WORLD TRADE  
ORGANIZATION   
WT/DS371/AB/R 
17 June 2011 
 (11-2997) 
 Original:   English 
  
 
     
 
    
 
     
THAILAND – CUSTOMS AND FISCAL MEASURES ON CIGARETTES  
FROM THE PHILIPPINES 
 
  
AB-2011-1 
 
 
    
 
     
Report of the Appellate Body  WT/DS371/AB/R 
 Page i 
 
 
 
I.  Introduction .................................................................................................................. ............... 1  
II.  Arguments of the Participants and the Third Participants .......................................................... 5  
A.  Claims of Error by Thailand – Appellant ...................................................................... 5 
1.  Article III:2 of the GATT 1994 ........................................................................ 5  
2.  Article III:4 of the GATT 1994 ........................................................................ 8  
(a)  Article III:4:  "treatment no less favourable" ....................................... 8  
(b)  Article 11 of the DSU:  the Panel's Treatment of Exhibit 
PHL-289 ............................................................................................ 10  
(c)  Thailand's Defence Under Article XX(d) of the GATT 1994 ........... 12  
3.  Article X:3(b) of  the GATT 1994 ................................................................... 13  
B.  Arguments of the Ph ilippines – Appellee ..................................................................... 16 
1.  Article III:2 of the GATT 1994 ...................................................................... 16  
2.  Article III:4 of the GATT 1994 ...................................................................... 18  
(a)  Article III:4:  "treatment no less favourable" ..................................... 19  
(b)  Article 11 of the DSU:  the Panel's Treatment of Exhibit 
PHL-289 ............................................................................................ 20  
(c)  Thailand's Defence Under Article XX(d) of the GATT 1994 ........... 22  
3.  Article X:3(b) of  the GATT 1994 ................................................................... 23  
C.  Arguments of the Third Participants ............................................................................ 26 
1.  Australia .......................................................................................................... 26  
2.  European Union .............................................................................................. 28  
3.  United States ................................................................................................... 32  
III.  Issues Raised in This Appeal .................................................................................................. .. 33 
IV.  Article III of the GATT 1994 .................................................................................................. .. 34 
A.  Introduction ................................................................................................................. 34 
B.  Overview of the Me asures at Issue .............................................................................. 34 
1.  The Measure Challenged Under Ar ticle III:2 of the GATT 1994 .................. 34  
2.  The Measure Challenged Under Ar ticle III:4 of the GATT 1994 .................. 38  
C.  Article III:2 of the GATT 1994 ..................................................................................... 41 
D.  Article III:4 of the GATT 1994 ..................................................................................... 46 
1.  Article III:4:  "treatment no less favourable" .................................................. 47  
2.  Article 11 of the DSU:  the Panel's Treatment of Exhibit PHL-289 ............... 55  
3.  Thailand's Defence Under Article XX(d) of the GATT 1994 ........................ 64  
4.  Conclusion ...................................................................................................... 70  
V.  Article X:3(b) of  the GATT 1994 ............................................................................................. 7 0 
A.  Introduction ................................................................................................................. 70 
B.  Article X:3(b) of the GATT 1994 ................................................................................. 71 
1.  The Meaning of "administrative action relating to customs matters" 
and "prompt review and correc tion" in Article X:3(b) ................................... 73  
2.  Application of Article X:3(b) to the Facts of the Dispute ............................... 78  
(a)  Administrative Action Relating to Customs Matters ......................... 78  
(b)  Prompt Review and Correction .......................................................... 81  
VI.  Findings and Conclusions ...................................................................................................... ... 84 
ANNEX I Notification of an Appeal by Thailand ......................................................................... 87  WT/DS371/AB/R 
Page ii  
 
