WT/DS371/RW/Add.1  
 
12 November 2018  
(18-7027) Page: 1/89 
  Original: English  
 
  
THAILAND – CUSTOMS A ND FISCAL MEASURES ON  CIGARETTES  
FROM THE PHILIPPINES  
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE PHILIPPINES  
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/RW . 
 
 
_______________  
 
 WT/DS371/RW/Add.1  
 
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  LIST OF ANNEXES  
ANNEX  A 
WORKING PROCEDURES O F THE PANEL  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  A-2 
Annex  A-2 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  A-8 
Annex  A-3 Procedural Ruling Concerning Third -Party Access to the Final Report of the 
Panel in the Philippines' Firs t Recourse to Article 21.5 of the DSU  A-9 
ANNEX B  
ARGUMENTS OF THE PAR TIES 
Contents  Page  
Annex  B-1 Executive Summary of the Arguments of the Philippines   B-2 
Annex  B-2 Executive Summary of the Arguments of Thailand  B-26 
ANNEX  C 
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex  C-1 Executive summary of the arguments of  Australia  C-2 
Annex  C-2 Executive summary of the arguments of Canada  C-4 
Annex C -3 Executive summary of the arguments of the European Union  C-8 
Annex C -4 Executive summary of the arguments of Japan  C-11 
Annex  C-5 Executive summary of the arguments of  the United States   C-15 
 
 
 WT/DS371/RW/Add.1  
 
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 ANNEX  A 
WORKING PROCEDURES O F THE PANEL  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  A-2 
Annex  A-2 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  A-8 
Annex  A-3 Procedural Ruling Concerning Third -Party Access to the Final Report of the 
Panel in the Philippines' Firs t Recourse to Article 21.5 of the DSU  A-9 
 WT/DS371/RW/Add.1  
 
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  ANNEX  A-1 
WORKING PROCEDURES O F THE PANEL  
Adopted on 25 January 2017  
 
1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on Rules 
and Procedures Governing the Settlement of Disputes (DSU). In addition, the following Working 
Procedures shall apply.  
General  
2. The Panel will provide the parties to the dispute (hereinafter “parties”) and third parties to the 
dispute (hereinafter “third parties”) with a timetable for panel proceedin gs. 
3. The deliberations of the Panel and all documents submitted to it shall be kept confidential. 
Nothing in the DSU or in these Working Procedures shall preclude a party from disclosing 
statements of its own positions to the public. A party may indicate pa rticular 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 submi ssion containing such information shall give notice of 
this request and explain why 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 the 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.  
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 
submissions 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, un less a 
different deadline is granted by the Panel where good cause is shown.  
4. 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.  
5. Each party and third par ty 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 such delegation acts in 
accordance with the DSU and these Working Procedures, particularly with regard to the 
confidentiality of the proceedings.  The parties and the third parties shall provide a list of the 
participants of their delegation to the Secretary of the Panel, no later t han 5.00 p.m. three working 
days before the substantive meeting commences.  
6. Each party's written submissions, written answers to questions and comments thereon, 
comments on the descriptive part of the report, and written request for review of precise aspect s 
of 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.  
Submissions  
7. Before the substantive meeting of the Panel with the parties, each party shall submit a w ritten 
submission in which it presents the facts of the case and its arguments, in accordance with the WT/DS371/RW/Add.1  
 
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 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.  
8. A party shall submit any request for a preliminary ruling at the earliest possible opportunity 
and in any event on or before the date of the organizational meeting. If either party requests such 
a ruling, the other party sha ll submit its response to the request in accordance with the timetable 
adopted by the Panel. Exceptions to this procedure shall be granted upon a showing of good cause. 
The Panel reserves the right to ask the parties to submit copies of their preliminary s ubmissions 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 Panel 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 electronically or 
otherwise. S hould a meeting on the preliminary ruling request be held, the Panel will consult the 
parties on suitable dates for the meeting.  
9. Each party shall endeavour to submit all factual evidence to the Panel with its first written 
submission 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 showing 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.  
10. Where the original language of an exhibit is not a WTO working langua ge, 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 either 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 time for the translation of 
such exhibits upon a showing of good cause.  
11. 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 
submission which contains th e translation in question. Any objection shall be accompanied by a 
detailed explanation of the grounds of objection and an alternative translation. The Panel shall rule 
on any objection to the accuracy of a translation as promptly as possible thereafter.  
12. Any publically available WTO document that is relied on by either party need not be produced 
as an exhibit. Such publically available WTO documents are deemed to be part of the Panel record. 
The other party, third parties, the Panel, or the Appellate Body m ay, at any stage, request a copy 
of the relevant publicly available WTO documents.  
13.  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 dictionary 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 relevant excerpts as ex hibits. 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 relevant dictionary 
defini tions.  
14. 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, as 
attached to Appendix 1, to the extent that it is practical to do  so. 
15. To facilitate the maintenance 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. Exhibits submitted by the Philippines shall be numbered PHL -1, PHL -2, etc. 
and exhibits submitted by Thailand shall be numbered THA -1, THA -2, etc. If the last exhibit in WT/DS371/RW/Add.1  
 
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  connection with the first submission was numbered, for example, PHL -5, the first exhibit of the 
next submission thus would be numbere d PHL -6. 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 
submitted it.  
16. Each party shall provide an updated consolidated exhibit list with each submission made.  
Questions prior to the substantive meeting  
17. Prior to the substantive meeting, the Panel shall 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 the r ight 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 ques tions 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 timetable i n the light of the Panel 's additional questions.  
Substantive meeting  
18. 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 will be fixed subsequently by the Panel, at 
least three 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 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 que stions or make comments, through the Panel. Each party shall then 
have an opportunity to answer these questions orally. Each party shall send in writing, 
within a timeframe to be determined by the Panel, any questions to the other party to 
which it wishes to receive a response in writing. Each party shall be invited to respond in 
writing to the other party's written questions within a deadline to be determined by the 
Panel.  
c. The Panel may subsequently pose questions to the parties. Each party shall then h ave 
an opportunity to answer these questions orally. The Panel shall send in writing, within a 
timeframe to be determined by it, any questions to the parties to which it wishes to 
receive a response in writing. Each party shall be invited to respond in wri ting to such 
questions within a deadline to be determined by the Panel.  
d. Once the questioning has concluded, the Panel shall afford each party an opportunity 
to present a brief closing statement, with the Philippines presenting its statement first.  
Third  parties  
19. The Panel shall invite each third party to 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.  
20. Each third party shall also be invited to 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.  WT/DS371/RW/Add.1  
 
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 21. 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 parties 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 t han 5.00 p.m. 
of the first working day following the session.  
c. After the third parties have made their statements, the parties may be given the 
opportunity, through the Panel, to ask the third parties questions for clarification on any 
matter raised in t he third parties' submissions or statements. Each party shall send in 
writing, within a timeframe to be determined by the Panel, any questions to a third party 
to which it wishes to receive a response in writing. Each third party shall be invited to 
respon d in writing to such questions within a deadline to be determined 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 wri ting, 
within a timeframe to be determined by it, any questions to the third parties to which it 
wishes to receive a response in writing. Each third party shall be invited to respond in 
writing to such questions within a deadline to be determined by the Pan el. 
Descriptive part  
22. 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 appropria te by the Panel. The executive summaries shall be annexed 
as addenda to the report. These executive 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.  
23. Each part y shall submit a consolidated executive summary of the facts and arguments as 
presented to the Panel in its written submissions and oral statements, three weeks after the last 
submissions have been made, in accordance with the timetable adopted by the Pane l. These 
summaries may also include a summary of responses to questions. Each such executive summary 
shall not exceed 30 pages. The Panel will not summarize in the descriptive part of its report, or 
annex to its report, the parties ' responses to questions.  
24. Each third party shall submit an executive summary of its arguments as presented in its 
written submission and statement in accordance with the timetable adopted by the Panel. This 
summary may also include a summary of responses to questions, where releva nt. The executive 
summary to be provided by each third party shall not exceed 6 pages.  
25. The Panel may revise the page limits upon request of a party.  Paragraph 29 below shall apply 
to the service of executive summaries.  
Interim review  
26. 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 e xercised no 
later than at the time the written request for review is submitted.  
27. 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 accordance with th e timetable WT/DS371/RW/Add.1  
 
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  adopted by the Panel. Such comments shall be limited to commenting on the other party's written 
request for review.  
28. The interim report, as well as the final report prior to its official circulation, shall be kept 
strictly confidential and shall  not be disclosed.  
Service of documents  
29. 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 documents 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 docume nts it 
submits to the Panel at the same time as the paper versions, 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 , *****@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.  
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 copi es 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 appropr iate. When 
the Panel transmits to the parties or third parties both paper and electronic versions of a 
document, the electronic version shall constitute the official version for the purposes of the 
record of the dispute.  
30. The Panel reserves the right to modify these procedures as necessary, after consultation with 
the parties.  
  WT/DS371/RW/Add.1  
 
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APPENDIX 1  
"EDITORIAL  GUIDE FOR ENGLISH WT O PANEL SUBMISSIONS"  
 [SEE THE ATTACHMENT TO THE E -MAILS OF 25 /01/2017 AND 02/02/2 017 SENT BY THE 
SECRETARIAT ON BEHAL F OF THE PANEL]  
  WT/DS371/RW/Add.1  
 
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  ANNEX A -2 
ADDITIONAL WORKING P ROCEDURES CONCERNING  THIRD -PARTY ACCESS TO THE FINAL REPORT 
OF THE PANEL  IN THE PHILIPPINES' FIRST RECOURSE TO AR TICLE 21.5 OF THE DS U 
Adopted on 24 May 2018  
1. Following consultation with the parties, the Panel has adopted these additional procedures 
pursuant to its authority under Article 12.1 of the DSU and taking into account the particular 
circumstances of these proceedings.  
 
2. Pending the translation and public circulation of the Final Report of the Panel in the 
Philippines' first recourse to Article 21.5 of the DSU (the Final Report), the Panel will provide an 
electronic copy of the Final Report to any Member participating as a  third party in Thailand – 
Customs and Fiscal Measures on Cigarettes from the Philippines – Second Recourse to Article 21.5 
of the DSU by the Philippines  (Philippines' second recourse to Article 21.5) subject to the following 
conditions:  
 
(a) the electroni c copy of the Report obtained under these procedures may be referenced 
by a third party only for the purpose of enabling it to prepare its third -party written 
submission, third -party oral statement, or responses to questions in the Philippines' 
second reco urse to Article 21.5, and for no other purpose; and  
 
(b) no person may have access to the Report except an employee of a third party, and an 
outside adviser acting on behalf of the third party for the purposes of this dispute, and 
each third party shall ha ve responsibility in this regard for its employees as well as 
any outside advisers used for the purposes of this dispute.  
 
3.  Any Member participating as a third party in the Philippines' second recourse to Article 21.5 
that wishes to receive a copy of t he Final Report subject to these conditions shall request a copy of 
the Final Report from the Panel. To promote the orderly conduct of the proceeding, any interested 
third party is invited to make any such request promptly upon becoming aware of these addi tional 
procedures.  
 
4. The parties and third parties are free to refer to the contents of the Final Report in their 
submissions to the Panel in the Philippines' second recourse to Article 21.5 of the DSU. Pending 
the translation and public circulation of the Final Report, any reference to the contents of the Final 
Report included in the parties' and third parties' written submissions, oral statements or responses 
to questions in the context of the Philippines' second recourse to Article 21.5 of the DSU sha ll be 
treated as confidential information by the parties and third parties and shall not be publicly 
disclosed. Accordingly, if a party or third party makes its submissions publicly available, any 
reference to the contents of the Final Report shall be reda cted from the public version of its 
submission pending the translation and public circulation of the Final Report.  
 
5. In accordance with paragraph 28 of the Working Procedures adopted by the Panel on 25 
January 2017 in the context of the Philippines' firs t recourse to Article 21.5 of the DSU, the Final 
Report is strictly confidential and shall not be disclosed . For greater clarity, granting third parties 
access to the contents of the Final Report in accordance with paragraphs 2 to 4 of these additional 
procedures does not constitute "disclosure" within the meaning of paragraph 28.  
 
6. These additional working procedures concerning third -party access to the Final Report of the 
Panel will be annexed to the Report of the Panel in the Philippines' first recour se to Article 21.5 of 
the DSU, and have been incorporated by reference into the working procedures adopted by the 
Panel in the context of the Philippines' second recourse to Article 21.5 of the DSU.  
  WT/DS371/RW/Add.1  
 
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 ANNEX A -3 
PROCEDURAL RULING CO NCERNING THIRD -PARTY ACCE SS TO THE FINAL REPO RT OF THE PANEL 
IN THE PHILIPPINES' FIRST RECOURSE TO AR TICLE 21.5 OF THE DS U 
24 May 2018  
1  INTRODUCTION  
1.1.  The Philippines has requested that the Members participating as third parties in its second 
recourse to Article 21.5 of the DSU recei ve a copy of the confidential Final Report that was already 
issued to the parties in its first recourse to Article 21.5 of the DSU, and that is not expected to be 
translated and publicly circulated before the last quarter of 2018.  
1.2.  After consulting with th e parties, the Panel has decided to grant the Philippines' request. This 
procedural ruling relates to the working procedures of both the first and second compliance panels, 
and will therefore be annexed to the Reports of the Panel in both the first and second compliance 
panel proceedings . 
2  FACTUAL BACKGROUND  
2.1.  In the context of the Philippines' first recourse to Article 21.5 of the DSU, the Panel informed 
the Dispute Settlement Body (DSB) that  it expected  to issue its Final R eport to the parti es in the 
first quarter of 2018 .1 The Panel did so. Following the issuance of the Report to the parties, the 
Secretariat informed the parties that the translation of the Final Report into Spanish and French 
was not expected to be completed before the last quarter of  2018.  
2.2.  At its meeting on 27 March 2018, the DSB established a second compliance panel to examine 
the matter referred to by the Philippines in its second recourse to Article 21.5 of the DSU in this 
dispute. As set forth in its request for the establishment  of a second compliance panel2, the two 
sets of measures at issue in the Philippines' second recourse to Article 21.5 are  related to the 
measures at issue in the first compliance proceeding:  
a. The Philippines challenges Notices of Assessment that Philip Morr is (Thailand) Limited 
(PMTL) received in November 2017 from Thailand's Customs Department, rejecting  
PMTL's declared transaction values, and determining revised customs valu es, for 1052 
shipments of cigarettes imported over the period 2001 -2003. These 1052  shipments 
include 208 shipments whose  customs values were previously assessed by a ruling of the 
Board of Appeals that was issued on 16 November 2012. The November 2012 Board of 
Appeals Ruling is the subject of the Philippines' first reco urse to Article 2 1.5 of the DSU.  
b. The Philippines challenges a set of criminal charges filed by the Public Prosecutor against 
PMTL and one of its former employees on 26 January 2017, in respect of 779 shipments 
of cigarettes imported in 2002 -2003. This second set of charge s was filed one year after 
a first set of criminal charges was filed by the Public Prosecutor against PMTL and seven 
of its current and former employees on 18  January 2016 , in respect of 272 shipments  of 
cigarettes imported between 2003 -2006. The first set  of criminal charges is  the subject 
of the Philippines' first recourse to Article 21.5 of the DSU.  
2.3.  With respect to both sets of measures at issue in the second compliance proceeding, the 
Philippines' panel request claims that the Thai authorities acted inconsistently with various 
obligations under the Customs Valuation Agreement (CVA) and the GATT 1994,  including inter 
alia:  
                                                
1 WT/DS371/20, dated 15 May 2017.  
2 WT/DS371/22, dated 14 March 2018.  WT/DS371/RW/Add.1  
 
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  a. Articles 1.1 and 1.2(a) of the CVA, by rejecting PMTL's transaction values without 
conducting a proper examination of the circumstances of sale, by failing to communicate 
the grounds for considering that the relationship between the  buyer and seller influenced 
the price , and by failing to give the importer any opportunity to comment on the 
information under consideration ;  
b. the relevant provisions of Articles 2 through 7 of the CVA, by failing to comply with the 
applicable valuation r ules when determining the revised customs values of the imported 
goods; and  
c. 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 determined . 
2.4.  The Panel observes th at these claims are similar , if not identical , to the legal claims raised in 
the first compliance panel proceeding pertaining to  both the November 2012 Board of Appeals 
Ruling and the first set of criminal c harges filed on 18 January 2016. These legal clai ms are the 
subject of the Panel's findings in the Final Report that was already issued to the parties in the first 
quarter of 2018.  
2.5.  The DSB was informed on 9 May 2018 that the second compliance panel is composed of the 
same individuals serving on the firs t compliance panel.3 On 24 May 2018, the Panel adopted its  
timetable and working  procedures, based on a draft timetable and a draft set of working 
procedures jointly agreed and proposed  by the parties. In accordance with the  timetable proposed 
by the parti es and subsequently adopted by the Panel, the complainant is expected to file its  first 
written submission before the end of May . The agreed timetable  further provides that the parties' 
remaining written submissions, the third -party written submissions, an d the written responses to 
any pre -hearing questions, will all be received before the last quarter of 2018. The timetable 
further provides that the substantive meeting with the parties (including the third -party session), 
and any post -hearing written quest ions and responses, will take place  within the last quarter of 
2018.  
3  THE PHILIPPINES' REQ UEST AND THAILAND'S RESPONSE  
3.1.  On 15 May 2018, the Philippines requested that the working procedures governing the 
conduct of the first compliance panel proceeding, which were adopted by the Panel on 25 January 
2017, be amended so as to make the Final Report available to the third parties participating in this 
second compliance proceeding. In its request,  the Philippines recalled that under paragraph 28 of 
those working procedures, the Final Report of the Panel is to be treated as "strictly confidential" 
and thus could not be shared with WTO Members, besides the Philippines and Thailand, until it is 
circul ated. The Philippines presented this request at the same time that the parties presented the 
Panel with their agreed timetable and working procedures.  
3.2.  In its request, the Philippines confirmed that the interpretations developed by the Panel in its 
Final R eport relate to issues that will also arise in the context of this second compliance 
proceeding. The Philippines observed that both proceedings concern criminal charges brought by 
the Thai authorities against the same importer, and that some of the claims that the Philippines 
brings in this case are identical to the claims that it made in the first compliance proceeding. The 
Philippines further noted that there is an overlap in the shipments of cigarettes covered by each of 
the two sets of measures at issue  in the second compliance proceedings, on the one hand, and one 
of the measures at issue in the first compliance proceeding (namely, the November 2012 Board of 
Appeals Ruling). In its request, the Philippines informed the Panel that it intends to refer to the 
Final Report in its submissions in this second compliance proceeding, including in its first written 
submission due to be filed before the end of May.  
3.3.  The Philippines recalled that Article 10 of the DSU provides that the third parties must be 
given ac cess to the submissions of the parties in order to participate in the second compliance 
proceedings, but observed that if paragraph 28 of the working procedures is left as it is, the 
Philippines would be obliged to prepare a redacted and incomplete version  of its submissions for 
the third parties. In the Philippines' view, this would necessarily deny the third parties full access 
                                                
3 WT/DS371/23, dated 9 May 2018.  WT/DS371/RW/Add.1  
 
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 to the submissions and thereby prejudice their right to participate in the proceedings in a full and 
meaningful fashion. The Phil ippines noted that without access to the Final Report, the third parties 
would be denied the ability to make submissions informed by the Final Report because they would 
be unaware of, and unable to address, an important part of the jurisprudence relevant t o the 
second compliance proceeding and also to the parties' arguments in that respect.  In the 
Philippines' view, providing the Final Report to a limited number of Members participating in this 
proceeding as third parties would not be tantamount to the cir culation of the Report, because 
those Members participating as third parties would still be subject to the obligation to preserve the 
confidentiality of the Report.  
3.4.  At the organizational meeting with the Panel held on 19 May 2018, Thailand indicated that it 
had serious reservations and concerns regarding the Philippines' request because of the systemic 
issues that it raised. Thailand considered that it was for the Panel to decide, but emphasized that if 
the Panel chose to grant the request, any such decisi on should be taken on the grounds that there 
are sui generis circumstances so as to avoid creating a broader precedent.  
3.5.  Thailand expressed its doubts whether there were circumstances in this case that would 
warrant a decision to sacrifice the important ru le of "strict confidentiality" of the Final Report, and 
queried whether the Philippines was in effect proposing to advance the circulation date simply for 
its own convenience. Thailand emphasized two points. First, Thailand suggested that the present 
case was not so exceptional insofar as it is quite common for Members and legal counsel involved 
in multiple WTO dispute settlement proceedings to have access to a Report or ruling in one 
proceeding that, regardless of its relevance, cannot be shared or referen ced in the context of 
another proceeding. Second, Thailand observed that delays in the translation of panel reports were 
not exceptional either. Therefore, Thailand suggested that if the Panel chose to grant the 
Philippines' request in this case, the delay  in translation should not be treated as sui generis 
circumstance or otherwise given undue weight in the reasoning justifying that course of action.   
3.6.  As to the modalities for how access would be granted to the third parties if the Panel chose to 
do so, Th ailand indicated that in its view it was too late to modify the working procedures 
governing the conduct of the first compliance panel. Thailand also noted that the Members 
participating as third parties in the first and second compliance panel were not id entical. For these 
reasons, Thailand suggested that if the Panel were inclined to grant the Philippines' request, the 
issue should be addressed in the context of the working procedures of this second compliance 
panel.  
4  EVALUATION BY THE PA NEL  
4.1.  We would str ess at the outset that this case involves a particular combination of 
circumstances, which are as follows:  
a. there are two consecutive compliance panel proceedings in Thailand – Customs and 
Fiscal Measures on Cigarettes from the Philippines (DS371) between t he same disputing 
parties and before two compliance panels composed of the same individuals;  
b. the Final Report in the first compliance proceeding has already been issued to the 
parties, and therefore the Panel's findings and reasoning are no longer subject to any 
further modification by the Panel;  
c. prior to filing its first written submission, the Philippines informed the Panel that by 
virtue of the overlapping subject -matter of the two compliance proceedings, its 
submissions will refer to the Final Report to  an extent that will necessitate third -party 
access to the Final Report if they are to participate in the proceeding in a full and 
meaningful fashion;  
d. the Secretariat has informed the parties and the Panel that the Final Report will not be 
circulated unti l some point (yet to be determined) in the last quarter of 2018, which is 
after the dates for the parties to file all of their written submissions and the date for the WT/DS371/RW/Add.1  
 
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  filing of the third -party written submissions, and possibly also after the substantive 
meeting with the parties and the third -party session;  
e. the Philippines has specifically requested that the Panel modify its working procedures to 
grant third -party access to the Final Report pending its translation; and  
f. ten Members have already notified the ir third -party interest in these proceedings, and 
these third parties are therefore legally entitled to receive all of the parties' submissions 
filed prior to the substantive meeting.  
4.2.  Clearly, the Panel does not have the authority to unilaterally authoriz e the circulation of a 
panel report prior to its translation into all three official languages of the WTO. The General 
Council's Decision on Procedures for the Circulation and Derestriction of WTO Documents4 states 
unequivocally that official WTO documents , including reports of panels5, shall be made available 
via the WTO website to facilitate their dissemination to the public at large "[o]nce translated into 
all three official WTO languages".6 It is true that the same decision states that the translation o f 
panel reports shall be completed "expeditiously"7, and the Panel notes that Article 15.2 of the DSU 
likewise envisages that the translation and circulation of a panel's final report shall be completed 
"promptly". However, that requirement does not serve to qualify the rule that panel reports may 
only be circulated once translated into the other official languages. Insofar as time periods being 
experienced for the translation of panel reports warrants a review of that rule and the existing 
procedures gover ning circulation, the authority to do so is vested with the Members.8  
4.3.  The issue presented by the Philippines' request is distinct from the question of whether the 
Final Report can be circulated prior to its translation. The Philippines has not requested t hat the 
Panel circulate the Report prior to its translation, nor has it requested that the Panel waive the 
confidentiality of the Final Report prior to its public circulation. Rather, the Philippines has 
requested that the Panel allow those Members partici pating as third parties in the Philippines' 
second recourse to Article 21.5 of the DSU to have access, on a confidential basis, to the contents 
of the Final Report that has already been issued to the parties in the Philippines' first recourse to 
Article 21 .5 of the DSU, and to which the parties are undoubtedly going to refer in their 
submissions to the second compliance panel.  
4.4.  Furthermore, the question before the Panel is not whether it should adopt special procedures 
to deal with the situation that the parties find themselves in, but rather what special procedures 
the Panel should adopt to deal with this situation. If the Panel  does not adopt a special procedure 
for granting third parties access to the contents of the Final Report on a confidential basis, the 
Panel will then have to adopt one of the following alternative sets of special procedures:  
a. the Panel could decline to gra nt third parties access to the contents of the Final Report 
without modifying the timetable for the proceeding agreed by the parties, in which case 
the Panel would then have to adopt special procedures requiring the parties to redact all 
reference to the c ontents of the Final Report when they serve their submissions on the 
third parties in this second compliance panel proceeding9; or   
b. the Panel could decline to grant the third parties access to the contents of Final Report, 
and deal with the situation by m odifying the timetable proposed by the parties so as to 
postpone the dates for filing their written submissions until such time as the Final Report 
has been translated and circulated sometime in the last quarter of 2018.   
4.5.  With these preliminary considerat ions and the alternative options in mind, t he Panel recalls 
that it is well established that "the DSU, and in particular its Appendix 3, leave panels a margin of  
 
                                                
4 WT/L/452, dated 16 May 2002.  
5 WT/L/452, dated 16 May 2002, paragraph 1 and footnote 1.  
6 WT/L/452, dated 16 May 2002, paragraph 3.  
7 WT/L/452, dated 16 May 2002, paragraph 3.  
8 WT/L/ 452, dated 16 May 2002, paragraph 5.  
9 Such additional procedures would also require the Panel to redact any references to the Final Report 
from any preliminary or procedural rulings made by the Panel and served upon the third parties prior the 
circulation  of the Final Report.  WT/DS371/RW/Add.1  
 
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  discretion to deal, always in accordance with due process, with specific situations that may  arise 
in a particular case and that are not explicitly regulated".10 The Panel is required to deal with a 
situation that is not explicitly regulated by the DSU or any other applicable rules, and it falls within 
the authority of the Panel to adopt appropria te arrangements to deal with this situation in 
accordance with due process and following consultation with the parties pursuant to Article 12.1 of 
the DSU. The Panel is mindful that " due process requires a balancing of various interests, including 
systemic  interests as well as those of the parties, and both general and case -specific 
considerations".11 The Panel has given careful consideration to the particular circumstances of the 
case and the parties' views, while engaging in a balancing exercise taking int o account how each of 
the alternative options before the Panel would impact on the rights and interests of the third 
parties, the Panel, the parties, and the WTO membership at large. In the particular circumstances 
of this case, the Panel considers that du e process is best served by granting the third parties 
access to the contents of the confidential Final Report of the Panel in the Philippines' first recourse 
to Article 21.5 of the DSU,  subject to the conditions set forth in the enclosed additional proced ures 
adopted by the Panel.  
4.6.  The Panel recalls that Article 10.1 of the DSU obliges it to ensure that the interests of the 
third parties are "fully taken into account during the panel process". Further, it is generally 
understood that " the third participants ' interests lie mainly in the correct legal interpretation of the 
provisions of the WTO agreements ".12 Providing the third parties with versions of the parties' 
submissions that have not been redacted so as to remove all references to the contents of the 
Final Report, including the relevant legal interpretations contained therein and the parties' legal 
arguments based on those interpretations, would therefore ensure that the third parties are able 
to exercise their right to participate in these proceedings " in a full and meaningful fashion"13, as 
guaranteed by Article 10 of the DSU. Conversely, requiring the parties to serve third parties with 
redacted versions of their submissions, which would remove all references to the Final Report 
including all of the par ties' argumentation directly referencing any interpretations by the first 
compliance panel, may infringe upon the right of the third parties to receive "the submissions" of 
the parties prior to the first meeting with the panel as provided for in Article 10 .3 of the DSU. As 
to the alternative option of delaying the proceedings until the Final Report of the Panel is circulated 
in both Spanish and French, the submissions of the parties  in this proceeding are in English. It  is 
not clear how any third party woul d be prejudiced by receiving access only to the English version 
of the Final Report while its translation is pending, given that  the principal reason for granting 
third-party access to the Final Report is to enable the Members participating in this proceed ing as 
third parties to have access to, understand , and meaningfully comment on  the legal arguments 
contained in the submissions of the parties .  
4.7.  The Panel considers that meaningful third -party participation in this proceeding is 
instrumental to the Panel' s own function of making an objective assessment of the matter before 
it, and in particular to ensuring that the Panel arrives at the  correct legal interpretation of the 
provisions of the WTO agreements . This again favours granting third parties access to non-
redacted versions of the parties' submissions, as a means of ensuring that the third parties can 
provide meaningful views on the parties' legal arguments. Conversely, if the third parties are  
 
                                                
10 Appellate Body Report, EC – Hormones , footnote 138. The Appellate Body made that statement in EC 
– Hormones , when reviewing the panel's decision to grant the United States access to all information in the 
proceedings initiated by C anada (and vice versa), in the context of Canada and the United States having 
initiated separate dispute settlement proceedings, and each participating as a third party in the proceeding 
initiated by the other. The Appellate Body considered that "[a]lthoug h Article 12.1 and Appendix 3 of the DSU 
do not specifically require the Panel to grant this opportunity to the United States, we believe that this decision 
falls within the sound discretion and authority of the Panel, particularly if the Panel considers i t necessary for 
ensuring to all parties due process of law". The Appellate Body considered that "in the case before us, 
circumstances justified the Panel's decision", and recalled that in other cases, panels have considered that 
"particular circumstances j ustified the grant to third parties of rights somewhat broader than those explicitly 
envisaged in Article 10 and Appendix 3 of the DSU". (Appellate Body Report, EC – Hormones , paras.  154-155.)  
11 Appellate Body Report, Thailand – Cigarettes (Philippines) , para. 150.  
12 Appellate Body Report, EC and certain member States – Large Civil Aircraft , Annex III, Procedural 
Ruling and Additional Procedures to Protect Sensitive Information, para. 23.  
13 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 249. See also Appellate Body Report, 
Japan – DRAMs (Korea) , para.  279, cautioning panels against sweeping redactions that could render a report 
unintelligible to third parties.  WT/DS371/RW/Add.1  
 
- A-14 - 
 
   unable to access the parties' argumentation, the Panel may  receive a number of third -party 
submissions advancing argumentation on the interpretation of CVA obligations that were prepared 
without sufficient knowledge of what the parties are actually arguing before this second 
compliance panel, and without the know ledge of the jurisprudence that may serve as the basis for 
those arguments. The Panel considers that if it is denied the benefit of informed third -party 
submissions in this manner, this could compromise the Panel's own ability to make an objective 
assessme nt of the matter as required under Article 11 of the DSU. Alternatively, if the Panel were 
to stay the proceeding by at least four to six months against the wishes of the parties and leave all 
dates in the air pending the public circulation of the Report, the Panel would not be acting 
consistently with its general duty to conduct the proceedings in a fair and orderly manner, or with 
its specific obligation to fix the timetable as required by Article 12.3 of the DSU.14 
4.8.  The Panel does not consider that grantin g access to the contents of the Final Report on a 
confidential basis to the third parties would prejudice the interests of either the responding party 
or the complaining party in the circumstances of this proceeding. Thailand has indicated that its 
concern s and reservations are "systemic" in nature, and has not suggested that sharing the Final 
Report with third parties would prejudice its interests in the context of this proceeding. For its 
part, the Philippines specifically requested that the Final Report be shared with the third parties, 
and argued that its own due process rights may be affected if its request is not granted. In 
contrast, the Panel considers that prejudice to the due process rights of one or both parties would 
indeed arise if the Panel ado pted special procedures providing for the redaction, or postponement, 
of the parties' written submissions. The first scenario would, as already explained, give rise to a 
very real possibility of the third parties preparing submissions without adequate know ledge of the 
parties' submissions, and in particular without adequate knowledge of the parties' arguments 
regarding the correct interpretation of the WTO obligations at issue in this proceeding, or the 
jurisprudence that may serve as an important basis for  the parties' arguments. Requiring the 
parties to dedicate their time and resources to responding to third -party submissions prepared in 
such circumstances may entail an "uneconomical use of time and resources"15 by the parties. 
Alternatively, the Panel con siders that the prejudice visited upon the complaining party would be 
even greater if the Panel sought to deal with the situation confronting it by postponing the filing of 
the parties' submissions until the Final Report has been circulated. While this opt ion for dealing 
with the delay in translation would fully safeguard the interests of the third parties and ensure 
their meaningful participation, it would do so at the expense of the complaining party's due 
process rights16 and the overall object and purpos e of the DSU.17  
4.9.  Finally, the Panel has considered the rights and systemic interests of the WTO membership at 
large, particularly from the perspective of contemplating how granting access to the contents of 
the Final Report to third parties in this proceedi ng could potentially affect other Members in their 
capacity as parties in any other parallel panel proceedings. In general, those Members receiving a 
confidential copy of the Final Report for the purpose of enabling them to develop their 
argumentation in t his panel proceeding would enjoy no advantage over other Members in the 
context of any parallel proceeding, given that those Members who receive a copy of the Final 
Report would be prevented from referencing the contents of the Final Report outside of the context 
of the present proceeding.18 Having said that, the Panel recognizes that if there are parallel 
                                                
14 Article 12.3 of the DSU provides that the timetable for the panel process is to be  fixed "as soon as 
practicable and whenever possible within one week after the composition and terms of reference of the panel 
have been agreed upon".  
15 Appellate Body Report, EC – Hormones , para. 152. In this scenario, the potential burden on the 
parties  could be compounded if the Final Report were circulated prior the conclusion of the briefing phase of 
the second proceeding, and at a late stage of this proceeding one or more the third parties requested leave 
from the Panel to provide a supplemental thir d-party submission prepared in the light of the information in the 
Final Report to which it finally had access . 
16 The Appellate Body has also stated that " due process" requires a panel to take appropriate account of 
the complaining party's "right to have r ecourse to an adjudicative process in which it can seek redress in a 
timely manner".  (Appellate Body Report, Thailand – Cigarettes (Philippines), para. 150.)   
17 Article 3.3 of the DSU provides that the "prompt settlement" of disputes is "essential to the effective 
function of the WTO". The Appellate Body has confirmed that this is part of the "overall object and purpose" of 
the DSU. ( Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 311. ) 
18 Furthermore, we understand that in the event of a breach of its confidentiality, another panel would 
be precluded from  considering the contents of the Final Report prior to its circulation. See China – Raw 
Materials , Communication from the Panel, 18 May 2 010, WT/DS394/9, WT/DS395/9, WT/DS398/8, paras. 43 -
44. WT/DS371/RW/Add.1  
 
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 proceedings involving similar issues to those examined in the Final Report, and if one of the 
parties to those proceedings has access to the contents of t he Final Report and the other disputing 
party does not, such knowledge could potentially inform that party's argumentation in a manner 
that could give rise to due process issues. However, the Panel considers that insofar as this is a 
concern for any Member , that concern is appropriately and fully addressed by circulating this 
procedural ruling enclosing the additional working procedures to the DSB, and thereby putting all 
WTO Members on an equal footing.  
4.10.   The Panel agrees with Thailand that preserving the c onfidentiality of the contents of the 
Final Report pending its circulation to all Members in the three official languages is an important 
principle. However, the Panel does not consider that its decision to grant interested third parties 
access to the cont ents of the Final Report on a confidential basis, for the sole purpose of allowing 
them to exercise their right to participate in a meaningful and full way in this second compliance 
panel proceeding, sacrifices that principle. The Report remains confidenti al. As elaborated in the 
enclosed procedures, which establish particularized arrangements for the purpose of this 
proceeding, the Panel has decided that the Final Report may be provided upon request to an 
interested third party on the basis of several inte rlocking conditions aimed at ensuring that the 
confidentiality of the Final Report is preserved.  
4.11.   The Panel agrees with Thailand that it is common for Members and legal counsel involved in 
multiple WTO dispute settlement proceedings to have access to a Rep ort or ruling in one 
proceeding that, regardless of its relevance, cannot be shared or referenced in the context of 
another proceeding. This procedural ruling is not mean t to suggest otherwise, or to open the door 
to panels, parties or third parties receiv ing advance copies of panel reports in translation whenever 
two different proceedings have overlapping subject -matter . In the circumstances of this case, the 
disputing parties and the Panel already have the Final Report , and will refer to it in their 
submi ssions to the Panel . The decision to grant third -party access to the Final Report  has not been 
taken because of  the degree of overlappin g subject -matter  as an autonomous  consideration, but 
rather because the Panel expects  that by virtue of th e overlapping subject -matter between the two 
compliance proceedings, the parties' submissions in the second compliance proceeding will refer to 
the Final Report from the first compliance proceeding in a manner that will necessitate third -party 
access to th e contents of the Final Report if they are to participate in the second compliance panel 
proceeding in a full and meaningful fashion.  In order words, the principal reason for granting third -
party access to the Final Report is simply to enable the third par ties to have access to, understand , 
and meaningfully comment on  the submissions of the parties . 
4.12.   The parties have provided the Panel with alternative views on the modalities for granting 
third parties access to the Final Report. In its request, the Philippi nes requested that the Panel 
amend paragraph 28 (regarding the strict confidentiality of both the Interim and Final Reports) of 
the working procedures adopted by the panel on 25 January 2017,  in its capacity as the first 
compliance panel. The Philippines i ndicated that it could then attach the Final Report as an exhibit 
to its first written submission in this second compliance proceeding. However, Thailand considers 
that the modalities for implementing any decision to grant access to third parties should in stead 
relate to the working procedures in this second compliance proceeding, because in its view it is too 
late for the Panel to amend the working procedures governing the first compliance proceeding. 
Thailand also notes that there is no identity between t he third parties in the first and second 
compliance proceedings.  
4.13.   Having considered the parties' view on the modalities for providing third parties with access 
to the contents of the Final Report, the Panel has concluded as follows:  
a. If third parties are to  be given access to the contents of the Final Report, they should be 
given a copy of the Final Report rather than merely being able to receive non -redacted 
versions of the parties' submissions and the passages of the Report that are referenced 
or extracted  therein. The reason is to avoid inducing one or both parties to insert 
lengthy, multi -page extracts from the Final Report in their submissions (which would 
erase the formal distinction between third parties having a copy of the Final Report 
versus not hav ing one, and leave the parties, third parties and Panel having to work with 
needlessly long, extract -laden submissions).  WT/DS371/RW/Add.1  
 
- A-16 - 
 
  b. The Panel accepts that either party attaching the Final Report to its submission could be 
one practical way of making it available to a ll of the third parties, but the Panel considers 
that it would be more appropriate for the Panel itself to provide a copy of the Final 
Report to the third parties, and to limit such provision to only those third parties that 
specifically request it.  
c. The P anel considers that it is not necessary to amend the terms of paragraph 28 of the 
working procedures adopted in the first compliance panel proceeding, because the Panel 
considers that making the contents of the Final Report available to third parties, in 
accordance with the confidentiality and permissible use provisions of paragraphs 2 to 4 
of the enclosed additional procedures, does not constitute "disclosure" of the Report 
within the meaning of paragraph 28 of the working procedures adopted by the Panel o n 
25 January 2017.   
d. Only the Panel in the first proceeding has the legal authority to grant third -party access 
to the contents of its Final Report. The Panel considers that it still has the authority to 
take appropriate action in its capacity as the first compliance panel, notwithstanding that 
it has already issued its Final Report.19 At the same time, the Panel agrees with Thailand 
that because the third parties are not identical in the first and second compliance 
proceedings, any procedures governing acces s to the Final Report cannot be made 
effective solely through a change to the working procedures of the first compliance 
panel. In the light of the foregoing, the enclosed additional working procedures will be 
annexed to the Report of the Panel in the Phil ippines' first recourse to Article 21.5 of the 
DSU, and also incorporated by reference into the working procedures adopted by the 
Panel for the purposes of the Philippines' second recourse to Article 21.5 of the DSU.  
 
