain some policy space 
in order to prosecute customs fraud effectively.  
3.58.   Thailand argues that Members retain policy space under  Article XX of the GATT 1994 to justify 
such violations, and that the 02 -03 Charges are justified under Article XX(d) and XX(a) of the GATT 
1994.  
3.4.1   Article XX applies to violation of the CVA  
3.59.   Thailand is of the view that were the procedures of t he CVA to be applied to criminal 
investigations/prosecutions, it would be necessary to find the policy space required to conduct 
criminal proceedings elsewhere in the covered agreements. In Thailand's view, the requisite policy 
space would be found in Arti cle XX of the GATT 1994, which, by reason of Article VII, was clearly 
intended to apply to customs valuation matters and which expressly provides that nothing in the 
general agreement – including necessarily the rules on customs valuation – prevents Member s from 
taking measures necessary to enforce their customs laws.153 In response to Thailand's assertions 
with respect to the applicability of Article XX, the Philippines briefly restated the first compliance 
panel's views which Thailand will address and pre sents its arguments on this issue here below.  
                                                
151 Thailand’s comments on the Philippines’ responses to Panel question 170, para. 5.14.  
152 Thailand’s first written submission, par. 3.113; Thailand’s second written submission, paras. 3.83 
and 3.86. 
153 Thailand’s first written submission, para. 3.118.  WT/DS371/RW2/Add.1  
 
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  3.60.   To support its arguments, Thailand first submits that there are several textual bases in the 
CVA. In particular, its title and preamble both refer to Article VII of the GATT 1994. This indicates a 
close relationship between the CVA and Article VII of the GATT 1994, showing that the former is an 
elaboration of the latter. Hence, since Article XX is available to justify inconsistencies with Article 
VII, it should also be available to justify inconsistencies  with the CVA. Thailand respectfully disagrees 
with the first compliance panel's view that the title and the preamble of the CVA are only general 
links to the GATT 1994 and not direct textual links to Article XX.154 In Thailand's view, rather than 
establis hing a direct reference to Article XX, the title and the preamble of the CVA reveal, in a holistic 
approach, the close links in the architecture, design and structure of the provision at issue. In 
particular, they shed light on the close link between the C VA and Article VII, in that the CVA expressly 
elaborates and implements Article VII. Since it is undisputed that Article XX applies to Article VII, 
by extension, Article XX also applies to the CVA.155 
3.61.   Second, because of the nature of the relationshi p between the CVA and Article VII of the GATT 
1994, it could lead to absurd situations if a Member could justify a violation of Article VII by invoking 
the exceptions in Article XX, but it could not do so with respect to its obligations under the CVA, 
notwithstanding that the CVA implements the obligations in Article VII.156 However, the first 
compliance panel found that the CVA contains obligations that are additional to and different from 
those under Article VII.157 In Thailand's view, by definition, any agreement that elaborates on a 
provision will necessarily contain more detailed provisions that are different from and additional to 
those of the original agreement. Logically, the content of the CVA cannot be identical to the content 
of Article VII. This does not mean that the drafters intended to exclude the policy space from the 
CVA that Members previously enjoyed under Article VII. Moreover, the CVA, Article VII, and Article 
XX are part of one single treaty and must be read harmoniously.158  
3.62.   In any event, Thailand is of the view that the applicability of Article XX should be considered 
with respect to the CVA in its entirety, not with respect to certain of its provisions. To analyse 
whether specific provisions of the CVA are different from specifi c provisions of Article VII would lead 
a compartmentalization of the CVA, whereby Article XX would be applicable to certain provisions of 
the CVA only to the extent that they are identical to the provisions of Article VII of the GATT 1994. 
Thailand would c aution against such an approach.159 
3.63.   Third, Thailand argues that all WTO agreements contain a balance between a Member's 
obligations and its policy space, and that the CVA should be no different. However, the first 
compliance panel viewed that there already exists an inherent balance in the CVA between a 
Member's obligations and its policy space. More specifically, the balance is reflected in "the relatively 
limited scope of the substantive and procedural obligations contained in the CVA, including a degree 
of discretion accorded to the customs authority in implementing those obligations".160 However, to 
some extent, almost all WTO agreements are limited in scope, which does not mean that they should 
lack policy space for WTO Members.161 The question of where Members' policy space to address 
customs fraud is found under the covered agreements is central to this issue. In effect, the 
Philippines argues that efforts to pursue customs fraud must comply with the CVA, without recourse 
to exceptions  under Article XX. In Thailand's view, the Philippines' argument lacks textual basis and 
would unduly and impermissibly restrict Members' right to pursue suspected or alleged customs 
fraud. If the Panel were to agree with the Philippines that the CVA appli es to suspected or alleged 
customs fraud, therefore, it would be necessary to situate policy space for Members to take actions 
against customs fraud in Article XX, which expressly refers to customs enforcement.162  
                                                
154 The Philippines’ second written submission, para. 358.  
155 Thailand’s second written submission, para. 3.98; Thailand’s first written submission, paras. 3.124 -
3.128.  
156 Thailand’s first writt en submission, para. 3.129.  
157 The Philippines’ second written submission, para. 361.  
158 Thailand’s second written submission, para. 3.93; Thailand’s first written submission, paras. 3.129 -
3.133.  
159 Thailand’s first written submission, para. 3.134.  
160 The Philippines’ second written submission, para. 362, citing to Panel report int the first compliance 
proceedings, para. 7.756.  
161 The Philippines’ first written submission, paras. 3.135 -3.138.  
162 Thailand’s second written submission, para. 3.94.  
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  3.64.   For the reasons above, Thailand fi nds the Philippines' effort insufficient to rebut Thailand's 
arguments as the Philippines briefly restated the first compliance panel's views, which Thailand has 
addressed above. Consequently, Thailand submits that the Panel should retain policy space unde r 
Article XX to prosecute customs fraud effectively because the architecture, design, and structure of 
the covered agreements indicate that Article XX of the GATT 1994 is available to justify measures 
that are inconsistent with the CVA.163   
3.4.2   The 02 -03 Charges are provisionally justified under Article XX(d) and XX(a) of the 
GATT 1994  
3.65.   For a measure to be provisionally justified under Article XX(d) or Article XX(a) of the GATT 
1994, a panel must first examine whether the measure is designed and n ecessary "to secure 
compliance with laws or regulations which are not inconsistent with the provisions of this Agreement" 
or "to protect public morals", respectively. Then, under the chapeau  of Article XX, a panel  must 
address whether the application of th e measure does not unjustifiably or arbitrarily discriminate 
among countries where the same conditions prevail or otherwise lead to a disguised restriction on 
international trade.164 
3.66.   With respect to Article XX(d), Thailand submits that the 02 -03 Cha rges are "designed" to 
secure compliance with Section 27 of the Thai Customs Act B.E. 2469 (1926), a WTO -consistent 
provision which criminalizes the avoidance of the payment of taxes or duties with the intention to 
defraud the Thai government. These Charge s expressly refer to Section 27 and constitute a 
necessary formal step to the prosecution of the alleged customs fraud perpetrator.165 Moreover, the 
Charges are "necessary" to secure compliance with that provision, because, in order to prosecute 
customs fr aud effectively, the Public Prosecutor must follow and apply criminal law instead of the 
rules contained in the CVA. In particular, the CVA establishes a complex and detailed set of rules for 
calculating the customs value of goods, and it would be unreason able to expect the Public Prosecutor 
to go through all the sequential steps in the CVA when the evidence it is confronted with lead him 
to suspect that the importer engaged in fraudulent activities.166 Notably, the evidence is not always 
clear, and the pro secution teams are often faced with more complex facts. This is the case that the 
Public Prosecutors had to confront in the investigation. Following the CVA rules would rather place 
an undue burden on the prosecution teams when prosecuting customs fraud.167 Lastly, since the 
Charges do not contain any import restriction or import prohibition, nothing indicates that they are 
trade -restrictive.168 
3.67.   The Philippines, however, suggests a less trade -restrictive alternative to the 02 -03 Charges 
by proposing that Thailand should perform a WTO -consistent customs valuation determination.169 
Thailand finds the alternative proposed by the Philippines invalid. The Philippines' logic cannot work 
because Members may never rely on the Article XX defences as the underl ying alternative of not 
violating another provision is always available. This would render Article XX inutile. If Thailand would 
have performed or performs a WTO -consistent customs valuation, there would be no need to invoke 
the Article XX defences. The re moval of the inconsistency in the original measure cannot be a 
reasonable alternative measure, because there would be no inconsistent measure to defend. 
Thailand thus reaffirms that since nothing indicates that the Charges are trade restrictive, there are 
no less trade -restrictive alternatives to that measure.170  
3.68.   With respect to Article XX(a), Thailand submits that the 02 -03 Charges are "designed" to 
protect public morals because by prosecuting alleged customs fraud perpetrators in compliance with 
Section 27 which criminalizes tax and duty evasion, they are closely related to the fight against 
smuggling and contraband. These issues represent a real concern for Thailand. Smuggling of 
cigarettes causes significant losses to Thailand each year and, ther efore, is subject to considerable 
                                                