CASES CITED IN THIS REPORT 
 
 
Short Title Full Case Title and Citation 
Argentina – Hides and 
Leather Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and 
Import of Finished Leather , WT/DS155/R and Corr.1, adopted 16 February 
2001, DSR 2001:V, 1779 
Argentina – Textiles and Apparel Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, 
Textiles, Apparel and Other Items , WT/DS56/AB/R and Corr.1, adopted  
22 April 1998, DSR 1998:III, 1003 
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of 
Salmon , WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded 
Tyres , WT/DS332/AB/R, adopted 17 D ecember 2007, DSR 2007:IV, 1527 
Canada – Autos Panel Report, Canada – Certain Measures Affecting the Automotive Industry , 
WT/DS139/R, WT/DS142/R, adopted 19 June 2000, as modified by Appellate 
Body Report WT/DS139/AB/R, WT/DS142/AB/R, DSR 2000:VII, 3043 
Canada – Continued Suspension Appellate Body Report, Canada – Continued Suspension of Obligations in the 
EC – Hormones Dispute , WT/DS321/AB/R, adopted 14 November 2008 
Canada – Patent Term Appellate Body Report, Canada – Term of Patent Protection , 
WT/DS170/AB/R, adopted 12 October 2000, DSR 2000:X, 5093 
Canada – Periodicals Appellate Body Report, Canada – Certain Measures Concerning Periodicals , 
WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, 449 
Canada – Wheat Exports and Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/AB/R, adopted 27 September 2004, 
DSR 2004:VI, 2739 
Canada – Wheat Exports and 
Grain Imports Panel Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/R, adopted 27 September 2004, as 
upheld by Appellate Body Report WT/DS276/AB/R, DSR 2004:VI, 2817 
Chile – Price Band System Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products , WT/DS207/AB/R, adopted  
23 October 2002, DSR 2002:VIII, 3045 (Corr.1, DSR 2006:XII, 5473) 
China – Auto Parts Appellate Body Reports, China – Measures Affecting Imports of Automobile 
Parts , WT/DS339/AB/R, WT /DS340/AB/R, WT/DS342/AB/R, adopted  
12 January 2009 
China – Auto Parts Panel Reports, China – Measures Affecting Imports of Automobile Parts , 
WT/DS339/R, WT/DS340/R, WT/DS342/R and Add.1 and Add.2, adopted  
12 January 2009, as upheld (WT/DS339/R) and as modified (WT/DS340/R, 
WT/DS342/R) by Appellate Body Reports WT/DS339/AB/R, 
WT/DS340/AB/R, WT/DS342/AB/R 
China – Intellectual Property Rights Panel Report, China – Measures Affecting the Protection and Enforcement of 
Intellectual Property Rights , WT/DS362/R, adopted 20 March 2009 
China – Publications and 
Audiovisual Products Panel Report, China –  Measures Affecting Trading Rights and Distribution 
Services for Certain Publications and Audiovisual Entertainment Products , 
WT/DS363/R and Corr.1, adopted 19 January 2010, as modified by Appellate 
Body Report WT/DS363/AB/R 
Colombia – Ports of Entry Panel Report, Colombia – Indicative Prices and Restrictions on Ports of 
Entry , WT/DS366/R and Corr.1, adopted 20 May 2009  WT/DS371/AB/R 
 Page iii 
 
 
Short Title Full Case Title and Citation 
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting 
Asbestos and Asbestos-Containing Products , WT/DS135/AB/R, adopted  
5 April 2001, DSR 2001:VII, 3243 
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, 
Sale and Distribution of Bananas , WT/DS27/AB/R, adopted 25 September 
1997, DSR 1997:II, 591 
EC – Chicken Cuts Appellate Body Report, European  Communities – Customs Classification of 
Frozen Boneless Chicken Cuts , WT/DS269/AB/R, WT/DS286/AB/R, adopted 
27 September 2005, and Corr.1, DSR 2005:XIX, 9157 
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, 
DSR 1998:I, 135 
EC – Sardines Appellate Body Report, European Communities – Trade Description of 
Sardines , WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3359 
EC – Selected Customs 
Matters Appellate Body Report, European Communities – Selected Customs Matters , 
WT/DS315/AB/R, adop ted 11 December 2006,  DSR 2006:IX, 3791 
EC – Selected Customs 
Matters Panel Report, European Communities – Selected Customs Matters , 
WT/DS315/R, adopted 11 December 2006, as modified by Appellate Body Report WT/DS315/AB/R, DSR 2006:IX-X, 3915 
India – Autos Panel Report, India – Measures Affecting the Automotive Sector , 
WT/DS146/R, WT/DS175/R and Corr.1, adopted 5 April 2002, DSR 2002:V, 
1827 
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R, adopted 16 January 1998, 
DSR 1998:I, 9 
Japan – Alcoholic  
Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages , 
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 
1996, DSR 1996:I, 97 
Korea – Alcoholic Beverages Appellate Body Report, Korea – Taxes on Alcoholic Beverages , 
WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, 3 
Korea – Alcoholic Beverages Panel Report, Korea – Taxes on Alcoholic Beverages , WT/DS75/R, 
WT/DS84/R, adopted 17 February 1999, as modified by Appellate Body 
Report WT/DS75/AB/R, WT/DS84/AB/R, DSR 1999:I, 44 
Korea – Various Measures on 
Beef Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled 
and Frozen Beef , WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 
2001, DSR 2001:I, 5 
Mexico – Corn Syrup 
(Article 21.5 – US) Appellate Body Report, Mexico – Anti-Dumping Investigation of High 
Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 
21.5 of the DSU  by the United States , WT/DS132/AB/RW, adopted 21 
November 2001, DSR 2001:XIII, 6675 
Thailand – Cigarettes (Philippines) Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes from the 
Philippines , WT/DS371/R, circulated to WT O Members 15 November 2010  
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes 
and Sections of Iron or Non-Alloy Steel and H-Beams from Poland , 
WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, 2701 WT/DS371/AB/R 
Page iv  
 