 
_______________  
 
 
 
 
                                                
19 A panel's authority to take procedural decisions does not lapse upon the issuance of its final report to 
the parties. By way of illustration, a panel that has issued its final report to the parties s till has the authority to 
suspend the proceedings upon request of a party pursuant to Article 12.12 of the DSU.  WT/DS371/RW/Add.1  
 
- B-1 - 
 
  
 ANNEX  B 
ARGUMENTS OF THE PAR TIES 
Contents  Page  
Annex  B-1 Executive Summary of the Arguments of the Philippines  B-2 
Annex  B-2 Executive Summary of the Arguments of Thailand  B-26 
 
 WT/DS371/RW/Add.1  
 
- B-2 - 
 
  ANNEX  B-1 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF TH E PHILIPPINES  
I. INTRODUCTION  
1. The Philippines initiated this dispute in 2008 because Thailand had consistently subjected 
PM Thailand – an importer which sources virtually all of its cigarettes from the Philippines – to 
prejudicial and protectionist regulatory conduct. The original pane l found, inter alia , that Thai 
Customs improperly rejected PM Thailand 's transaction values, on entries between June 2006 and 
September 2007, in violation of both the procedural and substantive obligations in the CVA. 
Thailand did not appeal these findings , and informed the DSB that it intended to comply with its 
recommendations and rulings.  
2. The Philippines had hoped that Thailand 's implementation of the DSB 's recommendations 
and rulings would bring about security and predictability for importers in Thailan d, without further 
recourse to WTO dispute settlement. Regrettably, the situation confronting the Philippines ' export 
interests today is considerably worse than it was when the original proceedings were brought. 
Indeed, not only has Thailand has failed to comply with the recommendations and rulings of the 
DSB, it has taken compliance measures that themselves give rise to WTO violations, as described 
below.  
3. The Philippines raises claims in relation to three sets of compliance measures:  
4. First, the Philippin es challenges the rejection by the Board of Appeals ("BoA") of PM 
Thailand 's declared transaction values for 210 Marlboro  entries from 2002 and the determination  
of alternative deductive values (the "BoA Ruling"), as well as certain notices of assessment t hat 
result from the BoA Ruling.  
5. Second , the Philippines challenges criminal charges, filed on 18 January 2016, against PM 
Thailand and seven of its current employees, concerning 272 entries of cigarettes imported from 
the Philippines in the period 2003 -2006 ("the Charges"). The Charges reject PM Thailand 's 
transaction value, and threaten vast criminal fines, on the basis of a spurious comparison with 
purchase prices paid by King Power, a Thai duty -free operator. The Philippines also challenges 
Thailand 's failure to protect certain confidential information made public by Thai authorities.  
6. Third, the Philippines challenges the notification requirement imposed in administering the 
amended base for value -added tax ("VAT"), which Thailand adopted to implement the DSB 's 
original recommendations and rulings (the "VAT notification requirement"). The Philippines also 
challenges Thailand 's failure to publish certain measures of general application relating to the VAT 
notification requirement.  
II. THE BOA RULING IS IN CONSISTENT WITH THE CVA 
7. The BoA Ruling was the culmination of a process within the Thai customs administration 
for establishing the customs value of 210 Marlboro  entries from 2002. The declared values were 
rejected at the time of entry.  The customs value was initially set according to WTO -inconsistent 
reference prices. The importer appealed the initial assessment to the BoA, which is an appeal body 
within the Thai customs administration. The BoA 's failure to rule on the appeal was the su bject of 
findings by the original panel: the panel found that the undue delay in concluding the appeal 
violated Article X:3(a) and (b) of the GATT  1994.  
8. In the BoA Ruling, the BoA undertook a de novo  assessment of the customs value and 
decided to reject t he transaction values. It determined an alternative customs value using a 
deductive value calculation. Thailand declared the BoA Ruling as a measure taken to comply with 
the DSB 's recommendations and rulings in this regard.  
9. In these Article 21.5 proceedin gs, the Philippines claims that the BoA Ruling is inconsistent 
with Articles 1.1 and 1.2(a) of the CVA because the BoA improperly rejected the transaction value, 
and with Article 5 of the CVA because the BoA failed to make appropriate deductions for Provin cial 
tax and transport costs when calculating the alternative customs value.  WT/DS371/RW/Add.1  
 
- B-3 - 
 
  
 A. The applicable factual and legal standards of review1 
10. Thailand argues that, although Article 11 of the DSU is applicable, Article 17.6(i) of the 
Anti-Dumping Agreement ("ADA") pr ovides the standard of review for the Philippines ' substantive 
claims under Articles 1.1, 1.2(a), and 5.1 of the CVA. Thailand characterizes this as a deferential 
standard of "reasonableness", which it applies to the entirety of the Panel 's evaluation of t he 
claims regarding the BoA Ruling, including the assessment of the facts, and the interpretation and 
application of the law. Thailand 's argument has no merit.  
11. First, with respect to the Panel 's evaluation of the facts , the standard of review is set forth 
in Article 11 of the DSU. The Appellate Body has consistently rejected Thailand 's position that the 
standard in Article 17.6(i) of the ADA applies outside of the ADA. Under Article 11, the Panel must 
"make … an objective assessment of the facts of the case  and the applicability of and conformity 
with the relevant covered agreements", "in the light of the specific obligations of the relevant 
agreements that are at issue".2 Thus, the precise contours of the s tandard of review under 
Article  11 must be understood in light of the relevant substantive obligations. Under this standard, 
the Appellate Body has required panels to conduct a critical review of a national authority 's 
findings in light of the explanation given by an authority for its decision.3 If an authority 's 
explanation fails to demonstrate how the facts support its determinations under the obligations 
that govern its conduct, the Member violates those obligations.  
12. Second , with respect to the Panel 's evaluation of the law , pursuant to Article 3 .2 of the 
DSU, a panel must interpret the treaty text using the "customary rules of interpretation of public 
international law". Contrary to Thailand 's position, a panel cannot defer to a Member 's 
interpretation of treaty language simply because the interp retation is allegedly "reasonable" in 
some abstract sense. Under this approach, each Member would decide for itself how to define the 
treaty terms, provided it acts "reasonably". The multilateral standard in the covered agreements 
would be replaced with di verse unilateral standards, subject only to a reasonableness requirement. 
That would not be consistent with the DSU .  
B. The rejection of PM Thailand 's transaction values on the basis of the BoA 's 
circumstances of sale test violated Articles 1.1 and 1.2(a) of  the CVA 
13. The primary basis of valuation under the CVA is the transaction value. Article 1.2(a) 
provides that the fact that the buyer and seller are related " shall not in itself be grounds for 
regarding the transaction value as unacceptable".4 Rather, where  an authority has doubts about 
the transaction value 's acceptability, it must examine the circumstances of sale to determine 
whether the relationship influenced the price. Specifically, an administration must undertake a 
"critical consideration of, inquiry  into, and investigation of, the relevant situation", and "an active, 
critical review and consideration of the information before" it;5 in other words, a rigorous and 
critical examination of the circumstances of sale.  
14. The CVA does not prescribe a specific  process  for conducting an examination of the 
circumstances of sale. Examples in the Interpretative Note , however, contemplate a comparison 
between some aspect of the transaction under consideration, and a benchmark that represents 
normal commercial behavi or between unrelated parties. When making such a comparison, the CVA 
requires the authority to respect two basic principles of comparability: (1) the goods involved must 
be comparable ; and (2) full account must be taken of any factors that affect comparabi lity. If 
these principles are not observed, a comparison provides neither an objective basis for reaching 
conclusions about whether the relationship influenced the price, nor a valid basis for rejecting the 
transaction value.  
                                                
1 The Philippines' second written submission, paras. 38 -84; the Philippines' response to Panel Questions 
4, 5 and 94; the Philippines' opening statement, paras. 5 -14.   
2 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 - Canada) , para. 92. See also  Appellate 
Body Report, US – Countervailing Duty Investigation on DRAMS , para. 184. The Original Panel referenced this 
standard at paras. 7.68-7.72. 
3 See Appellate Body Report, US – Lamb , para. 106; Appellate Body, Argentina – Footwear Safeguards , 
para. 121.  
4 Emphasis added.  
5 Original Panel Report, para. 7.171.  WT/DS371/RW/Add.1  
 
- B-4 - 
 
  1. The BoA 's examination was bas ed on a flawed industry comparator 
group  
15. In the BoA Ruling, the BoA purported to examine the circumstances of sale by comparing 
P&GE rates of PM Thailand and those of an industry group. There were multiple flaws in the BoA 's 
comparison.  
a. The BoA selected co mpanies that were not comparable to PM 
Thailand in terms of goods sold and commercial level6 
16. The first flaw in the BoA 's construction of its industry group relates to the companies that 
it included  in the group. Specifically, the BoA selected companies tha t were not comparable to PM 
Thailand in terms of goods sold, and the commercial level at which the goods were sold. In doing 
so, the BoA failed to respect the principles of comparability required by the CVA.  
17. The BoA itself accepted that its industry group must comprise companies that sold goods 
that were sufficiently comparable to those sold by PM Thailand. In particular, in the BoA Ruling, 
the BoA asserted that its industry group consisted of wholesalers of i mported cigarettes with a 
brand reputation similar to Marlboro . Instead, however, the BoA selected an industry group 
comprised of the following five companies: (1) PM Thailand itself; (2)  Chemical Resins (a domestic 
manufacturer of cigarette filters); KHS (a wholesaler of cut tobacco); Lee Intertrade (a wholesaler 
of cigars, tobacco, rolling paper and cigarette holders); and Piriyapul (a grocery store retailer). 
Apart from PM Thailand itself, none of these companies were wholesalers of imported cigarettes.  
18. Nonetheless, while conceding that the BoA misrepresented the industry group and went 
"beyond the cigarette industry to establish a comparator group",7 Thailand says that the BoA 
respected the first principle of comparability  because the comparator compani es all sell "goods of 
the same class or kind" as imported cigarettes. Specifically, the companies were selected on the 
basis of registrations made by companies under code 51233 of Thailand 's SIC codes, i.e. 
"wholesale of tobacco and tobacco products". Howe ver, this rationalization of the BoA 's approach 
does not remedy the flaws in the industry group.  
19. First, Thailand 's explanation is not based on a proper interpretation and application of the 
term "goods of the same class or kind". Article 15.3 of the CVA defines this term as "the range of 
goods produced by a particular  industry or industry sector, and includes identical or similar goods". 
This requires an authority to identify the " particular " industry/sector that produces the goods being 
valued, and ascert ain the "range" of goods produces by that "particular" industry/sector. In 
making this assessment, an authority should take into account a variety of factors, including the 
identity of the producers, the nature of the finished goods, the methods of product ion, the chain(s) 
of distribution, and the final consumers. There is no evidence that the BoA ever did so.  
20. Second , not only was Thailand 's SIC code system not a reliable way to identify 
"wholesale[rs] of tobacco and tobacco products", the BoA did not prope rly apply the SIC codes. In 
any event, there is a question whether "tobacco and tobacco products" constitutes the "particular 
industry", within the meaning of Article 15.3 of the CVA, producing the goods being valued. The 
"industry" selected by the BoA inc luded finished and unfished tobacco products, as well as goods 
used to consume tobacco ( e.g. cigarette holders). These goods are made by different producers, 
have different inputs, different methods of production, different supply chains, and different 
consumers. Thailand has never explained why these goods are all produced by "a particular 
industry" for purposes of Article 15.3.  
21. Third, even if the BoA correctly identified "tobacco and tobacco products" as the "particular 
industry", the BoA included compani es – namely, Piriyapul and Chemical Resins – that did not sell 
"tobacco and tobacco products" at the "wholesale" level, as Thailand alleges. Piriyapul is a retailer 
of over 3,000 different goods, and KHS is a domestic manufacturer of cigarette filters. The se 
companies ' P&GE rates were earned in respect of sales of goods other than "tobacco and tobacco 
products" at the wholesale level.  
22. With respect to the second principle of comparability , the BoA also failed to take account of 
differences affecting the comp arison. In particular, the BoA 's industry group included companies 
                                                
6 The Philippines's first written submission, paras. 239 -257; the Philippine s' second written submission, 
paras. 110 -153; the Philippines' response to Panel Questions 6, 7, 78 and 79; the Philippines' opening 
statement, paras. 17 -22; the Philippines' comments on Thailand's responses to Panel Question 78.  
7 Thailand's first writte n submission, para. 5.31.  WT/DS371/RW/Add.1  
 
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 that sell goods at different commercial levels. Because prices differ depending on the commercial 
level at which they are sold, P&GE rates earned in sales cannot be used as a benchmark for P&GE 
rates earned in sales of goods at a different commercial level, without adjustments. The BoA made 
no such adjustments.  
23. Thailand 's defense of its failure to comply with the principles of comparability required 
under the CVA consists largely of repeated assertions regarding an expert witness statement 
submitted by the importer, PM Thailand, to Thailand 's Public Prosecutor in the context of a criminal 
investigation unrelated to the BoA Ruling.8   
24. Thailand 's reliance on this st atement is misplaced. The statement explicitly states that 
comparator companies in a P&GE comparison must be "comparable" .9 In the portion of the 
statement highlighted by Thailand, the statement explains that, pursuant to Points of 
Understanding between PM  Thailand and the Customs Department, a company could be considered 
comparable where it undertook the same economic activities , at the same commercial level , as PM 
Thailand. This statement therefore provides no support for the BoA 's approach, which involve d 
inclusion of companies engaged in different economic activities , at different commercial levels.  
b. The BoA included PM Thailand itself in the industry group10 
25. The second flaw  in the BoA 's construction of its industry group was that the BoA included 
PM Thailand itself in the comparator industry group . To recall, the purpose of the examination is to 
establish if the price paid by an importer  in a related party transaction reflects normal commercial 
behavior between unrelated parties , in order to determine  whether the relationship influenced the 
price. If the examination includes a comparison of the importer with the importer itself, in respect 
of transactions involving the same seller, that element of the examination cannot, by definition, 
shed light on wh ether the importer 's pricing is consistent with pricing in unrelated transactions. 
Any decision to reject transaction value that is based on an examination that compares the 
importer with itself does not meet the requirements of Article 1.2(a).  
c. The BoA in appropriately excluded certain companies from the 
industry group11 
26. The next flaw in the BoA 's construction of its industry group was its inappropriate exclusion 
of certain companies from the group. First, the BoA excluded BAT and JTI on the sole basis that 
they were loss -making. Second , the BoA excluded Classic Cigars and Macrorich, either because the 
BoA apparently lacked sufficient information, or because these companies ' P&GE rates were too 
high.   
27. With regard to BAT and JTI, lack of profitability is not,  in itself, a sufficient basis for the 
exclusion of a company from the industry group. Rather, an administration must examine whether 
there are "valid commercial reasons" for losses. This is consistent with the logic of using a P&GE 
comparison in order to examine the circumstances of sale under Article 1.2(a): If there are "valid 
commercial reasons" for losses, these companies are part of, and representative of, the 
marketplace. Further, since P&GE combines both profits and general expenses, a company could  
have a positive P&GE rate, even where it makes losses.  
28. Thailand argues that it is valid to exclude loss -making companies simply on the grounds 
that they are loss -making. In the case of BAT and JTI, Thailand suggests that it is valid to assume 
that they w ere loss -making because the cigarette import prices they paid were influenced by 
relationships with suppliers. In assuming this explanation for losses, Thailand implicitly concedes 
the Philippines ' point that it is appropriate to consider the reasons  for losses when considering 
whether companies with low P&GE rates should be included in a comparison. In any event, 
Thailand 's explanation does not justify the exclusion of BAT and JTI from the BoA 's comparator 
group. To the extent necessary, the Customs Depart ment could easily have adjusted their 
respective P&GE rates, as it did for PM Thailand.  
                                                
8 Expert witness statement, 16 December 2010, (Exhibit PHL -115) . 
9 Expert witness statement, 16 December 2010, (Exhibit PHL -115), p. 7 (emphasis added).  
10 The Philippines' response to Panel Question 7; the Philippines' comments o n Thailand's response to 
Panel Question 78.  
11 The Philippines' first written submission, paras. 258 -268; the Philippines' second written submission, 
paras. 154 -186; the Philippines' response to Panel Questions 8, 9, 10, 80 and 82; the Philippines' opening 
statement, paras. 23 -26; the Philippines' comments on Thailand's responses to Panel Questions 80, 81 and 82.  WT/DS371/RW/Add.1  
 
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  29. With regard to Macrorich and Classic cigars, these companies made very similar sales to 
two companies that were included in the industry group, namely Lee Intertrade a nd KHS; all four 
companies import and distribute tobacco and cigars (but not cigarettes). If it was appropriate to 
include Lee Intertrade and KHS, it was also appropriate to include Macrorich and Classic Cigars. 
Thailand initially asserted that it excluded  Macrorich and Classic Cigars because their P&GE rates 
were "abnormally" or "inexplicably" high.12 However, if an authority chooses to make a P&GE 
comparison under Article 1.2(a), it cannot reject the P&GE rates "usually" made by other sellers 
simply because the authority believes – based on its own preconceived prejudices – that the 
amount is too low or too high. The P&GE rates "usually" made by other sellers define what is 
normal  in selling the goods in question.  
30. Thailand then changed its position, asserting that the BoA excluded Classic Cigars because 
no financial information about its operations (in cluding its SIC code registration) and P&GE ratios 
for 2002 was available. Yet, in 2010, the BoA had enough information about Classic Cigars ' 
operations to consider it as part of the group of 29 companies making up the industry at the time, 
and to characte rize its activities as "import, wholesale, and retail of cigarette, cigar and cut 
tobacco". The BoA also itself calculated Classic Cigars ' P&GE rate to be 34.01 percent.  
d. The BoA did not account for important differences in sales volumes 
in composing the in dustry group13 
31. A further flaw in the BoA 's construction of its industry group was that the BoA calculated a 
simple average of the P&GE rates of the five companies included in the industry group, despite the 
group including companies with very different sale s volumes.  
32. PM Thailand 's sales volumes were by far the largest of the five companies in the 
comparator group: Piriyapul 's sales were a mere 2.4 percent of PM Thailand 's net sales, and the 
remaining three comparator companies had combined sales revenues of  just over one percent of 
PM Thailand 's net sales.  The BoA 's failure to account for differences in sales volumes tainted the 
comparison, because any insight regarding the effect of the relationship between buyer and seller 
on the transaction values was ma sked by differences that flowed purely from the different sales 
volumes. The BoA could easily have overcome this problem by weighting the P&GE rates of the 
industry group when calculating the average and any measure of dispersion within the data. The 
BoA f ailed to do so.  
2. The BoA 's examination of the P&GE rates used in the comparison 
was flawed  
a. The BoA inconsistently used adjusted and unadjusted P&GE rates 
for PM Thailand14 
33. The BoA 's comparison was also flawed in its decision to attribute three different P&GE 
rates to PM Thailand, and then use these different rates inconsistently when undertaking its 
comparison. Two of these P&GE rates were for PM Thailand as the subject of the compa rison, one 
an adjusted rate of 9.22 percent, and the other an unadjusted  rate of 18.47 percent. The third was 
for PM Thailand as a Member of the industry group, and was a different adjusted rate of 9.36 
percent. There was, therefore, a lack of even -handedn ess in the treatment of PM Thailand 's P&GE 
rate on each side of the comparison.  
34. The BoA should have used the adjusted rate of 18.47 percent. Whereas the unadjusted 
rate is based on the uplifted customs values determined by the customs administration, the 
adjusted rate is based on PM Thailand 's declared transaction values . The adjusted rate alone sheds 
light on whether the declared transaction values  allowed the importer to earn a "normal" P&GE 
rate. Basing the P&GE rate on an uplifted alternative customs v alue would, by necessity, lower the 
importer 's P&GE rate. A comparison based on such a P&GE rate would reveal only whether the 
uplifted customs value allowed the importer to earn a "normal" P&GE rate on its sales, which is not 
the object of the comparison.  
                                                
12 Thailand's first written submission, footnote 66.  
13 The Philippines' first written submission, paras. 269 -279; the Philippines' second written s ubmission, 
paras. 187 -198; the Philippines' response to Panel Questions 12 and 38.  
14 The Philippines' first written submission, paras. 282 -288; the Philippines' second written submission, 
paras. 199 -212; the Philippines response to Panel Question 14.  WT/DS371/RW/Add.1  
 
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 b. The BoA failed to use a consistent approach when calculating P&GE 
rates for the five companies in the industry group15  
35. The BoA 's second flaw in comparing the various P&GE rates was to use inconsistent figures 
when calculating the P&GE rates attributed to the five companies in the industry group. To recall, 
Thailand stated that the BoA determined P&GE rates using the following formula: [N]umerator = 
net profit + selling and administrative expenses + corporate income tax (if any). The denominator 
was the inc ome of the company.  
36. As Thailand describes, in this fraction, a company 's income is relevant in establishing both 
the numerator and the denominator. The Philippines accepts Thailand 's clarification that the BoA 
calculated the companies ' income using figures  based on profits before tax , plus general expenses. 
There is, however, still an anomaly in the BoA 's calculation. Specifically, the BoA was inconsistent 
in the figures it used for corporate income, as between the numerator and the denominator.  
37. In the numerator , the BoA used total income , whereas in the denominator , the BoA used 
main income . While both total income  and main income consist of ordinary operating income , total 
income  also includes extraordinary income not earned through sales of the relevant goods, 
whereas main income does not. Although one company had no extraordinary income, the other 
four did. Thus, for one company, the income used in the numerator and the denominator was the 
same. However, for the four others, the income in the numerator w as larger than the income used 
in the denominator.  
38. The use of inconsistent income figures, within a single fraction, to calculate the P&GE rate 
for a single company, is not compatible with the requirement of a rigorous and critical 
"examination" of the ci rcumstances of sale under Article 1.2(a).  
3. The BoA used incorrect use of statistical methods to calculate the 
normal or reference P&GE range for the industry group that served 
as the comparison benchmark 16 
39. The BoA 's examination of the circumstances of sale was also inconsistent with Article 
1.2(a) because of its use of statistical tools. To recall, the BoA compared certain P&GE rates 
attributed to PM Thailand against a range  of P&GE rates established for an industry group. The 
logic of the BoA 's comparison w as that any P&GE rate falling outside this supposedly "normal" 
industry range reflects transaction values influenced by the relationship between the buyer and 
seller.  
40. In order to determine the normal range, the BoA: (1) determined the simple average of 
the P&GE rates of the five companies included in the industry group; (2) calculated the standard 
deviation for this data set; and (3) calculated a standard error of the mean. The supposedly 
normal range was then calculated by adding two standard errors to cre ate the upper end of the 
range, and deducting two standard errors to create the lower end of the range. The resulting 
"normal" range was 9.80 percent to 15.08 percent.  
41. First, with a group of only five observations, the BoA should not have used statistical tools 
at all to assess the "normal" P&GE range. A customs administration should only have recourse to 
statistical tools to assess the "normal" P&GE range when the number of ob servations is sufficiently 
large for statistical analysis to yield meaningful results. With a sample of only five observations, 
any resulting statistical analysis will have an unacceptably high level of uncertainty. In short, 
analysis of a sample of five o bservations produces results that are arbitrary and inaccurate.  
42. Second, the BoA should not have used the standard error, which introduces distortion and 
bias into the assessment, both when the group constitutes the whole population, and when it 
constitute s a sample. This is because the range generated by the standard error is sensitive to the 
number of observations included within the group. The larger a sample, the smaller the range 
generated by the standard error.  In effect, the use of the standard erro r tends to exclude P&GE 
rates that are properly regarded as – and, indeed, define – normal and usual P&GE rates for the 
                                                
15 The Philippines' first written submission, paras. 289 -295; the Philippines' second written submission, 
paras. 213 -225. 
16 The Philippines' first written submission, paras. 296 -324; the Philippines' second written submission, 
paras. 226 -260; the Philippines' r esponse to Panel Question 16; the Philippines' opening statement, paras. 27 -
33. WT/DS371/RW/Add.1  
 
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  industry. Comparing PM Thailand 's P&GE rate with a "normal" P&GE range generated in this way 
cannot constitute grounds for rejecting tra nsaction value.  
43. In contrast to the standard error, the standard deviation  is an appropriate statistical tool 
for identifying a normal range within a group of observations. In a normal distribution, 68 percent 
of the observations will fall within a range ca lculated by adding and subtracting one standard 
deviation to/from the average; and 95 percent of the observations will fall within a range 
calculated by adding and subtracting two standard deviations to/from the average. These 
proportions remain stable, re gardless of the number of observations in the data set.  
44. Thailand argues that, when using the standard deviation, only five percent of observations 
would be excluded from the range, meaning that the relationship between the parties could be 
deemed to have a ffected the transfer price in only 5 percent of all possible cases. This argument 
reveals a misunderstanding of the statistical tools.  
45. The statistical tools seek to establish a "normal" range for one group of companies, for 
which the transaction value is not influenced by a relationship between the buyer and seller . This 
group 's normal range serves as an independent benchmark for assessing the P&GE rates of a 
distinct, second group (including one or more companies) where there is a relationship between 
buyer and seller . Using standard deviations, all or none of the second group could fall outside the 
normal range of the first group. This statistical tool does not predict or dictate the outcomes of 
comparing the two distinct groups.  
4. The BoA failed to undert ake a proper examination in finding that 
PM Thailand 's P&GE rates were "inconsistent with" those of the 
comparator group17  
46. Finally, the BoA erred in determining whether PM Thailand 's P&GE rates were "inconsistent 
with" the P&GE rates calculated for the ind ustry group.  
47. In making its comparison, the BoA looked only at quantitative factors and, using a bright 
line test, determined that because PM Thailand 's P&GE rates fell outside of the range it had 
created, they were not consistent. It did so even though the  quantitative gap was small.  
48. When a comparison is used as part of an examination of the circumstances of sale, the 
value being tested need not match perfectly the comparator value in order to conclude that the 
price is acceptable. The legal standard accom modates a degree of difference between the figures 
being compared, particularly when the differences are explained by commercial considerations or 
are not commercially significant.   
49. The purpose of an examination of the circumstances of sale is to ascertai n whether the 
relationship influenced the price. In undertaking such an examination, the administration must 
"inquire into, investigate and critically consider" all of the information before it.18 In any given 
case, a customs administration must consider all relevant facts, including both quantitative and 
qualitative elements.  
50. When an administration compares an importer 's P&GE rates with the range of an industry 
group, it makes a quantitative asse ssment only. It cannot then draw rigid, bright lines on the basis 
of that quantitative assessment alone, and conclude that the importer 's P&GE rates are 
"inconsistent with" those of the industry group.  
51. Further, the BoA 's chosen methodology was tainted by numerous flaws that undermined 
the comparison. The more imprecise a comparison methodology, the more accommodating an 
administration must be of a degree of difference when assessing whether one figure is "not 
inconsistent with" another figure or range.  
C. The BoA 's determination of a new customs value using a deductive value 
method violated Article 5 of the CVA 
52. Article 5.1 of the CVA sets forth requirements for the deductive valuation method. Article 
5.1 bases the customs value on the unit price at which the imported goods are sold in the greatest 
aggregate quantity to unrelated parties. It then requires the valuing authority to make deductions 
                                                
17 The Philippines' first written submission, paras. 325 -337; the Philippines' second written submission, 
paras. 261 -276; the Philippines' response to Panel Question 19.  
18 Original Panel Report, 7.188.  WT/DS371/RW/Add.1  
 
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 to arrive at an import price. Deductions are based on the categorie s outlined in subparagraphs 
(i) -(iv).  
1. The BoA fa iled to deduct the correct amount for P&GE in violation 
of Article 5.1(a)(i)19 
53. The BoA deducted 12.44  percent for P&GE, i.e. the simple weighted average of the 
benchmark P&GE rates established for the industry group, which the BoA had previously 
constructed  as part of its examination of the circumstances of sale.  
54. Paragraph 6 of the Interpretative Note  to Article 5 explains that the P&GE amount 
deducted under Article 5.1(a)(i) should be based on the importer 's own figures. Where that is not 
possible, Paragra ph 9 provides that the authority must deduct the usual P&GE amount earned in 
the sale of the "narrowest group or range of imported goods of the same class or kind".  
55. The rejection of an importer 's transaction value under Article 1.1 does not mean that, 
under Article 5.1(a)(i), its P&GE figures are inevitably "inconsistent with" the P&GE earned in the 
sale of goods of the same class or kind. Rather, because Article 5.1(a)(i), in principle, requires the 
use of the importer 's own figures, an authority does not have license automatically to depart from 
the importer 's own P&GE figures when determining a deductive value, even if it has rejected 
transaction value. An authority must undertake a separate analysis of this specific issue under 
Article 5.1 of the CVA. 
56. The BoA had previously found that PM Thailand 's P&GE rates of 9.36 percent and 18.47 
percent were not consistent with the range of P&GE rates established for the industry group. On 
this basis alone, the BoA concluded that PM Thailand 's figures were inconsist ent with P&GE rates 
obtained in sales of goods of the same class or kind.   
57. As summarized above, there are numerous flaws with the BoA 's assessment of P&GE rates 
for the industry group.20 These flaws vitiate the BoA 's conclusion that PM Thailand 's figures for 
P&GE were not consistent with those obtained from sales in Thailand of imported goods of the 
"narrowest group or range of imported goods of the same class or kind".  
2. The BoA failed to deduct the correct amount for Provincial tax in 
violation of Article 5.1(a)(iv)21 
58. Article 5.1(a)(iv) of the CVA requires deduction of customs duties and other "national 
taxes payable in the country of importation by reason of the importation or sale of the goods". 
Pursuant to the 1999 Excise Department 's Guidelines, PM Thail and pays Provincial tax on behalf of 
retailers. An amount for Provincial tax must, therefore, be deducted under Article  5.1(a)(iv).  
59. The original panel found that this deduction must be based on Provincial taxes payable 
generally , not on Provincial taxes a ctually paid on specific sales.22 The BoA, however, deducted 
only a portion (around 60 percent) of the amount of Provincial taxes that PM Thailand had 
demonstrated, with evidence, was payable.  
60. Because there is no Provincial tax payable in Bangkok, the BoA c alculated an average, per -
unit amount using a fraction in which the BoA divided: (1) the total amount of Provincial tax paid 
by PM Thailand in provinces collecting the tax (numerator) by (2) the total volume of all sales 
(including in Bangkok) (denominator ).  
61. PM Thailand provided extensive evidence in support of its claim that it paid THB 
162,347,608.85 in total Provincial tax ( i.e., the numerator). Nonetheless, the BoA requested 
receipts for all payments of Provincial tax claimed in the period in order to prove the total amount 
of Provincial tax that had actually been paid in 2002. In response, PM Thailand provided all the 
receipts it had received from the Provincial authorities, which are still in Thailand 's possession.  
                                                
19 The Philippines' first written submission, paras. 380 -399; the Philippines' second written submission, 
paras. 281 -295; the Philippines' response to Panel Question 21.  
20 See above, paras. 15-51. 
21 The Philippines' first written  submission, paras. 400 -415; the Philippines' second written submission, 
paras. 296 -331; the Philippines' response to Panel Questions 20(b), 22, 24, 86, 89 and 90; the Philippines' 
opening statement, paras. 34 -39; the Philippines' comments on Thailand's re sponses to Panel Questions 86, 
87, 88, 89 and 90.  
22 Original Panel Report, para. 7.359.  WT/DS371/RW/Add.1  
 