163 Thailand’s second written submission, para. 3.95.  
164 Thailand’s first written submission, paras. 3.141 -3.144, 3.154 -3.159, 3.165 -3.167.  
165 Thailand’s second written submission, para. 3.96; Thailand’s  first written submission, paras. 3.145 -
3.148.  
166 Thailand’s second written submission, para. 3.101.  
167 Thailand’s first written submission, paras. 3.149 -3.150.  
168 Thailand’s first written submission, para. 3.151.; Thailand’s second written submission, para. 3.104.  
169 The Philippines’ second written submission, para. 390.  
170 Thailand’s second written submission, para. 3.104.  
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  enforcement efforts.171 Moreover, the Charges are "necessary" to protect public morals. Any 
departure from the rules for customs valuation prescribed in the CVA is necessary in order to 
prosecute customs fraud effectively.  Indeed, in order to fulfil the important objective of fighting 
smuggling through criminalizing tax evasion and customs fraud, the Public Prosecutor had to apply 
a different set of rules that are not always compatible with the CVA rules, for the same reaso ns 
elaborated in the context of Article XX(d). Lastly, as nothing indicates that the 02 -03 Charges are 
trade restrictive, there is thus no less trade -restrictive alternative measure to the 02 -03 Charges.172  
3.69.   The Philippines argues, as it did under A rticle XX(d)173, that there can never be circumstance 
where an incorrect customs valuation decision is necessary to ensure the collection of the correct 
amount of customs duties, and that, therefore, Thailand's CVA -inconsistent measure cannot make 
any cont ribution to the protection of public morals.174 The Philippines' arguments would in effect 
mean that Members can never prosecute customs fraud, except by following exactly the rules in the 
CVA, even though certain rules under the CVA are incompatible with the good conduct of criminal 
proceedings. Moreover, the Philippines' argument is circular, as it uses the same inconsistencies that 
would have been found by the Panel before reaching Article XX to claim that the measure at issue 
is not necessary under Arti cle XX(a). This would render the justfification under Article XX(a) inutile 
and should not be accepted by the Panel.175  
3.70.   With respect to the requirements under the chapeau of Article XX, there is no indication that 
the 02 -03 Charges are applied in a n arbitrary or unjustifiable discriminatory manner, or as a 
disguised restriction on international trade. First, nothing suggests that Thailand's enforcement of 
its customs and criminal laws discriminates against imports of the Philippines compared to impo rts 
from other Members in which the same conditions prevail. A criminal allegation necessarily applies 
to an individual importer and cannot, as such, be considered to be discriminatory. Similarly, nothing 
indicates that the Charges are a disguised restrict ion on international trade. The Philippines argues 
that the fact that a fine may be imposed threatens the very survival of PM Thailand, and the Charges 
may therefore remove the largest source of import competition from the Thai market. However, that 
fine m ay or may not be imposed, and the amount of the fine is still to be determined by the Court 
after hearing and examining all the evidence. Therefore, it does not make any sense to argue that 
the Charges, as they stand today, are applied as a disguised restr iction on international trade.176  
3.71.   In sum, in the event that the Panel were to find that the 02 -03 Charges are inconsistent with 
certain provisions of the CVA, Thailand submits that the 02 -03 Charges are justified under Articles 
XX(d) and XX(a) and applied consistently with the chapeau of Article XX of the GATT 1994.  
3.5  The Philippines' alleged claims under Article 7 of the CVA  
3.72.   In its opening statement at the substantive meeting, the Philippines referred to the alleged 
claims of inconsistenc ies under Article 7 of the CVA, arguing that Thailand used valuation methods 
that are prohibited under those provisions.177 However, the Philippines had not ever put forward 
such claims before, either in its Panel request or its first and second written su bmissions or its pre -
hearing questions from the Panel where the Philippines (and Thailand) addressed questions relating 
generally to the relationship between Articles 6 and 7 of the CVA.  
3.73.   To the extent that the Philippines attempts to correct this de ficiency in its opening statement 
or subsequently in this proceeding, Thailand submits that it is too late, and the Panel should not 
make any findings under Article 7. In any event, the Philippines' claims are outside the Panel's terms 
of reference because  the Philippines' vague reference to Article 7 in its request for the establishment 
of a panel does not meet the basic standards of Article 6.2 of the DSU.  
                                                
171 Thailand’s first written submission, paras. 3.160 -3.161.  
172 Thailand’s first written submission, para. 3.162.  
173 The Philip pines’ second written submission, paras. 376 and 389.  
174 The Philippines’ second written submission, para. 403.  
175 Thailand’s second written submission, para. 3.108.  
176 Thailand’s first written submission, paras. 3.168 -3.132.; Thailand’s second written submission, 
paras. 3.110 -3.113.  
177 The Philippines’ opening statement at the substantive meeting, paras. 59 -60, 66 -89. WT/DS371/RW2/Add.1  
 
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  3.5.1   The Philippines failed to make prima facie  case in a timely fashion for the alleged 
claims u nder Article 7 of the CVA  
3.74.   Thailand submits that the Philippines failed to make a prima facie  case in a timely fashion for 
the alleged claims under Article 7 of the CVA. It is far too late to correct its deficiency of not 
advancing arguments or clai ms under Article 7 of the CVA prior to its opening statement at the 
substantive meeting. Moreover, the Philippines cannot allege that it did not have enough information 
available at the beginning of the dispute and could make its claims and/or prima facie  case under 
Article 7 only after receiving Thailand's sample calculation of the constructed CIF price. This is not 
accurate. At the time it prepared its request for the establishment of the panel and first written 
submission, the Philippines possessed all the factual information on which it relies to make its claims 
under Article 7 of the CVA. Notably, the information contained in CK -21A which the Philippines used 
for its claim of inconsistency under Article 6 of the CVA. Despite being in a position to do s o, the 
Philippines chose not to pursue such claims. In this context, the Philippines cannot cure that fault 
by belated developing its argumentation towards the end of the proceedings. 178   
3.75.   Instead, the Philippines continued to insist that Thailand applied and violated Article 6.179 This 
is because the Philippines believed that, if a Member avails itself of the flexibilities afforded by Article 
7.1 and paragraph 2 of the Interpretative Note to Article 7, that WTO Member necessarily acts 
inconsistently with the obligations in Articles 1 -6. This is an incorrect interpretation. Article 7.1 is a 
separate and distinct methodology that may be used when those in Articles 1 -6 cannot. Therefore, 
when a complaining considers that a defending Member may  have acted inconsistently with the 
obligations governing the Article 7.1 methodology, it must allege in its Panel Request and properly 
make its prima facie  case. However, the Philippines did not do so.180  
3.76.   Thailand also notes that a panel cannot ma ke a complaining Member's case for it.181 
References in the Panel's questions to Article 7, and the responses thereto, cannot be construed as 
giving rise to a prima facie case. Especially, the responses to the questions come after the 
complaining Member ha s already submitted both its first and second submissions. Even in its 
responses to pre -hearing questions from the Panel where were posed the questions to the 
relationship between Articles 6 and 7 of the CVA, the Philippines did not advance claims or seek 
findings with respect to Article 7 of the CVA.182 
3.77.   In addition, Article 7 of the CVA is not a defence that must be asserted by a defending Member 
in order to trigger a claim or arguments by a complaining Member.183 Due process does not require 
the de fending Member to go out of its way to help the complaining Member make its prima facie  
case. Where the Philippines chose to remain silent regarding Article 7 in its submissions, Thailand 
was not required to point this out to the Philippines to correct its  error or omission.184     
3.78.   For all these reasons, the Panel should reject the Philippines' alleged claims under Article 7 of 
the CVA.  
3.5.2   The Philippines' panel request does not properly identify its claims under Article 7 
of the CVA  
3.79.   In an y event, to the extent that the Philippines could be said to have advanced claims under 
Article 7, those claims cannot satisfy the standards of Article 6.2 of the DSU. To recall, the WTO 
jurisprudence has firmly established that Article 6.2 of the DSU impo ses the obligation to identify 
the treaty provisions of which a violation is alleged. In the case of a treaty provisions that establish 
                                                