Short Title Full Case Title and Citation 
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion-Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, 
3779 
US – Continued Suspension Appellate Body Report, United States – Continued Suspension of Obligations 
in the EC – Hormones Dispute , WT/DS320/AB/R, adopted 14 November 
2008, DSR 2008:X, 3507 
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application 
of Zeroing Methodology , WT/DS350/AB/R, adopted 19 February 2009 
US – FSC Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations" , WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, 
1619 
US – FSC 
(Article 21.5 – EC) Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations" – Recourse to Article 21.5 of the DSU by the European 
Communities , WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, 55 
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R, adopted 20 April 
2005, DSR 2005:XII, 5663 (Corr.1, DSR 2006:XII, 5475) 
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R, adopted 23 August 
2001, DSR 2001:X, 4697 
US – Malt Beverages GATT Panel Report, United States – Measures Affecting Alcoholic and Malt 
Beverages , DS23/R, adopted 19 June 1992, BISD 39S/206 
US – Section 211 
Appropriations Act Appellate Body Report, United States – Section 211 Omnibus Appropriations 
Act of 1998 , WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, 589 
US – Section 301 Trade Act Panel Report, United States – Sections 301-310 of the Trade Act of 1974 , 
WT/DS152/R, adopted 27 January 2000, DSR 2000:II, 815 
US – Section 337 Tariff Act GATT Panel Report, United States Section 337 of the Tariff Act of 1930 , 
L/6439, adopted 7 November 1989, BISD 36S/345 
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp 
and Shrimp Products , WT/DS58/AB/R, adopted 6 November 1998, DSR 
1998:VII, 2755 
US – Shrimp (Thailand) / US – Customs Bond Directive Appellate Body Report, United States – Measures Relating to Shrimp from 
Thailand / United States – Customs Bond Directive for Merchandise Subject 
to Anti-Dumping/Countervailing Duties , WT/DS343/AB/R / 
WT/DS345/AB/R, adopted 1 August 2008, DSR 2008:VII, 2385 / DSR 
2008:VIII, 2773 
US – Tobacco GATT Panel Report, United States – Measures Affecting the Importation, 
Internal Sale and Use of Tobacco , DS44/R, adopted 4 October 1994, 
BISD 41S/131 
  WT/DS371/AB/R 
 Page v 
 
 
LIST OF ABBREVIATIONS USED IN THIS REPORT 
 
Abbreviation Description 
1995 DG Revenue ruling Ruling by the Director-G eneral of the Thai Revenue Department, 
Gor.Kor. 0802/Por.22836, dated 10 October 1995 (Panel Exhibit THA-96) 
2000 DG Revenue ruling Ruling by the Director-G eneral of the Thai Revenue Department, 
Gor.Kor. 0811/Por.633, dated 27 January 2000 (Panel Exhibit PHL-253). 
2006 textbook Excerpt of page 4-266 of Textbook on the Revenue Code  by Professor 
Paichit Rojanavanich, Chumporn Se nsai, and Saroch Thongpracum, 
B.E. 2549 (2006) (Panel Exhibit THA-95) 
Agreement on Customs Valuation  Agreement on Implementation of Arti cle VII of the General Agreement 
on Tariffs and Trade 1994  
Anti-Dumping Agreement  Agreement on Implementation of Article VI of the General Agreement on 
Tariffs and Trade 1994  
BCI business confidential information  
BoA  Board of Appeals  
DSB Dispute Settlement Body  
DSU  Understanding on Rules and Procedures Governing the Settlement of 
Disputes 
GATT 1994  General Agreement on Tariffs and Trade 1994 
MRSP maximum retail selling price, a reference price fixed by the Thai 
Government for each brand of cigarettes 
Order No. Por. 85/2542 Government of the Kingd om of Thailand, Order of Revenue Department 
No. Por. 85/2542, Re Computation of Tax Base for Importation and Sale of Tobacco According to Category and Type Prescribed by Director-General and Approved by Minister Under Section 79/5 of 
Revenue Code, and Preparation of Tax Invoice in Case of Sale of 
Tobacco Under Section 86/5(2) of Revenue Code (Panel Exhibit PHL-95) 
Panel Report Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes 
from the Philippines , WT/DS371/R, 15 November 2010 
Revised Kyoto Convention  International Convention on the Simplification and Harmonization of 
Customs Procedures , done at Kyoto, 18 May 1973, 950 UNTS 269, as 
amended by the Protocol of Amendment to the International Convention 
on the Simplification and Harmonization of Customs Procedures , done 
at Brussels, 26 June 1999, 2370 UNTS 27 
Royal Decree No. 239 Government of the Kingdom  of Thailand, Royal Decree Issued Under 
the Revenue Code Governing Ex emption from Value Added Tax 
(No. 239) B.E. 2534 (Panel Exhibit PHL-217) 
Thai Customs Thai Customs Department 
Thai Customs Act Government of the Kingdo m of Thailand, The Customs Act, B.E. 2469 
(Panel Exhibit PHL-20). WT/DS371/AB/R 
Page vi  
 