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  62. The BoA, however, accepted only a p ortion of these receipts. The Philippines cannot, at 
this stage, know precisely which receipts the BoA accepted, and which it rejected. What is clear, 
however, is that, whereas PM Thailand reported payment of Provincial tax of THB 162,347,609, the 
BoA dedu cted only THB 100,497,371.  
63. Thailand has asserted that the BoA doubted PM Thailand 's claim that it paid Provincial tax 
of THB 162,347,609 because a "test" calculation showed that the per stick amount claimed was 
THB 0.147, which exceeded the maximum per sti ck amount payable of THB 0.100. This test 
calculation was, however, faulty.  
64. In the BoA 's "test" calculation, the BoA sought to divide the claimed Provincial tax 
payment of THB 162,347,609 by the total number of sticks sold outside Bangkok, which would 
yield an average per stick amount of tax paid on sales subject to the tax. In the denominator of 
this "test" calculation, the BoA used a figure of 1.1 billion sticks as the number of sticks sold 
outside of Bangkok. In so doing, the BoA rejected, without expla nation, PM Thailand 's reported 
figure of 3.57 billion sticks sold outside of Bangkok. Using the reported figure, the per stick 
amount of tax paid is well within the maximum per stick amount payable.  
65. Thailand asserted that the BoA 's figure of 1.1 billion s tick sales outside of Bangkok came 
from sales volumes shown on PM Thailand 's monthly VAT returns. This is false. The Revenue 
Department 's monthly VAT return form requires vendors to report only a single figure for all sales 
revenues earned for sales of all  products/brands, in the relevant month, in the whole of Thailand. 
The information reported does not enable the BoA to derive the number of sticks sold. The 
provenance of the figure of 1.1 billion is, thus, still unknown.  
66. In rejecting PM Thailand 's report ed figures, the BoA failed to give the importer any 
opportunity to comment, and failed to provide any explanation. The BoA 's insistence on actual 
receipts, therefore, flowed directly from its own failure to consult PM Thailand. Irrespective of 
which specif ic receipts the BoA deducted, it violated Article 5 by rejecting PM Thailand 's claimed 
amount of Provincial tax, without giving PM Thailand the opportunity to address the perceived 
deficiencies in the supporting evidence, and without properly engaging in t he process of 
consultation required under the CVA.  
3. The BoA failed to deduct any amount for transportation costs in 
violation of Article 5.1(a)(ii)23 
67. Article 5.1(a)(ii) required the BoA to deduct "the usual costs of transport and insurance 
and associated co sts incurred within the country of importation". Thailand argues that the BoA was 
excused from its obligation to make a deduction, because PM Thailand "waived its right to claim an 
adjustment for transportation costs".24 This is incorrect.  
68. On 24 August 2011 , PM Thailand offered to waive a deduction for transportation costs on 
the proviso that doing so would result in an "immediate conclusion" to appeals that, at that stage, 
had been pending for nine years. This condition was not met. On 13  October  2011, PM T hailand 
sent the BoA a letter clearly indicating that it considered its offer was no longer valid and that it 
sought a deduction of transport costs.  
69. PM Thailand provided the BoA with an estimate of domestic transportation costs in its 
letter of 9 December  2010. The BoA could have made a deduction on the basis of this evidence. If 
the BoA considered the information provided to be deficient, it was required to indicate why and 
give the importer the opportunity to provide further information. Moreover, accord ing to the 
original panel, even where an importer omits to request a deduction for transportation costs, an 
administration should inquire as to whether such a deduction is needed. Instead, the BoA simply 
chose not to deduct transportation costs at all.  
D. The BoA violated the due process and procedural requirements of the CVA 
70. The procedural obligations in Articles 1.2(a) (third sentence), 11.3 and 16 apply to a 
Member 's "customs administration". As Thailand has previously acknowledged, the BoA is "an 
                                                
23 The Philippines' first written submission, paras. 416 -424; the Philippines' second written submission, 
paras. 332 -342; the Philippines' response to Panel Questions 25 and 26.  
24 Thailand's first written submission, para. 5.96.  WT/DS371/RW/Add.1  
 
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 authority  within the customs administration", and has insisted that it is "not ‘independent ' of" the 
Thai "customs administration".25  
1. The BoA violated the procedural requirements of Article 1.2(a)26 
71. The third sentence of Article 1.2(a) requires that, "if a customs administration has grounds 
for considering that the relationship influenced the price" it must "communicate its grounds to the 
importer", and allow the importer "a reasonable opportunity to respond". This process must take 
place before a decision to reject  transaction value is reached.27  
72. Before reaching its decision to reject transaction value, the BoA failed to communicate its 
grounds for considering that the relationship influenced the price. As a result, the BoA also denied 
PM Thailand its "reasonable op portunity" to address the relevant grounds, before the decision to 
reject transaction value was reached. It was especially important that PM Thailand have an 
opportunity to address the BoA 's grounds for rejecting transaction value, because the BoA 
develope d its own novel (" de novo ") grounds for considering that the relationship influenced the 
price.  
73. Thailand does not dispute that the BoA failed to communicate its grounds. Rather, Thailand 
argues that the procedural obligations in Article 1.2(a) do not appl y to the BoA, because it is an 
appeals body under Article 11.2 of the CVA. As noted above, this is incorrect; Thailand has 
previously accepted that the BoA is part of the "customs administration". The procedural 
obligations in Article 1.2(a) therefore appl y. 
2. The BoA violated the procedural requirements of Article 11.328 
74. Article 11.3 requires that, when an authority within the customs administration makes a 
decision on appeal, it must provide in writing both (i) notice of the decision and (ii) the reasons for  
the decision . The BoA failed to provide reasons for its decision.  
75. Contrary to Thailand 's argument, a statement of "reasons" is not sufficient simply because 
it contains some – any – statement of facts relevant to a decision, even if the stated facts do n ot 
communicate adequately the substantive basis for the decision. Like Article 16, the duty to provide 
"reasons" under Article 11.3 embodies a "due process objective".29 The "reasons" must set forth 
the basis to justify and explain a decision on appeal, inc luding providing sufficient details to make 
clear the basis for rejecting transaction value and the basis for an alternative value.  
76. In the BoA Ruling, the BoA 's statement of reasons does not meet this threshold. The BoA 
provided an inaccurate and misleadi ng explanation of how it constructed the industry group, 
stating that it was comprised of "imported cigarette wholesalers … whose brand reputation is close 
to the Marlboro cigarettes".30 Thailand 's submissions to the Panel reveal that this is not what the 
BoA did.  
77. It is also impossible to understand from the Ruling how the BoA undertook its examination 
of the circumstances of sale, and why the BoA considered that the transaction value was not 
acceptable; it is also impossible to understand the BoA 's deducti ve valuation under Article 5.  
3.  The BoA violated the procedural requirements in Article 16  
78. Article 16 requires a customs authority to provide "an explanation" of its decision. The 
original panel explained that this provision serves "due process and transpar ency" objectives.31 
The explanation enables an importer to consider whether to appeal the decision and, if so, on what 
                                                
25 Thailand's first written s ubmission in the original proceedings, para. 289 (emphasis added).  
26 The Philippines' first written submission, paras. 338 -346; the Philippines' second written submission, 
paras. 348 - 368; the Philippines' response to Panel Questions 28 and 91; the Philip pines' opening statement, 
paras. 41 -46 
27 Original Panel Report, para. 7.155.  
28 The Philippines' first written submission, paras. 441 -460; the Philippines' second written submission, 
paras. 369 -382; the Philippines' response to Panel Questions 29, 92, 93 an d 95; the Philippines' opening 
statement, paras. 47 -55.  
29 Original Panel Report, paras. 7.234 -7.237.  
30 BoA Minutes of Meeting No. 9 -2555, 26 September 2012 (English translation), (Exhibit PHL -21), p. 
8. 
31 Original Panel Report, para. 7.237.  WT/DS371/RW/Add.1  
 
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  grounds. It also enables domestic courts and WTO panels to understand an authority 's valuation 
determination for purposes of scrutinizing it.  
79. To meet these due process and transparency ends, the explanation "must be sufficient to 
make clear and give details  of how the customs value of the importer 's goods was determined, 
including the basis for rejecting the transaction value ", and " how the  [alternative] valuation 
method [used] was applied  to derive the customs value".32 The BoA never provided PM Thailand 
with a sufficient explanation.  
80. On 18 December 2012, after the BoA issued its Ruling, PM Thailand requested, in writing, 
as required by Arti cle 16, that the BoA provide clarifications on the method used to determine the 
customs values. Four years later,  the BoA purported to respond, in a letter of 16 June 2016. The 
content of this letter does not meet the standard of explanation required under  Article 16. It does 
not provide, for example, the source of the data that the BoA used in its comparison, the nature of 
the data, and calculations based on that data. Nor does it contain sufficient information for PM 
Thailand to understand the basis for t he BoA 's calculation of a deductive value.  
81. The timing of the 16 June 2016 letter, and its inadequate content, deprived PM Thailand of 
the ability to use the explanation in exercising its rights of appeal. In short, the BoA 's letter of 16 
June 2016 was too little, and too late, to discharge its obligation under Article 16.  
III. THE CHARGES ARE INCO NSISTENT WITH THE CVA 
82. On 18 January 2016, the Thai Public Prosecutor filed criminal charges against PM Thailand 
and seven of its current employees, concerning 272 entries of cigarettes imported from the 
Philippines in the period 2003 -2006 ("the Charges"). The Charges embody a determination that PM 
Thailand 's declared transaction values are lower than the correct customs value. They involve a 
rejection of the transac tion values that is inconsistent with Article 1.1 and 1.2(a) of the CVA and a 
determination of an alternative values that is inconsistent with Articles 2 and 3 of the CVA.  
83. Thailand raises four separate hurdles that seek to prevent the Panel from reviewing  
whether the Charges are inconsistent with the CVA. If the Panel succeeds in clearing these four 
hurdles, Thailand concedes that the Charges are inconsistent with the CVA, but asserts that the 
Charges are justified by general exceptions in a different cove red agreement, namely Article XX of 
the GATT 1994. Below, the Philippines summarizes why: (1) Thailand 's four hurdles cannot shield 
the Charges from scrutiny; (2) the Charges are inconsistent with the CVA; and (3) the Charges are 
not justified by Article X X of the GATT 1994.  
A. Thailand 's four hurdles cannot shield the Charges from the Panel 's 
scrutiny  
1. The Philippines is not precluded from challenging the Charges33 
84. Thailand asserts that the Philippines is precluded from challenging the Charges in these 
complian ce proceedings. Thailand argues that this obstacle arises because, in the original 
proceedings, the Philippines raised, but did not pursue, claims relating to the Department of 
Special Investigation 's ("the DSI") investigation that preceded the Charges.  
85. Thailand 's position lacks merit because the Charges did not exist at the time of the original 
proceedings. The Charges are a new measure, which Thailand took in January 2016, after the 
DSB's original recommendations and rulings. They are distinct from the D SI investigation. Thus, in 
the original proceedings, the Philippines did not challenge, and indeed could not have challenged, 
the Charges.  
86. Thailand itself makes statements that support the Philippines ' position. Thailand remarks, 
for example, that the Char ges were adopted "nearly five years after the adoption of the original 
panel and Appellate Body Reports"34, while the DSI investigation "was initiated almost five years 
before the adoption of the original panel and Appellate Body Reports".35   
                                                
32 Original Pan el Report, paras. 7.240 and 7.241 (emphasis added).  
33 The Philippines' second written submission, paras. 457 -464; the Philippines' response to Panel 
Question 46; the Philippines' opening statement, paras. 60 -63.  
34 Thailand's response to Panel Question 41( a), p. 37.  
35 Thailand's rebuttal submission to the preliminary ruling request, para. 3.29.  WT/DS371/RW/Add.1  
 
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 2. The Charges ar e "ripe" for adjudication36 
87. The second hurdle Thailand presents is that the Panel cannot assess the Charges because 
they are not "ripe" for adjudication.  
88. Thailand is wrong that there is a doctrine of "ripeness" in WTO law; rather, the issue under 
WTO law i s whether there is a measure  that is attributable to the respondent. As the European 
Union has explained, "rather than introducing a new procedural concept of ‘ripeness ', with unclear 
content and vague contours, the question should be framed in a more clas sical manner, namely 
whether there is a challengeable ‘measure at issue '."37  
89. In principle, under the DSU, a Member may challenge as a "measure"  any act or omission  
taken by a respondent. In terms of the relevant measures, Article 19.2 of the CVA foresees t hat 
claims may be made under the CVA in respect of any " actions  of another Member or of other 
Members". Thus, the operative word in Article 19.2 is "actions". The word "action" refers broadly 
to "[s]omething done or performed, a deed, an act". This encompa sses but is not limited to 
customs valuation "determinations".  
90. In any event, while the Charges are an "action" by the Thai Public Prosecutor under Article 
19.2, they are, more specifically an "action" in the nature of a customs valuation "determination". 
The word "determination" in the CVA includes any "more or less final decision" by any organ of the 
state that establishes, for purposes of Article 15.1(a) of the CVA, the value of goods for the 
purposes of levying ad valorem  customs duties.  
91. Despite accepting that the Charges are a measure, Thailand argues that the Panel should 
not rule on them because they are merely an "allegation" or "accusation" of wrongdoing, as 
opposed to a "determination". This characterization seems designed to convey that the  Charges 
are casual, informal, and of no consequence. Whilst accusations may be casual, informal, and 
inconsequential in some settings – for example, schoolyard banter – that is far from the case with 
the Charges brought by the Public Prosecutor.  
92. The Charg es are a formal act by an authority of the Thai government, exercising criminal 
enforcement powers under Thai law, finding that PM Thailand under -declared transaction values 
pursuant to provisions of Thai law. The Charges result in real, legal consequences  for the accused. 
Thailand 's own arguments establish that an offence under Section 27 of the Customs Act can be 
prosecuted solely on the basis of charges formally issued by the Public Prosecutor, as the 
executive officer responsible under Thai law for taki ng this action.38  Accordingly, under Thai law, 
the Charges are a necessary, authoritative, and definitive final step – a determination – taken by 
the executive branch of the Thai government to enforce Section 27.  
93. Thailand also argues that the Charges are not "ripe" because they represent an allegation 
upon which the Court has not ruled. Contrary to Thailand 's views, the fact that the Court will make 
a separate decision whether to convict does not mean that the Charges are not – and cannot be – 
a "determina tion". Different organs of the state may make different customs valuation 
determinations with respect to a given entry for the purpose of levying ad valorem  customs duties. 
For example, the customs administration, an independent appeals body, and multiple courts may 
make customs valuation determinations with respect to a single entry under the CVA. Each of 
these decisions may properly be considered a "determination", and is subject to the CVA. 
3. The Charges are a "measure taken to comply"39 
94. A third hurdle depl oyed by Thailand is its argument that the Charges are not a measure 
taken to comply. However, the Charges share a close nexus – in terms of timing, nature, and 
effects – with the DSB 's recommendations and rulings, and the 12 September 2012 BoA ruling, 
which is one of Thailand 's declared measures taken to comply.  
                                                
36 The Philippines' second written submission, paras. 399 -456; the Philippines' response to Panel 
Questions 38; the Philippines' opening statement, paras. 64 -72; the  Philippines' comments on Thailand's 
response to Panel Question 100 and 101.  
37 European Union's oral statement, para. 7.  
38 Thailand's response to the Philippines' Question 3, p. 2.  
39 The Philippines' second written submission, paras. 456 -522; the Philip pines' response to Panel 
Questions 40, 41, 43, 103 and 104; the Philippines' opening statement, paras. 73 -76; the Philippines' 
comments on Thailand's responses to Panel Questions 103 and 104.  WT/DS371/RW/Add.1  
 
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  95. With respect to timing , the Charges post -date the expiry of Thailand 's reasonable period of 
time to implement the DSB 's recommendations and rulings, as well as the adoption by Thailand of 
its declar ed measures taken to comply. Accordingly, the timing of the Charges is such that they 
are capable of undermining Thailand 's compliance with the DSB 's recommendations and rulings.  
96. With respect to nature , the Charges have specific, close connections to the m easures 
subject to the DSB 's recommendations and rulings, and to one of Thailand 's declared measures 
taken to comply ( i.e., the September 2012 BoA ruling). Specifically, the Charges share: the same 
importer  (PM Thailand); the same exporter  (PMPMI); the same importing country  (PM Thailand); 
the same exporting country  (the Philippines); the same product and brands  (Marlboro  and L&M 
cigarettes produced by PMPMI); the same type of legal determination  (customs valuation); and the 
same grounds for doubting the de clared customs values  (a comparison with the duty -free prices of 
King Power).  
97. With respect to effects, the Appellate Body has found a close nexus in terms of "effects" to 
exist when the undeclared compliance measure has "the effect of undermining complianc e with the 
DSB's recommendations and rulings".40  
98. Here, the Charges have precisely that effect. The Charges involve a customs valuation 
decision to reject the transaction values in exactly the same circumstances as Thailand 's rejection 
of the 118 entries and the September 2012 BoA Ruling. The effect of the Charges is to perpetuate 
the WTO -inconsistencies it is obliged to correct with respect to a continuous stream of entries, 
between the same parties, under the same commercial terms. The relevant transacti ons are also 
governed by the same supply contract, with the same business terms.  
99. Indeed, Paragraph 2 of the Interpretive Notes  to Article 1.2(a) provides that, in a related 
party situation, "[i]t is not intended" that the customs administration would examine the 
circumstances of sale where it has "previously examined the relationship" between the buyer and 
seller. Thus, under the  terms of the CVA itself, an unbroken stream of entries are connected across 
time where they involve the same commercial relationship.  
100.  Thailand argues that, notwithstanding these connections, the close nexus is severed 
because the Charges do not pertain to  the exact same  118 entries as those at issue in the original 
proceedings. Thailand has, however, engineered the lack of overlap between the entries at issue. 
The DSI investigation initially included  18 of the original "WTO" 118 entries subject to the DSB 's 
recommendations and rulings. However, after the significance of these entries under Article 21.5 
of the DSU was explained by the importer, the Public Prosecutor decided – at a very late stage in 
the investigation process – to remove them. Thailand now se eks to profit from that decision.  
101.  In any event, Thailand is wrong that the measures at issue in the original and compliance 
proceedings must pertain to identical entries. Its position is contradicted by long -standing 
jurisprudence in which compliance measu res pertained to different entries.41  
102.  It is also contrary to the findings of the latest panel to examine the "close nexus" test, in 
US – Large Civil Aircraft (2nd Complaint) (Article 21.5 – EU). In this case, the compliance panel 
found that, "despite the d ifferences" between the original and compliance measures, there was a 
close nexus between them because they all related to the production of the same Boeing 
product.42 In this case, the undeclared compliance measures concern the customs valuation of the 
same products  and even the same brands of those products. Just as in US – Large Civil Aircraft 
(2nd complaint) (Article 21.5 – EU), the fact that the measures are not identical  does not sever 
this connection.  
4. The CVA applies to the Charges43  
103.  Thailand 's fourt h and final hurdle to prevent scrutiny of the Charges is its argument that 
the CVA does not apply to the Charges. Thailand is, once more, incorrect.  
                                                
40 Appellate Body Report, US – Upland Cotton (Article 21.5) , para . 205.  
41 Appellate Body Report, US – Zeroing (Article 21.5 – Japan) , paras.160; Appellate Body Report, US – 
Zeroing (Article 21.5 – EC), paras. 222 -224, 240; Appellate Body Report, US – Softwood Lumber IV (Article 
21.5) , para. 83  
42 Panel Report, US – Large Civil Aircraft (2nd complaint) (Article 21.5 – EU), para. 7.342.   
43 The Philippines' second written submission, paras. 523 -618; the Philippines' response to Panel 
Questions 48; the Philippines' opening statement, paras. 77 -115; the Philippines' comments on Thailand's 
responses to Panel Questions 99, 105 and 106.  WT/DS371/RW/Add.1  
 
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 104.  Article 15.1(a) provides that the CVA applies whenever a Member: (1) determines the 
value or monetary wort h of imported goods; and (2) does so for the purposes of levying 
ad valorem  customs duties.   
105.  Under Article 15.1(a), the Public Prosecutor made a determination of customs value for the 
purposes of levying ad valorem  customs duties. Specifically, the Public  Prosecutor rejected PM 
Thailand 's declared transaction values through a comparison with King Power 's prices, and 
determined that King Power 's prices constituted alternative customs values, which were used as 
the tax base to determine the amount of ad valo rem customs duties supposedly due.  
106.  Thailand makes a number of argument as to why the CVA does not apply. First, Thailand 
argues that the Charges do not determine the monetary worth of the imported goods for the 
purposes of levying ad valorem  customs duties , because King Power 's prices serve only the 
purpose of establishing a benchmark to calculate a potential fine. Second , Thailand argues that 
because the Charges require a showing of intention to defraud, the CVA does not apply. Third, 
Thailand argues that the CVA cannot apply to the Charges, because it would be too onerous for 
Members to be subject to the procedural obligations in the CVA in criminal proceedings.  Below, 
the Philippines explains why these arguments are unavailing.  
a. The Charges make a determination of customs value for the 
purposes of levying ad valorem customs duties  
107.  Thailand contests that the Charges establish King Power 's prices as the basis for rejecting 
PM Thailand 's declared transaction values and as alternative c ustoms values. Instead, it argues 
that the references in the Charges to King Power 's prices are solely to establish a benchmark to 
calculate the potential fine.  
108.  However, the Charges themselves demonstrate that King Power 's prices are the 
benchmark for reje cting transaction values, and serve as the higher, alternative customs values 
used as the tax base to determine the amount of ad valorem  customs duties supposedly due. 
Every single clause of the Charges concludes that PM Thailand 's prices are "false" becau se they are 
"contrary to the actual price", which is identified as King Power 's prices. Every clause also refers to 
the "amount of tax and duty under the law of customs that the defendant was liable to pay", and 
calculates that "amount" using King Power 's prices as the tax base.  
109.  Although Thailand asserts that the Charges do not establish an alternative customs value, 
it also recognizes that underpayment of duties is an essential element of Section 27 of the 
Customs Act: "Section 27 requires a showing … of an under -statement of the declared value (and 
hence underpayment of duties)".44 As a matter of logic, the Public Prosecutor 's rejection of PM 
Thailand 's transaction values could not, on its own , be sufficient to conclude that customs duties 
were underpaid. Rather, to find that there was "underpayment of duties", the Public Prosecutor 
had to establish alternative customs values that were higher  than the rejected transaction values. 
These alternative values were King Power 's prices.  
110.  Other evidence also shows that King Power 's prices are the benchmark for rejecting 
transaction value and the alternative tax base for finding that customs duties were underpaid. In 
testimony before the Thai Senate, the DSI, the alleged informant himself (Mr. Somchai) and the 
Custom s Department all explicitly acknowledged that: King Power 's prices constituted the 
benchmark used to reject PM Thailand 's transaction values; and, that King  Power 's prices were the 
alternative tax base for calculating the duties supposedly due.  
111.  Even if Th ailand were correct that the King Power prices are used solely as the benchmark 
for fixing the fine, the  CVA would still apply. The basic building block of the fine under Section 27 
is an alternative customs price or value, determined for the expressed pur pose of levying the 
correct amount of ad valorem  customs duties due, multiplied by four. Therefore, in substance, the 
fine incorporates – and collects – the ad valorem  customs duties due on an alternative customs 
value.  
112.  Finally, irrespective of the role pl ayed by King Power 's prices in the Charges, and even if 
Thailand were correct that the Charges do not determine an alternative customs value, Thailand 's 
rejection of the declared transaction values alone suffices to make the CVA applicable. If a 
customs ad ministration decides to reject transaction value in deciding the "amount" of ad valorem  
                                                
44 Thailand's response to Panel Question 32, p. 26.  WT/DS371/RW/Add.1  
 
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  customs duties "that the defendant was liable to pay", that rejection is, fundamentally, a 
conclusion about the customs value of the goods.  
113.  The original panel agreed th at "an authority 's rejection of the transaction value under 
Article 1 is a necessary and integral element of its determination of the customs value under a 
different valuation method".  It would be absurd if the CVA did not apply to a determination 
merely because it rejects transaction value, given that transaction value is "the primary basis" of 
valuation under the CVA.  Such an approach would compromise the objectives of the CVA. In the 
case of the Charges, Thailan d acknowledges that the transaction values are rejected in the course 
of establishing the "amount" of ad valorem  customs duties "that the defendant was liable to pay", 
which is part of Thailand 's process of levying ad valorem  customs duties.  
b. The "intentio n to defraud" element does not prevent the 
application of the CVA  
114.  Thailand explains that the crime under Section 27 of the Customs Act includes both an 
"act" and "intention" element. Yet, it asserts that intent is the "principal" or "main" element of the 
crime, with the act flowing as a "natural consequence" of the "intentional under -declaration" 
element. Thailand argues that, as a result, the CVA does not apply to the Charges.  
115.  The Charges do not support Thailand 's assertion that the act of underpayment wa s 
established simply by showing an "intention" to underpay. Indeed, an intention to commit an act 
does not, in itself, amount to the commission of that act. The "act" of "underpayment" remains – 
as Thailand itself has accepted in these proceedings45 – one o f the two fundamental elements of 
the crime. Both elements of the crime must be established  
116.  In emphasizing the "intention" element of the crime, Thailand ignores the Appellate Body 's 
findings in US – 1916 Act  that the presence of an "intention" element doe s not exclude the 
application of relevant WTO rules. In that case, the criminal act under the 1916 Act involved an act 
that amounted to "dumping". In addition, the statute imposed an intention requirement. The 
United States argued that this intention requi rement excluded the application of Article VI of the 
GATT 1994 and the Anti-Dumping Agreement  to the 1916 Act.  
117.  The Appellate Body disagreed. First, it found that because "the constituent elements of 
‘dumping ' are built into the essential elements of civil  and criminal liability under the 1916 Act", 
the Anti-Dumping Agreement  applied.  Second , it held that an additional intention requirement 
"does not affect the applicability of Article VI of the GATT 1994".46 Similarly, the additional "intent" 
element under  Section 27 of the Customs Act does not exclude the application of the CVA. Rather, 
the CVA applies because the establishment of the criminal act – the underpayment of ad valorem 
customs duties – involves a determination of the allegedly proper customs val ue for the goods.  
118.  Finally, Thailand has sought to divert attention from the evidence before the Panel by 
relying on a "hypothetical" situation where an importer fails to declare additional invoices relating 
to an import transaction.  
119.  Thailand has failed to show that its hypothetical bears any relation to reality and appears, 
instead, to be nothing more than a speculative smoke -screen. Thailand acknowledges that Section 
192 of Thailand 's Criminal Procedure Code requires the Charges to contain all of the facts  that are 
considered "essential elements" of the crime.  Thailand also concedes that "the Charges contain 
[]sufficient information to discern the grounds for the accusation of customs fraud". Nothing in the 
Charges establishes anything remotely like the fa ct pattern described by Thailand in its 
hypothetical. Rather, they rely on a customs valuation using King Power 's prices.   
120.  Further, even if Thailand 's hypothetical had some connection to reality (which it does not), 
the CVA would continue to apply. Under the hypothetical, an importer might argue, for example, 
that the additional invoices were impermissible additions to the transaction value under Article 8 of 
the CVA.  Further, even if an importing Member, under the hypothetical, were to decide that 
transa ction value could be rejected ( e.g., because of doubts about its truth or accuracy, or 
because the use of multiple invoices suggests that the relationship influenced the price), an 
alleged underpayment of duties could still be established only on the basis  of a new alternative 
customs value determined consistently with the CVA.  
                                                
45 See Thailand's response to Panel Question 32, pp. 26 -28. 
46 Appellate Body Report, US – 1916 Act , para. 132 (emphases added). See also id. , para. 122.  WT/DS371/RW/Add.1  
 
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 c. The procedural obligations in the CVA do not prevent its application 
to the Charges  
121.  With respect to the Charges, the Philippines has not made claims under the procedural 
obligations in the CVA. Thailand argues, however, that the supposedly prejudicial consequences of 
applying the CVA's procedural obligations to criminal proceedings demons trate that the CVA 
cannot apply to the Charges.  
122.  The Philippines questions whether applying the CVA's procedural obligations to the Charges 
would be overly onerous. The Philippines considers that the Memorandum of Allegations and the 
Charges themselves cou ld satisfy the relevant procedural obligations.  
123.  In any event, there may be a distinction between the CVA's procedural and substantive 
obligations. Whereas the third parties agree with the Philippines that the substantive obligations 
apply to criminal proce edings, they have raised a question as to the scope of application of the 
procedural obligations. Since the procedural obligations apply specifically to a Member 's "customs 
administration", the scope of application depends upon the interpretation of this t erm.  
124.  The European Union takes a more "institutional" approach to this question, suggesting that 
the procedural obligations may apply only to the institution with responsibility for administering 
customs procedures, and not to other parts of the government , such as a prosecutor.47 Canada, by 
contrast, takes a functional approach to the application of both the substantive and the procedural 
obligations, suggesting that they are not restricted to the entity formally described as the customs 
administrations, bu t "apply to the function of determining customs value of imported goods".48 On 
balance, the Philippines inclines to an institutional approach to the application of the CVA's 
procedural obligations . This would mean that the procedural obligations would not, for example, 
apply to customs valuation made in the context of criminal proceedings.  
B. The Charges are inconsistent with the CVA 
125.  In this section the Philippines summarizes its arguments as to why the charges violate 
Articles 1.1, 1.2(a), 2 and 3 of the CVA. The Philippines notes that Thailand has not rebutted the 
Philippines ' arguments nor sought to explain why the Charges do not violate these provisions of 
the CVA. The Philippines also summarizes why Thailand 's disclosure of certain confidential 
information violates Article 10 of the CVA.  
1. The rejection of PM Thailand 's transaction value is inconsistent 
with Articles 1.1 and 1.2(a) of the CVA49 
126.  Above, the Philippines has summarized the legal standard under Article 1.2(a) of the 
CVA.50 To recall, when examining the circumstances of sale, an authority may decide to undertake 
comparisons, and in doing so is obliged to respect two basic principles of comparability: (1) the 
goods in the transactions subject to the comparison must be sufficiently comparable; and (2) f ull 
account must be taken of any factors that affect comparability.  
127.   In the case of the Charges, the Public Prosecutor undertook an examination of the 
circumstances of sale by comparing PM Thailand 's declared transaction values with King  Power 's 
prices . The CVA requires that, when undertaking a price -to-price comparison, the benchmark price 
must be a transaction value previously accepted for another imported good under Article 1 of the 
CVA, or a customs value previously determined for such a good under Art icles 2 -7.  
128.  Below, the Philippines summarizes why, in bringing the Charges, the Public Prosecutor 
improperly rejected PM Thailand 's transaction value.   
                                                
47 The European Union's response to Thailand's Question 4, para. 7.  
48 Canada's third party submission, para. 33.  
49 The Philippines' first written submission, paras. 576 -681; the Philippines' second written submission, 
paras. 620 -624; the Philipp ines' response to Panel Questions 49 and 53.  
50 See above, para. 14.  WT/DS371/RW/Add.1  
 
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  a. The comparison with King Power 's prices failed to respect the 
requirements in the CVA for a price-to-price comparison  
129.  Thailand 's reliance on a comparison between PM Thailand 's transaction values and King 
Power 's duty -free prices does not provide a valid basis for rejecting transaction values under the 
CVA, because the Public Prosecutor did not re spect the requirements in the CVA for a price -based 
comparison.   
130.  First, King Power 's purchase prices are not transaction values previously accepted, or 
customs values previously determined, by the Customs Department for imported goods. This is 
because Kin g Power 's relevant goods were sold duty-free, so King Power never  even declared a 
transaction value for customs valuation purposes.  
131.  Second , the Public Prosecutor 's comparison violated both of the principles of comparability 
that are embodied in the CVA.  
132.  In violation of the first principle of comparability, King Power 's goods were not identical  or 
similar  to the goods being valued. For goods to be identical or similar , they must be sufficiently 
similar in terms of physical characteristics, and they must be  produced in the same country and 
sold for export to the same country of importation. PM Thailand 's goods were produced in the 
Philippines, whereas King Power 's goods were produced in Malaysia.  
133.  In violation of the second principle of comparability, the Pu blic Prosecutor failed to account 
for important differences between the two parties ' transactions in respect of: (i) the impact of the 
incidence – if any – of fiscal charges  on the prices paid by PM Thailand, a duty -paid operator, and 
King Power, a duty -free operator; (ii) the difference in commercial level  of the transactions to PM 
Thailand and King Power ; and, (iii) the quantities  sold in the respective transactions.  
134.  With respect to differences in fiscal charges , whereas PM Thailand 's goods were duty-paid, 
King Power 's goods were duty-free. As a result, pricing at every stage of the two supply chains is 
different. With respect to differences in commercial level , the Public Prosecutor compared PM 
Thailand 's purchase prices in a manufacturer/distributor tr ansaction, with King Power 's purchase 
prices in a distributor/retailer transaction. In fact, King Power is two commercial levels removed 
from PM Thailand. With respect to differences in quantities sold, whereas PM Thailand imported on 
average 8 billion sti cks annually at the relevant time, King Power purchased just 170 million sticks, 
i.e. just 2 percent of PM Thailand 's volume.  
135.  Finally, the Philippines notes that the World Customs Organization, the Thai Customs 
Department and the Public Prosecutor all rej ected a comparison between PM Thailand 's transaction 
values and King Power 's prices. Regrettably, the Public Prosecutor made just such a comparison, in 
full awareness of the fact that the comparison was inappropriate.  
b. The arbitrary exclusion of 18 entries from the Charges shows that 
the Public Prosecutor failed to undertake a rigorous and critical 
"examination"  
136.  Although the DSI 's investigation had covered more than 290 entries from the period 2003 -
2007, the Public Prosecutor excluded 18 "WTO" entries that w ere initially included in the DSI 's 
recommendation to prosecute, thereby accepting the transaction value of these entries.  
137.  The Public Prosecutor 's decision to accept the transaction values for the 18 excluded 
"WTO" entries but to reject the transaction va lues for the 272 entries subject to the Charges was 
arbitrary. These entries all had identical or very similar circumstances of sale. To accept 
transaction value for one such entry but to reject it for another shows that the Public Prosecutor 's 
rejection of transaction value was arbitrary, and thus not based on a a rigorous and critical 
"examination" of the circumstances of sale under Article 1.2(a).  
2. The Charges ' determination of alternative customs values is 
inconsistent with Articles 2 and 3 of the CVA 
138.  In addition to rejecting the declared customs values, the Charges establish King  Power 's 
prices as alternative customs values. The determination of the alternative customs values is 
inconsistent with Articles 2 and 3 of the CVA.  WT/DS371/RW/Add.1  
 
