WT/DS371/21  
 
6 July 2017  
(17-3636) Page: 1/4 
  Original: English  
 
THAILAND – CUSTOMS AND FISCAL MEASURES  ON CIGARETTES  
FROM THE PHILIPPINES  
SECOND RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE PHILIPPINES  
REQUEST FOR CONSULTA TIONS  
The following communication, dated 4 July 2017 , from the delegation of the Philippines  to the 
delegation of Thailand  and to the Chairperson of the Dispute Settlement Body, is circulated in 
accordance with Article  21.5 of the DSU.  
 
_______________  
 
 
 My authorities have instructed me to request the Kingdom of Thailand ( "Thailand ") to enter 
into consultations pursuant to Articles 4 and 21.5 of the Understanding on Rules and Procedures 
Governing the Settlement of Disputes ("DSU"), Article XXII:1 of the General Agreement on Tariffs 
and Trade 1994 ( "GATT 1994 "), Article 19 of the Agreement on Imp lementation of Article VII of 
the General Agreement on Tariffs and Trade 1994 (the "Customs Valuation Agreement " or "CVA"), 
and paragraph 1 of the Understanding between the Philippines and Thailand of 1 June 2012 
regarding Procedures under Articles 21 and 22 of the DSU ( "Sequencing Arrangement "),1 in 
connection with a disagreement concerning Thailand 's implementation of the recommendations 
and rulings of the Dispute Settlement Body ( "DSB") in Thailand – Customs and Fiscal Measures on 
Cigarettes from the Phi lippines  ("Thailand – Cigarettes (Philippines) ") (WT/DS371).  
 
I. BACKGROUND TO THIS R EQUEST  
1. On 15 July 2011, the DSB adopted the Appellate Body Report, and the Panel Report, as 
modified by the Appellate Body Report, in Thailand – Cigarettes (Philippines) .2  In these reports, 
various Thai measures were found to be inconsistent with provisions of the GATT 1994 and the 
Customs Valuation Agreement , as follows:  
 
(i) Thailand acted inconsistently with Articles 1.1 and 1.2 of the CVA by rejecting the 
declared tra nsaction values for entries of cigarettes imported by the Thailand branch 
office of Philip Morris (Thailand) Limited ( "PM Thailand ");3 
(ii)  Thailand acted inconsistently with Article 1.2(a) of the CVA by failing to communicate 
its "grounds " for considerin g that the relationship between PM Thailand and Philip 
Morris Philippines Manufacturing Inc. ( "PM Philippines ") influenced the price paid by 
PM Thailand;4 
(iii) Thailand acted inconsistently with Article 16 of the CVA by failing to provide an 
adequate expl anation as to how the Thai Customs Department ( "Thai Customs ") 
determined the customs values for the imported cigarettes;5 
                                                
1 WT/DS371/16.  
2 WT/DSB/M/299.  
3 Panel Report, para. 8.2(b).  
4 Panel Report, para. 8.2(c).  
5 Panel Report, para. 8.2(d).  WT/DS371/21  
 