Abbreviation Description 
Thai Revenue Code Government of the Ki ngdom of Thailand, The Council of Regency, 
The Act Promulgating the Revenue Code, B.E. 2481 (Panel Exhibit 
PHL-94). 
TRIPS Agreement  Agreement on Trade-Related Aspects of Intellectual Property Rights  
TTM  Thailand Tobacco Monopoly  
VAT value added tax 
Working Procedures Working Procedures for Appellate Review , WT/AB/WP/6, 16 August 
2010 
WTO World Trade Organization  
WTO Agreement Marra kesh Agreement Establishing the World Trade Organization  WT/DS371/AB/R 
 Page 1 
 
 
 WORLD TRADE ORGANIZATION  
APPELLATE BODY 
 
 Thailand – Customs and Fiscal Measures on 
Cigarettes from the Philippines
 
 Thailand, Appellant 
Philippines, Appellee 
 
Australia, Third Participant 
China, Third Participant 
European Union
1, Third Participant 
India, Third Participant 
Separate Customs Territo ry of Taiwan, Penghu, 
 Kinmen and Matsu, Third Participant   
United States, Third Participant 
  AB-2011-1 
  Present:  
 Van den Bossche, Presiding Member 
 Ramírez-Hernández, Member  Zhang, Member   
 
 
I. Introduction 
1. Thailand appeals certain issues of law and legal interpretations develope d in the Panel Report, 
Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines  (the "Panel Report").2  
The Panel was established on 17 November 2008 to consider a complaint by the Philippines with 
respect to certain customs and fiscal measures im posed by Thailand on cigarettes imported from the 
Philippines.3   
                                                      
1This dispute began before the entry into force of the Treaty of Lisbon amending the Treaty on 
European Union and the Treaty establishing the European Community  (done at Lisbon, 13 December 2007) on 
1 December 2009.  On 29 November 2009, the World Trade Organization received a Verbal Note (WT/L/779) 
from the Council of the European Union and the Commission of the European Communities stating that, by 
virtue of the Treaty of Lisbon , as of 1 December 2009, the "Europe an Union" replaces and succeeds the 
"European Community".  On 13 July  2010, the World Trade Organizati on received a second Verbal Note 
(WT/Let/679) from the Council of the European Union confirming that, with  effect from 1 December 2009, the 
European Union replaced the European Community and assumed all the rights and obligations of the European 
Community in respect of all Agreements for which the Di rector-General of the Worl d Trade Organization is the 
depositary and to which the European Community is a si gnatory or a contracting party.  We understand the 
reference in the Verbal Notes to the "European Communi ty" to be a reference to the "European Communities".  
In the proceedings before the Panel, the third party subm ission dated 18 May 2009 and the statement at the third 
party session on 11 June 2009 were made by the delegation of the European Communities.  On 8 January 2010, 
the European Union requested the Panel to refer to "European Union" and "EU", rather than "European Communities" and "EC", in the Panel Report. (Panel Report, footnote 3 to para. 1.6)  We refer to the European 
Union in this Report. 
2WT/DS371/R, 15 November 2010. 
3Panel Report, para. 1.3. WT/DS371/AB/R 
Page 2  
 
 2. Before the Panel, the Philippines made a number of claims in respect of several Thai customs 
and fiscal measures affecting cigarettes imported from the Philippines.4  The Philippines raised three 
sets of claims:  (i) with respect to measures pertaining to customs valuation, under Articles 1, 4, 5, 7, 
10, and 16 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs 
and Trade 1994  (the " Agreement on Customs Valuation ")5;  (ii) with respect to measures forming part 
of Thailand's value added tax ("VAT") regime  under Article III:2 and Article III:4 of the General 
Agreement on Tariffs and Trade 1994  (the "GATT 1994")6;  and (iii) with respect to Thailand's 
administration of certain customs and fiscal measur es, including with respect to guarantees, under 
Article X of the GATT 1994.7  
3. The Panel Report was circulated to Members of the World Trade Organization (the "WTO") 
on 15 November 2010. 
                                                      