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 139.  Under Articles 2.1(a) and 3.1(a), the alternative values to be used are the transaction 
value of identical or similar goods. The CVA imposes a number of requirements for goods to be 
considered identical or similar to the goods being valued. King Power 's goods did not meet these 
requirements.  
140.  First, as noted above, goods are not identical or similar  unless they are produced in the 
same country as the goods being valued. PM Thailand 's goods were produced in the Philippines, 
whereas King Power 's goods were pr oduced in Malaysia.  
141.  Second , Paragraph 4 of the respective Interpretative Notes  to Articles 2 and 3 provides 
that "the transaction value of identical [or similar] imported  goods  means a customs value … which 
has already been accepted under Article 1 ". King  Power ‘s prices were not an already -accepted 
customs value.  
142.  Third, Articles 2.1(b) and 3.1(b) each require that the transaction value of identical or 
similar imported goods be taken from a sale "at the same commercial level and in substantially the 
same q uantities" as the goods being valued. King Power and PM Thailand 's goods were sold at 
different levels of trade.  
3. Thailand 's disclosure of business confidential information 
associated with the Charges breached Article 10 of the CVA 
143.  Thailand acted inconsist ently with Article 10 of the CVA by disclosing, to the media, 
business confidential information concerning PM Thailand 's transaction values. Specifically, press 
articles disclose PM Thailand 's declared transaction values.  
144.  The only party in a position to d isclose the confidential transaction values, other than PM 
Thailand itself, was Thailand. In the circumstances, the only way PM Thailand 's transaction values 
could have appeared in press articles is if Thai authorities disclosed those figures to the press.  In 
both press articles, immediately before reporting PM Thailand 's declared CIF transaction values, 
the articles address information obtained from the Office of the Attorney General.  
145.  The only reasonable inference to draw is that the entity that did the " report[ing]" was the 
Office of the Attorney General. Indeed, in the original proceedings of this dispute, the panel found 
Thailand violated Article 10 of the CVA based on similar evidence submitted by the Philippines from 
press articles.51  
146.  Thailand argues that the information may have been obtained from the press articles at 
issue in the original proceedings. In other words, because the information had been previously 
disclosed in violation of Article 10 of the CVA, it would have already bee n public information in 
January 2016.  
147.  On a factual level this cannot be correct because the original press articles and the current 
press articles address different entries. On a legal level, it would be absurd, and render the 
obligation in Article 10 of the CVA meaningless, if Thailand 's WTO -inconsistent disclosure of 
confidential information could effectively change the status of that information to non -confidential, 
such that Thailand could then continue to disclose the information freely in the press.  
C. The Charges are not justified by Article XX of the GATT 1994  
148.  Although Thailand offers no substantive defense to the Philippines ' claims in relation to the 
Charges under Articles 1.1, 1.2(a), 2 and 3 of the CVA, Thailand argues that violations of these 
provisions are nevertheless justified under Article XX(a) or Article XX(d) of the GATT 1994. Below, 
the Philippines summarizes why the CVA violations in the Charges cannot be justified by invoking 
these provisions of the GATT 1994.  
1. Article XX of the GATT 1994  does not apply to justify violations of 
the CVA 
149.  Article XX is not available as a defense to violations of the CVA, because there is no textual 
basis in the CVA that would make Article XX applicable to justify inconsistencies with that 
Agreement . 
                                                
51 Original Panel Report, paras. 7.399 -7.411.  WT/DS371/RW/Add.1  
 
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  150.  The text of Article XX establishes that the provision applies, in principle, to " this 
Agreement", i.e., the GATT 1994, and not to other covered agreements. Panels and the Appellate 
Body have found that the application of Article XX to another covered agreement requ ires 
affirmative language , in that other covered agreement, that is sufficient to incorporate Article XX 
into the other agreement.52  
151.  Only twice has the Appellate Body found that such affirmative language existed. Once was 
with respect to the TRIMS  Agreemen t, which explicitly provides that "[a]ll  exceptions under GATT 
1994 shall apply".53 The other occasion was with respect to a specific provision of China 's 
Accession Protocol, which expressly provides that the provision was "[w]ithout prejudice to China 's 
right to regulate trade in a manner consistent with the WTO Agreement".54 
152.  Thailand fails to point to any such affirmative language in the CVA. Thailand argues that 
the general reference in the CVA to Article VII of the GATT 1994, and general language in the 
preamble are a sufficient textual connection. Thailand is wrong.  
153.  First, the CVA's reference to Article VII does not reveal any intention to apply all of the 
other provisions of the GATT 1994, such as Article XX, to that other agreement. Indeed, as Japan 
explained, although the CVA refers generally to Article VII of the GATT 1994, it creates additional 
obligations  that go beyond the terms of this provision.55 It cannot thus be assumed that the 
general exceptions in Article XX of the GATT 1994 extend to the ad ditional obligations in the CVA.  
154.  Second , general language in the preamble of the CVA does not suffice to incorporate 
specific provisions of the GATT 1994, such as Article XX, into that Agreement . In this respect, the 
preamble to the CVA parallels that of the TBT Agreement . However, it is settled that the TBT 
Agreement does not incorporate the Article XX defense.56  
155.  Third, the fact that Article XX(d) of the GATT 1994 permits Members to take WTO -
inconsistent measures necessary to secure com pliance with their laws relating to customs 
enforcement does not evidence an intention for Article XX to apply to violations  of the CVA. 
156.   The obligations in the CVA and the provisions of Article XX(d) of the GATT 1994 share a 
common objective, namely, ensu ring proper customs enforcement. The CVA pursues this 
objective, among others, by establishing substantive disciplines with regard to customs valuation. 
Article XX(d) does so by allowing Members to adopt measures necessary to ensure the proper 
enforcement of customs laws. It makes no sense for Article XX(d) – which permits measures 
necessary to secure compliance with laws relating to customs enforcement – to justify action 
inconsistent with the substantive  disciplines relating to customs valuation that themselves  have 
the purpose of securing customs enforcement.  
157.  As the European Union put it, "the rationale and nature of the obligations set out in the 
CVA are not such as to justify the conclusion that Article XX should justify breaches in this context" 
and "[ t]he fact that Thailand 's Article XX defence appears to be obviously unfounded on substance 
confirms that Article XX simply does not ‘fit ' into the purpose and architecture of the CVA".57 
2. The Charges are not provisionally justified under either 
Article  XX(d ) or Article XX(a) of the GATT 1994  
158.  Even if the Article XX were available to justify a breach of the CVA (quod non ), the 
Charges could not be justified under either Article XX(d) or Article XX(a) of the GATT  1994.  
159.  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 values is inconsistent with 
Articles 2 o r 3 of the CVA.  
                                                
52 Appellate Body Report, China – Publications and Audiovisual Products , para. 233; Panel Report, China 
– Raw Materials , para. 7.153; Appellate B ody Report, China – Raw Materials , para. 303; Appellate Body 
Report, China – Rare Earths , paras. 96 and 101.   
53 Appellate Body Report, China – Rare Earths , para. 5.56.  
54 Appellate Body Report, China – Publications and Audiovisual Products , para. 233.  
55 Japan's opening statement, paras. 19 -20.  
56 China – Rare Earths , para. 5.56, citing Appellate Body Report, US – Clove Cigarettes , paras. 96 and 
101.  
57 The European Union's response to Panel Question 6 to the third parties, para. 16.  WT/DS371/RW/Add.1  
 
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 160.  It is well established in GATT and WTO case law that the aspect of a measure that must be 
"necessary" in order for a measure to be justified under Article XX(d) is the aspect that gives rise 
to the finding of WTO inconsistency . Most recently, the Appellate Body confirmed in EC – Seals  
that "the aspects of a measure to be justified under the subparagraphs of Article XX are those that 
give rise to a finding of inconsistency. 58 
161.  Accordingly, under Article XX(d), 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.  
162.  Thailand has, however, offered nothing to support it s 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.  
IV. THAILAND 'S MEASURES TAKEN IN CONNECTION WITH THE VAT BASE 
APPLICABLE TO IMPORT ERS OF CIGARETTES AR E INCONSISTENT WITH THE 
GATT 1994  
163.  To comply with the DSB 's recommendations and rulings, Thailand changed its tax base for 
VAT. As part of those changes, Thailand introduced new VAT notification requirements under 
Notification 187 and Order Por. 145 -2555 (hereinafter, the "notification requirement"). These 
measures were declared as compliance measures.  
164.  Under the notification requ irement, importers of cigarettes and the domestic monopoly 
producer, TTM, are subject to the  same  notification requirements. In June of each year, both are 
obliged to notify the average actual market price prevailing across Thailand on the date of the June  
notification.   
165.  For reasons explained below, importers cannot know  the average actual market price on 
the date of notification. Instead, importers can notify only the recommended retail selling price 
(RRSP). In practice, Thailand has accepted notification  of the RRSP.  
166.  This situation gives rise to the Philippines ' claims that Thailand 's VAT notification rules are 
inconsistent with Articles X:1, X:3(a) and III:4 of the GATT 1994: (1) in violation of Article X:1, 
Thailand has failed to publish the rule that t he Revenue Department applies to accept notification 
of the RRSP; (2) in violation of Article III:4, the notification requirement accords imported 
products treatment less favorable than domestic products, through the legal jeopardy they face by 
being unabl e to comply with the notification requirement; and, (3) in violation of Article X:3(a), 
the notification requirement is unreasonable.  
167.  In pursuing these claims, the Philippines does not seek to change the Thai Revenue 
Department 's now long -standing informa l practice of accepting notification of the recommended 
retail selling prices ("RRSP") in satisfaction of the notification requirement. Indeed, if Thailand 
were to simply publish this practice, in accordance with Article X:1, this would achieve compliance.  
To this end, the Philippines seeks, through its claims, to provide importers with appropriate 
security and predictability through a formal legal framework, under Thai law, that reflects this 
long-standing practice and, therefore, eliminates the risk of le gal jeopardy currently facing 
importers.  
A. Thailand has violated Article X:1 of the GATT 1994 by failing to publish the 
Revenue Department 's rule that importers may notify RRSPs  
168.  The Revenue Department 's rule permitting notification of RRSPs to satisfy the n otification 
requirement is a measure that falls within the scope of Article X:1 of the GATT 1994 because it: 
(1) is a rule that has general application; (2) is made effective by Thailand; and (3) pertains to 
taxes and to requirements affecting sale.  
169.  First, the phrase "[l]aws, regulations, judicial decisions and administrative rulings of 
general application" in Article X:1 of the GATT 1994 covers a "wide range of measures that have 
                                                
58 Appellate Body Report , EC – Seals , para. 5.185.  WT/DS371/RW/Add.1  
 
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  the potential to affect trade and traders", "rang[ing] from imperative rules  of conduct to the 
exercise of influence or an authoritative pronouncement by certain authoritative bodies".59 This 
phrase must be given broad effect because failure to do so would "undermine the due process 
objectives of Article X".60  
170.  As the authority resp onsible for administering Thailand 's VAT requirements, the Revenue 
Department 's practice of accepting notification of RRSPs, and then relying on them as the tax 
base, is both an exercise of its influence, and an authoritative pronouncement regarding the 
acceptable means for importers to comply with the notification requirement. Further, this practice 
applies to cigarette importers generally. The practice may properly be described the practice as a 
non-binding "administrative ruling[] of general application" . 
171.  Second , the rule permitting the notification of RRSPs in satisfaction of the notification 
requirement to has been "made effective" by Thailand. The term "made effective" means "brought 
into effect, or made operative, in practice".61 As Thailand has explai ned, the Thai Revenue 
Department has " adopted " a "system" or "practice" "of accepting notifications based on the 
RRSPs".62 The rule therefore results in conduct attributable to, and therefore made effective by, 
Thailand.  
172.  Third, the Revenue Department 's rule  pertains to taxes, and to requirements affecting 
sale, because it relates to the notification of the VAT base, which is connected or related to the 
imposition and collection of VAT; and the VAT, in turn, is a condition for lawful sale of cigarettes in 
Thailand. This point does not appear to be in dispute between the parties.  
173.  Thailand disputes that the Revenue Department 's acceptance of RRSPs in satisfaction of 
the VAT notification requirement is an "informal practice" of the Revenue Department, and argues 
that this is merely an importer 's "chosen means of compliance". However, the measure does not 
arise because importers  have chosen to notify RRSPs, but because the Revenue Department  has, 
in full knowledge of the facts, consistently chosen, over an extended  period, to accept RRSPs as a 
"means of compliance"  and has used the notified RRSPs as the tax base. The evidence, of course, 
also includes Thailand 's recognition of this as a "practice" and "system" "adopted" to implement 
the DSB rulings and recommendatio ns.  
174.  If this measure were published, importers could rely on it to show they have properly 
complied with the notification requirement, thereby resolving the legal jeopardy they currently 
face.  
B. Thailand has violated Article III:4 of the GATT 1994 by accord ing to 
imported products treatment less favorable than that accorded to like 
domestic products  
175.  In the absence of publication of the informal practice of allowing notification of the RRSP in 
fulfilment of the VAT notification requirements, importers face a risk of legal jeopardy in light of 
the specific requirements set forth in Notification 187 and Order Por. 145 -2555. The notification 
requirement set forth in those instruments gives rise to less favorable treatment of imported 
cigarettes as compared with t he like domestic product.  
176.  Thailand 's notification requirement entails de jure  discrimination because it subjects 
importers and domestic manufacturers to treatment that is formally the same, while failing to 
account for relevant differences in the respecti ve legal situations of importers and the monopoly 
producer of domestic cigarettes, TTM. Where a measure discriminates on a de jure  basis between 
like domestic and imported products, a panel may presume that the discrimination affects "like 
products".63 
177.  As noted above, under the notification requirement, importers of cigarettes are subject to 
the same  notification requirement as TTM for purposes of the VAT base. In June of each year, both 
                                                
59 Panel Report, EC – IT Products , paras. 7.1026 -7.1027.  
60 Panel Report, EC – IT Products , para. 7.1026.  
61 EC – IT Products , para. 7.1048 (emphasis added).  
62 Thailand's first written submission, paras. 7.33 and 7.48 (emphasis add ed). 
63 See the Philippines' first written submission para. 473, citing Panel Report, Indonesia – Autos , para. 
14.113; and Panel Report, Colombia – Ports of Entry , para. 7.355. In any event, as the Original Panel found, a 
consideration of the traditional fa ctors used to determine "likeness” demonstrates that TTM's domestically -
produced cigarettes are "like” PM Thailand's imported cigarettes. See Original Panel Report, paras. 7.442, 
7.451, 7.541.  WT/DS371/RW/Add.1  
 
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 importers and TTM are obliged to notify the average actual market price  across Thailand prevailing 
on the date of the June notification.  
178.  However, this formally  identical treatment  fails to account for the formally different legal 
situations  of importers. Specifically, with respect to domestic cigarettes, TTM 's exemption from 
Thai competition laws means that TTM can, and does, set the downstream retail price. Thus, on 
the date of notification, TTM is aware of the average actual market price and is able to comply with 
it, in fulfilment of the notification requirement.  
179.  By contra st, Thai competition law prohibits importers from fixing the retail selling price 
charged by independent operators who retail imported cigarettes. Thus, although cigarette 
importers are aware of – and able to notify – the recommended  retail selling price o n the date of 
notification, they do not know – and cannot notify – the average actual  market price on that date. 
In order to know the average actual market price across Thailand on a particular date, an importer 
would have to obtain market research through  a market research company. Because collecting and 
processing market data in order to calculate the average price necessarily takes time, there is 
necessarily a delay between the date of the notification and the subsequent date on which the 
average actual market price on the notification date becomes known.  
180.  Thailand contests that this constitutes a difference in treatment that is detrimental to 
imports . It contests that (1) cigarette importers do not know the average market price on the date 
it must be not ified; (2) it takes several weeks for a market research company to ascertain that 
price; and (3) importers face legal jeopardy if they do not comply with the VAT notification 
requirement. Each of Thailand 's arguments is unavailing.  
1. Cigarette importers do not know the average market price on the 
date it must be notified  
181.  Thailand argues that, on the date of notification importers do know the average actual 
market price prevailing on that date. Specifically, Thailand asserts that the Revenue Department 
define s the "actual price" to reflect only the price charged by sellers  – such as 7 -11 stores etc . – 
that invariably follow the RRSPs ".64 However, this definition does not allow the importer to know 
the average market price on the date of notification.  
182.  First, Thailand bases its contention on Example (b) provided in Clause 2(4) of Order Por. 
145-2555. Example (b) provides that, for Marlboro  cigarettes, the notified price should be the 
retail selling price "that the retailers in general , e.g. convenience stores or super stores use as the 
retail selling price to sell to the consumers in general or the majority [of them] ". Contrary to 
Thailand 's characterization, the Example does not state that importers may notify the price used 
either by one specific retailer , i.e., 7-11, or by retailers that "invariably follow the RRSP". Instead, 
it refers to "convenience stores" and "super stores" broadly as non-exhaustive examples  of the 
types of stores that constitute "retailers in general".  
183.  Second,  Thailand also provides no ev idence to support its assertion that 7 -11 or any other 
retailer "invariably follow the RRSPs". In fact, Thailand concedes that certain retailers " may charge 
higher prices for cigarettes " than the RRSPs.65 Further, Thailand 's New Excise Tax  explicitly 
envisa ges situations in which the RRSP "is not consistent with the reality, or is not in accordance 
with market mechanisms". In other words, at any given time, the average market price that 
"retailers in general" "use" for "consumers in general" could be higher than an importer 's RRSP.  
184.  As a result, an importer cannot possibly know what prices are being charged on the 
notification date. As a result, the only way to comply with the VAT notification requirement would 
be to engage in vertical price fixing.  
2. It takes  several weeks for a market research company to ascertain 
the average actual price  
185.  Thailand also argued that the Philippines had not shown the precise amount of time 
required to obtain market information. The Philippines demonstrated, based on information 
provided by PM Thailand and a market research company, that it takes approximately 4 -6 weeks 
to obtain average actual market price information. However, regardless of the precise amount of 
time required to obtain accurate data on the average actual retail price prevailing across Thailand 
                                                
64 Thailand's response to Panel Question 63(a), p. 57. Emphasis  added.  
65 Thailand's response to Panel Question 63(a), p. 57. Emphasis added.  WT/DS371/RW/Add.1  
 
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  on any given day, the decisive point for the Philippines ' claims is that it takes some amount of time  
after the date of notification for an importer to obtain average actual market price information 
from a market research c ompany. It is the necessary gap between the date on which the 
notification is made, on the one hand, and the date upon which the average actual retail price 
prevailing on that earlier date is known, on the other hand, that gives rise to the risk of legal 
jeopardy for importers.  
186.  Thailand itself has acknowledged that it takes some "amount of time" for a market 
research company to conduct market research and ascertain the average actual market price on a 
given date. In other words, Thailand recognizes that PM Thailand could not obtain the average 
actual market price on the same day the notification is due .  
3. Importers face legal jeopardy if they do not comply with the VAT 
notification requirement  
187.  Because importers do not know the average actual market price, the y cannot comply with 
the VAT notification requirement without violating Thai competition law. This situation creates legal 
jeopardy for cigarette importers, because they risk failing to comply with the notification 
requirement in the event of a discrepancy  between the average actual market price and the RRSP.  
188.  Thailand argues that importers ' lack of knowledge of the actual average market price 
prevailing on the notification date does not give rise to legal jeopardy because they can 
subsequently notify a corr ected price, if the price originally notified was incorrect. Thailand 
presents two scenarios, in which corrections can be made either before the incorrect VAT base 
enters into effect or before the deadline for submitting the tax return. However, this argum ent 
illustrates that less favorable treatment is, indeed, afforded to imported cigarettes.  
189.  For a start, Thailand 's scenarios do not account for the possibility that a discrepancy 
between the average actual market price is not discovered before a tax retur n is filed.  
190.  Further, on Thailand 's view, for importers to know whether they must file a correction, 
they must first undertake a market survey to monitor their VAT notifications against actual prices 
in the market, and then submit a correction. Thailand al so recognizes that a correction could 
require the reissuance of VAT invoices. As the usual supply chain includes PM Thailand, a 
distributor, a wholesaler and a retailer, three invoices may have to be reissued, by three different 
parties in the supply chain , for each pack of imported cigarettes.  
191.  In seeking to comply with the VAT notification requirement, importers face an endless 
spiral of notifications, corrections and reissuance of invoices. Market surveys necessarily provide 
information on average market prices with a time lag. Thus, a corrected notification, based on a 
market survey, necessarily provides the average market price prevailing on an earlier  date, 
namely, the date of the original notification. However, the corrected notification may itself be 
inaccurate because the average market price prevailing on the date of the corrected notification is 
unknown on that date, pending further price surveys that will take more time. Thus, for every 
corrected notification, further monitoring is needed, and a fu rther correction may be necessary 
several weeks in the future, with invoices reissued by several parties in the supply chain.  
192.  TTM does not face these additional regulatory burdens and risks. It need never monitor its 
VAT notifications against average mark et prices, submit corrections, or reissue invoices, because it 
is able to fix the retail price and therefore can know that its notified selling price is correct on the 
original date of notification.  
C. Thailand has violated Article X:3(a) of the GATT 1994 by imposing, 
through Notification 187 and Order Por. 145 -2555, an unreasonable 
notification requirement on importers with which they cannot comply  
193.  The Philippines ' claim under Article X:3(a) is premised on the same underlying problem 
that gives rise to less f avourable treatment under Article III:4, namely, the impossibility for 
importers of notifying the average actual market price on the date of notification, without violating 
competition law by fixing prices. Since the VAT notification requirements pertain t o administration  
of Thailand 's VAT rules, this impossibility gives rise to unreasonable administration  contrary to 
Article X:3(a). The Philippines summarizes further below.  
194.  First, the VAT notification requirement is a measure that falls within Article X:3( a) because 
it pertains the administration  of Thailand 's rules relating to the obligation to pay VAT. WT/DS371/RW/Add.1  
 
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 "Administration" of measures within the meaning of Article X:1 means the manner in which those 
measures are "applied", "implemented" or "enforced".66 Furthe r, "administration" can take the 
form of a "legal instrument that regulates the application or implementation of" substantive rules 
in another legal instrument.67 
195.  Whereas the Thai Revenue Code sets forth provisions containing substantive rules relating 
to the calculation of the VAT base, the notification requirement pertains to the application and 
implementation  of those rules, specifically, the way information used to establish the VAT base is 
collected by the administrator of the law. The notification requ irement therefore governs the 
administration of the VAT.  
196.  Second , the notification requirement provides for "unreasonable"  administration because it 
imposes an impossible administrative requirement on importers.  
197.  Thailand argues that the notification requirement is not unreasonable because no violation 
of Thai competition law arises by notifying the RRSPs. This is not, however, what the Philippines 
argues. As discussed above, the Philippines ' argument is that it is "unreasonable" to administer a 
tax th rough a notification requirement imposed on importers that seeks to collect information from 
importers that they do not, and cannot, possess. As discussed above, an importer cannot notify 
the average market price prevailing on the date of notification beca use it cannot know that price 
on that date. As a result, the only way to comply with the VAT notification would be engage in 
(illegal) vertical price fixing.  
198.  Thailand 's argument that importers may notify corrections of the VAT base supports the 
Philippines ' position. As explained earlier, in doing so, importers face an endless spiral of 
notifications and corrections because, when a corrected notification is filed, importers still cannot 
know the average market price on that date. Thus, further monitoring is  required and further 
corrections may ensue.  
199.  This only adds to the inherent unreasonableness of a requirement that forces importers to 
choose between complying with the VAT notification requirement and facing legal jeopardy under 
Thai competition law, or c omplying with Thai competition law and facing legal jeopardy under the 
VAT notification requirement.  
 
                                                
66 Appellate Body Report, EC – Bananas III , para. 200. See also Panel Report, Argentina – Hides and 
Leather , para. 11.72.  
67 Appellate Body Report, EC – Selected Customs Matters , para. 200.  WT/DS371/RW/Add.1  
 
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  ANNEX B -2 
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 alleges that Thailand has faile d to bring itself into compliance 
with the DSB recommendations and rulings with respect to: (i) the decision of the Thai Customs 
Board of Appeals (BoA) in the appeals by Philip Morris (Thailand) Limited (PM Thailand) of the 
original customs valuation decis ions of Thai Customs concerning 210 entries of cigarettes imported 
by PM Thailand; (ii) the Criminal Charges against PM Thailand (Charges); and (iii) Thailand's 
establishment of the value -added tax (VAT) tax base for cigarettes.  
1.3.  In an initial request for a  preliminary ruling , Thailand requests the Panel to find that the 
Philippines' claims regarding the Criminal Charges are outside the scope of these proceedings. It 
contends that the Philippines is precluded from raising the Charges in these Article 21.5 
proceedings because the Philippines raised, but did not pursue, the same issues before the original 
panel. Thailand further explained that the Philippines could not claim that the Charges were a 
"measure taken to comply" on the ground that there was a "nexus " between the Charges and the 
DSB recommendations and rulings in this case. Thailand notes that the Panel has indicated that it 
does not intend to issue its preliminary ruling before it issues its report in this case.  
1.4.  In a subsequent request for a procedur al ruling , Thailand addresses a serious violation of 
Thailand's due process rights in these proceedings. During the proceedings, the Philippines 
submitted an exhibit containing a confidential, internal Thai government memorandum to which 
was attached lawye r-client privileged legal advice from Thailand's legal advisors in this dispute. 
Thailand has not waived, and does not waive, either expressly or impliedly, its privilege in these 
documents or its right to obtain legal advice to assist it in presenting its  case to the Panel in these 
proceedings. Thailand requested the Panel to find that Thailand's due process rights have been 
violated in a manner that prevents the Panel  from fulfilling its obligations under Article 11 of the 
DSU. However,  the Panel issued i ts preliminary ruling prior to the first substantive meeting, 
concluding that Thailand's due process right have not been violated and rejecting Thailand's 
request.  Thailand therefore expressly requests the Panel to explain clearly in its ruling whether it 
considers that the Philippines' good faith/due process obligations and the Panel's due process 
obligations extended merely to inquiring whether the Philippines acted legally. If not, Thailand 
requests the Panel to explain clearly what additional steps were  required of the Philippines and 
where it took those steps in this case . 
1.5.  With respect to the Philippines' claims regarding the decision of the BoA , the Philippines has 
failed to show that the BoA's decision was in any way biased, partial or arbitrary.  In examining 
these claims, the Panel should apply a standard of review to these claims similar to that used to 
review decisions of domestic trade remedy investigating authorities. Under this standard, the Panel 
must examine whether the Bo A reached a reasonabl e, objectively justifiable, and unbiased, based 
on an objective review of the facts and circumstances of the case before it. As explained in more 
detail in section 2 below, the Philippines has failed to show that the Bo A acted unreasonably or 
that its deci sion lacked objectivity. Instead, the Philippines' arguments in the end amount to a 
claim that the Bo A should have used a different methodology that would have resulted in a more 
favourable outcome for the importer. This is not the purpose of multilateral review of these kinds 
of determinations and the Panel should not follow this approach.  
1.6.  With respect to the Philippines' claims regarding the Criminal Charges , these claims raise 
issues that are not within the scope of the CVA. The CVA governs the determination of the 
customs value of goods by the customs administration. It does not, and does not purport to, 
govern how WTO Members may exercise their police powe rs in the enforcement of their laws, 
including their customs laws. Since the Charges represent an exercise of Thailand's enforcement of 
its customs laws, not a determination of customs value by the customs administration, the CVA 
does not apply and the Phi lippines' claims under the CVA should be rejected. Moreover, the WT/DS371/RW/Add.1  
 
- B-27 - 
 
  
 Philippines' claims regarding the Charges are an unprecedented attempt to get a WTO panel to 
intervene in pending domestic criminal proceedings in order to pre-empt the court's consideration 
of the matter. The Charges are currently pending before the Thai Criminal Court, which will hear 
extensive evidence from both sides over the coming year and is unlikely to issue its decision 
before summer of 2018. Under the doctrine of "ripeness", however,  a WTO panel cannot exercise 
its jurisdiction to engage in an exercise of speculation as to what that decision might be or 
whether that decision would be consistent with WTO law. A WTO panel cannot possibly render an 
objective decision before the Thai Crim inal Court has had an opportunity to hear all the relevant 
evidence.  
1.7.  Finally, with respect to the Philippines' claims regarding the VAT system , Thailand has 
implemented the recommendations and rulings of the DSB on this matter in precisely the manner 
requested by the Philippines and the importers. Nevertheless, the Philippines has chosen to assert 
claims that this method of implementation is WTO -inconsistent because of a perceived difference 
in possible outcomes in the event of inaccurate notifications of the tax base by importers and the 
domestic producers. The Philippines' claims are based on a misunderstanding of both the relevant 
provisions of Thai law and the facts, and should be rejected.  
1.8.  Thailand will address the Philippines' claims with respect to the BoA Ruling in section 2 below, 
the claims regarding the Charges in section 3 below (including the preliminary ruling request and 
the procedural request on due process issues), and the claims regarding Thailand's VAT base in 
section 4 below. Finally, it  presents its conclusions in section 5.  
2  THE PHILIPPINES HAS FAILED TO DEMONSTRAT E THAT THE DECISIONS  OF THE BOA 
ARE INCONSISTENT WIT H THE CVA  
2.1.  This section concerns the BoA decision of November 2012 regarding the customs valuation of 
210 entries of cigaret te imported by PM Thailand. The Philippines claims that the BoA improperly 
determined that the relationship between PM Thailand and the exporter affected the price such 
that the declared transaction value was not an appropriate customs value under Article 1.2 of the 
CVA. The Philippines also claims that having made this determination, the BoA improperly 
determined the revised customs value, in a manner inconsistent with Article 5 of the CVA. Finally, 
the Philippines raises several claims regarding the proce dural aspects of the BoA's decision under 
Articles 1.2(a), 11.3 and 16 of the CVA.  
2.2.  Thailand disagrees that the BoA's decisions were inconsistent with the CVA. Thailand notes 
that this is the first case before a WTO panel involving a review of a determinati on of an appellate 
tribunal under Article 11.2 of the CVA.  In these circumstances, the parties agree that the Panel 
should not conduct a de novo review.  Instead, Thailand considers that the Panel should use a 
standard of review that examines not whether the outcome reached by the Bo A was favourable to 
the importer or indeed whether the Panel would have reached exactly the same outcome itself, 
were it in the shoes of the Bo A. Instead, the question is whether the Bo A's approach was 
reasonable and objective in the light of the circumstances of the case and the evidence before it.1  
This standard is analogous to that used in trade remedy dispute settlement proceedings, which is 
mentioned in Article 17.6(i) of the Agreement on Implementation of Article VI of th e General 
Agreement on Tariffs and Trade 1994  (Anti-Dumping Agreement ). 
2.3.  There is no express standard of review for decisions such as the BoA decision in the CVA. 
Given the analogies between a determination by the BoA and that of a domestic investigating 
authority in a trade remedy proceeding under the Anti -Dumping Agreement or the Agreement on 
Subsidies and Countervailing Measures (SCM Agreement), the Panel should follow a standard of 
review similar to that used by panels in reviews of trade remedy determin ations.2 
2.4.  The Appellate Body has explained that, in a trade remedy -related dispute, where a panel is 
reviewing an investigating authority's determination, the "objective assessment" standard in 
Article 11 of the DSU requires a panel to review whether the authority h as provided a reasoned 
and adequate explanation as to (i) how the evidence on the record supported  its factual findings; 
                                                
1 Thailand's second written submission, paras. 2.2 -2.3. 
2 Thailand's first  written submission, paras. 4.6 -4.8; Thailand's second written submission, para. 2.6.  WT/DS371/RW/Add.1  
 
- B-28 - 
 
  and (ii) how those factual findings support its overall determination.3 The Appellate Body has also 
clarified that in such cases, a panel should not conduct a de novo  review of the evidence, nor 
substitute its judgement for that of the investigating authority.4 
2.5.  There is no dispute between the parties on the fact that the Panel should not choose its own 
methodology to conduct the review of  PM Thailand's prices or re-assess de novo the facts that 
were examined by the BoA in the underlying customs determinations and that some level of 
deference to the discretion of the BoA is appropriate.5 
2.6.  However, t he Philippines states that the relevant sta ndard of review should be that provided 
in Article 11 of the DSU. The Philippines suggests that by proposing a standard of review similar to 
that of Article 17.6(i) of the Anti -dumping Agreement, Thailand is effectively seeking the Panel to 
accord total de ference to the decisions of the BoA.6  
2.7.  This is not correct.  Thailand made clear that Article 11 of the DSU applies to this dispute.7 In 
Thailand's view , the Panel should apply not only Article 11 of the DSU, but also a standard similar 
to that stated in A rticle 17.6(i) of the Anti -Dumping Agreement, because this case involves the 
review of a determination based on a complex set of facts, by a domestic entity (the BoA) 
comparable to those in charge of investigat ions for trade remedy purposes.8 
2.8.  Under this st andard, a panel need not determine whether the approach used by the 
investigating authority is the best approach. Equally, a panel is not to focus on whether the 
outcome is favourable to one side or another. Instead, it focuses on the reasonableness, the 
objectivity and the  unbiased nature of the determination, not its results. This approach is 
particularly appropriate in a case like this, where the BoA used "objectively" the exact same 
methodology to decide three sets of appeals by PM Thailand. In two instances, the outcome was 
favourable to PM Thailand. In the third, the instance before the Panel, the outcome was 
unfavourable to PM Thailand. The purpos e of the "reasonableness" standard used in trade remedy 
cases is precisely to avoid result -driven outcomes, whereby the WTO -consistency of the 
determination would depend on the result rather than on the method by which the domestic 
authority arrived at the  result.9 
2.9.  Therefore , Thailand considers that the Panel should apply a standard of review to the BoA 
decision that is analogous to the "reasonableness" and "objectively justifiable" standards used in 
trade remedy and other analogous disputes as discussed ab ove. In any event, the Panel must 
avoid becoming the initial trier of facts or examining the issues before BoA on a de novo basis that 
results in a substitution of the Panel's assessment for the objective assessment of the BoA.10 
2.1  The BoA properly identified  the comparison group of companies to establish P&GE 
rates  
2.10.   The BoA addressed PM Thailand's appeal using an approach that compared PM Thailand's 
profit and general expense (P&GE) ratio with those of a comparator group to determine whether 
PM Thailand's rat io fell within what would be considered a "normal" range.  In principle, the 
Philippines agrees that it was appropriate for the BoA to use this approach and argues only with 
the manner in which it was applied in this case.   
                                                
3 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 186; and Appellate 
Body Report, US – Lamb , para. 103.  See Thailand's second written submission, para. 2.7.  
4 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , paras. 187 – 188. Appellate 
Body Report, US – Softwood Lumber VI (Article  21.5 – Canada) , para. 93.  See Thailand's second written 
submission, para. 2.7.  
5 Thailand's second written submission, paras. 2.5, 2.8. See Thailand's first  written submission, para. 
4.10;  The Philippines' second written submission, paras. 57 and 66.  
6 The Phili ppines' second written submission, paras. 52 and 62.  See Thailand's second written 
submission, para. 2.10.  
7 Thailand's first written submission, paras. 4.1 -4.3. 
8 Thailand's second written submission, paras. 2.11 -2.14. 
9 Thailand's second written submissi on, paras. 2.21 -2.22; Thailand's opening statement at the meeting 
of the Panel, paras. 81 -82. 
10 Thailand's second written submission, para. 2.37.  WT/DS371/RW/Add.1  
 