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  (iv) Thailand acted inconsistently with Article 7.1 of the CVA by improperly assessing the 
customs values of the imported cigarettes using a deductive method;6  
(v) Thailand acted inconsistently with Article  7.3 of the CVA by failing properly to inform 
PM Thailand in writing of the customs values determined under Article  7 and the 
method used to determine these values;7  
(vi) Thailand a cted inconsistently with Article 10 of the CVA by disclosing to the Thai 
media confidential customs valuation information provided by PM  Thailand to Thai 
Customs;8 
(vii) Thailand acted inconsistently with Article  III:2 of the GATT 1994 by subjecting 
import ed cigarettes to value added tax ( "VAT") liability in excess of that applied to like 
domestic cigarettes with respect to the Maximum Retail Selling Prices ( "MRSP ") 
determined in the MRSP Notices of December 2005, September 2006, March 2007, 
and August 2007 ;9 
(viii) Thailand acted inconsistently with Article  III:2 of the GATT 1994 by subjecting 
imported cigarettes to VAT liability in excess of that applied to like domestic cigarettes 
by granting an exemption from VAT solely upon resale of domestic cigarettes , and not 
imported cigarettes;10  
(ix) Thailand acted inconsistently with Article  III:4 of the GATT 1994 by subjecting 
imported cigarettes to less favourable treatment than like domestic cigarettes by 
exempting resellers of cigarettes from certain administr ative requirements, related to 
VAT liability, upon resale of domestic cigarettes, and not imported cigarettes;11 
(x) Thailand acted inconsistently with Article X:1 of the GATT 1994 by failing to publish 
the methodology used to determine the tax base for VAT;12 
(xi) Thailand acted inconsistently with Article X:1 of the GATT 1994 by failing to publish 
the general rule pertaining to the release of guarantees collected pending the 
determination of customs value;13 
(xii) Thailand acted inconsistently with Articl e X:3(a) of the GATT 1994 by failing to 
administer, in a reasonable manner, its laws and regulations pertaining to customs 
valuation due to delays by the Board of Appeals ( "BoA"), an administrative tribunal 
within the Ministry of Finance, in resolving admi nistrative appeals of customs valuation 
decisions taken by Thai Customs in respect of 210 entries imported by PM Thailand in 
2002;14 
(xiii) Thailand acted inconsistently with Article X:3(b) of the GATT 1994 by failing to  
maintain or institute independent tribunals or procedures for the prompt review and 
correction of customs valuation determinations;15 and,  
(xiv) Thailand acted inconsistently with Article  X:3(b) of the GATT 1994 by failing to 
maintain or institute independent review tribunals or procedures  for the prompt 
review and correction of guarantees collected pending the determination of customs  
value.16 
                                                
6 Panel Report, para. 8.2(e).  
7 Panel Report, para. 8.2(f).  
8 Panel Report, para. 8.2(g).  
9 Panel Report, para. 8.3(a).  
10 Panel Report, para. 8.3(b).  
11 Panel Report, para. 8.3(c).  
12 Panel Report, para. 8.4(a).  
13 Panel Report, para. 8.4(c).  
14 Panel Report, para. 8.4(e).  
15 Panel Report, para. 8.4(f).  
16 Panel Report, para. 8.4(g).  WT/DS371/21  
 
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  2.  On 11 August 2011, Thailand informed the DSB that it intended to comply with its WTO 
obligations in this dispute, but that it would require a reason able period of time to do so.17  
Pursuant to Article 21.3(b) of the DSU, the Philippines and Thailand agreed that there would be 
two reasonable periods:  first, a period of 10 months, expiring on 15 May 2012, with respect to the 
findings addressed in points  (i) through (vii) and (x) through (xiv) above; and, second , a period of 
15 months, expiring on 15 October 2012, with respect to the findings addressed in points (viii) and 
(ix) above.18 
 
3. On 1 June 2012, the Philippines and Thailand agreed upon the Sequenci ng Arrangement 
regarding the procedures that would apply under Articles 21 and 22 of the DSU for purposes of 
this dispute.19  Paragraph 1 of the Sequencing Arrangement provides that, should the Philippines 
consider that the situation described in Article 21 .5 of the DSU exists, the Philippines may request 
consultations at any time, and that the parties to the dispute will hold those consultations within 
15 days.  
 
4. On 4 May 2016, the Philippines requested consultations in its first recourse to Article 21.5 in 
this dispute.20  Those consultations failed to resolve the dispute, and therefore, on 29 June 2016, 
the Philippines requested the establishment of a panel in its first recourse to Article 21.5.21  Since 
that time, Thailand has taken additional measures that are properly regarded as measures taken 
to comply, and that are inconsistent with Thailand 's WTO obligations.  Consequently, the 
Philippines requests consultations once again in this second recourse to Article 21.5.  
 
II. MEASURES AT ISSUE AN D CLAIMS MADE I N THESE PROCEEDINGS  
5. In the paragraphs to follow, the Philippines identifies the measures taken to comply at issue 
in this second recourse to Article 21.5, and indicates the legal basis for claims against those 
measures.  
 