4Panel Report, para. 7.1. 
5With respect to Thai Customs' valuation of cigarettes imported from the Philippines and cleared 
between 11 August 2006 and 13 September 2007, the Philippines claimed that:  (i) Thailand acted inconsistently with Article 1.1 and Article 1.2(a) of the Agreement on Customs Valuation  because Thai Customs improperly 
rejected the transaction values of those entries;  (ii) Thai Customs applied the deductive valuation method 
inconsistently with Thailand's obligations under Articles 5 and 7 in determining the customs value of those 
cigarette entries;  (iii) Thailand acted inconsistently  with its obligation under Article 10 not to disclose 
confidential information;  and (iv) Thailand acted inconsistently with its obligation under Article 16 to provide an explanation for the determination of the final customs value.  The Philippines also claimed that Thailand 
acted inconsistently with Article  1.1 and Article 1.2(a) of the Agreement on Customs Valuation  by maintaining 
an unpublished general rule requiring the rejection of tr ansaction value and the use of the deductive valuation 
method. (Panel Report, paras. 7.2 and 7.79-7.81) 
6The Philippines claimed that Thailand acted inconsiste ntly with Article III:2, first sentence, of the 
GATT 1994 by subjecting imported cigarettes to tax in excess of that applied to like domestic cigarettes through:  (i) a discriminatory tax base for VAT imposed on imported cigarettes;  and (ii) the exemption of 
domestic cigarettes from VAT obligations.  The Philippines also claimed that Thailand acted inconsistently with 
Article III:4 of the GATT 1994 by imposing more onerous administrative requirements on resellers of imported cigarettes than on resellers of domestic cigarettes. (Panel Report, paras. 7.412, 7.568, and 7.645) 
7The Philippines claimed that Thailand acted inconsistently with Article X:1 of the GATT 1994 by 
failing to publish:  (i) the methodology for determini ng the maximum retail selling price ("MRSP"), a reference 
price fixed by the Thai Government for each brand of  cigarettes;  (ii) the me thodology for determining 
ex factory prices for Thailand Tobacco Monopoly ("TTM") cigarettes;  and (iii) laws and regulations governing 
the release of guarantees for potential liability arising from health, excise, and television taxes.  The Philippines also raised the following claims under Article X:3(a) of the GATT 1994:  (i) Thailand did not administer its 
customs and internal tax rules in a "reasonable" and "impartial" manner by appointing certain senior Thai 
Government officials to serve on the Board of Directors of TTM;  (ii) u ndue delays in th e decision-making 
process of the Board of Appeals (the "BoA") constitute  an "unreasonable" administration of customs laws;  
(iii) the determination of the tax base for VAT for im ported cigarettes is administered in a "non-uniform", 
"unreasonable", and "partial" manner;  and (iv) the estab lishment of the health, excise, and television taxes in 
relation to imported cigarettes is administered in a "non-uniform", "unreasonable", and "partial" manner.  The 
Philippines further claimed that Thailand acted inconsis tently with Article X:3(b) of the GATT 1994:  by 
(i) failing to maintain tribunals or procedures for the pr ompt review of appeals against certain customs valuation 
decisions;  and (ii) failing to  maintain or institute tribunals or proced ures for the purpose of prompt review of 
guarantees imposed by Thai Customs on imported cigarettes. (Panel Report, paras. 7.759, 7.862, 7.989, and 7.1016)  WT/DS371/AB/R 
 Page 3 
 
 
 4. In its Report, the Panel made a number of findi ngs with respect to the scope of the matters 
before it8, and a number of findings that Thailand had act ed inconsistently with its obligations under 
the Agreement  on Customs Valuation .9  None of these findings is at issue in this appeal.  
5. The Panel further made several findings that Thailand had acted inconsistently with its 
obligations under Article III of the GATT 1994, including that:  
(b) regarding the VAT exemption for domestic cigarette 
resellers, Thailand acted inconsiste ntly with Article III:2, first 
sentence by subjecting imported cigarettes to a VAT liability in excess of that applied to like dome stic cigarettes by granting the 
exemption from the VAT liability only to domestic cigarettes 
resellers;  and 
(c) regarding the VAT exemption for domestic cigarette 
resellers, Thailand acted inconsistently with Article III:4 by subjecting imported cigarettes to less favourable treatment compared to like domestic cigarettes by impos ing additional administrative 
requirements, connected to VAT liabilities, on imported cigarette 
resellers.
10 
                                                      