- B-29 - 
 
  
 2.11.   In order to determine whether P M Thailand's P&GE was within the normal range for 
importers of cigarettes into Thailand, the BoA had to identify a comparison group of companies. 
The Philippines claims that the BoA used a flawed comparison group to determine benchmark 
P&GE rates inconsist ently with Article 1.2(a) of the CVA.  
2.12.    First, the Philippines tries to impose an incorrect standard of review of the BoA decision.  
Thailand has addressed this above. Second , the Philippines raises several objections regarding how 
the BoA implemented its a pproach. The Philippines apparently seeks perfection from the BoA.  
However, it fails to acknowledge that the BoA was not faced with a perfect set of choices in its 
determination. The nature of the cigarette industry in Thailand, where PM Thailand was the 
predominant importer, limited the options available to the BoA. Notwithstanding the Philippines' 
arguments, an  expert statement filed by the Philippines itself in its first written submission made 
essentially this point – that it was not easy to identify a  perfect comparison group  in the 
circumstances of the cigarette industry in Thailand and that it might even have been appropriate 
to compare PM Thailand to companies outside the cigarette industry .11   
2.13.   The Philippines questions the e xclusion of certain comp anies f rom the comparison group. 
However, it is presumptively reasonable to establish a rule that loss -making companies – 
especially those that are affiliated with the exporter – do not provide an appropriate basis for a 
comparison to determine whether an importer is operating at an arm's length basis.12  
2.14.   The BoA narrowed down its selection of the comparison group of companies using the 
following methodological steps:  
• Duty-free operators were excluded (King Power, King Power Duty Free, Bangkok 
Airways).  
• Comp anies that did not import cigarettes or sold only domestic products were excluded 
(Weh Weh, Kha Sin Thai, HAH, Chitapanya, Dekthaileemax, Ruwamsahairungruang, 
Thaiseree Hadyai, Pangna Changwad Trading).  
• Loss making companies were excluded (BAT, JTI, PX Imp ort Export, Oriental & Eight 
Happiness, Prestige Brand, Universal Consumer Products, Goldimex Intertrade, 
Sereewat, Phromrangsi 1999, Boontong Trading, First Trago).  
• One company, Macrorich, was excluded because its P&GE ratio was excessively high.  
• One comp any, Sutanatrading, was excluded because the BoA was unable to obtain its 
financial statement or confirm its activities.  
2.15.   Thailand sees nothing in this approach that is not objectively justifiable.13 
2.16.   The Philippines further questions (i) the BoA's decision t o use a comparison group outside 
the industry, (ii) the BoA's alleged failure to take into account the difference in size of the 
companies as compared to PM Thailand, and (iii) the BoA' s decision to include PM Thailand in the 
comparison group. Regarding th e first point, it is objectively justifiable to choose companies selling 
the same product instead of companies of the same size.14 Regarding the second point, this is 
precisely the reason why the expert statement provided by the Philippines said it was difficult to 
find a perfect comparison group.15 Regarding the third point, had PM Thailand not been included in 
the comparison group, its P&GE ratio would still have fallen outside even the absolute range of the 
values for the comparison group.16 
                                                
11 Thailand's first  written submission, para. 5.31; Thailand's second written submission, paras. 2.39 -
2.40; Thailand's opening statement at the meeting of the Panel, para. 84.  
12 Thailand's second written submission, para. 2.42. 
13 Thailand's second written submission, para. 2 .45; Thailand's first  written submission, paras. 5.21 -
5.29. 
14 Thailand's second written submission, paras. 2.47 -2.48. 
15 Thailand's second written submission, para. 2.49.  
16 Thailand's second written submission, para. 2.50.  WT/DS371/RW/Add.1  
 
- B-30 - 
 
  2.17.   Thus, t he Philippines has failed to make a prima facie  case that the Bo A's determination was 
inherently unreasonable, not objective, or biased against PM Thailand. In these circumstances, the 
Panel cannot set the determination aside, simply because the outcome might not have been 
favourable to a multinational corporation or be cause the circumstances before the BoA were not 
perfect in every respect.17  
2.18.   For these reasons, the Panel should reject the Philippines' claims regarding the BoA's 
selection of the comparison group in this case.  
2.2  The BoA calculated the P&GE ratios consisten tly  
2.19.   The Philippines argues that the BoA calculated the P&GE ratios for the companies involved 
inconsistently.  In particular, the Philippines states that for two of the companies in the comparison 
group, the BoA used a P&GE ratio based on figures for profi ts before tax. For the three other 
companies, however, the Philippines alleges that the BoA used a P&GE ratio based on figures for 
profits after tax. 
2.20.   This is incorrect. The BoA used exactly the same numerator and denominator for all of the 
companies within  the comparison group, including PM Thailand.  The numerator for each company 
was profit plus general expenses (before tax). The denominator for each company was the main or 
operating income (not including non -operating income such as interest income etc.).  There is 
nothing inconsistent or unreasonable about this approach.18 
2.21.   Moreover, contrary to the Philippines' assertion, it was reasonable for the BoA to exclude 
companies that made losses because it may indicate that the sales were not at arm's length in th e 
case of related -party transactions.19 In addition, it was appropriate for the BoA to focus on 
operating income, profits, and expenses, rather than on whether the companies had a tax liability 
under Thai tax law .20  
2.22.   Finally, the Philippines argues that the BoA erred in "attribut[ing] three different P&GE rates 
to PM Thailand and then us[ing] these different rates inconsistently when undertaking its 
comparison".21 This is incorrect.  PM Thailand changed its position on what P&GE ratio should be 
used in this analysis at several stages in the proceeding. However, the BoA approached these rates 
consistently.22 Moreover, i n order to make an apples to apples comparison, it was appropriate to  
use comparable figures for PM Thailand and the other companies, based on the financial results in 
the audited financial statements.23 
2.23.   For these reasons, the Panel should reject the Philippines' arguments that the BoA's 
calculations were inconsistent or tha t the BoA was not unbiased and objective.  
2.3  The BoA's establishment of the range of P&GE ratios was proper  
2.24.   The Philippines questions the methods used by the BoA to establish whether PM Thailand's 
P&GE rates were consistent with the representative industry r ate. Based on the assumption that 
any P&GE rate falling outside the "normal range" reflects transaction values influenced by the 
relationship, it argues that the standard error is not the appropriate statistical method, and that 
the appropriate method for that purpose is necessarily the standard deviation.24 
2.25.   However, the purpose of the test was  not to identify "outliers" or abnormal transactions , as 
the Philippines seems to suggest .25 The BoA determined that the appropriate standard was 
                                                
17 Thailand's second written submis sion, para. 2.54; Thailand's opening statement at the meeting of the 
Panel, paras. 81 -82. 
18 Thailand's first written submission, para. 5 .41-5.42; Thailand's second written submission, paras. 
2.57-2.58. 
19 Thailand's first written submission, para. 5 .18-5.22; Thailand's second written submission, para. 2.59.  
20 Thailand's second written submission, para. 2.59.  
21 The Philippines' second written submission, paras. 199 et seq.  
22 Thailand's first  written submission, para. 5.45; Thailand's second written submissio n, para. 2.61.  
23 Thailand's second written submission, paras. 2.62 -2.64. 
24 Thailand's second written submission, paras. 2.68 -2.69. 
25 Thailand's first written submission, para. 5 .54; Thailand's second written submission, para. 2.66.  WT/DS371/RW/Add.1  
 
- B-31 - 
 
  
 whether PM Thailand's P&GE rates were "consistent with those of the industry group"26, and that 
such consistency should be measured by comparing PM Thailand's P&GE rates with a 
representative benchmark based on the average or mean of the individual P&GE rates.27 However, 
as it wo uld not be reasonable to compare PM Thailand's P&GE rates with an absolute and precise 
figure (i.e. the mean), the BoA decided to introduce a range around the average or mean. For this 
purpose , it used the standard error of the mean, which is the statistic al tool that measures how 
precisely the population mean is estimated by the sample mean.28 
2.26.   In layman's terms, the range used by the BoA is the range within which the mean might be 
expected to fluctuate. It is perfectly reasonable to use this to establish a benchmark range of what 
is "normal" in an industry and to use this based on a sample, not the population as a whole. This 
approach has no inherent bias, no inherent subjectivity, and is plainly not outcome -based.29 The 
use of the standard error is particula rly apt when using a smaller sample group. As noted, the 
standard error is an inferential tool that estimates how close the sample mean is to the population 
mean.  The smaller the sample group, the larger the standard error.  Thus, the two standard error 
approach is perfectly reasonable with a small sample group as it results in a broad range within 
which the population mean could fall.30 
2.27.   The CVA does not prescribe a particular means of determining whether a related company's 
P&GE ratios are consistent with those of an unrelated importer. There is no textual base in the CVA 
requiring the identification of outlier sales or the use of the standard deviation as the appropriate 
tool to conduct this assessment. In its arguments, t he Philippines is reading into the  CVA 
obligations that are not there.31 
2.28.   In any event, even assuming for the purposes of argument that the task is to establish a 
"normal" range of P&GE ratios in the industry or for importers that are not related to the exporter, 
it remains the case that the re is no express guidance on how this "normal" range is to be 
established.32 In this context, it is clear that the Philippines' argument is simply that its suggested 
approach is better or that the BoA should have used an outcome that would have been favoura ble 
to the importer.33 
2.29.   For these reasons, the Panel should reject the Philippines' claims regarding the benchmark 
range established by the BoA. 
2.4  The BoA's treatment of provincial taxes was reasonable  
2.30.   The Philippines argue s that the Bo A's decision to limit the deduction for provincial taxes to 
the amount that could be documented with receipts by PM Thailand was inconsistent with Article 
5.1 of the CVA.  
2.31.   The Philippines dr aws an analogy to the determination of a fair comparison between the 
export price and the normal value under Article 2.4 of the Anti -Dumping Agreement. Under anti -
dumping law, the burden is on the party claiming an adjustment under Article 2.4 to prove that it 
is entitled to the adjustment.34  
2.32.   The Philippines argues that it w as unreasonable from the BoA to request PM Thailand to 
support its claimed adjustment for provincial taxes. In effect, the Philippines considers that the 
BoA should simply have accepted the adjustment as claimed by PM Thailand.  However, when the 
BoA perfor med a reasonableness check on the amount claimed by PM Thailand , the amount 
                                                
26 Thailand's first  written submission, para. 5.56; Thailand's second written submission, para. 2.66.  
27 Thailand's first  written submission, para. 5.57; Thailand's second written submission, para. 2.66.  
28 Thailand's first  written submission, para. 5.60; Thailand's second wri tten submission, para. 2.66.  
29 Thailand's opening statement at the meeting of the Panel, para. 90.  
30 Thailand's opening statement at the meeting of the Panel, para. 92.  
31 Thailand's second written submission, para. 2.71.  
32 Thailand's second written submiss ion, para. 2.74.  
33 Thailand's second written submission, para. 2.75.  
34 Thailand's first  written submission, paras. 5.86 -5.87; Thailand's second written submission, para. 
2.81. WT/DS371/RW/Add.1  
 
- B-32 - 
 
  seemed to be too high. However , it was perfectly reasonable for the BoA to require additional 
substantiation of the claimed amounts from PM Thailand.35 
2.33.   The Bo A requested PM Thailand  to substantiate the amounts claimed by providing receipts. 
PM Thailand provided three types of receipts: (i) receipts showing that the tax was paid by PM 
Thailand; (ii) receipts showing that the tax was paid by a retailer such as a 7 -11 shop on behalf of 
PM Thailand; and (iii) receipts showing that the tax was paid by an individual with nothing to 
indicate that this was paid on behalf of PM Thailand.  The third category of receipts did not indicate 
that the payor was PM Thailand or show that the amounts wer e paid by retailers on behalf of PM 
Thailand. It was therefore perfectly reasonable for the BoA to conclude that the claimed 
adjustment had not been substantiated in full and to adjust the amount of the deduction 
accordingly.36 
2.34.   Therefore, the Panel should r eject the Philippines' arguments regarding the issue of 
provincial taxes and find that the BoA properly limited the adjustment to the amounts that were 
actually documented by PM Thailand.  
2.5  The BoA's treatment of transportation costs was reasonable  
2.35.   The Phili ppines argues that the BoA should have made an adjustment for transportation 
costs.  
2.36.   As discussed above with respect to provincial taxes, the burden to prove an adjustment lies 
on the party claiming the adjustment.37 Since the BoA did not have its own acces s to the 
necessary records, it was up to PM Thailand to document the claim for an adjustment for 
transportation costs.38 
2.37.   Thailand recalls that t he Bo A did not make this adjustment because PM Thailand had 
explicitly stated in a letter dated 24 August 2011  that it was willing to waive this adjustment.39 In 
response, the Philippines argued that PM Thailand had "withdrawn" its offer to "waive" an 
adjustment for transportation costs and that the BoA could have made this adjustment on the 
basis of an "estimate" provided by PM Thailand.  
2.38.   Thailand disagrees. In the letter  referred to by the Philippines to support its point, PM 
Thailand did not seek a deduction for any particular amount for transportation  costs, even though, 
in the same letter, PM Thailand provided further figures on what it considered to be the correct 
P&GE ratio to be used in the calculation.40 In fact, PM Thailand never made a substantiated claim 
of an adjustment for transportation costs . As the Philippines indicates, PM Thailand referred only to 
an "estimate" of transportation costs in its submissions to the BoA.41 In these circumstances, the 
BoA was not required to take the burden of proof entirely on itself and to be more assiduous than  
the importer itself in seeking out information that would have been in the possession of the 
importer regarding this minimal amount.42 
2.39.   Therefore , it was perfectly reasonable of the BoA not to make any adjustment for 
transportation costs.  
                                                
35 Thailand's first  written submission, paras. 5.88 -5.92; Thailand's second writt en submission, paras. 
2.82-2.85. 
36 Thailand's second written submission, paras. 2.86 -2.87. 
37 Thailand's first  written submission, para. 5.97; Thailand's second written submission, para. 2.98.  
38 Thailand's second written submission, para. 2.94. 
39 Thailand's  first written submission, para. 5.98; Thailand's second written submission, para. 2.95 . See 
Exhibit PHL -39-B, p. 18, para 4.2 . 
40 Thailand's second written submission, para. 2.97. 
41 Thailand's second written submission, para. 2.100. 
42 Thailand's second written submission, para. 2.103.  WT/DS371/RW/Add.1  
 
- B-33 - 
 
  
 2.6  The BoA did not act inconsistently with the procedures of Article 1.2(a) of the CVA  
2.40.   The Philippines claims that the BoA acted inconsistently with the procedural requirements of 
Article 1.2(a) of the CVA by failing to communicate its grounds for considering that the relati onship 
influenced the price or allowing the importer a reasonable opportunity to respond.43 
2.41.   Thailand's view is that the procedural requirements of Article 1.2(a) do not apply mutatis 
mutandis to decisions of appellate tribunals under Article 11 of the CVA. Thailand explained that 
while Article 1.2(a) clearly envisages a determination of the customs value that may subsequently 
be subject to an appeal under Article 11, there is nothing in either Article 1.2(a) or Article 11 to 
suggest that the appellate tribun al must follow exactly the same procedures as must be used to 
reach the initial valuation decision. Thailand also explained that the logic and purpose of an appeal 
would also suggest that the same procedures should not apply mutatis mutandis , in that the i ssues 
and evidence would normally be different at an appellate stage.44 
2.42.   Moreover,  Article 11 does not prescribe the procedures to be followed in appeals of customs 
valuation decisions. The drafters did not prescribe any such procedures or state that they in tended 
the procedures of Article 1.2(a) to apply mutatis mutandis to appeals under Article 11. These 
omissions must be given effect in the interpretation of what procedures apply to appeals under 
Article 11 of the CVA.45  
2.43.   In response, the Philippines argues  that since the BoA is part of the customs administration , 
the procedural provisions of Article 1.2(a) necessarily apply to its decisions.  This does not follow. 
Article 1.2(a) applies to determinations of the customs value. In contrast, the BoA's task is t o 
resolve a n appeal of a determination of customs value. There is  no reason to assume that the 
same procedures necessarily apply mutatis mutandis to both.46 Moreover, u nder the Philippines' 
reliance on the reference to "customs administration", the procedur es of Article 1.2(a) would apply 
to appeals to authorities within the customs administration but not to appeals to the judicial 
authorities (who are not part of the customs administration). It would not make sense for the 
procedures of Article 1.2(a) to ap ply to appeals in one case but not the other.47 
2.44.   The Philippines also states that the procedures of Article 1.2(a) must apply because, in its 
view, the Bo A conducted a de novo assessment of PM Thailand's customs values.48 This term 
appears to imply that the BoA went back and conducted exactly the same enquiry as a customs 
officer would have done when goods were first imported. However , this is not what the Bo A did. 
Instead, the Bo A used a testing methodology based on PM Thailand's P&GE rates, which the 
Philip pines acknowledges was not as such inappropriate.49 
2.45.   For these reasons, the Panel should reject the Philippines' claims regarding the procedural 
aspects of Article 1.2(a).   
2.7  The Philippines failed to establish that the BoA acted inconsistently with Article 11 .3 
of the CVA  
2.46.   The Philippines claims that the BoA acted inconsistently with Article 11.3 of the CVA, which 
requires that "[n]otice of the decision on appeal shall be given to the appellant and the reasons for 
such decision shall be provided in writing".  
2.47.   In effect, the Philippines' argument is that the BoA ruling  did not provide the reasons for its 
decision in sufficient detail.  However, this is incorrect. T he Bo A's decision  makes clear both the 
legal conclusions and key facts on which the decision is based .50 The Bo A explains that its decision 
                                                
43 The Philippines' first written submission, paras. 338 -346. 
44 Thailand's first written  submission, paras. 5.119 -5.124; Thailand's second written submission, paras. 
2.109 -2.110 . 
45 Thailand's first written  submission, para. 5.121; Thailand's second written submission, para. 2.103.  
46 Thailand's second written submission, paras. 2.111 -2.112.  
47 Thailand's second written submission, para. 2.113.  
48 The Philippines' second written submission, para. 355.  
49 Thailan d's second written submission, para. 2.114.  
50 Thailand's first written submission, paras. 5.106 -5.107; Thailand's second written submission, para. 
2.124.  WT/DS371/RW/Add.1  
 
- B-34 - 
 
  to reject the transaction value is based on its conclusion that the relationship between purchaser 
and seller affected the purchase price, a conclusion reached after having examined the 
circumstances of sale, using the  test methodology which is also at issue in this case. The Bo A 
ruling also explains that it compared PM Thailand's P&GE rates to the "profits and general 
expenses rate of the industry group of imported cigarette wholesalers in the year 2002 (9.80 -
15.08 per cent)". In its ruling, the BoA also indicated that PM Thailand's P&GE rates were not 
consistent with the industry rates.51 
2.48.   Moreover,  the twelve points the Philippines considers that the Bo A should have addressed in 
its decision go well beyond the level of d etail that would normally be required as "reasons". 
Contrary to other WTO agreements (such as the Anti -Dumping Agreement and the SCM 
Agreement), Article 11 of the CVA does not contain such detailed requirements regarding the 
reasons for a decision in an ap peal.52 
2.49.   Therefore, the Philippines' claim under Article 11.3 of the CVA should be rejected since it is 
premised on an erroneous understanding of the disciplines actually imposed by this provision.  
2.8  The Philippines failed to establish that the BoA acted incon sistently with Article 16 
of the CVA  
2.50.   Finally, the Philippines claims that the Bo A ruling is inconsistent with Article 16 of the CVA 
because it "fails to provide basic information that is essential to understand the reasons for its 
customs valuation decisio n".53  
2.51.   However, Article 16 does not apply to decisions by appellate tribunals under Article 11.2 of 
the CVA. Instead , decisions of an appellate tribunal under Article 11.2 are subject to the more 
specific procedural rules of Article 11.3. More specifically,  Article 16 provides that an importer, on 
written request, shall have the right to an explanation from the customs administration of how the 
customs value was determined. Article 11 applies to an appeal  of the "determination of customs 
value" referred  to in Article 16, and Article 11.3 provides that notice of the decision and the 
"reasons for such decision shall be provided in writing" even without a request from the importer.  
Article 11.3 therefore applies specifically to appeals decisions, and provides mo re detailed rules 
governing those decisions than Article 16. Therefore , Article 16 does not apply to decisions on 
appeal. To conclude otherwise would render Article 11.3 redundant, since it would essentially be a 
repetition of the disciplines contained in Article 16, and would go against the principle of effective 
treaty interpretation.54 
2.52.   In response, the Philippines uses the same argument discussed above with respect to the 
procedures under Article 1.2(a): since in both provisions (Articles 11 and 16) the text refers to the 
"customs administration", both obligations apply. Thailand's response is also the same: This 
ignores the difference between the nature of the determinations – a determination of customs 
value vers us an appeal of a determination of customs value. In addition, under the Philippines' 
approach, Article 16 by its terms would apply only to appeals under Article 11 before bodies such 
as the Bo A but not appeals before judicial authorities. This would make no sense.55 
2.53.   Therefore , the Philippines has failed to establish that the Bo A acted inconsistently with 
Article 16 of the CVA.  
                                                
51 The Philippines' firs t written submission, para. 452; Thailand's second written submission, para. 
2.124. 
52 Thailand's first written submission, paras. 5.109 -5.110; Thailand's second written submission, paras. 
2.125 -2.129.  
53 The Philippines' first written submission, para. 462.  
54 Thailand's first written submission, paras. 5.114 -5.115; Thailand's second written submission, paras. 
2.132 -2.133.  
55 Thailand's second written submission, paras. 2.134.  WT/DS371/RW/Add.1  
 
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 3  THE PHILIPPINES HAS FAILED TO DEMONSTRAT E THAT THE CHARGES A RE 
INCONSISTENT WITH TH E CVA  
3.1.  This section concerns criminal Charges tha t were issued by the Public Prosecutor in January 
2016 and relating to 272 entries of cigarettes imported by PM Thailand. The Philippines claims that 
these Charges are inconsistent with Articles 1.2(a), 1.1, 2 and 3 of the CVA.  
3.2.  The Philippines' claims agai nst the Charges should be dismissed ab initio as they suffer from 
fundamental legal flaws: (i) Thailand's due process rights have been violated as a result of the 
Philippines' use of confidential internal communications between Thailand and its legal couns el; (ii) 
the Philippines is precluded from challenging the Charges in these compliance proceedings because 
the Philippines challenged this same measure in the original proceedings; (iii) the Charges fall 
outside the scope of these compliance proceedings be cause they are not a "measure taken to 
comply" within the meaning of Article 21.5 of the DSU; (iv) the Philippines' claims against the 
Charges raise issues that are not covered by the CVA; and (v) the Charges are a measure that is 
not "ripe" for adjudicati on. In any event, the Charges are justified under Articles XX (a) and (d) of 
the GATT 1994. The Philippines has also failed to make a prima facie  case of inconsistency under 
Article 10 of the CVA.  
3.1  Thailand's due process rights have been violated  
3.3.  In its req uest for a procedural ruling, Thailand addresses a serious violation of Thailand's due 
process rights in these proceedings. In its second written submission, the Philippines submitted to 
the Panel as Exhibit PHL -150 materials including confidential, intern al Thai government 
memorandum to which was attached lawyer -client privileged legal advice from Thailand's legal 
advisors in this dispute, the Advisory Centre on WTO Law (ACWL). Thailand has not waived, and 
does not waive, either expressly or impliedly, its  privilege in these documents or its right to obtain 
legal advice to assist it in presenting its case to the Panel in these proceedings. As explained in 
more detail below, the Philippines' decision to use these materials violates Thailand's due process 
rights under Article 11 of the DSU and, in addition, appears inconsistent with the Philippines' 
obligation under Article 3.10 of the DSU to engage in these proceedings in good faith.56 
3.4.  The due process rights of parties to a dispute settlement proceeding are an  extremely serious 
matter. Any failure to observe these rights, especially with respect to a matter as important to the 
integrity of the process as the right of a Member to defend itself, must be rectified fully wherever 
possible. If the failure cannot be fully rectified, such that it continues to cast a shadow over the 
fairness and objectivity of the proceedings, the proceedings have been tainted and the Panel must 
decline to rule on the claims before it.57  
3.5.  Article 11 of the DSU requires a panel 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 ... ". Article 11 embodies the due process 
inherent in WTO dispute sett lement proceedings and the due process rights of the parties.58  
3.6.  As the Appellate Body made clear in the original proceedings in this dispute, "[d]ue process is 
a fundamental principle of WTO dispute settlement".59 The Appellate Body emphasized that "[i]n 
conducting an objective assessment of a matter [under Article 11 of the DSU], 'a panel is bound to 
ensure that due process is respected'".60 The Appellate Body explained the basis for this as 
follows:  
Due process is intrinsically connected to notions of fairn ess, impartiality, 
and the rights of parties to be heard and to be afforded an adequate 
opportunity to pursue their claims, make out their defences, and establish 
the facts in the context of proceedings conducted in a balanced and 
orderly manner, according  to established rules. The protection of due 
                                                
56 Thailand's request for a procedural ruling regarding the violation of its due process rights, para. 1.1.  
57 Thailand's request for a procedural ruling regarding the violation of its due process rights, para. 1.2.  
58 Thailand's request for a procedural ruling regarding the violation of its due process rights, para. 1.5.  
59 Appellate Body Report, Thailand – Cigarettes (Philippines) , para. 147.  
60 Appellate Body Report , Thailand – Cigarettes (Philippines) , para. 147, quoting Appellate Body Report, 
Chile – Price Band System,  para. 176.  WT/DS371/RW/Add.1  
 
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  process is thus a crucial means of guaranteeing the legitimacy of and 
efficacy of a rules -based system of adjudication.61 
3.7.  The Appellate Body emphasized that panels must be "vigilant in the protection of due proce ss 
and remain within the bounds of their duties under Article 11 of the DSU".62 
3.8.  The disclosure of privileged legal advice to a WTO panel, without the consent of the Member, 
necessarily disadvantages that Member, violates its due process rights, and undermin es the 
objectivity and fairness of the panel's analysis. A panel must be able to address a party's 
arguments and defences with a clear and open mind. This cannot happen when the panel has 
before it not merely the arguments put forth by a party but also som e of the legal advice received 
by the party in the process of preparing for the dispute. Put another way, a party has a right to 
have its arguments before a panel judged only according to the standard in Article 3.2 of the DSU 
of whether they are based on a correct clarification of the provisions of the covered agreements in 
accordance with the customary rules of interpretation of public international law. A party should 
not be forced also to have to justify its arguments in the light of the legal advice it  may have 
received in preparing those arguments. This would be particularly inappropriate where, in order to 
explain how the context in which it received legal advice and how that advice relates to the 
arguments it has made before a panel, the party would necessarily be forced to reveal further 
details of what questions it asked its legal advisors and more details regarding the nature and 
context for the advice provided. To force a party into having to explain the legal advice it has 
obtained is, therefore,  absolutely inconsistent with its due process right to be able to defend itself 
meaningfully before a panel.63  
3.9.  Moreover, a panel's own ability to perform an objective evaluation of the case before it is 
necessarily tainted by the panel having before it pri vileged legal advice obtained by a party in the 
course of preparing for proceedings. No matter how great the integrity of the members of a panel 
(and, indeed, of the officers of the Secretariat assisting them) the objectivity of the panel is 
tainted – not of its own doing – when it is made aware of the privileged legal advice obtained by a 
party as part of its preparations. In these circumstances, Thailand notes that the Rules of Conduct 
for the DSU refer to situations that might "give rise to justifiable d oubts" as to the impartiality of 
the covered persons".64 Such doubts may arise, of course, through no fault of the individuals 
themselves. Thailand also recalls that the "protection of due process is thus a crucial means of 
guaranteeing the legitimacy of an d efficacy of a rules -based system of adjudication".65 This means 
that with respect to the protection of due process rights, justice must not only be done, it must be 
seen to be done.66 
3.10.   In the Philippines' words, "PM Thailand exercised its rights under Thai law to request, 
through the criminal court, evidence from the Public Prosecutor's files. PM Thailand requested a 
copy of the ACWL opinion, together with a letter from the Ministry of Commerce to the Attorney 
General concerning this opinion".67 To the best o f Thailand's knowledge, in exercising its rights 
under Thai law, PM Thailand did not indicate to the Thai Criminal Court that these materials would 
be considered as privileged and confidential under the DSU and that PM Thailand sought these 
documents with a view to providing them to the Philippines for use in WTO dispute settlement 
proceedings. On 8 April 2016, the Criminal Court instructed the Public Prosecutor to provide 
various documents, including those in Exhibit PHL -150, to PM Thailand for the purpose s of 
assisting in its defence. On 19 April, in accordance with Thai law, the Public Prosecutor complied 
with the Court's order. Thus, these documents were provided to PM Thailand, not to the 
government of the Philippines.68  
3.11.   The Philippines states that PM T hailand provided the Philippines with these materials on 2 
June 2016, on the date of the formal consultations in Bangkok in these proceedings. Thus, even 
                                                
61 Appellate Body Report, Thailand – Cigarettes (Philippines) , para. 147.  
62 Appellate Body Report, Thailand – Cigarettes (Philippines) , para. 150. See  Thailand's request for a 
procedural ruling regarding the violation of its due process rights, paras. 1.6 -1.7. 
63 Thailand's request for a procedural ruling regarding the violation of its due process rights, para. 1.14.  
64 Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of 
Disputes, WT/DSB/RC/1 (11 December 1996), para. III.1.  
65 Appellate Body Report, Thailand – Cigarettes (Philippines) , para. 147.  
66 Thailand's request for a procedural ruling regarding th e violation of its due process rights, para. 1.15.  
67 The Philippines' second written submission, para. 433.  
68 Thailand's request for a procedural ruling regarding the violation of its due process rights, para. 1.30.  WT/DS371/RW/Add.1  
 
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 though the documents were clearly marked as "Confidential" and were provided to PM Thailand 
ostensibly  as evidence for the purpose of PM Thailand's defence in the Thai criminal proceedings, it 
appears clear that the documents were actually requested and obtained at the behest of the 
government of the Philippines, not for the purpose of the domestic Thai pr oceedings, but to be 
provided to the government of the Philippines for use in the WTO dispute settlement 
proceedings.69  
3.12.   Once again, even though the Philippines was undoubtedly aware of the privileged and 
confidential nature of these materials, the Philippi nes declined the opportunity during the 
consultations in Bangkok to check, in good faith, with the relevant officials of the Thai government 
whether privilege had been waived in these materials under WTO law.70  
3.13.   As noted above, the Philippines provided thes e materials to the Panel in its second written 
submission on 12 April 2017, more than 10 months after it says it received them from PM 
Thailand. During that 10 -month period, including in the preparation of its second written 
submission, the Philippines nev er made any good faith effort to check with Thailand whether 
privilege in these materials had been waived.71  
3.14.   Again, there can be no doubt whatsoever that the Philippines fully understood that these 
materials would be considered as subject to lawyer -client privilege and that had they asked at any 
time, Thailand would have asserted privilege in the documents.72  
3.15.   In presenting these materials to the Panel, without clarifying with Thailand whether it could 
do so, the Philippines expressly seeks to undermine Thai land's credibility before the Panel and 
place it in a disadvantageous position. Thus, the Philippines states that "Thailand and its legal 
counsel accept ... ".73 Further, the Philippines claims that the legal advice obtained by Thailand 
"directly contradict s the position that Thailand now takes before the Panel".74 It is not an 
exaggeration to say that the only purpose for the Philippines' actions is to attempt to undermine 
Thailand's credibility and to restrict its ability to defend itself in these proceedin gs.75  
3.16.   The Philippines was required to accord Thailand the full measure of protection of its due 
process rights and not to engage in unfortunate litigation techniques that would frustrate the 
objectives of the DSU, which include the due process rights inher ent in Article 11 of the DSU 
instead of respecting these rights, the Philippines and/or PM Thailand sought to obtain privileged 
material in a circuitous manner, without respect for Thailand's rights. In any event, regardless of 
precisely how the Philippine s obtained this material, it is clear that the Philippines made no effort 
to respect Thailand's rights by checking in good faith with Thailand whether privilege had been 
waived.76 
3.17.   Thailand made clear that it considered that its due process rights had been v iolated 
regardless of whether the Philippines had obtained these materials "legally". As Thailand explained 
during the hearing, if materials are obtained illegally, it is beyond dispute that they cannot be 
used.  Issues of good faith and ethical protection of due process rights scarcely arise. Thus, a 
finding that materials were obtained legally is just the beginning of the analysis of good faith and 
due process, not the end.77 
3.18.   It is one of the oldest princi ples of law that what is legal cannot be equated with what is 
proper.  As long ago as the sixth century CE, the Code of Justinian provided that "non omne quod 
licet honestum est" (not everything that is permitted is honourable). Thailand strongly disagrees  
with an interpretation of what previous panels and the Appellate Body have said about the duties 
                                                
69 Thailand's request for a procedural ruling regarding the violation of its due process rights, para. 1.31.  
70 Thailand's request for a procedural ruling regarding the violation of its due process rights, para. 1.32.  
71 Thailand's request for a procedural rul ing regarding the violation of its due process rights, para. 1.33.  
72 Thailand's request for a procedural ruling regarding the violation of its due process rights, para. 1.34.  
73 The Philippines' second written submission, subheading a on page 132.  
74 The Phi lippines' second written submission, para. 577.  
75 Thailand's request for a procedural ruling regarding the violation of its due process rights, para. 1.35.  
76 Thailand's request for a procedural ruling regarding the violation of its due process rights, para . 1.39.  
77 Thailand's responses to the Panel questions following the meeting with the parties, p. 40.  WT/DS371/RW/Add.1  
 
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  of panels and, indeed, parties themselves to protect the due process rights of other parties as 
meaning that anything goes as long as it is legal.78 
3.19.   In light o f the foregoing, Thailand requested the Panel to find that due to the violation of 
Thailand's due process rights under WTO law, under Article 11 of the DSU, the Panel can no longer 
rule on the claims before it. In addition, the Panel should delete f rom the  record the exhibit at 
issue and any references to it.79 However, on 2 August 2017, the Panel informed the parties that it 
decided to reject Thailand's assertion that its due process rights have been violated. Consequently, 
it rejected Thailand's request th at the Panel should decline to rule on the charges, and declined to 
order the Philippines to withdraw Exhibit PHL -150. It further stated that it would elaborate the 
reasons for its decision in its Report.80 
3.20.   Thailand therefore expressly requests the Panel to  explain clearly in its ruling whether it 
considers that the Philippines' good faith/due process obligations and the Panel's due process 
obligations extended merely to inquiring whether the Philippines acted legally. If not, Thailand 
requests the Panel to explain clearly what additional steps were required of the Philippines and 
where it took those steps in this case.  
3.2  The Philippines is precluded from raising the Charges -related claims in these Article 
21.5 proceedings  
3.21.   Thailand submits that the Philippines  is precluded from pursuing the Charges -related claims 
in these Article 21.5 proceedings because the Philippines already challenged this same measure in 
the original dispute, with respect to which the Philippines failed to make a prima facie  case.81  
3.22.   In thi s case, the Charges were brought in the context of a criminal investigation  conducted 
by Thailand's Department of Special Investigation (DSI)  that was challenged by the Philippines in 
the original panel proceedings in this dispute. The Philippines' origina l panel request (2008 panel 
request) contained claims with respect to the DSI criminal investigation .82 The Philippines could 
have sought rulings and recommendations from the panel on the consistency of the DSI 
investigation with WTO law. However, it ultima tely decided not to do so and, therefore, the Panel 
made no findings with respect to the criminal investigation.83 
3.23.   The jurisprudence confirms that the preclusion doctrine applies when the failure to make a 
prima facie case is attributable to the complainant , either because of the complainant's inactivity 
or inability to make a prima facie  case. 
3.24.   The panel's decision in US – Countervailing Measures on Certain EC Products (Article 21.5 – 
EC) offers a pertinent example of a claim excluded from Article 21.5 proceedings due to the 
complainant's inactivity to make a prima face case in the original proceedings.84 The decisions in 
EC – Bed Linen (Article 21.5 – India)85 and US – Shrimp (Article 21.5 – Malaysia)86 offer examples 
of claims excluded from Article 21.5 p roceedings due to the complainant's inability to make a 
prima facie  case in the original proceedings.  
3.25.   The Philippines finds itself in a similar situation. The failure to make a prima facie  case of 
violation before the panel is attributable to its own actio ns or, more precisely, to its own inactivity 
to substantiate its claims under Articles X:3(a) and X:3(b) of the GATT 1994. As the Appellate 
Body did in the cases described above, the Panel in this Article 21.5 dispute should exclude from 
its terms of refer ence the Philippines' challenge against the Charges.  
                                                