178 Thailand’s communication regarding the scope of the claims advanced by the Philippines, paras. 2.7 -
2.8; Thailand’s comments on the P hilippines’ response to Thailand’s communication regarding the scope of the 
Philippines’ claims, pars. 2.16 -2.18; See Panel Report, EC – Fasteners , para. 7.522.  
179 Thailand’s comments on the Philippines’ response to Thailand’s communication regarding the scope 
of the Philippines’ claims, para. 2.14.  
180 Thailand’s comments on the Philippines’ response to Thailand’s communication regarding the scope 
of the Philippines’ claims, para. 2.13.  
181 Appellate Body Report , US – Shrimp (Thailand) / US – Customs Bond  Directive , para. 300, citing 
Appellate Body Report, Japan – Agricultural Products II , para. 129.  
182 Thailand’s communication regarding the scope of the claims advanced by the Philippines, para. 2.9.  
183 Thailand’s communication regarding the scope of the  claims advanced by the Philippines, para. 2.7.  
184 Thailand’s communication regarding the scope of the claims advanced by the Philippines, para. 2.10.  
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- 105 - 
 
  multiple obligation, "the mere listing of treaty articles would not satisfy the standard of Article 6.2"185 
and "a panel  request might need to specify which of the obligations contained in the provision is 
being challenged".186 Moreover, the panel request must "explain succinctly how or why the measure 
at issue is considered by the complaining Member to be violated the WTO obligation in 
question".187,188  
3.80.   In this case, the Philippines' generally referred to Article 7 without specifying which of the 
three paragraphs of Article 7, or which of the seven subsections of paragraph 2 of Article 7, if any, 
it considered to ha ve been violated. This is inadequate to provide a summary of the legal basis of 
the complaint sufficient to present the problem clearly as required under Article 6.2 of the DSU. 
Notably, Article 7 contains three sub -paragraphs with multiple obligations and  there are considerable 
differences between these sub -paragraphs.189  
3.81.   Moreover, in order to "present the problem clearly", a panel request "must plainly connect 
the challenged measure(s) with the provision(s) of the covered agreements claimed to hav e been 
infringed, so that the responding party is aware of the basis for the alleged nullification or impairment 
of the complaining party's benefits".190 Furthermore, a complaining party's written submissions 
"cannot have the effect of curing the failings of a deficient panel request".191 In this case, the 
Philippines' Panel Request does not "plainly connect" the challenged measure with the individual CVA 
provisions invoked and contains no explanation as to "why and how" the 02 -03 Charges are allegedly 
inconsistent with the individual CVA provisions, in particular Article 7.1. Therefore, these deficiencies 
in the Philippines' panel request cannot be cured by the Philippines' written submission.192 
3.82.   In light of the foregoing, Thailand requests that the Panel dismiss the Philippines' alleged 
claims under Article 7 of the CVA as being not properly within the Panel's terms of reference pursuant 
to Article 6.2 of the DSU.  
4  CONCLUSION  
4.1.  For the reasons stated above, Thailand requests the Panel to reject  the Philippines' claims.  
4.2.  With respect to the NoAs:  
a. The Panel should exercise its discretion and decline to rule on the NoAs because Thailand 
withdrew the NoAs before the Panel was established.  
b. In the event that the Panel decides to rule on the  NoAs, it should reject the Philippines' 
claims under the CVA for the same reasons that it should reject those claims with respect 
to 02 -03 Charges. In addition, the Panel should also reject the Philippines' claim under 
Article 16 of the CVA because the Th ai Customs Department sufficiently explained the 
grounds for issuing the NoAs.  
4.3.  With respect to the 02 -03 Charges, the Philippines' claims should be rejected for the following 
reasons:  
a. The CVA does not apply to the 02 -03 Charges as they allege that  PMTL's declared value is 
not the price actually paid and, thus, the accusation qualifies as "customs fraud".  
                                                
185 Appellate Body Report, Korea – Dairy , para. 124.  
186 Appellate Body Reports, China – Raw Materials , para. 220 and US – Countervailing and Anti -Dumping 
Measures (China) , para. 4.8.  
187 Appellate Body Report , EC – Selected Customs Matters , para. 130.  
188 Thailand’s comments on the Philippines’ response to Tha iland’s communication regarding the scope 
of the Philippines’ claims, para. 2.21; Thailand’s communication regarding the scope of the claims advanced by 
the Philippines, para. 2.11.  
189 Thailand’s comments on the Philippines’ response to Thailand’s communi cation regarding the scope 
of the Philippines’ claims, paras. 2.25 -2.26 
190 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 162.  
191 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 642.  
192 Thailand’s comments on the Philippines’ response to Thailand’s communication regarding the scope 
of the Philippines’ claims, paras. 2.27 -2.28. WT/DS371/RW2/Add.1  
 
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  b. Even if the accusation qualifies as "customs fraud", the Philippines has failed to make a 
prima facie  case because the 02 -03 Charges simply lac k sufficient information to allow the 
Philippines to do so.  
c. In the event that the Panel nonetheless decides to examine the merits of the 02 -03 
Charges, it must reject the Philippines' contentions as they are premised on an incorrect 
legal interpretation  of the invoked CVA provisions and because the Philippines' legal 
arguments are premised on admitted illegal acts committed by Philip Morris in Indonesia.  
d. Even if the Panel were to agree that the Philippines' claims fall within the scope of and are 
inconsistent with the provisions of the CVA cited by the Philippines, Thailand's actions are 
justified under Article XX(d) and XX(a) of the GATT 1994.  
e. With respect to the Philippines' alleged claims under Article 7 of the CVA, the Philippines 
failed to make  prima facie  case in a timely fashion. In any event, the Philippines' claims 
are not properly within the Panel's terms of reference pursuant to Article 6.2 of the DSU.  
 
_______________  
 
 
 
 WT/DS371/RW2/Add.1  
 
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  ANNEX  C 
ARGUMENTS OF THE THIRD PARTIES  
 
Contents  Page  
Annex C -1 Integrated e xecutive summary of the arguments of the European Union  107 
Annex C -2 Integrated e xecutive summary of the arguments of Indonesia  112 
Annex C -3 Integrated e xecutive summary of the arguments of Japan  115 
Annex  C-4 Integrated e xecutive summary of the arguments of  the United States   117 
 WT/DS371/RW2/Add.1  
 
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ANNEX  C-1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNIO N 
I. THE 1052  NOA'S 
1. Given the repeal of the measures at issue, the  EU will not provide comments on the 
substantive claims concerning the NoAs (many of the comments provided on the substantive claims 
against the Charges under Section III. of this submission can be transposed in essence). It will just 
briefly comment on the preliminary  question of repeal.  
2. The EU would first like to stress that it does not share Thailand's understanding that where 
measures were withdrawn after the establishment of a panel, the panel would have generally made 
findings on these measures. This is simply an incorrect rendition of the existing case -law and the EU 
would therefore urge the Panel not to confirm in passing this position in any way (which is in any 
event not directly relevant to the present case). On the contrary, the Appellate Body has consiste ntly 
stressed that, while panels can normally not make recommendations on terminated measures 
(regardless of whether the termination was before or after panel establishment), they have a margin 
of discretion in the exercise of their inherent adjudicative p owers under Article 11 of the DSU as 
regards making findings, and that within this margin of discretion, it is for a panel to decide how it 
takes into account subsequent modifications to, or expiry or repeal of, the measure at issue in their 
decision to ma ke findings or not – including where the expiry or repeal took place after panel 
establishment.  
3. While the fact that expiry or repeal took place only after panel establishment may, depending 
on the circumstances of each case and alongside other factors,  play a role in a panel's exercise of 
its discretion, it is clearly not a knock -out criterion which would mandate making findings on the 
expired measure, regardless of other relevant factors. On the contrary, Thailand's reading of the 
case-law that panels have normally only made findings on expired measures where there were 
specific reasons to do so, is true both for cases where measures expired or were withdrawn before 
and during the panel proceedings.  
4. In this context, as Thailand rightly highlights, th e by far most compelling reason for making 
findings despite expiry or repeal of the measure is the (real) risk of reintroduction of the measure, 
which is a matter for the complainant to substantiate; whether such a risk has been demonstrated 
in the current  case is a matter for the Panel to assess on the basis of the evidence before it. In this 
respect, the EU fully agrees with Thailand that the risk of reintroduction of the specific measure at 
issue is something for the complainant to demonstrate with clear  evidence. On the other hand, the 
EU would also join Thailand in cautioning against putting too much emphasis on the concept of 
"lingering effects" as a reason to make findings on terminated measures, at least outside the context 
of subsidies where this co ncept was introduced by US – Upland Cotton .  
II. THE 2002 -2003  CHARGES  
5. The EU will address below the questions of applicability of the CVA to the Charges, the 
argument that the Philippines has not made a prima facie  case and the legal standard for deter mining 
a "cost -plus benchmark" when examining the impact of a buyer -seller -relationship under Article 
1.2(a) of the CVA, including the argument on the importer's alleged illegal behaviour towards the 
Indonesian authorities. By contrast, the EU considers th at the First Compliance Panel has already 
addressed sufficiently the arguments under Article XX of the GATT 1994, which it rightly considered 
inapplicable to claims under the CVA. As the EU had already provided extensive arguments on this 
point in the Firs t Compliance Proceedings, it will not comment any further on this issue.  
A. Applicability of the CVA  
6. The EU, in line with the findings of the First Compliance Panel, reiterates its position from the 
First Compliance Proceedings, that a functional unders tanding of the term "customs valuation" is 
warranted, which leads to the application at least of the substantive rules of the CVA on customs 
valuation whenever customs values are being determined. The CVA thus applies regardless of which 
authority does it (in line with Article 4 of the ILC Articles on Responsibility of States for Internationally 
Wrongful Acts, and in the absence of a clear and explicit limitation to certain types of authority in 
the text of the CVA), in which type of procedure. It is clear from previous case -law, and the First 
Compliance Panel recalled this at length, that the legal framework to be applied by a panel does not 
change when the measure at issue is adopted in the sphere of a Member's criminal law. Allowing WT/DS371/RW2/Add.1  
 