8With respect to the claims advanced by the Philippines, the Panel found that:  (i) the Philippines' claim 
under Article X:3(a) of the GATT 1994 with respect to the Thai VAT system was outside its terms of reference 
because the Philippines failed to plainly connect the challe nged measure with Article X:3(a) in its panel request;  
and (ii) the Philippines' claim under Article X:3(a) with respect to the health, excise, and television taxes was 
within the Panel's terms of reference. (Panel Report, para. 8.1(a) and (b);  see also paras. 7.26 and 7.31)  The 
Panel also found that, although the two provisions were listed in the panel request, the Philippines' claims under Article 4 and Article 7.1 of  the Agreement  on Customs Valuation were not supported by specific arguments and 
evidence presented in a timely manner, and further that Article 7.1 of the Agreement  on Customs Valuation  does 
not constitute a basis for an independent sequencing claim under that Agreement. ( Ibid., paras. 8.5 and 8.6;  see 
also para. 7.280)  With respect to the measures at issue, the Panel found the following to be within its terms of 
reference:  (i) Thai Customs' valuation determinations  for the imported cigarettes at issue that were cleared 
between 11 August 2006 and 13 September 2007;  and (ii) the December 2005 MR SP Notice, the September 
2006 MRSP Notice, the March 2007 MRSP Noti ce, and the August 2007 MRSP Notice. ( Ibid., para. 8.1(c) 
and (d);  see also paras. 7.51 and 7.67) 
9Panel Report, para. 8.2;  see also paras. 7.195, 7. 223, 7.266, 7.332, 7.398, and 7.411.  With respect to 
the Philippines' claims under the Agreement  on Customs Valuation , the Panel found that the rejection by Thai 
Customs of the declared transaction values for certain ci garette entries in 2006 and 2007 was inconsistent with 
Article 1.1 and Article 1.2, and that Thailand acted inc onsistently with Article 1.2( a) by failing to communicate 
Thai Customs' grounds for such rejection.  The Panel also found that the application by Thai Customs of its 
valuation methodology was inconsistent with Thailand's obligations under Article 7.1 and Article 7.3, and that 
Thailand acted inconsistently with Article 10 and Article 16, respectively, by disclosing confidential 
information, and by failing to provide an adequate explanation as to how Thai Customs determined customs 
values for imported cigarettes.  The Panel found, however, that Thailand does not, as the Philippines claimed, maintain or apply a general rule requiring the rejection of the transaction value and the use of the deductive 
valuation method.  
10Panel Report, para. 8.3(b) and (c);  see also paras. 7.644 and 7.738.  The Panel also found that 
Thailand acted inconsistently with Article III:2, first sentence, by subjecting imported cigarettes to VAT liability 
in excess of that applied to like domestic cigarette s with respect to the MRSPs  for the December 2005 MRSP 
Notice, the September 2006 MRSP Notice, the Marc h 2007 MRSP Notice, and the August 2007 MRSP Notice. 
(Ibid., para. 8.3(a);  see also para. 7.567)  This finding has not been appealed. WT/DS371/AB/R 
Page 4  
 
 6. The Panel also made certain findings that Thailand had acted inconsistently with its 
obligations under Article X of the GATT 1994, including that: 
(g) Thailand acted inconsistently with Article X:3(b) by failing 
to maintain or institute independent  review tribunals or process for 
the prompt review of guarantee decisions.11 
7. The Panel recommended that the Dispute Settleme nt Body (the "DSB") request Thailand to 
bring those measures found to be inconsistent in to conformity with its obligations under the 
GATT 1994 and the Marrakesh Agreement Establishi ng the World Trade Organization  (the " WTO 
Agreement ").  The Panel made no recomme ndation with respect to one m easure that had expired.  
With respect to certain other measures found to be inconsistent with Thaila nd's obligations under the  
Agreement  on Customs Valuation , the Panel indicated that it was "not entirely clear … whether and, if 
so, to what extent"12 those measures have effects on subsequent measures.  Accordingly, for those 
measures, the Panel stated that its recommendations "apply only to the extent [that those measures] 
continue to have effects".13   
8. On 22 February 2011, Thailand notified the DSB of  its intention to appeal certain issues of 
law covered in the Panel Report and certain legal interpretations deve loped by the Panel, pursuant to 
Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement 
of Disputes  (the "DSU"), and filed a Notice of Appeal14 and an appellant's submission pursuant to 
Rule 20 and Rule 21, respectively, of the Working Procedures for Appellate Review  (the " Working 
Procedures ").15  On 14 March 2011, the Philippines filed an appellee's submission.16  On 15 March 
2011, Australia, the European Union, and the Un ited States each filed a third participant's 
submission17, and the Separate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu notified its 
                                                      