78 Thailand's responses to the Panel questions  following the meeting with the parties, p. 40.  
79 Thailand's request for a procedural ruling regarding the vio lation of its due process rights, paras. 1.4, 
1.41, 1.44 ; Thailand's response to Panel question 37(b).  
80 Panel's communication to the parties, 2 August 2017.  
81 Thailand's preliminary ruling request of 12 January 2017, paras. 3.26 et seq.  
82 The Philippines' original request for the establishment of a panel, WT/DS371/3, 6 October 2008, para. 
7 (2008 panel request).   
83 Thailand's preliminary ruling request of 12 January 2017, para. 1.3 . 
84 Panel Report, US – Countervailing Measures on Certain EC Pr oducts (Article 21.5 – EC), para. 7.74.   
85 Appellate Body Report, EC – Bed Linen (Article 21.5 – India) , paras. 78 – 99.   
86 Appellate Body Report, US – Shrimp (Article 21.5 – Malaysia) , paras. 89 – 99.   WT/DS371/RW/Add.1  
 
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 3.26.   The Philippines submits that, under WTO jurisprudence relating to Article 21.5 of the DSU, 
the preclusion doctrine applies when the complainant attempts to challenge in compliance 
proceedings a measure  that remains unchanged following the original proceedings.87 According to 
the Philippines, this jurisprudence does not apply in the present case because the Charges are a 
different measure from the DSI investigation.  
3.27.    The Philippines' argument that the Char ges are a distinct measure from the DSI 
investigation is without merit. The Philippines itself acknowledges that the Charges are the 
"culmination" of the DSI investigation.88  
3.28.   The Philippines' approach not only lacks support in WTO jurisprudence but also co ntradicts 
common sense. The term "investigation" is defined as "[t]he action or process of investigating".89 
The term "process", in turn, is defined as "[a] thing that goes on or is carried on; a continuous 
series of actions, events, or changes".90 It follow s that an investigation is, by definition, a 
continuous process that is composed of various events.91 The stages of an investigation – the 
beginning, the development, and the end – are inseparable; one cannot exist without the other. A 
culmination cannot ex ist in the abstract; it is necessarily part of the process that preceded it. The 
Philippines' efforts to divorce the culmination of the investigation from its earlier stages itself 
amount to an artificial separation of the investigation's various component s. 
3.29.   For the reasons stated above, Thailand requests the Panel to exclude from its terms of 
reference the Philippines' claims with respect to the Charges. The Philippines should not be given a 
second chance to revive a legal challenge that it initiated but a bandoned in the original 
proceedings. This is not the function of Article 21.5 of the DSU.  
3.3  The Charges are not a measure taken to comply within the meaning of Article 21.5 
of the DSU  
3.30.   Even if the Panel finds that the preclusion principle is not applicable, the Philippines' claims 
regarding the Charges would also be outside the scope of Article 21.5 because the Charges do not 
have a close nexus with the DSB recommendations and rulings or with Thailand's declared 
measure taken to comply (the S eptember 2012 BoA Ruling).92 
3.31.   To recall, A rticle 21.5 proceedings  are limited in scope. They "do not concern just any 
measure"93, but only measures taken to comply with the DSB rulings and recommendations. The 
Appellate Body has warned that "characterizing an act by a Member as a measure taken to comply 
when that Member maintains otherwise is not something that should be done light ly by a panel".94 
3.32.   To determine whether the measure not declared as a measure taken to comply by the 
defendant is nonetheless a " measure  taken to comply", the Appellate Body has articulated a 
"nexus -based test" which consists of examining whether, in terms o f timing, nature and effects, 
the disputed measure is sufficiently connected with the declared measures taken to comply and 
with DSB ruling and recommendations.95  
3.33.   In the present dispute, in terms of timing , the long time gaps between the initiation of the 
DSI investigation  (August 2006) , the adoption by the DSB of the original panel and Appellate Body 
reports  (July 2011) , and the filing of the Charges (January 2016) indicate that they are too 
                                                
87 The Philippines' first written submission, para.  700.   
88 The Philippines Article 21.5 panel request, WT/DS371/18, 29 June 2016, para. 11. See also t he 
Philippines' first written submission, paras. 471 – 493.   
89 Shorter Oxford English Dictionary , 6th edn (Oxford Univ. Press, 2007), Vol. 1, p. 1425.    
90 Shorter Oxford English Dictionary , 6th edn (Oxford Univ. Press, 2007), Vol. 2, p. 2356.  
91 The Philippines' description of the "procedural history of the Charges" illustrates perfectly that the DSI 
investigation consisted of various stages, which culmina ted into the Charges ( The Philippines' first written 
submission, paras. 471 – 493).   
92 Thailand's rebuttal submission on the preliminary ruling request, para. 3.9.  
93 Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil) , para. 36. (original emphasis)  See 
Thailand's rebuttal submission on the preliminary ruling request, para. 3.13.  
94 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 74.  (emphasis 
added). See Thailand's first written submission, para. 3.13.  
95 Appella te Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 77.  See Thailand's 
rebuttal submission on the preliminary ruling request, paras. 3.14 -3.20. WT/DS371/RW/Add.1  
 
- B-40 - 
 
  remote.96 Moreover, the investigation that led to the Charges and the entries  covered by the 
Charges (July 2003 to June 2006) pre -date the DSB recommendations and rulings.97 The entries 
covered by the Charges also pre -date the entries covered by the DSB recommendations and 
rulings (August 2006 to September 2007).98 
3.34.   In term s of nature , the Charges cover entries different from the specific entries covered by 
the panel's findings : the Charges cover 272 entries from July 2003 to June 2006 , whereas the 
panel's finding covered another specific set of 118 entries from August 2006 to September 2007. 
To recall, in the original proceedings, the Panel rejected the Philippines' assertion that Thailand 
maintained a "general rule requiring the rejection of the transaction value and the use of the 
deductive method".99 Therefore, the origina l panel's rulings concerned only the specific set of 118 
entries, not any previous or subsequent set of entries. Moreover, the Charges  are a mere 
accusation of wrong doing. Thus, they are  criminal in nature, and they do not involve any customs 
valuation de cision.  Finally, they were adopted by a different government agency than the ones 
responsible for implementing the panel's findings .100  
3.35.   In terms of the effects  of the Charges, the Charges  do not have any effects on the customs 
valuation of the entries at is sue in the original proceedings , because they do not concern the same 
entries and do not entail a customs valuation determination .101 To recall, Thailand implemented 
the original panel's ruling with respect to the 118 entries in its September ruling. In that  ruling, 
Thailand's BoA accepted PM Thailand's declared transaction value with respect to these specific 
118 entries that were subject to the original panel's findings under the CVA.102 The Philippines 
acknowledges this fact.103 
3.36.   Thus, the examination of the ti ming, nature and effects of the Charges clearly shows that 
the Charges are not sufficiently connected to the DSB recommendations and rulings and the 
declared measure taken to comply.  
3.37.   The Philippines argues that the Charges are nonetheless sufficiently con nected to  the DSB 
recommendations and rulings, and to Thailand's declared measure taken to comply  because they 
share certain characteristics, such as the fact that they refer to the same importer and exporter, 
same  importing and exporting country, same products and brand s.104 However,  the Appellate Body 
has made clear that identity in product and country coverage is insufficient to establish a close 
nexus . General similarities are not sufficient to establish a close n exus.105   
3.38.   Moreover, the Philippines argues that the Charges involve the same type of determination 
as that at issue in the original proceedings . However, the Philippines' assertion is based on a 
fundamental misunderstanding of the nature of the Charges. The  Charges do not form part of a 
continuum with any customs valuation decision dealt with in the original proceedings . They are an 
accusation of criminal actions, and not a decision or determination for the purpose of levying 
customs duties. The purpose of t he Charges is to seek  a finding of and punishment for alleged 
customs fraud by an importer , not to levy ad valorem  customs duties .106  
3.39.   Therefore, the Charges do not share a sufficiently close nexus with the DSB 
recommendations and rulings or with Thailand's declared measure taken to comply such that it can 
be considered a measure taken to comply within the meaning of Article 21.5 of the DSU.  
                                                
96 Thailand's rebuttal  submission on the preliminary ruling request, paras. 3.29 -3.31. 
97 Thailand's opening statement at the meeting of the Panel, para. 46.  
98 Thailand's response to Panel question s 41(b) and  104. 
99 Original Panel Report, para. 8.2(a).  
100 Thailand's rebuttal  submission on the preliminary ruling request, paras. 3.32 -3.42. 
101 Thailand's rebuttal submission on the preliminary ruling request, paras. 3.43 -3.48. 
102 Thailand's rebuttal submission on the preliminary ruling request, para . 3.25; Thailand's second 
written submission, para. 3.61.  
103 The Philippines' first written submissi on, paras. 61, 553; the Philippines' second written submission, 
para. 467.  
104 The Philippines' second written su bmission, para. 482.  
105 Appellate Body Report, US – Zeroing (Article 21.5  - EC), para. 239. See Thailand's opening 
statement at the meeting of the Panel, para. 47. 
106 See Thailand's rebuttal submission on the preliminary ruling request, para.3.42; Thailand's second 
written submission, para. 3.50; Thailand's opening statement at the me eting of the Panel, para. 48. WT/DS371/RW/Add.1  
 
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 3.4  The Philippines failed to show how the provisions of the CVA on which it relies 
govern criminal proceedings  
3.40.   The Charge s do not constitute "customs valuation" within the meaning of the CVA and, 
therefore, are not subject to the disciplines of this agreement.  
3.41.    The CVA's scope of application is limited to "customs valuation" conducted by the "customs 
administration" of WTO M embers.107 The definition of "customs valuation" is thus fundamental for 
understanding the scope of application of the CVA. Article 15.1(a) of the CVA defines the "customs 
value of imported goods" to mean "the value of goods for the purposes of levying ad va lorem 
duties of customs on imported goods". In Colombia – Ports Entry , the panel found it necessary to 
define the term "customs valuation" to decide whether one of Colombia's measures fell within the 
purview of the CVA. The panel sought guidance  from Artic le 15.1(a) of the CVA and, on this basis, 
found that "customs valuation" refers to "the process of determining the monetary worth or price 
of imported goods for the purpose of levying customs duties".108 The panel further noted that its 
definition of "custom s valuation" has two central aspects: (i) the value of the goods, which is used 
(ii) for the purposes of levying ad valorem customs duties.109  
3.42.   Thailand also notes that the CVA refers repeatedly and exclusively to the work of the 
"customs administration" of a Member. The CVA contains no references whatsoever to the work of 
government agencies exercising police powers. While Article 17 of the CVA preserves the right of 
customs administrations to satisfy themselves as to the truth or accuracy of customs declara tions, 
this should not be interpreted as limiting the police power with respect to the enforcement of 
customs laws. Had the drafters intended the CVA to circumscribe the exercise of the police powers 
and not merely the work of customs administrations in de termining the customs value of imported 
goods, they would have said so.  
3.43.   Given their criminal nature, the purpose of the Charges, and of the legal proceedings before 
the Criminal Court, is to ascertain whether PM Thailand has engaged in any criminal conduct  as 
provided in Section 27 of Thailand's Customs Act. Their purpose is not to determine the customs 
value of the 272 entries at issue in order to levy ad valorem customs duties . Nowhere in the 
Charges does the Public Prosecutor indicate that the criminal a ccusations against PM Thailand shall 
be the basis for levying ad valorem customs duties.  
3.44.   Thailand's position is further supported by Article XX(d) of the GATT 1994, which expressly 
provides that nothing in the GATT, including Article VII governing valuatio n, shall prevent Members 
from deviating from GATT rules with respect to measures necessary to secure compliance with 
laws or regulations "relating to customs enforcement".110 
3.45.   Furthermore, a report by the WTO's Technical Committee on Customs Valuation express ly 
states that "[n]othing in the Valuation Agreement prevents an administration from enacting tough 
enforcement  provisions in cases of valuation fraud".111 
3.46.   In response, the Philippines advances  various arguments, all of which are without merit.  
3.47.   The Philippin es argues that the Charges constitute "customs valuation" and, therefore, fall 
within the scope of the CVA. The Philippines contends that the references in the Charges to King 
Power's  prices mean that the Public Prosecutor used these prices as alternative customs value for 
the levying of customs duties.112  
3.48.   Thailand explained that the references to King Power's prices in the Charges, which are 
contained in an Annex, serve the purpose of providing a possible benchmark to the Criminal court 
                                                
107 Thailand's first written submission, para. 6.24.  
108 Panel Report , Colombia – Ports of Entry , para. 7.83.   
109 Panel Report , Colombia – Ports of Entry , para. 7.84.   
110 Thailand's first written submission, para. 3.71  
111 Committee  on Customs Valuation, Technical Committee on Customs Valuation response to the terms 
of reference for the work of the Technical Committee on Customs Valuation in connection with concerns on the 
accuracy of the declared value (G/VAL/51) , G/VAL/54, 16 May 2 003, para. 33   
112 The Philippines' opening statement at the substantive meeting, paras. 87 – 89. WT/DS371/RW/Add.1  
 
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  to impose a fine in the event of a conviction.113 Under Thai law, the Public Prosecutor is required to 
propose the amount of the potential fine to the Criminal Court.114 Clearly, a criminal fine is not the 
same thing as a customs duty. Therefore, the references to King Power in t he Annex of the 
Charges is not the basis for the accusation of a criminal offence under Section 27 of the Customs 
Act.115 
3.49.   Thailand recalled that the purpose of the Charges is not to determine the amount of ad 
valorem  customs duties owed by Philip Morris; rat her, their objective is to prosecute a criminal 
offence stipulated in Section 27 of Thailand's Customs Act.  
3.50.   The Philippines also argues that the Charges constitutes "customs valuation" because a 
necessary element of the offence under Section 27 of the Cus toms Act is the under -declaration of 
customs value, "which necessarily means that the Public Prosecutor determined the customs value 
that it considered to be correct".116 As clarified by Thailand, the Philippines' position is incorrect, as 
it ignores that cu stoms fraud, under Section 27 of the Customs Act, requires a showing not merely 
of an under -statement of the declared value, but also a showing of an intent to defraud. The 
element of intent in Section 27 is known in criminal law as mens rea, which refers to a situation 
where the accused individual acts with the express intent to avoid the payment of tax revenue.117 
This is a common feature of many legal systems in the world, including that of the Philippines. 
Section 3602 of the Philippines' Tariff and Custo ms Code criminalizes customs fraud, which the 
Philippines' Supreme Court has referred to as "technical smuggling".118 According to the 
Philippines' Supreme Court, this fraudulent practice is "[o]ften committed by means of 
misclassification of the nature, qua lity or value of goods and articles, undervaluation in terms of 
their price, quality or weight, and misdeclaration of their kind".119  
3.51.   The Philippines argues that, by using the word "price" in the Charges, the Public Prosecutor 
conducted an act of customs va luation within the meaning of the CVA.120 The Philippines bases this 
assertion on Section 2 of the Customs Act, which defines "price" as the customs value. The 
Philippines repeats this argument when alleging that the Public Prosecutor recognized it had 
engag ed in customs valuation under the CVA in a letter to the DSI. The Philippines says that the 
Public Prosecutor again mentioned the word "price" in a letter to the DSI in which he explained 
that 18 entries were excluded from the Charges because the BoA had r esolved to "accept the 
prices".121 
3.52.   The Philippines' argument is based on an incorrect understanding of Thailand's Customs Act. 
The Philippines incorrectly assumes that the term "price" has the same meaning throughout the 
entire Customs Act. This is not the c ase. The preamble of Section 2 of the Customs Act states that 
the definitions set out in Section 2 may have different meanings, which can be discerned only by 
looking at the specific provision of the Customs Act that is being applied. In this case, Section  103 
of Thailand's Customs Act is the relevant provision  to determine the meaning of the word "price" 
as used in the Charges. The text of Section 103 makes clear that "price" under this provision has a 
different meaning from "price" in Section 2. This trig gers the application of the preamble of Section 
2 mentioned above, because Section 103 stipulates a different rule from that of Section 2, such 
that the definitions of Section 2 do not apply.122  
3.53.   In response to Thailand's arguments that the scope of the CVA is also limited to acts of the 
"customs administration", which does not include acts of the Public Prosecutor, the Philippines' 
argumentation changed as the proceedings advanced, reaching a point where the Philippines 
contradicted  its own arguments and act ually supported Thailand's position.  
                                                
113 Thailand's first written submission, para. 6.40.  
114 Thailand's response to Panel question 99 (d). 
115 Thailand's response to Panel question 32 (a). 
116 The Philippines' second written submission, para. 600. 
117 Thailand's response to Panel question 32. 
118 Thailand's opening statement at the substantive meeting, para. 17 (referring to t he Philippines' Tariff 
and Customs Code, Section 3602, Exhibit THA -43). 
119 Thailand's opening statement at the substantive meeting, para. 17 (referring to Republic of the 
Philippines, Supreme Court, Bureau of Customs Vs. The Honorable Agnes Vst Devanadera, G.R. No. 193253, 8 
September 2015, page 22, Exhibit THA -44). 
120 The Philippines' second written submission, paras. 590 - 602.   
121 he Philippines' second written submission, para. 616 and Exhibit PHL -113-B.   
122 Thailand's second written submission, paras. 3.115 – 3.121.  WT/DS371/RW/Add.1  
 
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 3.54.    The Philippines first proposed a "functional" interpretation of the term "customs 
administration", whereby the CVA should apply to acts of any governmental entity, regardless of 
its classification under municipal law, provided that this entity performs customs valuation 
functions.123  This "functional" interpretation cannot apply to the CVA's procedural obligations, 
because entities outside the customs administration stricto sensu , such as the Public Prosecutor or 
the Sup reme Court, do not follow the procedures of the CVA when investigating and prosecuting 
acts of customs fraud.124 Realizing the flaw of its original proposition, the Philippines changed its 
position: it maintained the "functional" interpretation of "customs a dministration" but only for the 
CVA's substantive obligations, and proposed an "institutional" interpretation of "customs 
administration" for the CVA's procedural obligations.125 Under an "institutional" interpretation, the 
term "customs administration would encompass only those government entities whose institutional 
and structural features determine whether they are part of the customs administration.  
3.55.   This bifurcated interpretat ion of "customs administration" also fails because it lacks support 
in the text of the CVA. The term "customs administration" is used throughout the CVA without any 
indication that its scope could vary depending on the type of obligation.126 A close reading of the 
CVA shows that, where the drafters wished to distinguish different types of authorities for different 
obligations, they did so expressly. Whereas most of the substantive and procedural obligations 
refer to "customs administration", certain CVA provi sions, such as Article 10, refer generally to 
"authorities".  This indicates that the CVA negotiators, aware of the different types of authorities 
that could be subject to CVA disciplines, decided that most substantive and procedural obligations 
of the CVA would apply only to the "customs administration".  
3.56.   Thailand submits that the term "customs administration" must have the same meaning 
throughout the CVA, regardless of the type of obligation. In Thailand's view, when interpreting the 
term "customs administration", the only reasonable approach is an institu tional interpretation that 
applies  to the CVA as a whole, i.e. the CVA's substantive and procedural obligations.  
3.57.   The Philippines also cites the Appellate Body findings in US – 1916 Act  as support for its 
argument that "[t]he separate 'intent' element of t he Charges does not detract from" the 
conclusion that the Charges involve customs valuation for purposes of the CVA.127 The Philippines' 
reference to that dispute is inappropriate. In US – 1916 Act , the Appellate Body found that the US 
measure violated Artic le 18.1 of the Anti -Dumping Agreement, a provision that limits the types of 
measures Members may take against the act of "dumping" to those expressly stated in the Anti -
Dumping Agreement. In contrast, no similar provision exists in the CVA that would preve nt 
Members from applying criminal penalties to situations involving a false declaration of the value of 
imported goods. The silence of the CVA in this regard confirms Thailand's position that WTO 
Members are free to impose criminal penalties on customs fra ud.128 
3.58.   In summary, the Philippines has failed to demonstrate that the issues addressed in its 
claims against the Charges  are covered by the CVA as "customs valuation" conducted by 
Thailand's "customs administration".  
3.5  The Philippines failed to rebut Thailand' s argument that the Charges are a matter 
not "ripe" for adjudication  
3.59.   In addition, Thailand considers that the Panel lacks a basis to rule on the Philippines' claims 
regarding the Criminal Charges because the matter is not "ripe" for adjudication in WTO dis pute 
settlement proceedings. Put simply, where the Charges are pending before the Thai Criminal Court 
and that Court has yet to hear or evaluate the evidence, let alone reach a decision, a WTO Panel 
has no basis on which to evaluate the outcome of the matt er at this point. The Philippines' claims 
                                                
123 The Philippines' second written submission, par as. 553 and 572.  
124 Thailand's second written submission, paras. 3.91 -3.92. 
125 The Philippines' response to Panel question 92, para 179; See also Philippines' response to Panel 
question 102, para 235.   
126 Thailand's comments on the Philippines response to Pa nel question 92 (a) and (b), p. 22. 
127 The Philippines' response to Panel question 97, para. 209. See also the Philippines' oral statement at 
the substantive meeting, para. 81.   
128 Thailand's comments on the Philippines response to Panel question 9 7 (c), p.  27. WT/DS371/RW/Add.1  
 
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  represent an unprecedented attempt to get a WTO panel to interfere in pending domestic criminal 
proceedings.129 
3.60.   Thailand explained that t he doctrine of ripeness is present in WTO law under different 
provisions. First, it finds support in a panel's duty to make an objective assessment of the case 
before it under Article 11 of the DSU. A panel cannot make an objective assessment of a matter 
within the meaning of that provision if that matter is not ripe for adjudication . This principle is 
particularly valid in the context of ongoing court proceedings, where the decision of the court 
remains uncertain, and many unknown facts, such as evidence that will be presented, may still 
influence that decision.130 In US – Shrimp (21.5  – Malaysia) , the Appellate Body held that the 
panel was right not to examine a US Court ruling that was pending before the US Court of Appeals , 
because it would have engage d in "speculation" contrary to its duty under Article 11 .131  Moreover, 
Article 11 of  the DSU dictates that panels may not engage in de novo  reviews. This implies that a 
panel may only examine the matter where a decision has been reached. Otherwise, the panel 
would act as an initial trier of the facts and would engage in a de novo  review c ontrary to article 
11 of the DSU.132 
3.61.   Second, the doctrine of ripeness also finds support in Articles 3.4 and 3.7 of the DSU. These 
provisions make clear that the objective of the dispute settlement process is to provide a positive 
and effe ctive resolution to disputes. In the case of ongoing court proceedings, where the court has 
not reached a decision and the outcome is still uncertain, a panel cannot provide a "satisfactory 
settlement" or a "positive solution" to the dispute within the mea ning of Articles 3.4 and 3.7 of the 
DSU.133 
3.62.   Third, t he doctrine of ripeness finds support in a panel's obligation under Article 19.1 of the 
DSU to recommend that the Member concerned bring its measure into conformity with the 
agreement with which the measure  is inconsistent. In order for a panel to be able to make such 
recommendation , there has to be a measure that is capable of being brought into conformity. If a 
matter is not "ripe", a panel will be unable to recommend that the Member brings its measure int o 
conformity with its WTO obligations.134 
3.63.   Fourth, professor William Davey situated the doctrine of ripeness in WTO dispute settlement 
proceedings in the distinction between mandatory and discretionary measures. Under that 
distinction, when a measure, such as  a statute, provides discretion in its application to an agency 
of the government, a WTO panel can make a finding of WTO -inconsistency only when the statute 
has actually been applied in a manner that is WTO -inconsistent.  
3.64.   Fifth, in the anti -dumping context,  Article 17.4 of the Anti -Dumping Agreement provides 
that a Member may only challenge a measure when it is ripe for adjudication, i.e. when a 
provisional or a definitive measure  is imposed. A Member may not challenge a decision to initiate 
an anti -dumping investigation until such provisional or definitive measure has been imposed.135 In 
the context of subsidies, a challenge to an actionable subsidy under Article 5 of the SCM 
Agreement is not "ripe" until sufficient time has passed – three years under Article 6.3(d) – to 
enable a panel to determine whether the measure has had adverse effects.136 These are examples 
of how the doctrine of ripeness is reflected in WTO law.  
                                                
129 Thailand's first written submission, para. 6.48.  
130 Thailand's first writt en submission, paras. 6.57 -6.60; Thailand's second written submission, para. 
3.138.  
131 Appellate Body Report, US – Shrimp (21.5 – Malaysia) , para. 95.  
132 Thailand's first written submission, para. 6.61;  Thailand's second written submission, para. 3.140.  
133 Thailand's first writt en submission, paras. 6.62 -6.65; Thailand's second written submission, para. 
3.141.  
134 Thailand's first writt en submission, paras. 6 .66-6.67; Thailand's second written submission, para. 
3.143.  
135 Thailand's first writt en submission, para. 6.69; Thailand's second written submission, paras. 3.147, 
3.164; Thailand's comment on the Philippines' response to the Panel question 102.  
136 Thailand 's second written submission, paras. 3.145, 3.164; Thailand's comment on the Philippines' 
response to the Panel question 102.  WT/DS371/RW/Add.1  
 
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 3.65.   Sixth, the doctrine of ripeness is also reflected in US law, Swiss law, and in the context of 
the International Court of Justice .137 
3.66.   Finally, as the Panel rightly pointed out, Articles 1 through 7 of the CVA apply only to 
measures that constitute a customs valuation "determination". A "determination" is defined as 
"[t]he settlement of a suit or contr oversy by the authoritative decision of a judge or arbiter; a 
settlement or decision so made, an authoritative opinion".138 In US – Section 301 Trade Act , the 
panel, in assessing a claim under Article 23.2(a) of the DSU, found that the term "determination" 
implies "a high degree of firmness or immutability, i.e. a more or less final decision".139 Article 11 
of the CVA further confirms this view.  It provides that an importer shall have a right to appeal a 
customs valuation determination. Therefore, only measures  that constitute "more or less final 
decision[s]" may be subject to an appeal.140  
3.67.   In the present case, it is beyond dispute that the Charges mark the beginning of the 
Criminal Court proceedings. They are part of a process which started in 2006 with the DSI 
investigation , "culminated" in the Charges being filed by the Public Prosecutor in January 2016, 
and led to current examination by the Thai Criminal Court. As part of this process, hearings will 
take place and a considerable amount of evidence will be pres ented before the Court. The Court is 
expected to render its decision around mid -2018 at the earliest.141  
3.68.   It is clear from that description that the Charges do not constitute an evidence of guilt, and 
do not reflect all the evidence that the Public Prosecutor will present or the evidence supporting 
the defendant. Much less do they amount to a decision by the C ourt whether the accused is guilty , 
or whether a fine will be imposed.142  
3.69.   Moreover, the Charges do not meet the threshold of a "determination" covered by the CVA. 
They do not amount to a "more or less final decision" that has "a high degree of firmness and 
immutability". They are a mere accusation of wrong -doing. There will only be something akin to a 
"more or less final decision" once the Court renders its decision based on all the evidence it still 
needs to assess.143 Article 11 of the CVA also supports this  position, because only "more or less 
final decision[s]" may be subject to an appeal under that provision. If, as the Philippines asserts, 
the Charges amount to a customs valuation "determination", then Thai authorities would also have 
to provide a right t o appeal the Charges under Article 11. This makes no sense and would be 
impracticable.144 
3.70.   In light of these features, the Panel cannot make "an objective assessment of the matter … 
including an objective assessment of the facts of the case" within the meanin g of Article 11 of the 
DSU. It would be engaging in extensive de novo  review or making itself the initial trier of facts in a 
manner that would exceed its mandate under Article 11. It would also not be providing a positive 
and effective solution to this di spute in accordance with Articles 3.4 and 3.7 of the DSU by making 
a ruling on ongoing Court proceedings that are far from being over. The Panel can simply not pre -
empt the outcome of the Criminal Court proceedings.145 
3.71.   Moreover, there is no precedent for a W TO panel to put itself in the place of a domestic 
tribunal and make a determination that is within the jurisdiction of that tribunal before the tribunal 
itself has a chance to make its ruling.  The Philippines has provided no basis in WTO law for a WTO 
                                                
137 Thailand's first written submission, paras. 6.51 -6.54; Thailand's second written submission, para. 
3.135.  
138 Shorter Oxford Engli sh Dictionary , 6th edn (Oxford Universi ty Press, 2007), Vol. 1, p.663. See 
Thailand's response to Panel question 38(a).  
139 Panel Report, US – Section 301 Trade Act , fn 657 . This approach was endorsed by the panel in  EC – 
Commercial Vessels , para. 7.212 , and the Appellate Body in Canada/US – Continued Suspension , paras. 396 . 
See Thailand's response to Panel question 38(b).  
140 Thailand's response to Panel question 38(b).  
141 Thailand's first written submission, paras. 6.73 -6.77; Thailand's second written sub mission, paras. 
3.153 -3.156.  
142 Thailand's second written submission, para. 3.155.  
143 Thailand's response to Panel question 38(b).  
144 Thailand's comment on the Philippines' response to the Panel question 102.  
145 Thailand's first  written submission, para. 6.79;  Thailand's second written submission, para. 3.156.  WT/DS371/RW/Add.1  
 
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  panel to make such a pre -emptive ruling before a domestic tribunal has had a chance to make its 
ruling.146 
3.72.   In light in these facts, the Panel simply has no basis to assess the WTO -consistency of the 
Charges before all the evidence is presented, and before the C ourt makes a decision based on this 
evidence.  
3.6  The Philippines failed to rebut Thailand's argument that the Charges are justified 
under  Article XX(d) and (a) of the GATT 1994  
3.73.   Thailand considers that the Panel should not reach the issue of Thailand's Articl e XX defence 
in this case. This is so because: (i) the Charges are not within the scope of these Article 21.5 
proceedings, (ii) the claims advanced by the Philippines under the CVA do not govern or apply to 
criminal investigations and prosecutions of  custo ms fraud, and (iii) the charges are not "ripe" for 
adjudication.147  
3.74.   If, however, the Panel were to find otherwise, Thailand submits that the violations of 
Articles 1.1, 1.2(a), 2, and 3 of the CVA claimed by the Philippines are nonetheless justified under 
Articles XX(d) and XX(a) of the GATT 1994.148 
3.6.1   The defences under Article XX of the GATT 1994 are available to justify a 
departure from the CVA rules  
3.75.   In China – Rare Earths , the Appellate Body held that "in some instances … exceptions in one 
covered agreement,  such as Article XX of the GATT 1994, may be invoked to justify a breach of an 
obligation set forth elsewhere than in the GATT 1994 ".149 The Appellate Body in China – 
Publications and Audiovisual Products  held that Article XX is available where there is a clear textual 
link between the provisions under which the claims are made and the GATT  1994, in particular 
Article XX.150 
3.76.   Thailand submits that the Article XX defences may be invoked to justify a departure from 
the CVA rules for several reasons. First, t he title of the CVA clearly indicates that the CVA 
implements the rules contained in Article VII of the GATT 1994.151 The preamble of the CVA 
further recognizes the desire to "elaborate rules for the[] applicat ion of [the provisions  of Article 
VII of the GATT 1994] ". It is undisputed that Article XX of the GATT applies to all the obligations in 
the GATT 1994, including Article VII.152 Since Article XX is available to Article VII, it is also 
available to the agreem ent that implements and elaborates Article VII, i.e. the CVA. This flows 
from the well -established principle that treaty provisions must be interpreted harmoniously and is 
the only logical conclusion to be drawn from the structure of the relevant agreement s.153 In 
response to a question by the Panel, the Philippines argues that the CVA is lex specialis  as 
compared to Article VII of the GATT 1994, because it creates additional specific obligations. 
Therefore, it argues that it cannot be assumed that the except ions that apply to Article VII 
automatically apply to the CVA as well.154 However, there is no conflict between Article VII of the 
GATT 1994 and the CVA, such that the principle of lex specialis  would apply. In fact, since the CVA 
                                                
146 Thailand's opening statement at the meeting of the Panel, para. 28.  
147 Thailand's second written submission, paras. 3.186 -3.188.  
148 Thailand's first written submission, para. 6.90; Thailand's opening stat ement at the meeting of the 
Panel, para. 51.  
149 Appellate Body Report, China – Rare Earths , para. 5.56. See Thailand's secon d written submission, 
para. 3.196 . 
150 Appellate Body Report, China – Publications and Audiovisual Products , paras. 229 -233. See 
Thailand's first written submission para. 6.92; Thailand's secon d written submission, para. 3.195 . 
151 Thailand's first written submission, para. 6.91;  Thailand's second written submission, paras. 3.207 -
3.210.  
152 Appellate Body Report, US – Gasoline , p. 24. See Thailand's second written submission, para. 3.208; 
Thailand's response to Panel question 110(a).  
153 Appellate Body Report, Argentina – Footwear , para. 81. See  
154 The Philippines' response to Panel question 110(a).  WT/DS371/RW/Add.1  
 
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 implements and elaborates A rticle VII, it is clear that the former is a development of the latter, 
and that the Article XX defences apply to both.155  
3.77.   Second, t he preamble of the CVA also provides a textual basis for the applicability of Article 
XX of the GATT 1994 to the CVA. Recital  2 of the preamble mentions the desire to "further the 
objectives of the GATT 1994". Thus, there is another explicit mention in the preamble of the link 
between the CVA and the GATT 1994. The objectives of the GATT 1994 include trade liberalization 
but als o allow some regulatory space for Members.  In that respect, the Appellate Body in China – 
Raw Materials  explained that "[w] e understand the WTO Agreement, as a whole, to reflect the 
balance struck by WTO Members between trade and non -trade -related concerns ".156 
3.78.   Third, the text of Article XX itself supports the position that it is available to the CVA, 
because Article XX(d) provides explicitly  that Members may adopt measures necessary to secure 
compliance with their laws "relating to customs enforcement".157 Therefore, Article XX(d) can be 
used to justify measures otherwise WTO -inconsistent that are necessary to enforce a Member's 
customs laws.  
3.6.2   The Charges are justified under Articles XX(d) and XX(a)  
3.79.   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 necessary "to secure 
compliance with laws or regulations which are not inconsistent with the p rovisions of this 
Agreement" or " to pro tect public morals", respectively. Then , under the chapeau  of Article XX, a 
panel  must address whether the application of the measure does not unjustifiably or arbitrarily 
discriminate among countries where the same c onditions prevail or otherwise lead to a disguised 
restriction on international trade .158 
3.80.   With respect to Article XX(d) , Thailand submits that the Charges  are "designed " to secure 
compliance with Section 27 of the Thai Customs Act, which criminalizes the avo idance of the 
payment of taxes or duties with the intention to defraud the Thai government  and in turn enforces 
the obligation to pay customs duties contained in Section 10bis . The objective of fighting 
fraudulent tax and duty evasion through Section 27 is  of utmost importance to Thailand. The 
relationship between the Charges and Section 27 can be seen by the explicit reference to Section 
27 in the legal basis for the Charges, and by the fact that the Charges are the only way to enforce 
Section 27, as they lead to an examination of the matter by the Court.159 Moreover, the Charges 
are "necessary " to secure compliance with that provision, because the Charges - and the 
calculation of the potential fine by the Public Prosecutor  - make an essential contribution to  the 
enforcement of Section 27. Any departure from the CVA rules was necessary to secure compliance 
with a different set of rules that govern the prosecution of customs fraud. Specifically, Section 103 
of the Thai Customs Act  provides the rule for calculat ing a fine. There is no legal reason why the 
police authorities should have to go through exactly the same process outlined in the CVA for 
customs administrations in order to enforce laws against customs fraud. This would seriously 
undermine the police pow ers of a government to prosecute and punish customs fraud in an 
expedited and efficient manner.  Lastly, since the Charges do not contain any import restriction or 
import prohibition, nothing indicates that they are trade -restrictive.160  
3.81.   With respect to Arti cle XX(a), Thailand submits that the Charges are "designed" to protect 
public morals because by prosecuting alleged customs fraud perpetrators, they are closely related 
to the fight against duty and tax evasion, which in turn contributes to the fight against smuggling 
                                                