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  (criminal) enforcement  of CVA -inconsistent valuation decisions by carving them out from the scope 
of application of the CVA would not only be at odds with this principle, but also undermine 
considerably the effet utile  of the Agreement, and doesn't find any justification in thi s or other 
covered Agreements.  
7. The EU also considers that the First Compliance Panel has provided valuable analysis on the 
question of when, actually, a "customs valuation" takes place, developing the principles set out by 
the panel in Colombia – Ports of Entry . Relying on Article 15 of the CVA, customs valuation thus 
takes place where an authority (i) determines the monetary worth or price of imported goods (ii) for 
the purposes of levying ad valorem customs duties. In applying this definition to the C harges, the 
First Compliance Panel found that the Prosecutor actually determines the monetary worth of the 
imported goods, because in order to sustain the allegation of false prices, it compared the actual 
price declared to a benchmark (as opposed to a com parison between the actual price declared and 
the actual price paid, established for instance on the basis of evidence for a false invoice). It also 
found that the second condition (for the purposes of levying duties) is fulfilled, in particular as this 
notion includes the determination of amounts of duties due. It seems to the EU that this is not about 
generally equating customs fraud with customs valuation, but simply about examining whether the 
Prosecutor's assessment implies valuation decisions.  
8. In light of the guidance provided by the First Compliance Panel, the EU has difficulties in 
following Thailand's assertions that the 2002 -2003 Charges, contrary to the 2003 -2006 Charges 
dealt with by the First Compliance Panel, should be judged differently. Th ailand alleges that these 
Charges were actually based on substantiated findings that the declared price was not the actual 
price paid. It seems a priori  to the EU that the 2002 -2003 Charges, in the same way as the Charges 
in the First Compliance Proceeding s, compared the declared price with a benchmark price (and not 
the price actually paid), by calculating this benchmark on the basis of cost structure information 
received from the Indonesian government, which would qualify as meta -data rather than as actua l 
prices paid in Thailand. In this case, the reasoning of the First Compliance Panel would remain valid 
with regard to the measure at issue here. However, the EU does not take a definitive position on 
this factual question which the Panel will have to thor oughly assess on the basis of the evidence 
before it.  
B. Prima facie case  
9. The EU does not concur with Thailand's arguments. The Panel's duty under Article 11 of the 
DSU, consisting in a comprehensive obligation to make an "objective assessment of the ma tter", 
embraces all aspects of a panel's examination of the "matter", both factual and legal. Thus, panels 
are to make an objective assessment of the facts, of the applicability and interpretation of the 
covered agreements, and of the conformity of the mea sure at stake with those covered agreements. 
As the EU has already pointed out in the First Compliance Proceeding, as regards the assessment of 
the facts, a panel must neither conduct a de novo review nor simply defer to the conclusions of the 
national aut hority, but rather assess whether the conclusions drawn by the national authority were 
reasoned and adequate, and how they were justified by the evidence on the record. The Appellate 
Body has also made it clear that "the injunction that panels should not s ubstitute their own 
conclusions for those of the competent authorities does not mean that all a panel needs to do in 
order to comply with its duties when reviewing a determination is to consider whether the 
investigating authority's findings or conclusions  appear to be 'reasonable' or 'plausible' in the 
abstract. To the contrary, a panel can assess whether an authority's explanation for its determination 
is reasoned and adequate only if the panel critically examines that explanation in the light of the 
facts and the alternative explanations that were before that authority."  
10. In the present case, like in the First Compliance Panel, it is obvious that the Public Prosecutor 
actually made a determination on the basis of the evidence before it, namely the dete rmination that 
the transaction values had to be rejected and that therefore , there was a suspicion of under -
declaration of customs values. As the First Compliance Panel rightly stressed, the fact that this 
determination by the Prosecutor does not amount to  a final judgement does not, in any way, diminish 
its own legal value and effects, and does not make it a "non -determination".  
11. It is also clear that what the Prosecutor did to reach his determination was a circumstances 
of sale test pursuant to Article  1.2(a) of the CVA. Accordingly, Article 11 of the DSU requires the 
Panel to examine thoroughly whether the circumstances of sale test actually performed by the Public 
Prosecutor corresponded to the standards set by Article 1.2(a) of the CVA, and justified  the 
conclusion that the transaction values were unacceptable. In the EU's understanding, this 
assessment would not be a de novo  review of the facts, but simply the required critical examination WT/DS371/RW2/Add.1  
 
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  of whether the conclusions of the national authority were rea soned and adequate, and whether its 
reasoning was consistent.     
C. Legal standard for establishing "cost -plus-benchmarks" under Article 1.2(a) CVA  
12. Like in the First Compliance Proceeding, one of the key questions under the CVA is again the 
legal stan dard for rejecting a transaction value due to the allegation that the relationship between 
buyer and seller influenced the price. The First Compliance Panel considered that the benchmark for 
a customs authority's assessment under Article 1.2(a) must thus b e the question whether the 
examination was apt to reveal whether the relationship between the buyer and the seller influenced 
the price; flaws or shortcomings in the analysis are only relevant insofar as they are "sufficiently 
serious or consequential" in this regard.  
13. In the present proceedings, both Parties agree that the examination of circumstances of sale 
under Article 1.2(a) of the CVA can rely on a so -called "cost -plus-profit" benchmark, i.e. a 
comparison between the declared price and a benchmar k prices constructed on the basis of the 
seller's costs plus a reasonable profit. They disagree however under which conditions this benchmark 
can be used and how it is to be constructed.  
14. Firstly , a point of contention is whether the examination of the circumstances of sale must 
involve a process of consultation. The Philippines relies on the Original Panel Report and the First 
Compliance Panel Report which both stressed the importance of the process of consultation. Thailand 
seems to believe that this c onsultation requirement is only relevant under Article 2 and 3 of the CVA. 
The EU has difficulties in understanding Thailand's argument, as the findings of both the Original 
Panel and the First Compliance Panel explicitly related to the not less explicit t ext in Article 1.2(a). 
Thus, the process of consultation is indeed an essential, inherent  element of the circumstances of 
sale examination; if the consultation is insufficient or even inexistent, the examination is flawed.  
15. As Thailand highlights in th is context, the EU had signalled in the First Compliance Proceeding 
that one might want to consider making a distinction between substantive obligations of the CVA, 
by which any authority functionally carrying out customs determinations is bound, and purel y 
procedural provisions, for which the assessment might need to be more nuanced. The First 
Compliance Panel did not go down this route. In any event, even if one were to pursue this path, it 
would be absurd to draw the conclusion that a circumstances of sa le test performed by an authority 
which is not a customs authority in the formal sense would have to abide by a lesser standard, in 
terms of thoroughness of the examination (which clearly is a substantive obligation). As the 
consultation with the importer is an essential element in guaranteeing the thoroughness of the 
examination, the EU takes the view that this consultation requirement cannot be "carved out" of the 
requirements for the circumstances of sale test for those cases where the valuation is perfo rmed by 
authorities other than customs administration in the formal sense. The EU therefore agrees with the 
Philippines that "the procedural obligation in the third sentence cannot be artificially cleaved from 
the substantive obligation in the second sente nce". 
16. Secondly , the Parties disagree on the concrete conditions for the use of the "cost -plus" 
benchmark. Paragraph 3, last sentence, of the Interpretative Note to Article 1.2 envisages recourse 
to such a benchmark. However, on the one hand, the positive formulation "if …this demonstrates 
that the price had not been influenced" refers in the first place to the use of such a benchmark to 
demonstrate "non -influence" and, at least textually, does not tell the reader much about the use to 
the contrary  purpose, or the demonstration of influence. On the other hand, apart from the reference 
to a "representative profit over a representative period of time" and to "sales of goods of the same 
class or kind", it does not provide any further details on the con crete requirements for this cost 
benchmark test.  
17. The Parties disagree in particular on how far requirements set out in other provisions of the 
CVA, and notably Article 6 thereof, should apply in this context. For the EU, it is clear that Article 6 
as such concerns the determination of customs values of imported goods, and not the determination 
of benchmarks to which declared transaction values are compared under Article 1.2(a). Thus, they 
don't apply as such to this determination.  
18. However, in the E U's view this cannot mean that the principles set out in Article 6 (as well as 
in other Articles of the CVA) are completely irrelevant for the interpretation of Article 1.2(a). In this 
respect, the EU would like to point to the key principle of harmonious interpretation which a treaty 
interpreter must always search for and prefer.  
19. This is even more important where there is a close logical and systemic connection between 
the matters regulated in the provisions at stake, as here. The valuation methods un der the CVA WT/DS371/RW2/Add.1  
 