A. Criminal Charges against PM Thai land and Its Former Employee Regarding 
Customs Valuation on Entries Imported in 2002 -2003  
6. In its first recourse to Article 21.5, the Philippines raised claims with respect to criminal 
charges, filed on 18 January 2016, by the Thai Public Prosecutor against  PM Thailand and seven of 
its current and former employees in respect of 272 entries of cigarettes that cleared Thai Customs 
between 28 July 2003 and 24 June 2006 (the "2003-2006 Charges ").22 
 
7. In August 2006, when the Department of Special Investigation ( "DSI") initiated the 
investigation that resulted in the 2003 -2006 Charges, it also commenced a second criminal 
investigation into entries imported by PM Thailand in the 2000 -2003 period.  That second 
investigation resulted in the Thai Public Prosecutor filin g a second set of criminal charges, on 26 
January 2017, against PM Thailand and one of its former employees in respect of 780 entries of 
cigarettes that cleared Thai Customs between 22 January 2002 and 14 August 2003 (the "2002-
2003 Charges ").  The compete nt Thai criminal court accepted and issued the Charges.  It is these 
2002-2003 Charges that are at issue in this second recourse to Article 21.5.  
 
8. Specifically, the 2002 -2003 Charges allege that PM Thailand under -declared the customs 
values of imported cig arettes, with the declared transaction values described as "false" prices that 
were lower than the alleged "actual " prices.  The 2002 -2003 Charges state that they pertain to 
780 entries of cigarettes that cleared Thai Customs between 22 January 2002 and 14 August 
2003.  For each entry, an annex attached to the Charges states both the "declared " price (the 
alleged "false" price) and the "found " price (the alleged "actual " price).  However, neither the 
2002-2003 Charges nor the annex state the basis for the conclusions that the declared prices are 
"false" and that the declared prices should be replaced by alternative "actual" customs values.  
Based on the alleged "actual " prices, the 2002 -2003 Charges and annex specify that the duty -paid 
value of the cigarettes imported by PM Thailand is THB 4,953,456,655.93.  
                                                
17 WT/DS371/12.  
18 WT/DS371/14.  
19 WT/DS371/16.  
20 WT/DS371/17.  
21 WT/DS371/18.  
22 See WT/DS371/18, paras. 11-16. WT/DS371/21  
 
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  9. The 2002 -2003 Charges constitute "a measure taken to comply " that violates Articles 1.1, 
1.2(a), 2, 3, 4, 5, 6 and 7 of the CVA. 
 
10. The 2002 -2003 Charges are a "measure taken to comply " because they have a close nexus 
with the DSB 's recommendations and rulings in the original proceedings in this dispute and 
Thailand 's declared measures taken to comply.  To recall, in the original proceedings, the DSB 
found that the long delay in the BoA 's consideration of the appeals concerning 210 entries 
imported by PM Thailand in 2002 was inconsistent with Articles X:3(a) and X:3(b ) of the GATT 
1994.23  On 16 November 2012, the BoA finally issued its ruling in respect of these 210 entries 
(the "BoA Ruling "), which Thailand declared to be a measure taken to comply,24 and which is a 
measure at issue in the Philippines ' first recourse to  Article 21.5 in this dispute.25  The 2002 -2003 
Charges share a close nexus with the DSB 's recommendations and rulings regarding the BoA 's 
delay in its treatment of the appeals concerning the 210 entries just mentioned and with the BoA 
Ruling because they i nvolve: the same importer and same importing country (PMTL and Thailand); 
the same exporter and same exporting country (PT Philip Morris Indonesia ( "PTPMI ") and 
Indonesia); the same product and brand ( Marlboro  cigarettes produced by PTPMI); and some 
overla pping entries (205 of the entries at issue are identical).  
B. Other Subsequent Measures  
11. This request for consultations also concerns any amendments to the measures identified 
above, as well as any subsequent closely connected measures taken to comply that are adopted 
by Thailand, including, but not limited to, acts or omissions taken in relation to the measures (acts 
and/or omissions) and/or entries mentioned above by:  the Attorney General, the BoA, the DSI, 
the Excise Department, the Public Prosecutor, Thai courts, Thai Customs, or other institutions or 
agencies whose conduct is attributable to Thailand.  
III. CONCLUSION  
12. In accordance with paragraph 1 of the Sequencing Arrangement, the Philippines looks 
forwar d to Thailand 's response to this request, and to holding consultations within 15 days.  
13. The Philippines reserves all of its rights in respect of Thailand 's compliance with its WTO 
obligations in this dispute.  It also reserves its rights to raise additional  factual and legal claims 
during the course of the consultations and in any request for the establishment of a panel.  
 
 
__________  
                                                
23 Panel Report, paras. 8.4(e) -(g). 
24 WT/DS371/15/Add.8.  
25 See WT/DS371/18, paras. 9 -10.