155 Thailand's response to Panel que stion 110(a); Thailand's comment on the Philippines' response to 
Panel question 110(a).  
156 Appellate Body Report, China – Raw Materials , para. 306; Thailand's response to Panel question 
110(a).  
157 Thailand's first written submission para. 6.91; Thailand's second written submission, para. 3.212; 
Thailand's opening statement at the meeting of the Panel, para. 59; Thailand's response to Panel question 
110(a).  
158 Thailand's first written submission para s. 6.95 -6.102, 6.113 -6.119, 6.125 -6.128.  
159 Thailand's first written submission para. 6.103 -6.108; Thailand's second written submission, para. 
3.220 -3.229.  
160 Thailand's first written s ubmission, paras. 6.109 -6.110; Thailand's second written submission, paras. 
3.214 -3.215, 3.225, 3.232 -3.233.  WT/DS371/RW/Add.1  
 
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  and contraband.  This is an important policy objective that represents a real concern in Thailand.161 
Moreover, the Charges are "neces sary" to protect public morals. By investigating, prosecuting, and 
punishing perpetrators of customs fraud, the Charges significantly contribute to the fight against 
duty or tax evasion, which in turn contributes to the fight against smuggling and contraba nd. Any 
departure from the rules for customs va luation prescribed in the CVA was  necessary in order to 
prosecute perpetrators of customs fraud  efficiently following a different set of rules .162 
3.82.   In response, the Philippines argues that Thailand cannot ensure the collection of the correct 
amount of the customs duties with a WTO -inconsistent customs valuation.163 However, this 
assertion is based on a wrong understanding of the Charges. The Charges are not meant to collect 
the correct amount of the customs duties. Rather, the purpose of the Charges is to impose a 
punishment on offenders and to prevent or discourage criminal conduct . The fact that if the Panel 
reaches Article XX, it would have found that something in the Charges amounts to a customs 
valuation determi nation, does not change the fact that the Charges are criminal in nature.164 
Moreover, the Philippines cannot rely on same finding of inconsistency that the Panel would have 
found before reaching Article XX in order to argue that the Charges are not necessar y to secure 
compliance with Thai laws or to protect public morals.165 
3.83.   Notably, t he Philippines did not present any less trade -restrictive alternatives to Thailand's 
measure.166 This is an important part of the panel's assessment of the necessity of the measure . 
In the absence of any less trade -restrictive alternatives presented by the Philippines, Thailand 
maintains that no such alternatives to the Charges exist to fulfil the objectives pursued by the 
measure, and that the Charges are necessary to secure compli ance with Section 27 and to protect 
public morals.167 
3.84.   With respect to the requirements u nder the chapeau  of Article XX, nothing suggests that 
Thailand's enforcement of its customs and criminal laws discriminates against imports of the 
Philippines compared to  imports 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.168 Similarly, nothing indicates that the  Charges  are a disguised re striction 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.169 However, that  fine may 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 disguise d restriction on international trade.170 
3.85.   Therefore, the Charges are designed and necessary to secure compliance with Thai customs 
laws and to protect public morals, within the meaning of Articles XX(d) and XX(a) of the GATT 
1994.  
3.7  The Philippines failed to demonstrate that the Charges are inconsistent with Article 
10 of the CVA  
3.86.   The Philippines claims that the Office of the Attorney General disclosed PM Thailand's 
declared transaction values that appeared in press articles dated 19 January 2016.171 However, 
                                                
161 Thailand's first written submission paras. 6.120 -6.121; Thailand's second written submission, para. 
3.239.  
162 Thailand's first written submission para. 6.123; Thailand's second written submission, para. 
3.239.Thaila nd's opening statement at the meeting of the Panel, para. 64.  
163 The Philippines' second written submission, paras. 681 -682. 
164 Thailand's second written submission, paras. 3.234, 3.242; Thailand's response to Panel question 
109. 
165 Thailand's second written submission, paras. 3.216 -3.3.219; Thailand's response to Panel question 
109. 
166 The Philippines' second written submission, para. 704.  
167 Thailand's second written submission, paras. 3.250 -3.253.  
168 Thailand's first written submission para. 6.129.  
169 The Phili ppines' first written submission, paras. 712 -173. 
170 Thailand's opening statement at the meeting of the Panel, para. 67; Thailand's second written 
submission, paras. 3.258 -3.259  
171 The Philippines' first written submission, paras. 682 -687. WT/DS371/RW/Add.1  
 
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 the Philippines  failed to make a prima facie  case that the Thai authorities disclosed the confidential 
information at issue inconsistently with Article 10 of the CVA.  
3.87.   By merely drawing inferences that the Office of the Attorney General disclosed the relevan t 
information and by not providing any evidence to support this very serious accusation, the 
Philippines fails to meet its burden of proof. In the context of its Article 10 claim, the only two 
exhibits provided by the Philippines are press articles from Ja nuary 2016 that mention PM 
Thailand's declared transaction values. Neither of them identifies the source of this information.172 
3.88.   In contrast, in the original proceedings, where the Philippines succeeded in presenting a 
similar claim, several press articles e xplicitly identified the source of the information as a Thai 
governmental  agency. No similar circumstances exist in the current proceedings with respect to 
the disclosure at issue that took place in 2016.173 
3.89.   Thailand maintains that the only disclosure of the  relevant information that took place is 
when the Public Prosecutor filed the Charges with the Criminal Court. In that context, the Public 
Prosecutor provided  the relevant information to the Court. The Court then provided PM Thailand a 
copy of the Charges on the day they were issued.174 
3.90.   In any event, the Philippines is incorrect that the only inference to draw is that Thai 
governmental agencies disclosed  the information at issue. While Thailand cannot prove a negative 
– that the Office of the Attorney General  did not disclose the relevant information – this does not 
mean that the complainant has made the necessary prima facie  showing.175   
3.91.   To the contrary, there are many other possible sources of the information.  As Thailand has 
explained, the values at issue a re the same as those that were found to have been improperly 
disclosed in the original proceedings.176 Since the values were in the public domain, any journalist  
could have search ed on the internet for the previously disclosed transaction values, and could 
have used those values, assuming that they did not change  and without paying much attention to 
which entries were at issue .177 Moreover, the journalists may have spoken to some of the 
individuals outside the Thai government that were familiar either with the current or original 
proceedings. Finally, the journalists could have discussed these values with Philip Morris itself on 
the basis – or even an assumption – that they were discussing the previously -disclosed values.178 
3.92.   In these circumstances, the Philippines ' failure to provide any evidence that there was a 
fresh disclosure by the Thai government means that the Philippines has failed to establish a prima 
facie case. For these reasons, the Panel should reject the Philippines' claim under Article 10 of the 
CVA. 
4  THE PHILIPPINES HAS FAILED TO DEMONSTRAT E THAT THAILAND'S RU LES FOR 
DETERMINING THE VAT BASE ARE INCONSISTEN T WITH THE GATT 1994  
4.1.  The Philippines claims that Thailand's rules concerning the notification of the VAT base are 
inconsistent with Articles III:4,  X:1, and X:3(a) of the GATT 1994. For the reasons detailed  below, 
the Philippines' claims in this regard should be dismissed by the Panel.  
                                                
172 Thailand's first  written submission, para. 6.85; Thailand's second written submission, paras. 3.177 -
3.180; Thailand's opening statement at the meeting of the Panel, para. 71.  
173 Thailand's second written submission, paras. 3.181 -3.182; Thailand's opening statement at the 
meeting of the Panel, para. 72.  
174 Thailand's first written submission, para. 6.87; Thailand's second written submission, para. 3.184; 
Thailand's opening statement at the meeting of the Panel, para. 73.  
175 Thailand's opening statement at the meeting of the Pa nel, para. 74.  
176 Thailand's second written submission, para. 3.183; Thailand's opening statement at the meeting of 
the Panel, para. 75; Thailand's comments on the Philippines' response to Panel question 111.  
177 Thailand's comments on the Philippines' response to Panel question 111.  
178 Thailand's opening statement at the meeting of the Panel, para. 75.  WT/DS371/RW/Add.1  
 
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  4.1  The Philippines failed to demonstrate that Thailand's VAT rules are inconsistent 
with the national treatment obligat ion of Article III:4 of the GATT 1994  
4.2.  The Philippines' claims concern Thailand's requirement, contained in Notification 187 and 
Order Por. 145 -2555, that cigarette importers notify as their VAT base the average market price of 
their cigarettes  on the date of the notification. The price notified by cigarette importers then 
becomes the VAT base until further notice.  
4.3.  The Philippines recognizes that Thailand's VAT rules impose "formally identical notification 
requirements in respect of imported cigarettes sold by importers and domestic cigarettes sold by 
TTM".179 However, according to the Philippines, these formally identical notification requirements 
result in less favourable treatment for imported cigarettes because of the different situations of 
cigarette impor ters and TTM.180 Specifically, the Philippines argues that cigarette importers cannot 
fix the prices at which their buyers must sell; rather, they can only recommend retail prices, which 
means that importers run the risk of being held liable for non -complian ce with Thai law if the 
actual prices are not the same as the recommended prices.181 In contrast, the Philippines argues, 
TTM can set downstream prices because it is exempted from Thai competition laws and can 
therefore accurately notify to the Revenue Depar tment the average actual market price of its 
cigarettes.182 The Philippines submits, therefore, that importers face an "additional legal jeopardy" 
not faced by TTM.183 
4.4.  The Philippines claims must fail as they are premised on inaccurate descriptions of the facts 
and of Thailand's legal framework . A correct understanding of these points indicates that 
Thailand's VAT system does not give rise to less favourable treatment to  imported cigarettes. 
Thailand addresses these issues in turn.  
4.5.  First, it is incorrect for the Philippines to assert that Philip Morris does not know the retail 
price of its own cigarettes because cigarette importers can only recommend  retail prices but 
cannot fix them. Thailand  submits that, given the arrangements between retailers and cigarette 
producers, the recommended prices function, in practice, as the prices followed by retailers.184 In 
one of its questions, the Panel asked the Philippines directly whe ther there have been cases where 
the recommended retail price was less than the actual retail price. Unsurprisingly, the Philippines 
was unable to identify one single instance in which retailers did not follow the recommended 
price.185 This alone is sufficie nt to dismiss the Philippines' claim under Article III:4 of the GATT 
1994, as it demonstrates that the alleged "legal jeopardy" does not exist.  
4.6.  Second, the Philippines incorrectly asserts that the agreements between manufacturers and 
retailers concerning  the prices charged by retailers are a violation of Thai competition law. This 
practice, also known as "vertical price fixing", is not a per se  violation of Thai competition law. 
Under Thai competition law, the legality of vertical price fixing depends on th e specific 
circumstances of each case.186  
4.7.  Third, Thailand's competition law was recently modified to introduce multiple changes, among 
which is the elimination of TTM's automatic exemption from competition legislation. Therefore, 
even if vertical price fixi ng were illegal under Thai competition law, the fact that TTM, the Thai 
national cigarette producer, can also be subject to penalties under the competition  law further 
undermines the Philippines' claim that, unlike cigarette importers, TTM can comply easil y with the 
VAT notification requirements because it can legally fix retail prices.  
4.8.  Fourth, the Philippines did not correctly substantiate its factual assertion that the 
determination of the average market price to be notified requires a market study that takes 4 -6 
weeks to prepare. This means, according to the Philippines, that cigarette  importers do not have 
                                                
179 The Philippines' first written submission, para. 802.   
180 The Philippines' first written submission, para. 804.    
181 The Philippines' first written submission, para. 813.   
182 The Philippines' first written submission, para. 804.   
183 The Philippines' first written submission, para. 813.   
184 Thailand's second written submission, para. 4.16.  
185 The Philippines' response  to Panel question 66 .  
186 Thailand's response to Panel question 113.  "Vertical price fixing" is different from "horizontal price 
fixing", which is a per se violation of Thai competition law.  Vertical price fixing involves requiring downstream 
sellers (rather than competitors) to sell at a determined price.  WT/DS371/RW/Add.1  
 
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 enough time to know the price that must be notified in June of each year. Although the Philippines  
submitted a document that purports to substantiate this point, it did so at the express request of 
the Panel as part of its answers to  the second set of questions by the Panel.187 Thailand is of the 
view that the Panel should not admit this evidence because, as part of the Philippines' prima facie  
case, it should have been submitted much earlier in the proceedings.  
4.9.  For these reasons, Thail and submits that the Philippines has failed to make a prima facie  case 
of inconsistency under  Article III:4 of the GATT 1994 concerning Thailand's VAT notification 
requirements.  
4.2  The Philippines failed to demonstrate that Thailand acts inconsistently with A rticle 
X:1 of the GATT 1994 by not publishing a measure of general application  
4.10.   The Philippines claims that Thailand's Revenue Department has an official practice of 
permitting cigarette importers to notify their recommended retail prices as a way of comply ing 
with the obligation to notify the actual average price. In the Philippines' view, Thailand violates 
Article X:1 of the GATT 1994 because this practice is not published.  
4.11.   The Philippines' claims must be dismissed because they refer to an alleged practice  of 
Thailand's Revenue Department that does not exist.188 Given that the publication obligation under 
Article X:1 of the GATT 1994 applies only to measures of general application, the Philippines' 
claims must fail as there is no measure of general applicatio n as described by the Philippines.  
4.12.   Philip Morris has chosen to comply with the obligation to notify the average retail price by 
notifying its recommended retail selling price ("RRSP"). This was Philip Morris' chosen means of 
compliance given that, in pract ice, the RRSPs functions as the actual retail selling price. The fact 
that Philip Morris has chosen to comply with Thailand's VAT notification requirements in this 
manner does not mean that this amounts to a rule of general application maintained by the 
government.  
4.13.    The Philippines, however, believes that, under Article X:1 of the GATT  1994, WTO Members 
must notify not only the regulatory outcome required by their trade measures, but also the 
different methods that private operators may use to achieve such outcome. In particular, the 
Philippines believes that the method chosen by PM Thailand to calculate the average retail selling 
price should be enshrined in Thai legislation as a rule of general and prospective application. The 
Philippines is incorrect. Tha t importers can choose method "A", method "B", or method "C" to 
comply with the requirement of Order Por. 145 -2555 does not mean that any of these methods is, 
or should be, an express requirement under Thai law.189 
4.14.   The purpose of Article X:1 of the GATT 1994  is to ensure that governments publish 
measures of general application that exist. Article X:1 cannot be invoked to request governments 
to create new substantive rules. In essence, this is what the Philippines requests. Under the guise 
of its claim under A rticle X:1, the Philippines wants Thailand to develop tailor -made regulations so 
that Thailand's laws codify exactly PM Thailand's business practices.190 
4.3  The Philippines has failed to demonstrate that Thailand acts inconsistently with 
Article X:3(a) of the G ATT 1994  
4.15.   The Philippines argues that "[b]y imposing a notification requirement on importers with 
which they cannot comply, unless they violate Thai competition law, Notification 187 and Order 
Por. 145 -2555 provide for unreasonable administration" within th e meaning of Article X:3(a) of the 
GATT 1994.191 
4.16.   As is the case with its other claims against Thailand's VAT rules, the Philippines' claim under 
Article X:3(a) is based on crucial  misrepresentations of Thai law.  
                                                
187 Thailand's comments on the Philippines' response to Panel question 115 (a).  
188 Thailand's first written submission, paras. 7.75 – 7.79. 
189 Thailand's second written submission, para. 4.27.  
190 Thailand's response to Panel question, 61 (b).  
191 The Philippines' first written submission, para. 828.   WT/DS371/RW/Add.1  
 
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  4.17.   First, the notification requirements at issue are substantive elements of Thai VAT rules, 
rather than the "administration" of such rules.192 The scope of Article X:3(a) is limited to the 
"administration" of laws and regulations. Article X:3(a) does not govern the substantive content of 
laws and regulati ons. The Appellate Body has rejected claims under Article X after concluding that 
the legal challenge concerned the substantive content of the rules themselves rath er than their 
administration.193 
4.18.   Both Notification 187 and Order Por. 145 -2555 establish subst antive rules relating to the tax 
base to be used for purposes of VAT on cigarettes. The introductory paragraph of Notification 187 
indicates that the Director -General of the Revenue Department "hereby prescribes the tax base" 
for VAT on cigarettes. Clauses  4 and 5 of Notification 187 define the tax base for VAT on 
cigarettes, namely that the tax base shall be the value of tobacco derived from deducting the VAT 
from the full retail price. Clauses 4 and 5 provide further details on the type of price to be use d as 
the tax base.  This means that the notification requirements challenged by the Philippines do not  
refer to the "administration" of Thailand's VAT rules and, therefore,  fall within the category of 
measures covered by Article X:3(a).  
4.19.   Second, even assuming that Notification 187 and Order Por. 145 -2555 refer to the 
"administration" of Thailand VAT rules, the claim that this administration is unreasonable is 
unfounded.  Similar to its argument under Article III:4 of the GATT 1994, the Philippines' argu ment 
under Article X:3(a) is premised on the understanding that a cigarette producer must act in 
violation of Thailand's competition laws in order to comply with Notification 187 and Order Por. 
145-2555.  
4.20.   Thailand has explained in the context of its argumen ts under Article III:4 that, contrary to 
the Philippines' assertions, compliance with Thailand's VAT notification requirements do not require 
violating Thailand's  competition laws. As noted above, the Philippines failed to demonstrate that 
arrangements bet ween retailers and cigarette producers (vertical price fixing) are per se  
inconsistent with Thailand's competition laws.194 
4.21.   In light of the foregoing, Thailand requests  the Panel to reject the Philippines' claims under 
Article X:3(a) of the GATT 1994.  
5  CONCLU SION  
5.1.  For the reasons stated above, Thailand requests the Panel to reject the Philippines' claims.  
5.2.  With respect to the BoA Ruling, Thailand requests the Panel to reject the Philippines' claims 
under Articles 1.1, 1.2(a), 5.1, 11.3 and 16 of the CVA. Thailan d has showed that the methodology 
of the BoA for comparing P&GE is reasonable. The Philippines itself agrees with this. With respect 
to the application  of this methodology, the Philippines has not demonstrated that it was 
unreasonable given the circumstanc es. Thailand has emphasized the importance of applying the 
correct standard of review when the Panel examines the Philippines' claims against the BoA Ruling. 
The Panel should be mindful to not conduct a de novo  standard of review or substitute its own 
judgement for that of the BoA.  
5.3.  With respect to the Charges, Thailand requests the Panel to reject the Philippines' claims 
under Articles 1.1, 1.2(a), 2, and 3 the CVA. Thailand has explained the different reasons why the 
Philippines' claims fail ab initio : 
a. Thailand considers that its due process right have been violated. As a result, Thailand 
requested the Panel to decline to rule on the Charges and to delete the exhibit at issue 
form the record. The Panel declined Thailand's requests. Therefore, Thailand reque sts 
the Panel to explain clearly in its ruling whether it considers that the Philippines' good 
faith/due process obligations and the Panel's due process obligations extended merely to 
inquiring whether the Philippines acted legally. If not, Thailand reques ts the Panel to 
explain clearly what additional steps were required of the Philippines and where it took 
those steps in this case.  
                                                
192 Thailand's first written submission, paras. 7 .60 – 7.65. 
193 Appellate Body Report , EC – Poultry , para. 115.   
194 Thailand's first written submission, p ara. 7.67.  WT/DS371/RW/Add.1  
 
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 b. The Philippines is precluded from challenging the Charges in these compliance 
proceedings because it challenged essentially t he same measure in the original dispute 
and failed to make a prima facie case of WTO -inconsistency.  
c. The Philippines claims are not "measures taken to comply" within the meaning of Article 
21.5 of the DSU and, therefore, are not within the scope of these co mpliance 
proceedings.  
d. The provisions of the CVA on which the Philippines relies do not apply to the Charges. 
The Charges are not an exercise of "customs valuation" under the CVA as they do not 
have the purpose of levying ad valorem  customs duties. Nothing in the CVA regulates 
the manner in which WTO Members can conduct criminal proceedings on customs fraud.  
e. The Charges are not a matter "ripe" for adjudication. The Charges constitute merely an 
allegation of criminal conduct, not a judgement by the Criminal C ourt. The Philippines' 
challenge against the Charges is an attempt to interfere in a pending criminal process 
before Thailand's domestic Criminal Court.  
5.4.  In any event , even if the Panel were to accept the Philippines' position that the Charges are 
covered by the CVA and inconsistent with the provisions thereof, Thailand submits that any 
possible inconsistency with the CVA is justified under the general exceptions of Articles XX(a) and 
XX(d) of the GATT 1994.  
5.5.  Thailand requests the Panel to reject the Philippines' claim that Thailand violated Article 10 of 
the CVA by disclosing PM Thailand's CIF values.  
5.6.  With respect Thailand's VAT base, Thailand also requests the Panel to reject the Philippines' 
claims under Ar ticles III:4, X:1 and X:3(a) of the GATT 1994. The Philippines has failed to 
demonstrate that this measure violates the national treatment obligation under Article III:4, 
constitutes a measure of general application which Thailand failed to publish as requ ired by Article 
X:1, and that these notification requirements give rise to an unreasonable administration under 
Article X:3(a). The Philippines' argumentation on all three claims reflects a flawed understanding of 
Thai VAT rules. Indeed, it is difficult to  understand why the Philippines claims that these are 
inconsistent  with the cited provisions of the GATT  1994 when Thailand adopted these rules at its 
request.  
 
 
_______________  
 
 
 WT/DS371/RW/Add.1  
 
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 ANNEX  C 
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  C-1 Executive summary of the arguments of  Australia  C-2 
Annex  C-2 Executive summary of the arguments of Canada  C-4 
Annex C -3 Executive summary of the arguments of the European Union  C-8 
Annex C -4 Executive summary of the arguments of Japan  C-11 
Annex  C-5 Executive summary of the arguments of  the United States   C-15 
 
 WT/DS371/RW/Add.1  
 
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  ANNEX  C-1 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF AU STRALIA 
I. Introduction  
 
1. Australia thanks the Panel for this opportunity to present its views in this dispute.  
2. In its oral statement  today Australia will focus on the issue of the scope of Article 21.5 
proceedings, and the nature of "measures" and "measures taken to comply" in the context of 
compliance proceedings generally and in the specific context of the current case.  
3. In providing these views to the Panel, Australia would like to highlight some fundamental 
aspects of the WTO dispute settlement system and the role of the compliance Panel in this system.  
II. The WTO Dispute settlement system and the role of the compliance Panel  
 
4. Australi a recalls the object and purpose of the WTO dispute settlement system is to 
promptly resolve disputes between Members. Article 21.5 proceedings are particularly important in 
this regard, as they concern the proper implementation by a responding Member of f indings of 
inconsistency of its measures with its WTO obligations. It is thus of the utmost importance that 
Article 21.5 proceedings avoid a complaining Member having to initiate dispute settlement 
proceedings afresh when an original measure found to be in consistent has not been brought into 
conformity with the recommendations and rulings of the Dispute Settlement Body ("the DSB").  
5. While the scope of Article 21.5 proceedings has clear limitations, in our view the proper 
scope of proceedings and, in particul ar, the measures which can be addressed, should not be so 
strictly or inflexibly drawn as to allow a responding Member to effectively evade its obligations, or 
delay implementation.  
6. In considering the appropriate balance, Australia urges the Panel to cons ider Members' due 
process rights, the importance of supporting the legitimacy of the DSB's decisions and the proper 
functioning of the multilateral rules based system.  
III. The nature of "measures" and "measures taken to comply"  
 
7. Turning then to the specific l egal question at issue, determining in the context of this 
dispute what constitutes a measure taken to comply, we provide some views on whether the 
criminal charges laid against Philip Morris Thailand and seven of its current or former employees 
regarding customs valuation constitute measures taken to comply.  
8. It is established1 that where a complaining Member seeks to have the compliance Panel 
consider measures which the implementing Member maintains are not measures taken to comply, 
the Panel should seek to determine whether the measures are "particularly closely connected" to 
the measures the implementing Member has put forward as measures taken to comply and to the 
DSB's recommendations and rulings. As clarified by the Appellate Body, this close nexus te st2 
requires an examination of the links in terms of the nature, effects and timing of the measure, the 
claimed measure(s) taken to comply and the DSB's recommendations and rulings.  
9. Firstly, as a point of general law, we consider that there are instances where domestic 
charges could constitute a measure(s) taken to comply, notwithstanding that they by their nature 
imply further potential action. The examination in this instance pertains to the charges in relation 
to the implementing Member's obligations, n ot the ultimate outcome of the charges. We therefore 
do not agree with the application of the "ripeness" argument posited by Thailand in relation to 
these charges. Actions such as these which have been initiated by the State have the potential to 
                                                
 Australia has requested that its Oral Statement serve as its Executive Summary.  
1 US – Zeroing (EC) (Article 21.5 – EC), para. 207.  
2 US – Softwood Lumber IV (Article 21.5 – Canada),  para. 77.  WT/DS371/RW/Add.1  
 
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 impact tr ade and to engage trade obligations hence have the capacity to be considered "measures 
taken to comply".  
10. Secondly, in applying the "close nexus" test we examine the nature of the charges, their 
timing and their effects.  
11. With regard to their nature, the cha rges relate to the same actors, the same type of goods 
and the same actions of the authorities. We do not consider the fact that the actions relate to 
different arms of the Thai State as of relevance in this case, nor the fact that the charges do not 
relate to the same entries, recalling our initial comment that implementing parties must not be 
allowed to evade their obligations. We also do not consider the timing issues raised as preventing 
the Panel from considering the charges as measures taken to comply . 
12. In considering the effects, the key question for the Panel to consider is whether the 
charges affect Thailand's obligations under the covered agreements, and in particular whether they 
undermine the measures ostensibly taken to comply so as to render the se steps ineffective.  
IV. Conclusion  
 
13. Australia thanks the Panel for the opportunity to address these issues. We also thank the 
Panel for providing questions to the Third Parties in advance and we look forward to providing 
responses to those questions in due c ourse.  WT/DS371/RW/Add.1  
 
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  ANNEX C -2 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF CA NADA  
I. INTRODUCTION  
1. This dispute raises issues of a systemic nature regarding the scope of "measures taken to 
comply" under Article 21.5 of the DSU, when government acts such as criminal or civil charges can 
be adjudicated by a panel, the standard of review of a determination under the Customs Valuation 
Agreement (CVA) as well as issues related to the interpretation of the CVA and its relationship with 
the GATT 1994. Canada appreciates the opportunity it has had to provide its views on these 
issues. Below, Canada provides a summary of its key arguments in this dispute.  
II. CRIMINAL OR CIVIL CH ARGES CAN BE "MEASURES"  AND "MEASURES TAKEN  TO 
COMPLY" UNDER ARTICL E 21.5 OF THE DSU  
A. Charges can be a measure  
2. Canada notes that "measure" is not defined in the DSU, however, that term has been 
interpreted broadly for the purposes of dispute resolution under the GATT and the WTO, such that 
"measure" has generally been understood to refer to an action in which there was "sufficient 
government involvement"1. A determination of what constitutes a measure is made on a case -by-
case basis2. 
3. It must also foc us on the content and substance of a measure rather than form3, and 
ultimately, any act or omission attributable to a Member can be a "measure" for the purposes of 
dispute settlement proceedings4. 
4. Further, Members are responsible for the acts of all the ir governmental departments and 
organs of the state including their judiciary5. 
5. Thus, in Canada's view, charges, whether criminal or civil, can be characterized as acts of an 
organ of the state and could therefore be considered "measures". While not eve ry charge laid by a 
prosecutorial arm of the state will necessarily be considered a "measure", if the content and 
substance of a charge falls within the disciplines of the WTO Agreements and merits a finding, on 
objective grounds, that the charge is a "mea sure", then the charge can be a considered a 
"measure" for the purposes of dispute settlement.  
B. Charges can be a measure taken to comply  
6. In Canada's view if civil or criminal charges are found to be measures, they may also be 
"measures taken to comply ", under Article 21.5 of the DSU, if it can be demonstrated that they 
have a sufficient connection with the DSB rulings and recommendations and the declared 
measures taken to comply such that they meet the "close nexus" test.  
7. Where a Member declares mea sures to be a "measure[] taken to comply", an Article 21.5 
panel may review that measure to assess compliance with the WTO Agreement. Measures that are 
not declared by an implementing Member may also be reviewed by a panel under Article 21.5 and 
be charact erized as a measure "taken to comply"6. Those measures include measures that have 
                                                
1 Panel Report , Japan – Apples , para. 8.11, referring to Panel Report in Japan - Film, paras. 10.55 -
10.56, which refers to GATT panel reports, Japan –Semi-conductors , para. 102; and EEC – Dessert Apples , 
para. 126.  
2 Panel Report , Japan – Apples , para. 10.56.  
3 Appellate Body Report, US – Corrosion -Resistant Steel Sunset Review , para. 87, fn 87.  
4 See Appellate Body Report, US – Corrosion -Resistant Steel Sunset Review , para. 81 and fn 79. See 
also Appellate Body Report , Australia – Apples , para. 171.  
5 Appellate Body Report, US – Shrimp , para. 173.  
6 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada) , paras. 66 -69, 73 and 77.  WT/DS371/RW/Add.1  
 
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 the effect of undermining or nullifying the purported compliance achieved through the measures 
declared to be taken to comply7. 
8. A full examination of the application or th e effect of the measure, including the legal and 
factual settings in which they operate, is required to assess the "existence" of a measure taken to 
comply or its "consistency with a covered agreement". Through this examination, a compliance 
panel can dete rmine whether there are "sufficiently close links" between the undeclared measure, 
any declared measure and the recommendations and rulings of the DSB such that it would be 
appropriate to characterize the undeclared measure as a "measure taken to comply"8. 
9. The amount of weight to be given to the elements of the factual or legal background of a 
measure, including the timing of a measure taken to comply, will depend on the circumstances of 
the case at issue9. 
III. RIPENESS OF A CUSTOM S VALUATION DETERMIN ATION UNDER THE CUSTOM S 
VALUATION AGREEMENT AND THE APPLICABILIT Y OF THE CVA TO CRIM INAL OR 
PENAL PROCEEDINGS  
10. The key consideration to determine what constitutes a customs valuation determination that 
is ripe for adjudication is whether a decision has ac tually been taken.  
11. In the context of the CVA, the term "determination" is used when referring to a 
determination made by the customs administration of the customs value of certain imported 
goods10. Once the determination of customs value of imported go ods has been made, it is possible 
to assess whether that determination is consistent with the covered agreements, including the 
CVA. As a result, Canada is of the view that whether or not a criminal charge has resulted in an 
acquittal or conviction is neit her decisive nor relevant as to whether the determination is ripe for 
adjudication under the DSU. It is the consistency of the determination of customs value with the 
Member's CVA obligations that would be assessed, not the consistency of the charges.  
12. The CVA is primarily about function, that is, the methodology to be used in the valuation of 
goods for customs purposes. It would undercut the efficacy of the CVA if the same imported goods 
could be ascribed a different customs value by different entities within the same government and 
only the acts of some of those entities could be considered "measures" for the purposes of the 
DSU. If a criminal offence focuses on fraudulent undervaluation of an imported good then the 
methodology applied to determine the degree of undervaluation would be that found in the CVA, 
regardless of who within the government calculates the valuation.  
13. Therefore the relevant question to determine whether the CVA applies to criminal or penal 
proceedings is whether or not there is a custom valuation function. To the extent the function of 
the valuation of goods for customs purposes is exercised in the context of criminal or penal 
proceedings, the CVA would apply to the valuation of imported goods.  
IV. A MEMBER CANNOT DEFE ND A MEASUR E INCONSISTENT WITH THE CUSTOMS 
VALUATION AGREEMENT BY RELYING ON GATT A RTICLE XX  
14. It is Canada's view that GATT Article XX exceptions are not applicable to the provisions of 
the CVA because the text  does not refer to the provisions of Article XX or to the GATT 1994 in a 
manner indicating that the exceptions apply11. 
15. There is no jurisprudence that directly addresses the issue of whether GATT Article XX can 
be invoked to justify a breach of the CVA provisions. However, the Appellate Body has analyzed 
the question and determined that Article XX was available to justify inconsistencies with 
                                                
7 Panel Reports, Australia – Salmon (Article 21.5 –Canada) , para. 7.10(23); Australia – Automotive 
Leather II  (Article 21.5 –US), para. 6.4 ; EC – Bed Linen (Article 21.5 –India) , para. 6.21.  
8 Panel Report, EC and certain member States – Large Civil Aircraft (Article 21.5 – US), para. 6.83.  
9 Canada's third -party submission, paras. 15 -16. 
10 See the General Introductory Commentary "Articles 2 thro ugh 7 provide methods of  determining the 
customs value whenever it cannot be determined under the provisions of Article 1"; articles 1 -4, 6-9, 11 and 
13. 
11 Canada's third -party submission, paras. 42 -50. WT/DS371/RW/Add.1  
 
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  obligations set out in WTO agreements other than the GATT 1994 only under limited 
circumstances12. Article XX exceptions may be available for breaches of other WTO ag reements 
only if the text specifically or by means of a general reference provides a legal basis to resort to 
such exceptions13. 
16. Canada recognizes that the CVA refers to the GATT 1994 when it states in its preamble the 
desire of the Members to further "the objectives of GATT 1994". However, this phrase does not 
expressly incorporate the defences or exceptions under the GATT 1994. In fact, this type of 
preambular language has been interpreted in the context of the TBT Agreement as merely 
indicating that the two agreements have similar objectives14. 
17. Thailand submits that the GATT Article XX defence is available because the CVA implements 
and elaborates the disciplines of Article VII of the GATT 199415. However, an Article XX defence is 
not available to  a covered agreement on the basis that it implements a provision of the GATT 
199416. The mere reference to a GATT provision in a covered agreement does not compel the 
conclusion that GATT Article XX is available to justify a breach of that agreement17. In fact, the 
Appellate Body attached significance to the fact that an agreement refers to a provision of the 
GATT 1994 but does not refer to GATT Article XX18. It is also worth noting that other covered 
agreements governing the application of a provision of t he GATT 1994, such as the Anti -Dumping 
Agreement explicitly includes general exceptions19. The same approach was not adopted in the 
context of the CVA in which no reference is made to the application of general exceptions. It is 
Canada's view that the abse nce of references to general exceptions in the CVA reflects the 
intention of the Members not to make Article XX available to justify a violation of the CVA.  
18. Finally, the Panel raised a question as to whether Article 17 of the CVA is relevant to 
determi ne whether Article XX of the GATT 1994 applies to the CVA. Canada believes that no 
inference regarding the application of Article XX to the CVA can be drawn from the existence of 
Article 17. The ordinary meaning of Article 17 does not provide for, nor indi cate the application of, 
any exceptions to justify measures that could be found to be inconsistent with the obligations in 
the Agreement20. In fact, the purpose of Article 17 is only to reserve the right of customs 
administrations "to satisfy themselves as  to the truth or accuracy of any statement, document or 
declaration presented for customs valuation purposes"21. 
V. STANDARD OF REVIEW A PPLICABLE TO THE BOA  RULING  
19. The CVA does not set out a specific standard of review and therefore, the general standa rd 
of review under Article 11 of the DSU applies for all covered WTO agreements. The Appellate Body 
has been clear in finding that when a WTO agreement is silent as to a standard of review, Article 
11 applies, in particular the requirement that a panel sho uld make an objective assessment of the 
facts of the case and the applicability of and conformity with the relevant covered agreements22. 
                                                
12 Appellate Body Reports, China – Raw Materials , para. 272; Panel Reports, China Raw -Materials , 
paras. 7.150 and 7.153; and Appellate Body Report, China – Publications and Audiovisual Products , paras. 
224-230. 
13 Canada's third -party submission, paras. 42 -50; Appellate Body Reports, China – Raw Materia ls, para. 
307; see also Panel Reports, China – Raw Materials , para. 7.153; and Appellate Body Reports, China – Rare 
Earths , para. 5.56.  
14 See Appellate Body Report, US – Clove Cigarettes , paras. 91 and 101; Panel Report, US – Clove 
Cigarettes , para. 7.112 . In US – Clove Cigarettes , the panel found that this phrase suggests that the TBT 
Agreement is a "development" or a "step forward" from the disciplines of the GATT. The phrase also indicates 
that the TBT Agreement and the GATT overlap in scope and have si milar objectives. The Appellate Body 
observed that the TBT Agreement does not contain a general exception clause, such as those in Article XX.  
15 Thailand's first written submission, para. 6.91.  
16 Canada 's responses to the Panel 's questions to Third Parties, paras. 36 -39. 
17 Appellate Body Reports, China – Rare Earths , para. 5.63.  
18 Appellate Body Reports, China – Raw Materials , para. 303.  
19 See Anti -Dumping Agreement, Article 18.1 and fn 24.  
20 Canada 's responses to the Panel 's questions to Third P arties, paras. 40 -43. 
21 Panel Reports, China – Auto Parts , fn 401.  
22 Appellate Body Report, Argentina – Footwear (EC),  para 120.  WT/DS371/RW/Add.1  
 
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 20. The Appellate Body has also been clear that the only exception to this rule is found in the 
Anti-Dumping Agreement, in which Article 17.6 sets out a special standard of review for disputes 
arising under that Agreement23. 
21. Therefore, in Canada's view, it would be incorrect for the Panel to apply a standard of review 
analogous to or the same as the standard applied under Article 17.6 of the Anti -Dumping 
Agreement.  
22. In making its assessment under Article 11 of the DSU, the Panel should not engage in a de 
novo review with respect to the customs administration's determination under the CVA, nor should 
the Pan el give total deference to the determination of the custom's administration. The Panel must 
make an objective assessment of the facts and the applicability of and conformity with the CVA of 
the customs administration's determination. This requires a "reaso ned and adequate" explanation 
for the determination in light of the evidence on the record24. 
23. Determining what is "adequate" will "depend on the facts and circumstances of the case and 
the particular claims made" and the panel's assessment should test whether the reasoning of the 
authority is coherent and internally consistent"25.  Further, the panel must examine whether the 
explanations provided disclose how the authority treated the facts and evidence in the record and 
whether there was positive evide nce before the authority to support the inferences made and 
conclusions reached by the authority"26. 
24. Finally, an explanation is not reasoned, or is not adequate, if an alternative explanation of 
the facts is plausible and if the authority's explanation  does not seem adequate in the light of that 
alternative explanation"27. 
 