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  have as their principal objective to arrive at values as close as possible to the "real" / "true" price – 
hence, the preference for actual transaction values, if reliable, and the sequencing in alternative 
valuation methods. The preamble of the  CVA stresses this principle when it rejects "arbitrary or 
fictitious customs values". At the same time, the benchmark with which the transaction values are 
being compared in the circumstances of sales test are also supposed to be a close proxy of the "tru e 
price", absent the bias introduced by the relationship between the seller or buyer.  
20. If both values, the alternative customs value as well as the benchmark, are thus supposed to 
be the closest possible proxy to the "real" price, it makes sense that th e principles provided for by 
the CVA to ensure a maximum "real -ness" of the alternative customs value should also inform, as 
context, the search for a "real" benchmark to which transaction values would be compared in the 
circumstances of sale test. The CVA  itself acknowledges this connection in Article 1.2(b)(iii), where 
it mandates that the transaction value be accepted in any event in case it corresponds to the customs 
value of identical or similar goods determined under Articles 5 and 6.  
21. This does ce rtainly not mean that all the rules on determining alternative customs values 
apply, in the sense of being "inserted into Article 1.2 of the CVA", as Thailand puts it - and Article 
1.2(c) makes it clear that there is indeed a line to be drawn between what is done for comparison 
purposes and what is done for the purpose of establishing substitute values. Taken into account as 
context, the EU would however expect that where a customs authority goes fundamentally against 
those principles within the circumstanc es of sales test, it provides at least a substantiated 
explanation setting out convincing grounds for a different approach.  
22. In this context, the EU would also like to recall the essential requirement of comparability 
inherent in Article 1.2(a) CVA tha t the First Compliance Panel rightly highlighted. This requirement 
should also ultimately guide the assessment of whether the cost -plus benchmark was correctly 
constructed – namely in a way that the data used were comparable to those of the actual sales. T he 
reference in paragraph 3, last sentence, of the Interpretative Note to Article 1.2 to "sales of goods 
of the same class or kind" is exactly an expression of this principle of comparability.  
23. Thirdly , regard should be had to the good faith principle. In the EU's opinion, Thailand has a 
point in claiming that an importing country's authorities must be able a priori  to rely on information 
provided by a foreign government ( in casu : the exporting country at the time, Indonesia). Indeed, 
it must be able to assume that this information is accurate and truthful, and not have to start from 
the assumption that the information provided by the foreign government has been "fabricated" by 
the importer. Or, as Thailand puts it: it cannot be that "a customs administra tion has a duty to 
assume that a company's declarations to other governments are inaccurate".  
24. However, this cannot result in a situation where information of whatever kind and quality, if 
provided by a foreign government, has to be taken at face value,  even in cases where it obviously 
does not reflect real values. Such a "blind -trust-approach" would go diametrically against a main 
objective of the CVA, which, as set out above, is to ensure that customs determinations are based 
on real and truthful value s. It might be worth recalling that the Original Panel, quoting the Appellate 
Body in US – Wheat Gluten , underlined that "competent authorities have an independent duty of 
investigation and that they cannot 'remain[] passive in the face of possible short -comings in the 
evidence submitted, and views expressed, by the interested parties".  
25. The EU would thus advocate a nuanced approach, where data provided by foreign 
governments could indeed be taken as a valid starting point; however, customs authorities w ould 
be obliged to take due account of any doubts that would be obvious from the data submitted or 
signalled by the importer. Again, due consultation with the importer before final determinations are 
taken is obviously a conditio sine qua non  for this nuan ced approach to yield fair results.  
26. The European leaves it to the Panel to judge on the basis of the evidence before it whether in 
casu doubts on the reliability and suitability for customs purposes of the data received were 
warranted and whether the T hai authorities acted with the required circumspection and care.  
*   *   * 
27. With respect to the more horizontal questions under the DSU, the EU considers that the 
questions around the alleged reliance on own illegality in a foreign jurisdiction (with respect to CK -
21A) are of particular interest from a systemic point of view. In a ddition to the general good faith 
principle that we discussed already in our reply to the Panel's Advance Questions, the Panel noted 
in its questions to the Parties that, more specifically, Thailand's arguments seem to be "couched in 
terms that evoke the n otion of estoppel". Thailand has however clarified in its Replies to the Panel's WT/DS371/RW2/Add.1  
 
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  Advance Questions that Section 3.4.2 of Thailand's first written submission does not contain an 
argument of "estoppel".  
28. Moreover, the Appellate Body has stated in EC — Export Subsidies on Sugar  that "it is far from 
clear that the estoppel principle applies in the context of WTO dispute settlement". For principles 
inhibiting the right of Members to bring disputes, it would appear more appropriate to rely directly 
on limitati ons which are set out explicitly in the DSU, like in Article 3.7 (which refers to the exercise 
of judgement as to whether action under the DSU would be fruitful), and in Article 3.10 (which 
requires Members to engage in dispute settlement procedures in goo d faith). According to the 
Appellate Body, this latter obligation "covers the entire spectrum of dispute settlement, from the 
point of initiation of a case through implementation. Thus, even assuming arguendo that the principle 
of estoppel could apply in t he WTO, its application would fall within these narrow parameters set out 
in the DSU."  
29. A priori, the EU would apply the same line of reasoning in the present case. Without affirming 
that the principle of estoppel can never be relevant as such in WTO di sputes, the EU considers that 
a specific application of this principle is not needed in the present case, on top of the general 
principles set out in Articles 3.7 and 3.10 of the DSU.  
30. Also, on substance, the EU would have doubts about the pertinence o f such a principle in the 
current case. Recent doctrine and practice in public international law retain a rather focused notion 
of estoppel, according to which a State is not allowed to contest a situation contrary to a clear and 
unequivocal representation  previously made by it to another State, who was entitled to and did rely 
on it, and as a result that other State has been prejudiced or the State making it has secured some 
benefit or advantage for itself. Both conditions (clear and unequivocal representa tion and detriment/ 
prejudice) seem not to be fulfilled in the present case.  
 
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  ANNEX C -2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF INDONESIA  
I. Introduction  
 
1. In this dispute, the Philippines challenged two measures at issue in these second compliance 
proceedings which are: (i) Notices of Assessment ( "NoAs"), which re -assess the customs value of 
1,052 entries of cigarettes that cleared Thai customs in the period 2001 to 2003; and (ii) criminal 
charges that allege under -declaration of Philip Morris Thailand 's transaction value, which pertain in 
to 780 entries of cigarettes that cleared Thai customs from 2002 -2003 ( "02-03 Charges ").1 One of 
the main issues discussed by the parties to the dispute concerns Indonesian administ rative CK -21A 
form that has been relied upon by the Thailand Customs Department as well as Thailand Department 
of Special Investigation ( "DSI") to determine the measures at issue.  
 
2. Government of Indonesia ( "GOI") welcomes the opportunity to participate  as a third party in 
these proceedings and to present its views to the Panel. GOI considers that this proceeding require 
Indonesia 's intervention since it relates to Indonesia 's excise tax system for tobacco products during 
the relevant period, i.e. 2001 -2003.  
 
3. In this submission, Indonesia will clarify its excise tax system for tobacco products, in 
particular, the applicable excise regime for tobacco products during the period of 2001 – 2003. Based 
on that, Indonesia is of the view that CK -21A form shall only be  used for the purpose of calculating 
excise for tobacco products sold in Indonesia market.   
 