11Panel Report, para. 8.4(g);  see also para. 7.1087.  The Panel also found that:  (i) Thailand acted 
inconsistently with Article X:1 of th e GATT 1994 by failing to publish the methodology used to determine the 
MRSP (the tax base for VAT);  (ii) Thailand did not act inconsistently with Article X:1 by failing to publish the 
methodology and data necessary to determine ex factory prices for domestic cigarettes;  (iii) Thailand acted 
inconsistently with Article X:1 of the GATT 1994 by fa iling to properly publish the general rule pertaining to 
the release of guarantees;  (iv) Thailand did not act in consistently with Article X:3(a) by appointing certain 
government officials to the Board of Directors for TTM;  (v) Thailand acted inconsistently with Article X:3(a) 
because of the delays caused in the BoA decision-making process;  (vi) the Philippines' claim relating to the 
administration of Thai health, excise, and television ta xes was improperly brought under Article X:3(a);  and 
(vii) Thailand acted inconsistently with Article X:3(b) by failing to maintain or institute independent review 
tribunals or processes for the prompt review of customs valuation determinations. ( Ibid., para. 8.4(a)-(f);  see 
also paras. 7.791, 7.829, 7.861, 7.929, 7.969, 7.988, and 7.1015)  With the exception of the Panel's finding in paragraph 8.4(g)—reproduced above—none of these findings are at issue in this appeal. 
12Panel Report, para. 8.8. 
13Panel Report, para. 8.8. 
14WT/DS371/8 (attached as Annex I to this Report). 
15WT/AB/WP/6, 16 August 2010.   
16Pursuant to Rule 22 of the Working Procedures . 
17Pursuant to Rule 24(1) of the Working Procedures .  WT/DS371/AB/R 
 Page 5 
 
 
 intention to appear at the oral  hearing as a third participant.18  On 16 March 2011, China and India 
each notified its intention to appear at the oral hearing and requested to make an oral statement at the 
hearing.  In accordance with Rule 24(4) of the Working Procedures , the Division authorized China, 
India, and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, each to make an oral statement at the hearing. 
9. By letter dated 15 March 2011, the Philippines requested, pursuant to Rule 18(5) of the 
Working Procedures,  authorization
 from the Appellate Body Division hearing this appeal to correct a 
clerical error in its appellee's submission.  On 16  March 2011, the Division invited Thailand and the 
third participants to comment on this request.  No  comments were received.  On 18 March 2011, the 
Division authorized the Philippines to correct th e clerical error in its appellee's submission. 
10. The Panel adopted additional working proce dures for the protection of business confidential 
information ("BCI")19, but we have not done so in this appeal .  Neither participant requested that we 
adopt additional procedures for the protection of  BCI in these appellate proceedings, although the 
Philippines made a conditional request that we consult the participants in the ev ent that we considered 
it necessary to refer to information that was considered  to be BCI in the proceedings before the Panel.  
We have not found it necessary to refer to an y such information in this Report.  
11. The oral hearing in this appeal was held on 18 and 19 April 2011.  The participants and 
three of the third participants (Australia, the Eu ropean Union, and the United States) made oral 
statements.  The participants and third participan ts responded to questions posed by the Members of 
the Division hearing the appeal. 
II. Arguments of the Participants  and the Third Participants 
A. Claims of Error by Thailand – Appellant 
1. Article III:2 of the GATT 1994 
12. Thailand requests the Appellate Body to reve rse the Panel's finding that Thailand acted 
inconsistently with Article III:2, first sentence,  of the GATT 1994.  Thailand contends that the 
measures at issue consist of administrative requirements that are not subject to the scope of 
Article III:2, and that, even if these admini strative requirements could be examined under 
                                                      
18Although the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu indicated that its 
notification was made pursuant to Rule 24(2) of the Working Procedures, the notification was not received 
before the 17:00 deadline specified in Rule 18(1) of the Working Procedures .  Accordingly, the Division treated 
it as a notification and request to make an oral statement at the hearing made pursuant to Rule 24(4) of the 
Working Procedures .   
19See Panel Report, paras. 2.3 and 2.4, and Annex A-1 at pp. 399 and 400. WT/DS371/AB/R 
Page 6  
 