                                                
23 Ibid., para. 118.  
24 Panel Report, Thailand – Cigarettes (Philippines) , paras. 7.104 -105. 
25 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93.  
26 Ibid. 
27 Appellate Body Report, US – Lamb , para. 106.  WT/DS371/RW/Add.1  
 
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  ANNEX C -3 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF TH E EUROPEAN UNION  
1. This executive summary integrates comments made by the European Union at the Third 
Party Hearing on 30 August 2017 and its replies to the Panel's and Thailand's questions to Third 
Parties of 15 September 2017. The European Union considers that the present case raises 
important systemic questions on the interpr etation and application of the Agreement on the 
Implementation of Article VII of the General Agreement on Tariffs and Trade 1994  (Customs 
Valuation Agreement, CVA), and the Understanding on Rules and Procedures Governing the 
Settlement of Disputes (DSU) . Its submissions focussed on those systemic questions, without 
taking a definitive position on the facts of the case.  
I. The 2012 BoA ruling  
2. The comments by the European Union focussed on the standard of review for panel 
proceedings under the CVA; the ci rcumstances of sale test under Article 1.2(a) of the CVA; and the 
evidentiary standard for deductions for taxes payable pursuant to Article 5.1(a)(iv) of the CVA.  
3. Standard of review : Contrary to Thailand's arguments, the European Union considers that 
there is no special standard of "reasonableness" under the CVA. The standard of review in disputes 
concerning the CVA is the standard of Article 11 of the DSU, namely the obligation of the panel to 
make an "objective assessment of the matter". A panel genera lly does not have the full record of 
the domestic administrative proceedings and should not step into the shoes of the national 
authority and carry out the assessment on substance in the place of the national authority. 
However, it may examine whether the national authorities' determinations were supported by the 
factual evidence before them and resulted from a correct interpretation and application of the 
relevant WTO rules.  Methodological choices made by the national authorities should be subject to 
the same scrutiny as the other elements of the assessment.  
4. Circumstances of sale test : According to Article 1.2(a) of the CVA, the starting point is 
that relatedness between exporters and importers does not in itself make transaction values 
unacceptable. Tr ansaction values shall be accepted where the circumstances of sale show that the 
relationship did not influence the price. This test requires a thorough examination by the 
authorities, in a process of consultation with the importers. The Panel in the origi nal dispute 
highlighted that customs authorities and importers have respective responsibilities under Article 
1.2(a) of the CVA. Customs authorities must ensure that importers be given a reasonable 
opportunity to provide relevant information; importers are  responsible for providing such 
information. While the obligations concerning the decision on substance and those concerning the 
process are separate obligations, they are closely interlinked, and violations of procedural 
obligations may have a direct impa ct on the substantive decision.  
5. On substance, the deviation of an importer's P&GE from a range of comparables can indeed 
constitute a solid argument in favour of the actual influence of the relationship on the price, 
provided that the comparables are r eally reliable. However, all relevant quantitative and qualitative 
facts, submitted by the importer or otherwise in the possession of the customs authorities, must 
be taken into account in the assessment. Thus, a preliminary conclusion on the (non -)reliabi lity of 
transaction prices reached on the basis of a P&GE comparison must be overturned if other 
evidence pointing to the contrary prevails.  
6. Most importantly, the comparison of P&GE rates can only yield valid results if the situations 
being compared ar e truly comparable. This is a general principle which can be found throughout 
the covered agreements, such as in Articles I:1, III:2 and III:4 of the GATT 1994, in Article 14(b) 
of the SCM Agreement, in the extensive rules on price comparison and comparabi lity in Article 2 of 
the ADA, but also in various provisions of the CVA itself. Comparable means that there must be 
sufficient similarities between the things that are compared, so as to make that comparison worthy 
or meaningful. Where there are no situati ons which are fully comparable, authorities may resort to 
less like, although still similar, comparators, but will be obliged to make appropriate adjustments.  
7. Evidentiary standard for deductions for taxes payable  pursuant to Article 5.1(a)(iv) of 
the CV A: The Panel in the original proceedings made it very clear that deductions must be made WT/DS371/RW/Add.1  
 
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 for taxes, including provincial taxes, that are payable , in the sense of payments usually  made1, 
and not actual payments made and evidenced as such for each instance. The European Union fails 
to see how this finding can be reconciled with a system where only such taxes are deducted for 
which receipts of actual payments are being provided.  
II. The Charges  
8. The Philippines' claims relating to the Criminal Charges issued on 18 January 2016 raise 
important questions on what type of measures can be challenged in WTO dispute settlement, and 
in which procedural circumstances this can be done. The European Union commented on the 
concept of preclusion, the close nexus tes t, the question of "ripeness" or what constitutes a 
"measure at issue", and the application of the CVA in criminal proceedings. In its reply to a 
question by the Panel, the European Union also shared its views on the availability of defences 
under Article XX of the GATT 1994 for breaches of the CVA.  
9. Alleged preclusion : In any event, the question of preclusion can only be relevant in cases 
where the potentially precluded measure is the same as in the original proceedings. This is not the 
case in the prese nt dispute; the investigations and the Charges are measures of a different nature.  
10. Close nexus test : When carrying out this test, a panel acting under Article 21.5 of the DSU 
is called upon to examine if the undeclared measure taken to comply is a “me asure […] with a 
particularly close relationship to the declared “measure taken to comply”, and to the 
recommendations and rulings of the DSB.”2 Assessing whether this is the case requires panels to 
“scrutinize these relationships”, and examine “the factua l and legal background against which a 
declared ‘measure taken to comply ' is adopted”.3  Depending on the facts, a number of other 
specific factors may be examined, in particular the “timing, nature, and effects of the various 
measures”.4 These aspects sho uld however not be assessed in a mechanistic, box -ticking fashion; 
their relative importance will depend on the concrete circumstances of each case.  
11. For the present case, the decisive question should be whether the measure at stake can be 
seen as havi ng the effect of undermining compliance for the measures that had been found 
incompliant. In the European Union's view, some sort of concrete connector (and not a pure 
similarity) between the measures having been found incompliant and the undeclared measur e 
taken to comply is required. This connector, however, must not necessarily be state action but 
could be a pure factual link such as the commercial relationship between the importer and the 
exporter in the current case.  
12. Ripeness / Measure at issue:  The parties disagree on whether the Criminal Charges can 
be challenged in this dispute, as in Thailand's view, they are only a preliminary step in the criminal 
proceedings and therefore not "ripe" for adjudication in WTO dispute settlement. The European 
Union considers that, rather than introducing a new procedural concept of "ripeness", with unclear 
content and vague contours, the question should be framed in a more classical manner, namely 
whether there is a challengeable "measure at issue".  
13. While the universe of issues that can be challenged in WTO dispute settlement proceedings 
is – rightly – broad, it is however not unlimited. According to the Appellate Body, only acts or 
omissions  attributable to a WTO Member  can be challengeable measures.5 In United States - 
Corrosion -Resistant Steel Sunset Review , the Appellate Body indicated that the measures subject 
to review "encompass the entire body of generally applicable  rules, norms and standards, for 
purposes of WTO law, adopted by Members ".6 (emphasis add ed)   
14. Internal preparatory conduct cannot, absent any express and specific obligations to the 
contrary in the Agreement at stake, be a measure in that sense. Such conduct is incapable of 
having tangible, present effects – thus, it cannot affect the ope ration of any covered agreement or 
impair benefits accruing to a Member under the covered agreements (see Articles 3.3 and 4.2 of 
the DSU).  
                                                
1 Panel Report, Thailand - Cigarettes (Philippines) , paras. 7.356 -7.360.  
2 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada) , para. 77 (emphasis added); 
see also Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 203; Appellate Body Report, US – 
Upland Cotton (Article 21.5 – Brazil) , para. 205.  
3 Appellate Body Report, US – Softwood Lumber IV (Article 21.5  – Canada) , para. 77.  
4 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada) , para. 77.  
5 Appellate Body Report, US - Corrosion -Resistant Steel Sunset Review , para. 81.  
6 Appellate Body Report, US - Corrosion -Resistant Steel Sunset Review , para. 87.  WT/DS371/RW/Add.1  
 
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  15. In light of these considerations, for the European Union, the key criterion in this case should 
be whether the measure at stake has legal effects in itself. The exact contours of what can 
constitute a "measure at issue" will be delineated by the substantive WTO law provisions at stake. 
Hence, in the present case, the notion of customs valuation "determination" cont ributes to this 
delineation. The European Union interprets the notion of "determination" as an act which sets out 
a finding of something by a competent authority. As such, the notion confirms the criterion of 
"genuine legal effects" suggested by the Europe an Union. A priori, and without taking a definitive 
position on the facts of this case, it seems to the European Union that the Charges have such legal 
effects of their own.  
16. Application of the CVA in criminal proceedings : In accordance with the views expressed 
by other Third Parties, the European Union considers that the application of the substantive 
obligations under the CVA is not dependent on the authority taking the decision or the formal 
characterisation of the measure in question (as "pure custo ms decision" versus 
"criminal/enforcement measure"). On the contrary, the scope of application should rather be 
determined on a functional basis. Thus, the substantive obligations of the CVA should apply 
whenever an organ of the state engages in determinin g the customs value of imported goods, 
regardless of which authority takes this decision and in which type of proceedings. Different 
considerations might come into play when it comes to the application of the procedural obligations 
of the CVA. As the Phili ppines allege no breach of these obligations with regard to the Charges, the 
question does, however, not need to be adjudicated in this case.  
17. Availability of defences under Article XX of the GATT 1994 to justify breaches of 
the CVA : The European Union notes that arguendo , the substantive conditions of Article XX, in 
particular the necessity test, seem not to be fulfilled in the present case. On the question of 
principle, the European Union would caution against interpreting the scope of Article XX too 
broadly, in view of the absence of any explicit reference to the exceptions of the GATT 1994 in the 
CVA, and the special nature of the obligations under the CVA, which c onsists of technical rules 
aiming at ensuring orderly customs administration. The Europe an Union fails to see how policy 
considerations as those contemplated in and protected by Article XX can be of any relevance in 
this context.  WT/DS371/RW/Add.1  
 
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 ANNEX C -4 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF JA PAN 
I. INTRODUCTION  
1. Japan participat es in this dispute because o f its systemic interest in the consistent 
interpretation and implementation of the Understanding on Rules and Procedures Governing the 
Settlement  of Disputes ( "DSU") and the Agreement on Implementation of Article VII of the Genera l 
Agreement on Tariffs and Trade 1994 ( "Customs Valuation Agreement " or "CVA"). Japan made 
observations on (i) the scope of Article 21.5 proceedings ; (ii) the examination of "circumstances 
surrounding the sale " in related -party transactions under the CVA; (iii) the standard of review 
under the  CVA; (i v) the so -called doctrine of ripeness; and ( v) the applicability of Article XX of the 
General Agreement on Tariffs and Trade 1994 ( "GATT 1994 ") to the CVA.  
II. THE SCOPE OF ARTICLE 21.5 PROCEEDINGS  
2. It is we ll established that a party having recourse to Article 21.5 of the DSU may request the 
compliance panel to review measures that the implementing Member maintains are not measures 
"taken to comply ".1 The Appellate Body has explained that, in such circumstan ces, "the compliance 
panel should seek to determine whether such distinct measures are particularly closely connected 
to the measures the implementing Member[ s] asserts are  'taken to comply  ', and to the 
recommendations and rulings of the DSB, so as to fa ll within the purview of the compliance 
panel ".2 This determination involves, in turn, an examination of the links, in terms of the nature, 
effects, and timing, between the alleged measure, the declared measure taken to comply, and the 
DSB recommendations and rulings.3  
3. As regards the nature  (or subject matter),4 the Appellate Body has found that the use of a 
common methodology (zeroing) in instruments issued in connected stages of an administrative 
proceeding provided the necessary link in terms of the nature of the measures, particularly where 
the methodology was the subject of the DSB recommendations and rulings.5  
4. By effects , Japan understands the Appellate Body to have in mind legal consequences.  The 
legal consequence of a challenged  measure can b e analyzed  from two perspectives: (i) the legal 
effect of the challenged measure on the measure found to be WTO -inconsistent in the original 
proceedings ; and (ii) the legal effect of the challenged measure on the declared measure taken to 
comply . With rega rd to the first type of the legal effects, t he Appellate Body in US – Zeroing 
(Article  21.5 – EC) has found that, when a measure has legal effects that supersede those of the 
measure found to be WTO -inconsistent in the original proceedings, but those effec ts continue to 
reflect the same WTO -inconsistent conduct, this would provide a sufficient link in terms of effect.6  
Meanwhile, concerning the second type of the legal effects of the ch allenged measure, the 
Appellate  Body in US – Softwood Lumber IV (Article 21.5 – Canada)  has upheld the analysis by the 
panel that a subsequent  measure " could  have an impact on " or "could possibly  undermine " the 
implementation  of the declared measure taken to comply  in the original proceedings.7 Such an 
analysis is necessitated  in order to ensure that "limits [on Article 21.5 proceedings]  should not 
allow circumvention by Members by allowing them to comply through one  measure, while, at the 
same time, negating compliance through another ."8 
5. As regards to timing , the Ap pellate Body has found that the fact that a measure is adopted 
simultaneously with, shortly before, or shortly after specific actions taken by a Member to 
                                                
1 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para. 207.  
2 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para. 207.  
3 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para. 229.  
4 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para. 230.  
5 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para. 230.  
6 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para s. 231-232. 
7 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada) , para. 87. 
8 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada) , para. 7 1. WT/DS371/RW/Add.1  
 
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  implement DSB recommendations and rulings can provide support for a finding that those 
measures are c losely connected.9 By contrast, adoption of a measure a considerable time before 
the adoption of the DSB recommendations and ruling could be evidence that the measures are not 
closely connected.10 Still, the Appellate Body has cautioned against "formalistic  reliance on the 
date of issuance"11 and has found measures adopted prior to the adoption of the DSB 
recommendations and ruling to fall within the scope of Article 21.5 proceedings , if those measures 
"still bore a sufficiently close nexus, in terms of natur e, effects and timing ." 12 
6. Japan considers that the Panel should follow the approach outlined by the Appellate Body.  In 
particular, the Panel could examine: whether the Charges address the same subject matter and 
actions addressed through the Thai Custom s Board of Appeals ("BoA ") ruling and the DSB 's 
recommendations and rulings (nature); whether the Charges result s in the legal effect of 
maintaining the WTO -inconsistency found by the DSB or negating the effect of the declared 
measure taken to comply (effe ct); and whether the timing of the Charges support the assertion 
that they are linked to the BoA ruling and DSB  's recommendations and rulings.   
7. Japan considers that the need to interpret the scope of Article 21.5 in a flexible manner 
stems from the pos sibility that an implementing Member may seek to avoid full compliance with 
the DSB 's recommendations and rulings by imposing inconsistent measures and yet declaring 
them not to be "measures taken to comply ". Japan also recalls that the object of Article 2 1.5 
proceedings is to determine whether  the implementing Member has complied with the DSB  's 
recommendations and rulings.13 In this light, Japan considers that the Panel should examine the 
link between the measure at issue, the declared measure taken to com ply, and the DSB  's 
recommendations and rulings , to ensure that the implementing Member does not  avoid full 
compliance.  
III. EXAMINATION OF "CIRCUMSTANCES SURROUNDING THE SALE " IN RELATED -
PARTY TRANSACTIONS  
8. Japan agrees that a benchmark comparison may be one method of examining the 
"circumstances surrounding the sale ". However, Japan believes that customs authorities should 
examine th e circumstances surrounding the sale by taking into consideration all releva nt 
qualitative and quantitative factors to determine whether the transaction price was influenced by a 
relationship between the buyer and seller.  
9. Paragraph 3 of the Interpretive Notes  to paragraph 1.2 describes that "circumstances 
surrounding the sale " involves "relevant aspects of the transaction, including the way in which the 
buyer and seller organize their commercial relations and the way in which the price in question 
was arrived at  [ ]". These are qualitative analyses that would require an authority to examine that 
may not be readily comparable to a quantitative benchmark.  The Interpretive Notes  then provide 
for quantitative analyses, providing as a further example of a situation where a relationship may 
not have influenced the sale "where i t is shown that the price is adequate to ensure recovery of all 
costs plus a profit which is representative of the firm 's overall profit realized over a representative 
period of time [ ] in sales of goods of the same class or kind. "  
IV. THE STANDARD OF RE VIEW UNDER THE CVA  
10. Japan considers that Article 17.6(i) of the AD Agreement applies exclusively to the review of 
anti-dumping measures and the Appellate Body has confirmed that it does not apply to claims 
brought under the other covered agreements.14  
11. Even when reviewing decisions  that are the outcome of an administrative investigation, the 
Appellate Body has held that a panel must no t "simply defer to the conclusions of the national 
authority ".15 Instead, "a panel  must examine whether, in  the light of the evidence on the record, 
                                                
9 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para. 225.  
10 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para. 225.  
11 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para. 226.  
12 Appellate Body Report, US – Zeroing (EC)(Article 21.5 – EC), para. 226  (emphasis original) . 
13 Appellate Body Report, US – Zeroing (Japan) (Artic le 21.5 – Japan) , para. 122.  
14 Appellate Body Report, Argentina – Footwear  (EC), para. 118.  
15 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada ), para. 93.  WT/DS371/RW/Add.1  
 
- C-13 - 
 
  
 the conclusions reached by the investigating authority are  reasoned and adequate ", and such a 
review must be "critical and searching ". 16 
V. THE SO -CALLED DOCTRINE OF RIPENESS  
12. Considering the systemic  importance of the arguments raised in relation to this doctrine, 
Japan would like to make the following points.  
13. First, as a general rule, the fact that a measure is  pending before a national court is not 
relevant  in the examination of the inconsistency of that measure with international law, such as 
the WTO covered agreements.  Japan recalls that Article 27 of the Vienna Convention on the Law of 
Treaty stipulates that "national law cannot be invoked to justify non -compliance with international 
law". Even if the doctrine of ripeness were to apply to WTO dispute settlement, the situation in 
domestic judicial proceedings would have  no bearing on the so-called ripeness under the DSU or 
other WTO covered agreements, unless those agreements so provide d.  
14. Second , Japan considers that there is no requirement for a distinctive  "ripeness " test in the 
DSU.17 Japan observes  that, in previous disputes , panels and the Appellate Body have rather 
focused their analysis on whether an act or omission constitutes a "measure at issue " for the 
purposes of WTO dispute settlement, and have then examined whether the measure constitutes a 
violation of a Member  's obligation under the WTO covered agreements.18 Questions about whether 
a measure is properly subject to dispute settlement are determined within the context of analyzing 
whether the act or omission properly constitutes a "measure at issue " under Article 6.2 of DSU, 
and not through a separate "ripeness " test to be conducted after this initial determination.  
15. Therefore, while Japan does not comment on any factual aspect of this case, it considers 
that the Panel should examine those measures as a matter of "fact" in the light of the "legal rules " 
in the WTO covered agreements, independently from their situation in national judicial 
proceedings.  
VI. APPLICABILI TY OF ARTICLE XX OF THE GATT 199 4  
16. In Japan  's view, Article XX of the GATT 1994 is not available to justify measures that are 
found to be inconsistent  with the CVA.  
17. First, the CVA does not provide  any textual link to Article XX of the GATT 1994.  A common 
drafting technique to indicate the intention to make available in one agreement a provision in 
another  agreement is the inclusion of a cross-reference.  For example, cross -references to Article 
XX of the GATT 1994 are found in other WTO covered Agreements such as the SPS Agreement and 
in the Agreement on Preshipment Inspection.  The TRIMs Agreement expressly provides that "[a]ll 
exceptions under GATT 1994 shall apply, as appropriate, to the provisions of this Agreement ". 
In contrast, the CVA does not contain any reference to Article XX of the GATT 1994.   
18. Second, Article XX of the GATT 1994 and the CVA are of different legal construct and  nature.  
Article XX is a provision of the GATT 1994 that provides general exceptions under the GATT 1994.  
In contrast, the CVA is a special agreement on implementation of a specific Article, namely, Article 
VII of the GATT 1994.  Therefore, by its nature, t he CVA constitutes a special law vis -à-vis GATT 
1994, and provides special rules focusing on how Member states should determine the customs 
value.  Considering this difference, Japan is of the view that Article XX of the GATT 1994 may be 
applicable to the C VA only when the latter provides for such application in its text, because 
principles that are applicable to general rules are not necessarily applicable to special rules unless 
the special rules intend to incorporate these principles.  Yet, as mentioned ab ove, the CVA lacks 
any provision that indicates an intention to incorporate the general exceptions provided in Article 
XX of the GATT 1994.  
19.  It is well established by the Appellate Body that the a pplicability of Article XX of the 
GATT  1994 to other WTO covered agreement s depends on whether a textual link exist s in the text 
                                                
16 Ibid. 
17 Japan ’s oral statement, paras. 12 -15. 
18 See e.g., Appellate Body Report, US – Corrosion Resistant Steel Sunset Review , para. 79.  WT/DS371/RW/Add.1  
 
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  of that other agreement . The Appellate Body in China – Publications and Audiovisual Products  
stated that China may resort to Article XX of the GATT 1994 to justify an inconsistency with 
Paragraph 5.1 of China  's Accession Protocol  based on  the very text of th at paragraph which  
provides that "[w]ithout prejudice to China  's right to regulate trade in a manner with the WTO 
Agreement [ ] ". In that case, the Appellate Body recognized the  availability of Article  XX of the 
GATT 1994 to justify a deviation from obligations under Paragraph 5.1 of China  's Accession 
Protocol  because, according to the Appellate Body, the said language of Paragraph 5.1 
encompasses "China  's Power to take a regul atory action that derogates from WTO obligations that 
would otherwise  constrain China  's exercise of such power – that is, to relevant exceptions ".19 In 
contrast, the Appellate Body in China – Raw Materials  denied the availability of Article XX of the 
GATT 1994 to justify a meas ure inconsistent with Paragraph  11.3 of the China  's Accession 
Protocol, for the reason that Paragraph 11.3 does not contain any language similar to that of 
Paragraph 5.3 and that Paragraph 11.3 cannot be interpreted to make Article X X of the GATT 1994 
available.20 While denying the applicability of Article XX of the GATT 1994 to the claim under 
Paragraph 11.3, the Appellate Body also pointed out the lack of cross -reference to Article XX of the 
GATT 1994 in Paragraph 11.3 of China  's Accession Protocol.21 
20. Japan considers that the absence of a reference to Article XX of the GATT 1994 in the CVA 
weighs heavily against the applicability of Article XX to the CVA.  Under the circumstances just 
discussed, the absence of any cross -reference  to Article XX in the CVA indicates that the CVA is 
not intended to apply the Article XX of GATT 1994.  This is particularly the case given that the CVA 
does include a cross -reference to Article X of the GATT 1994, while it does not refer to Article XX.  
21. Japan notes, in addition, that even if Article XX of the GATT 1994 were to apply to certain 
claims under other Articles of the CVA, nonetheless, Article XX is not available in the present case, 
because there is no textual link to Article XX in Article s 1.1, 1.2(a), 2, 3 or 10 of the CVA  
 
                                                
19 Appellate Body Report, China – Publications and Audiovisual Products , para. 221.  
20 Appellate Body Report, China – Raw Materials , paras. 304  and 307. 
21 Appellate Body Report, China – Raw Materials , para. 303.  WT/DS371/RW/Add.1  
 
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 ANNEX C -5 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF TH E UNITED STATES  
I. Scope of   "Measures Taken to Comply  " Under Article 21.5 of the DSU  
1. Panel proceedings under Article 21.5 of the DSU have a more limited scope than original 
panel proceedings, as the only measures at issue in an Article 21.5 proceeding are  "measures 
taken to comply. " The complainant in an Article 21.5 proceeding must show either that such a 
measure does not exist, or that it is inconsistent with one of the covered agreements.  Measures 
that negate or undermine compliance with the DSB  's recommendations and rulings may also 
come within the scope of an Article 21.5 proceeding.  In addition, panels and the Appellate Body 
have found th at a measure that is not itself a measure taken to comply, but which has a  
"particularly close relationship  " or "sufficiently close nexus " to a declared measure taken to 
comply and to the DSB  's recommendations and rulings, may fall within an Article 21.5  panel  's 
terms of reference.  
2. The Philippines and Thailand dispute whether certain criminal charges are a  "measure taken 
to comply " for purposes of this proceeding.  The United States does not understand Thailand 's 
compliance obligations to be necessaril y limited to the valuation of entries at issue in the original 
proceeding.  However, the United States questions whether valuation determinations with respect 
to entries that pre -date entries that were the subject of recommendations and rulings would be a 
measure taken to comply with such recommendations and rulings as a general matter.  The Panel 
should consider the timing of the entries in the charges vis -à-vis the timing of entries at issue in 
the original proceeding in evaluating whether the charges share  a sufficiently close relationship 
with the recommendations and rulings and the declared measure taken to comply.  
II. Application of the CVA With Respect to the Criminal Charges  
3. In addition to being limited to  "measures taken to comply,  " a panel  's terms of reference in 
a proceeding under Article 21.5 are set forth in Articles 7.1 and 6.2 of the DSU.  Under Article 7.1, 
the panel  's terms of reference are generally   "[t]o examine . . . the matter referred to the DSB  " 
by the complainant in its panel req uest. Under Article 6.2, the   "matter  " consists of the  "specific 
measures at issue  " and "a brief summary of the legal basis of the complaint. " 
4. In turn, the panel  's terms of reference are to examine the   "specific measures at issue  " set 
out in the co mplainant  's panel request, as they exist at the time of panel establishment.  Neither 
the DSU nor the CVA establishes a   "ripeness  " doctrine as articulated by Thailand.  If a measure is 
within a panel 's terms of reference, the panel 's mandate is to examine  the measure as it existed at 
the time of panel establishment and to make findings with respect to that measure.  
5. In addition, pursuant to Article 19.1 of the DSU, a panel is required to make a 
recommendation where it has found a measure within its terms  of reference to be inconsistent 
with the relevant Member 's obligations.  Article 19.1 of the DSU states, in part,  "Where a panel .  . . 
concludes that a measure is inconsistent with a covered agreement, it shall recommend that the 
Member concerned bring the  measure into conformity with that agreement. " 
6. The Panel 's task regarding the Philippines ' claims under the CVA with respect to the criminal 
charges is, therefore, to examine whether the charges, as they existed at the time of the Panel 's 
establishment,  are inconsistent with the provisions asserted.  If an inconsistency is found, the DSU 
requires the Panel to make a recommendation with respect to the measure.   
7. The Philippines claims that the criminal charges are inconsistent with Articles 1.1 and 1.2(a ) 
of the CVA.  These articles establish that the primary basis of valuation is the transaction value.  An 
analysis of whether the criminal charges are inconsistent with Articles 1.1 and 1.2(a) should focus 
on whether the charges reflect a failure to accept t he transaction value as the value of goods for 
the purposes of levying ad valorem customs duties on imported goods.  If the Panel finds that such 
a failure occurred, it should assess whether the customs administration had grounds for WT/DS371/RW/Add.1  
 
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  considering that the re lationship influenced the price and whether it communicated those grounds 
to the importer and provided the importer with a reasonable opportunity to respond.  
EXECUTIVE SUMMARY OF U.S.  THIRD PARTY ORAL STATEMENT  
8. The recommendations and rulings of the DSB  are naturally the starting point for assessing 
compliance with those recommendations and rulings.  With respect to the criminal charges, the 
relevant question for purposes of the Panel 's terms of reference in this Article 21.5 proceeding is 
whether the cha rges may be subject to a proceeding whose scope is limited under the DSU to 
resolving disagreement as to the consistency or existence of measures taken to comply with those 
recommendations and rulings.  The valuation of entries imported at one point in time  does not 
necessarily have a relationship – much less a close relationship – with the valuation of any other 
entries, or to DSB recommendations and rulings issued later in time that cover subsequent entries.  
To find that the charges fall within the scope o f an Article 21.5 proceeding by virtue of a close 
relationship with the recommendations and rulings and a declared measure taken to comply, the 
Panel must find that a close relationship exists.  
9. With respect to the November 2012 Board of Appeals ruling, under Articles 7.1 and 6.2 of 
the DSU, the task of the Panel is to conduct an objective assessment as to whether the ruling is 
inconsistent with the provisions of the CVA asserted.  The CVA does not set forth a  "standard of 
review,  "and Article 11 of the DS U does not call for the Panel to conduct a de novo  review of the 
Board of Appeals ruling.  The United States expects that the Panel  's assessment of whether the 
specific steps taken by the authority satisfied the obligations set forth in Articles 1.1 and 1. 2 of the 
CVA will depend on the facts surrounding the ruling, including, in light of the Interpretative Notes, 
the Board 's efforts to obtain information from the importer, the information regarding the 
transaction before the Board, and the reasoning provid ed for its determination.  
EXECUTIVE SUMMARY OF RESPONSES OF THE UNITED STATES TO THE PANEL  'S QUESTIONS TO  
THIRD PARTIES  
 
GENERAL  
 
10. There is no provision in the DSU that establishes a requirement that a compliance panel 
follow legal interpretations of the original panel or of the Appellate Body in reports adopted by the 
DSB. Under the structure of the WTO Agreement (Article IX:2) and the DSU (Article 3.9), it is only 
through appropriate action by the Ministerial Conference and the General Council that t his Panel 
would be  "legally bound  " to follow such an authoritative legal interpretation.   
11. In Chile – Price Band (Article 21.5 – Argentina) and US – Tuna II (Article 21.5 – Mexico) , the 
Appellate Body noted that Article 21.5 proceedings  "form part of a  continuum,  " such that "due 
cognizance " must be accorded to the DSB  's recommendations and rulings in the original 
proceeding.  In this regard, it is useful to bear in mind that the DSB recommendations and rulings 
in the original proceedings play an import ant role in evaluating compliance.  They inform a 
Member 's understanding of how to bring its measure into compliance with its WTO obligations.  
12. Under the DSU, the scope of proceedings under Article 21.5 is more limited than the scope 
of original panel proceedings.  Given that valuation is conducted for all imports, on a case -by-case 
basis, the Panel will need to carefully consider how the criminal charges relate to the original 
recommendations and rulings in this context.  
13. In addition, the DSU require s the complainant to show that the content of the measure 
identified, as it exists at the time of panel establishment, is inconsistent with the obligation 
asserted.  If the identified measure, as it exists at panel establishment, consists of charges or 
allegations, the complainant must show how those charges or allegations are inconsistent with the 
provisions at issue in order to prevail on its claims.  
CRIMINAL CHARGES  
14. The CVA itself does not exclude criminal or penal actions from the scope of its commitments.  
The question of whether a challenged measure is inconsistent with a particular CVA obligation 
depends on whether that measure, as it exists at panel establishment, is inconsistent with that 
obligation, as interpreted under customary rules of i nterpretation.   WT/DS371/RW/Add.1  
 
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 15. Articles 1.1 and 1.2(a) of the CVA obligate a WTO Member to accept the transaction value, 
and not to reject the transaction value on the sole ground that the buyer and seller are related.  
These obligations are not limited to particular entities within a Member 's government.  Moreover, 
nothing in the CVA suggests that these obligations do not apply with respect to valuation in cases 
where the importer has committed fraud.  A Member may seek and apply penalties in such a case, 
but it must fo llow the requirements of the CVA in determining the value of the goods.  Improper 
valuation is not a permissible response to customs fraud.  
16. With respect to the applicability of Article XX of the GATT 1994 to claims under the CVA, the 
United States is no t aware that this issue has arisen in a previous dispute.  Both parties to this 
dispute have presented arguments regarding the merits of the Article XX defenses asserted by 
Thailand.  As such, the Panel may not need to reach this question in order to resolve  this dispute, 
but could proceed to analyze, on an arguendo  basis, the defenses presented by Thailand.   
BOA RULING  
17. Customs valuation is a transaction -specific process.  The specific steps taken by the customs 
authority in examining the circumstances of sale will depend on the circumstances of the 
transaction at issue.   
18. However, the discretion afforded with respect to valuation under the CVA is not unlimited.  
The CVA clearly establishes the transaction value as the primary basis for valuation.  It furt her 
provides that, even when the buyer and seller are related, the customs value shall be accepted, 
provided that the transaction value is acceptable under Article 1.2.  The Interpretative Notes make 
clear that the customs authority need not examine the rel ationship in every case, but rather when 
it has  "doubts  " about the acceptability of the price.  In those cases, Article 1.2(a) requires an 
examination of the circumstances of sale, and also requires, if the customs administration has 
grounds for considerin g the relationship influenced the price, the customs authority to 
"communicate its grounds to the importer  " and give the importer   "a reasonable opportunity to 
respond.  " 
 
__________