II. Indonesia 's Excise Tax Law for Tobacco Products During 2001 -2003  
 
4. Like any other country in the world, one of the sources of revenue for Indonesia to finan ce 
our state expenditures comes from taxes. Every year State Budget/Anggaran Pendapatan dan 
Belanja Negara ( "APBN ") is prepared by the government and must be approved by the House of 
Representative/ Dewan Perwakilan Rakyat ( "DPR").2 APBN consists of State Revenue, State 
Expenditures and Budget Financing.3 Therefore, every year the government must set a target on 
how much revenue they have to obtain either from taxes or other sources to finance the state 
expenditures. This target is also applicable to excise  tax, which is one of the forms of domestic tax 
revenues.4  
 
5. Based on these targets, which is set annually, GOI will determine the amount of excise 
imposed on particular products.5 Excise in Indonesia is only imposed towards 3 products category 
namely:  
a. ethyl alcohol/ethanol;  
 
b. drinks containing ethyl alcohol;  
 
c. tobacco products including cigarette, cigar, cigarette leaves, sliced tobacco, and other 
tobacco processing products.6 
 
6. For tobacco products, the excise tariffs and/or the tax base (HJ E)7 are stipulated usually once 
a year except for special occasion in order to achieve certain revenue target as stipulated in the 
                                                
1 The Philippines’s f irst written submission, para. 9.  
2 Article 1(1) of the Law No. 15 of 2017.  
3 Article 2 of the Law No. 15 of 2017.  
4 Article 1(4) of the Law No. 15 of 2017.  
5 Article 2(1) of the Law No. 11 of 1995.  
6 Article 4 (1) of the Law No. 11 of 1995.  
7 The translat ion of “HJE” into English would be “retail selling price”.  However, although the GOI fixed 
the minimum tax base (HJE), it did not fix the actual retail selling price.  Sellers could sell tobacco products at 
any price. When we refer to the HJE in this subm ission, we refer to the tax base.  
 WT/DS371/RW2/Add.1  
 
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  APBN.8 The excise tariffs and minimum HJE differ for different producers ' classifications, different 
types of tobacco product s, whether it is domestic production or imported or whether the producers 
export the products in such quantity more than their domestic sales. 9 
 
7. The determination of excise tax for tobacco product that must be paid by the producer or 
importer is calcul ated based on the multiplication of excise tariff with the base price.10 The base 
price of tobacco product that used for excise tax calculation is HJE11 submitted by the producers, 
and approved by the Directorate General of Customs and Excise ( "DGCE "), whi ch must not be lower 
than the minimum HJE predetermined by the government depending on, inter alia , the size of the 
producers and type of products.12 Regulating minimum HJE is necessary in order to fulfill GOI 's 
target for excise tax, which is already set annually.  
 
8. Under Indonesian Excise Tax Law, the producers shall pay excise tax for excise goods when 
the products left the factory or the storage.13 Payment of excise can be done by, inter alia , attaching 
excise tape on the packing of the related produc t.14 Therefore, the determination of HJE has to be 
done first before the producer or importer orders excise tax tape through CK -1 form.15  
 
9. The determination of HJE is made following an application submitted by cigarette producers.16 
In the application the producers must attach the CK -21A form containing items that need to be filled 
out by the producers to determine the producers ' HJE.17 It should be noted that the producers need 
to submit the application of HJE including the attachment CK -21A form prior  to the production and 
sales of the tobacco products. Thus, the numbers stated in CK -21A form are pre calculation, which 
is used to calculate tax base to determine excise tax.  
 
10. Although HJE for each producer is self -declared, there are several requirements that need to 
be complied with. For examples, first, as aforementioned, the producers ' HJE shall not be below the 
minimum HJE that has been stipulated by the government. The purpose of stipulating minimum HJE 
is to achieve excise revenue target  that has been set by the GOI. For this purpose, the GOI also has 
the authority to increase HJE that has been previously stipulated.18 GOI also has an authority to 
determine the maximum HJE.19 Therefore, when assessing an application for HJE determination as 
well as its attachment i.e. CK -21A form, DGCE only assesses: (a) whether HJE declared by the 
producer in the application has exceeded minimum HJE set by the GOI; (b) whether the producers 
                                                
8 Under the Indonesian Excise Tax Law, there are several implementing regulations concerning 
Indonesian excise system for tobacco products such as Minister of Finance Decree and Director General of 
Customs and Excise Decis ion. During the period between 2001 to 2003, the determination of excise tax tariff 
and the excise tax base price for tobacco products was regulated by Minister of Finance Decree of the Republic 
of Indonesia No. 89/KMK.05/2000 (MOF Decree 89/2000), as amen ded the last time with Minister of Finance 
Decree No. 384/KMK.04/2001 (MOF Decree 384/2001). On 1 December 2001, MOF Decree 89/2000 and its 
amendments were replaced by Minister of Finance Decree No. 597/KMK/09/2001 (MOF Decree 597/2001), as 
amended the las t time with Minister of Finance Decree No. 121/KMK.04/2002 (MOF Decree 121/2002). On 1 
November 2002, MOF Decree 597/2001 and its amendments were replaced by Minister of Finance Decree No. 
449/KMK/04/2002 (MOF Decree 449/2002). Whereas, the retail price de termination for tobacco products was 
regulated by the Decision of Director General of Customs and Excise No. KEP -17/BC/2000 (DGCE Decision 
17/2000), as amended by the Decision of Director General of Customs and Excise No. KEP -27/BC/2000.  
9 Excise tariff an d minimum HJE of domestic tobacco production for different producers classification 
was stipulated in: (i) Article 5(1) and Attachment II of MOF Decree 89/2000; (ii) Article 8 and Attachment III 
of MOF Decree 597/2001; and (iii) Article 7 and Attachment II  of MOF Decree 449/2002.  
10 Article 2(1) of MOF Decree 89/2000.  
11 Article 2(2) of MOF Decree 89/2000; Article 2(2) of MOF Decree 597/2001; and Article 4 of MOF 
Decree 449/2002.  
12 Excise tariff and minimum HJE of domestic tobacco production for different producers classification 
was stipulated in: (i) Article 5(1) and Attachment II of MOF Decree 89/2000; (ii) Article 8 and Attachment III 
of MOF Decree 597/2001; and (iii) Article 7 and Attachment II of MOF Decree 449/2002. While, excise tariff 
and minimum H JE for imported tobacco was stipulated in: (i) Article 5(2) and Attachment III of MOF Decree 
89/2000; (ii) Article 14 and Attachment V of MOF Decree 597/2001; and (iii) Article 12 and Attachment IV of 
MOF Decree 449/2002.  
13 Article 7 (1) of the Law No. 11  of 1995.  
14 Article 7 (3) of the Law No. 11 of 1995.  
15 Article 6 (2) of MOF Decree 89/2000; Article 5 (1) of MOF Decree 597/2001; and Article 1(8) of MOF 
Decree 449/2002.  
16 Article 2 (1) and (3) of DGCE Decision 17/2000.  
17 Ibid. 
18 Article 6 (1) of MOF  Decree 89/2000.  
19 Article 4 of MOF Decree 453/2000 and Article 9 of DGCE Decision 17/2000.  
 WT/DS371/RW2/Add.1  
 
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  or importers have decreased their HJE that is still in force.20 There is no other verification or 
assessment performed by DGCE during the stage of application for HJE determination.  
 
11. Second, HJE for a new product from the same producer or importer may not be lower than 
the HJE that is still in force.21 Third, the factory price stipulated in CK -21A form must not exceed 
92.5% of the HJE.22 Fourth, regardless of any different circumstances, the HJE amount that listed in 
the CK -21A form is also listed in the CK8 form (for export purposes) with the same valu e.23 The 
purpose of this provision is aimed at securing domestic revenue in the event of a failed export 
product and re -entering the domestic market. If exports continue to be carried out, the excise of 
the product will not be collected or charged since ex cise tax is only imposed on certain products sold 
domestically.  
 
III. CONCLUSION  
 
12. In view of the above, GOI just want to reiterate that:  
 
a. The role of administrative CK -21A form is an official document of which sole purpose 
was to determine HJE cons istently with the prevailing regulation so that the collection of excise tax 
in appropriate amount can be done to achieve revenue target set by the government;  
 
b. DGCE assessment is focused on whether HJE that has been self -declared by the 
producers excee ds minimum HJE stipulated by the government and whether the producers or 
importers have decreased their HJE that is still in force;  
 
c. Excise tax is imposed for domestic sales and not for export sales. The purpose of 
stipulating HJE in CK 8 form is to ant icipate the condition of a failed export product re -entering the 
domestic market;  
 
d. Indonesia has been enforcing its excise system vigorously pursuant to the laws and 
regulations. DGCE has always been monitoring any illegal conduct by tobacco producers p articularly 
in relation to the enforcement of excise collection.  
 
e. Although it is for the Panel to determine whether CK -21A form could be the basis of 
customs valuation or not, Indonesia is of the view that under the Customs Valuation Agreement, 
informa tion used for the purpose of making customs valuation determination should be objective 
and accurate and ensure that customs valuation is "fair, uniform and neutral ". 
 
 
 
 
 
 
 
                                                
20 Article 6 (4) of MOF Decree 89/2000; Article 6 (1) of MOF Decree 597/2001; and Article 5(3) of MOF 
Decree 449/2002.  
21 Article 8 (2) of MOF Decree 597/2001; and  Article 7(2) of MOF Decree 449/2002.  
22 Article 9 of MOF Decree 597/2001.  
23 This is in accordance with the provision in Article 6 of the Director General of Customs and Excise 
Regulation No. KEP -19/BC/1999 and Article 14 of Minster of Finance Decree No. 449/KMK/04/2002, where it is 
stated that HJE and excise duty of tobacco products for export purposes are the same with HJE and excise duty 
of tobacco products for domestic market purposes.  WT/DS371/RW2/Add.1  
 
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ANNEX C -3 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN  
I. APPLICABILITY OF ARTICLE XX OF THE GATT 1994 TO THE CVA  
1. Concerning  the applicability of Article XX of the General Agreement on Tariffs and Trade 1994  
("GATT 1994 ") to the Agreement on Implementation of Article VII of the General Agreement on 
Tariffs and Trade 1994  ("Custom s Valuation Agreement " or "CVA"), Japan agrees wi th the conclusion 
of the first compliance panel that Article XX of the GATT 1994 is not available to justify measures 
that are found to be inconsistent with the CVA for two reasons.   
2. First, Japan considers that the absence of a textual reference to Arti cle XX of the GATT 1994 
in the CVA weighs heavily against the applicability of Article XX to the CVA.  Japan notes that the 
CVA does not provide an explicit textual link or cross -reference to Article XX of the GATT 1994, a 
common drafting technique to indi cate the intention to make available in one agreement a provision 
in another agreement.  Yet, specific cross -references to Article XX of the GATT 1994 are found in 
other agreements, and the CVA itself includes a cross -reference to Article X of the GATT 199 4.  These 
two considerations indicate that, had the drafters intended for Article XX  of the GATT 1994 to apply 
to the CVA, they could have, and would have, included a cross -reference to the provision as they 
did for Article X.  The  panel and the Appellate Body reports in  China – Raw Materials  also make the 
point that drafters have incorporated the provisions of Article XX of the GATT 1994 into other 
agreements by cross -reference.1  In Japan 's view, the CVA 's position as an implementing agreement 
of the GATT  1994 and its abstract mention of the "objectives of the GATT 1994 " are also not sufficient 
to create a link between Article XX of the GATT 1994 and the CVA.   
3. Second, Japan considers that Article XX of the GATT 1994 and the CVA are of different legal 
construct and nature.  Article XX provides for general exceptions under the GATT 1994.  In contrast, 
the CVA is a special agreement on how to implement a specific p rovision under the GATT 1994, 
namely, Article VII.  Therefore,  by its nature, the CVA constitutes a special law vis -à-vis the GATT 
1994 that provides specific rules focusing on how WTO Members shall go about applying such rules 
to determine customs values.   Considering this difference, Japan is of the view that Article XX of the 
GATT 1994 may be applicable to the CVA only when the latter provides for such application in its 
text.  This is  because general exceptions that are applicable to general rule s are not necessarily 
applicable to specific rules unless  the specific rules explicitly  incorporate those general exceptions, 
which the CVA does not.  
II. THE TREATMENT OF INFORMATION PROVIDED BY THE CUSTOMS ADMINISTRATION 
OF AN EXPORTING MEMBER UNDER ARTICLE 1.2 OF THE CVA  
4. With regard to  the treatment of information provided by the customs administration of an 
exporting Member under Article 1.2 of the CVA , Japan considers that the customs administration of 
an importing Member has an obligation to examine inform ation provided by the customs 
administration of an exporting Member for three reasons . 
5. First, as a general matter, Japan notes that the CVA recognizes some degree of cooperation 
between Members.  While Japan notes that the CVA has no explicit provision on cooperation between 
customs administrations , Article 18 provides a framework for coordination between Members by 
establish ing the Committee on Customs Valuation.  One of the Committee 's purpose s is to provide 
an opportunity for Members to consult on mat ters relevant to the operation and objectives of the 
CVA.  Furthermore, Japan considers  that it may be generally useful for the customs administration 
of an importing Member to be provided with information by the customs administration s of other 
Member s to implement the CVA.  
6. Second, specifically considering the text of CVA Article 1.2(a), Japan considers that the third 
sentence of that provision allows the customs administration of an importing Member to use 
                                                
1 Appellate Body Report, China – Raw Materials , para. 303 (quoting Panel Report, China – Raw 
Materials , para. 7.153).  WT/DS371/RW2/Add.1  
 
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  information provided by the customs administration of other Members , including , but not limited to,  
an exporting Member  by the inclusion of the terms "or otherwise ".  Moreover, there is no provision 
which distinguishes information provided by the customs administrations of other Members from  
information  provided by the importer.  Nor is there a provision which exempt s such information from 
examination by the customs administration of an importing Member under Article 1.2(a).  In Japan 's 
view, the use of the word "including " in paragraph 3 of the Interpretative Note  to Article 1.2 also 
provides a basis to require the customs administration of an importing Member to examine a broad 
range of information and circumstances surrounding the relevant sale of goods, including information 
provided by th e customs administration of the exporting Member.  
7. Third, Japan notes that the second sentence of the CVA Article 1.2(a) states that the 
circumstances surrounding the sale between the related buyer and seller "shall be examined ".  As 
paragraph 2 of  the Interpretative Note  to Article 1.2 provides that "such examination " is only 
required when the price is in doubt, Japan considers that this implies that, whenever the customs 
administration of an importing Member has any doubts about the acceptability of the  transaction 
value, it must examine the circumstances surrounding the sale by doing a critical review of the 
information before it, including information provided by the exporting Member.  
III. THE SCOPE OF ARTICLE 21.5 PROCEEDINGS  
8. Concerning  the appropriate scope of Article 21.5 proceedings on the permissibility of 
incorporating by reference the relevant findings and reasoning ruled on  in the first Article 21.5 
proceedings , Japan notes that the measures at issue in the second Article 21.5 pro ceedings are 
different from the measures at issue  in the first Article 21.5 proceedings.  Therefore, Japan considers 
that the Panel must determine whether these measures at issue in this second 21.5 proceedings are 
"particularly closely connected to the me asures the implementing Member asserts are ‘taken to 
comply, ' and to the recommendations and rulings of the DSB, so as to fall within the purview of the 
compliance panel. "2  Japan considers that the Panel must examine the links, specifically in terms of 
their nature, effects, and timing, between the alleged measure, the declared measure taken to 
comply, and the DSB recommendations and rulings. If the measures fall within the purview of the 
Panel, the Panel must independently examine the issues of law or leg al interpretation that arise in 
this second recourse to Article 21.5 . 
IV. APPRICABILITY OF EQUITABLE MAXIMS SUCH AS THE "CLEAN HANDS " DOTRINE IN 
WTO DISPUTE SETTLEMENT  
9. Lastly, with regard to the applicability of equitable maxims such as the "clean hands " doctrine 
in WTO dispute settlement, Japan 's view is that such maxims could be applicable in WTO dispute 
settlement if recognized as general principles of law .  Japan does not take a specific position on the 
particular circumstances  in this dispute .  Rather , Japan considers that the Panel must  carefully 
assess: (i) whether there is any linkage  between the equitable maxims  and the term "good faith " as 
used in Article 31(1) of the Vienna Convention on the Law of Treaties or Article 3.10 of the 
Understand ing on Rules and Procedures Governing the Settlement of Disputes ("DSU"); (ii) what 
the legal effects of such linkage  are; and (ii i) whether the application of the equitable maxims  in 
question is indispensable for the prompt settlement of this dispute.  
                                                
2 Appellate Body Report, US – Zeroing (EC)(Article 21.5 - EC), para. 207.  WT/DS371/RW2/Add.1  
 
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ANNEX C -4 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES  
EXECUTIVE SUMMARY OF  U.S. THIRD PARTY OR AL STATEMENT  
I. Procedural Issues  
1. There is no provision in the DSU that requires a panel to follow legal interpretations in previous 
panel or Appellate Body reports . To the contrary, the WTO Agreement and the DSU explicitly reserve 
to the Ministerial Conference and General Council the "exclusive authority " to adopt an "authoritative 
interpretation " of a provision of the covered agreements . As such, it is only through a ppropriate 
action by those  bodies (and not the DSB) that this Panel would be bound to follow a legal 
interpretation.  
 
2. While this proceeding might present similar legal questions as the past proceeding, this Panel 's 
special focus under Article 21.5 and i ts terms of reference under Article 7.1 do not change the role 
of the Panel . The DSB established the Panel to assess the disagreement as to the existence or 
conformity with the covered agreements of a measure taken to comply with a DSB recommendation . 
In m aking that assessment, the Panel is to apply customary rules of interpretation of public 
international law to the relevant provisions of the covered agreements . The Panel might consider 
and incorporate certain prior findings by reference, if it considers a ny underlying legal interpretation 
to remain appropriate under those customary rules .  
 
3. The United States considers that the Panel must provide a rationale for its findings, including 
any findings it might incorporate by reference . Article 11 of the DSU  describes the function of the 
panel to "make an objective assessment of the matter, including an objective assessment of the 
facts of the case and the applicability of and conformity with the relevant covered agreements. "  
Article 12.7 requires the Panel 's report to "set out . . . the basic rationale behind any findings and 
recommendations that it makes. " 
 
4. In determining whether the Notices of Assessment are within its terms of reference, the Panel 
should consider whether those measures as they existed at the time of panel establishment are 
consistent with the obligations asserted . Under Article 7.1 of the DSU, the DSB establishes a panel 
"[t]o examine . . . the matter referred to the DSB " by the complainant in its panel request . Under 
Article 6.2, in tu rn, the "matter " consists of "the specific measures at issue " and "a brief summary 
of the legal basis of the complaint. " 
 
5. Thus, the DSB has charged the Panel with assessing the "matter " as of the time of its 
establishment, including "specific measures a t issue. "  If the Panel finds the Notices existed and 
were inconsistent with a WTO obligation as of panel establishment, Article 19.1 of the DSU requires 
the Panel to make a recommendation regarding those measures.  
 
II. Scope of the Customs Valuation Agree ment  
6. Articles 1 through 6 of the CVA establish a sequential hierarchy of methods for determining 
the customs value of imported goods . Article 1.1 provides that the customs value "shall be the 
transaction value, that is the price actually paid or payable  for the goods, " except under certain 
specified circumstances . If, after taking the necessary procedural steps, the transaction value is 
determined not to be acceptable, the authority proceeds to the valuation methodologies set forth in 
Articles 2 through 7. The CVA makes clear that recourse to the method set forth in each of those 
Articles is available only when the valuation cannot be determined by the methods in the preceding 
Articles.  
 
7. The CVA does not establish requirements with respect to determina tion of the "price actually 
paid or payable " itself, or task a Member with determining what price should have been paid . Under 
Article 1.1, the price paid or payable is the transaction value . If goods are valued using the 
transaction value, the disciplines of Article 1 apply, and there is no basis to proceed to any of the 
methodologies set out in the subsequent Articles.  
 WT/DS371/RW2/Add.1  
 
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  8. Nothing in the CVA suggests that its disciplines do not apply in determining the customs value 
in transactions involving cu stoms fraud . In establishing the hierarchy of permissible valuation 
methodologies, the CVA does not distinguish between valuation of legitimate and fraudulent 
transactions . The text of the CVA generally imposes obligations on WTO Members . These obligations  
are not limited only to subsets of a Member 's government.  
 
9. As such, the United States considers that the key interpretative question presented with 
respect to the charges at issue in this proceeding is whether those charges reflect a determination 
of customs value, and if so whether that valuation is consistent with CVA requirements.  
 
III. Sources of Information  
10. As this Panel observed in the original proceeding, valuation typically involves a degree of 
communication between the importer and the cust oms authority . In related party transactions, the 
CVA provides that the circumstances of sale shall be examined if there are doubts about the reliability 
of the price and the importer should be given an opportunity to provide information . The CVA further 
requires that, if the customs authority has grounds for considering that the relationship influenced 
the price, it communicate those grounds to the importer and provide an opportunity to respond .  If 
the authority has grounds for doubting the truth or accur acy of the declared value, the Decision 
Regarding Cases where Customs Administrations Have Reasons to Doubt the Truth or Accuracy of 
the Declared Value  likewise requires the authority to communicate its grounds and provide the 
impor ter an opportunity to re spond.  
 
11. As such, the United States would expect the authority to communicate with the importer if it 
has doubts about the acceptability of the price, or the truth or accuracy of the declaration, including 
in a case where the doubts are created by infor mation provided by a third country.  
 
12. In addition, Article 7 of the CVA expressly prohibits the use of minimum prices or arbitrary or 
fictitious values . It is not relevant that the information that would establish those prices or values is 
provided by a third country government.  
 
EXECUTIVE SUMMARY OF  RESPONSES OF THE UN ITED STATES TO THE P ANEL'S 
QUESTIONS TO THIRD P ARTIES AND THE PHILI PPINES' QUESTION TO THIRD PARTIES  
 
THE 1052 REVISED NOT ICES OF ASSESSMENT  
13. A panel 's terms of reference are set forth in Articles 7.1 and 6.2 of the DSU . Under Article 7.1, 
a panel 's terms of reference (unless otherwise decided) are "[t]o examine . . . the matter referred 
to the DSB " by the complainant in its panel request . Under Article 6.2, the "matter " consists o f "the 
specific measures at issue " and "a brief summary of the legal basis for the complaint. "  Consequently, 
the measures with a panel 's terms of reference are defined by the complainant 's panel request, and 
the relevant time for defining the measures wit hin the terms of reference is the time of the DSB 's 
establishment of the panel.  
 
14. The question is whether the NoAs, as they existed at the time of the Panel 's establishment, 
when the "matter " was referred to the Panel, are properly within the Panel 's terms of reference . As 
a general matter, the United States would understand that a measure that has been "withdrawn " 
does not "exist, " and cannot be "affecting the operation of any covered agreeme nt." 
 
15. Judicial economy is exercised at the panel 's discretion, provided that all findings are made 
that are necessary for resolution of the dispute . Article 3.7 of the DSU provides that "[t]he aim of 
the dispute settlement system is to secure a positiv e solution to a dispute, " while Article 3.4 provides 
that "[r]ecommendations or rulings made by the DSB shall be aimed at achieving a satisfactory 
settlement of the matter . . . . "  Pursuant to Article 11, a panel "should make an objective assessment 
of the matter before it " – that is, the "matter " as defined in Article 6.2, which establishes the panel 's 
terms of reference under Article 7.1.  
 
16. Thus, under the DSU, the Panel is charged with making those findings that may lead to a 
recommendation by the DS B to a WTO Member to bring a WTO -inconsistent measure into conformity 
with WTO rules . While a panel should decline to make findings that are not necessary to resolve a 
dispute, a measure that has been withdrawn prior to the establishment of the panel would  not be 
within the panel 's terms of reference and not form part of the "matter " to be resolved.  WT/DS371/RW2/Add.1  
 
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ALLEGED ILLEGALITY  
17. It is not necessary for the Panel to determine whether it can apply "equitable maxims " such 
as the "clean hands " doctrine . Rather, the P anel should conduct an objective assessment of whether 
the challenged measures are inconsistent with the identified provisions of the CVA, interpreted in 
accordance with customary rules of treaty interpretation.  
ARTICLE XX OF THE GA TT 1994  
18. In resolving  "the applicability of and conformity with the relevant covered agreements, " the 
DSU establishes that the Panel is to apply "customary rules of interpretation of public international 
law" to the terms of those agreements . Prior reports do not form part of the customary rules of 
interpretation of public international law, and the DSU assigns no particular interpretive weight to 
prior reports.  
 
19. The Panel may take into account the reasoning of the prior compliance panel, to the extent 
that the Panel, havin g conducted an objective assessment of the matter, finds that reasoning 
persuasive . However, the Panel is not "required " to reach the same conclusion as the previous panel, 
even absent any novel argument, circumstance,  or development.  
 
RESPONSE TO QUESTION  FROM THE PHILIPPINE S TO THE THIRD PARTI ES 
20. The CVA establishes disciplines with respect to the determination of "the customs value of 
imported goods. "  Article 1.1 provides that the customs value "shall be the transaction value, that 
is the price actually paid or payable for the goods, " except under certain specified circumstances . 
Article 1.2 establishes disciplines wi th respect to how a customs authority examines the price actually 
paid or payable (that is, the transaction value) as reported by the importer for purposes of 
determining whether it is acceptable.  
 
21. If the transaction value is determined not to be accep table, the authority proceeds to the 
valuation methodologies set forth in Articles 2 through 7 . None of Articles 2 through 7 requires the 
customs authority to determine the price paid or actually payable . If the customs authority is relying 
on the price ac tually paid or payable to determine the customs value, it is by definition operating 
within the scope of Article 1.  
 
 
__________