 Article III:2, the Panel erred in finding an incons istency arising in situa tions where resellers of 
imported cigarettes do not satisfy those requirements.  
13. Thailand argues that the Panel improperly fo und a violation of Article III:2 because the 
Panel's analysis was not based on any differen ce in the tax burdens imposed on imported and 
domestic cigarettes, but rather on the regulatory requirements affecting the resale of imported cigarettes and the consequences of non-compliance with  those requirements.  In Thailand's view, such 
a difference in regulatory requirements cannot give rise to a violation of Article III:2 and should 
therefore have been addressed solely under Article III:4.   
14. According to Thailand, Article III:2 "imposes a strict standard"
20 that internal taxes or internal 
charges on imported products may not be in excess of those applied to like domestic products.  Thus, 
Article III:2 concerns the actual tax burden, and is  essentially a mathematical exercise in which the 
tax burden on imported and domestic products under the measure at issue is first identified and then 
compared.  In contrast, Article III:4 addresses the non-ch arge elements of internal legislation, which, 
in this dispute, consist of administrative requirements.   
15. Thailand submits that the difference in how measures are analyzed under Article III:2 and 
under Article III:4 explains why it is important to maintain the distinction between their scopes.  
Article III:2 is intended to discipline the tax bur dens imposed on imported and domestic products by 
Members, not how Members regulate their internal markets.  Subjecting administrative requirements, or the financial consequences of failing to comp ly with those requirements, to the scope of 
Article III:2 will deprive Members of their right under Article III:4 to regulate sales of imported and 
domestic products differently, so long as the differe nces do not amount to less favourable treatment of 
imported products.  Thailand further argues that it is well established that a measu re that consists of 
administrative requirements should be analyzed under Ar ticle III:4, even if the failure to comply with 
those administrative requirements may have fi nancial consequences for an imported product.  
Accordingly, the financial conse quences of non-compliance with the administrative requirements of 
Thailand's VAT regime cannot be treated as separ ate measures to be analyzed under Article III:2 
independently of those administrative requirements. 
16. Thailand contends that, in the circumstances of  this case, there is "no question of any 
difference between the actual tax burden"
21 on imported cigarettes and th at on domestic cigarettes.  
The Panel found that Thailand's VAT rate is seven pe r cent for both imported and domestic cigarettes, 
and that the full amount of VAT is collected from both the domestic producer and the importer at the 
                                                      
20Thailand's appellant's submission, para. 55.   
21Thailand's appellant's submission, para. 73.   WT/DS371/AB/R 
 Page 7 
 
 
 time of the initial sale by the domestic producer or importer to the wholesaler.  Thus, the Panel's 
finding was not based on the tax burden under Thai VAT  law, but instead solely on the difference in 
the regulatory requirements for resales of importe d and domestic cigarettes and the consequences of 
failure to comply with those requirements.  Such requirements, Thailand cont ends, "are fundamentally 
administrative rather than fiscal in nature".22 
17. Thailand objects to the Panel's re liance on the GATT panel report in US – Tobacco  and to its 
application of the proposition that a challenged measu re is inconsistent with Article III:2 where it 
carries with it " the risk of discriminatory treatment of imports  in respect of internal taxes".23  Thailand 
states that it does not disagree that a risk of excess taxation may give rise to a violation of 
Article III:2, and that a measure that contains an inherent risk of applying a higher tax rate for 
imported products will be in consistent with Article III:2.  Such risk, however, must relate to the 
calculation of the tax burden imposed under the meas ures at issue.  The scope of Article III:2 cannot 
be expanded to include consequences  arising out of non-compliance w ith administrative requirements.  
In this dispute, the measures at issue do not pr escribe a mandatory formula that "mathematically, 
invariably leads to a specific result concerning the tax rate".24  Moreover, any risk associated with a 
failure to comply with reporting re quirements cannot be equa ted with an inherent risk of being subject 
to higher taxation.  Thailand maintains that the measures in this dispute a priori  provide for equal 
taxation for imported and domestic products. 
18. Even if the Panel were correct in examining the consequences of failure to comply with 
administrative requirements under Article III:2, first sentence, Thailand argues that the Panel's finding 
of inconsistency was incorrect for two reasons.  First, a system of  offsetting tax paid against tax 
collected cannot be said to be inconsistent with  Article III:2 simply because private parties are 
required to comply with certain administrative re quirements in order to obtain offsetting credits.  
Entitlement to a right is not any less "automatic" where parties do not avail themselves of that right.  
Moreover, the Panel improperly relied on the Appellate Body report in Korea – Various Measures on 
Beef in concluding that "what is relevant in asses sing the consistency of a measure with the WTO 
obligations is whether the concerned measure itself imposes 'the legal necessity' of certain action on 
private parties".25  In Thailand's view, the Appellate Body di d not, in that dispute, suggest that WTO 
law does not permit Members to require private parties to comply with administrative procedures in 
order to protect their rights and fulf il their obligations under domestic law. 
                                                      
22Thailand's appellant's submission, para. 78.  
23Thailand's appellant's submission, para. 80 (quoting Panel Report, para. 7.625, in turn quoting GATT 
Panel Report, US – Tobacco , para. 97 (emphasis added by the Panel)). 
24Thailand's appellant's submission, para. 83.  
25Thailand's appellant's submission, para. 93 (quoting Panel Report, para. 7.637, in turn quoting 
Appellate Body Report, Korea – Various Measures on Beef , para. 146). WT/DS371/AB/R 
Page 8  
 
 19. Second, Thailand considers that the situations in which a tax credit may be denied involve 
either instances in which resellers cannot establish that the claimed credit relates to an actual and 
legitimate purchase of cigarettes, or where the ru les do not relate to th e purchase and resale of 
imported products.  It cannot be in consistent with WTO law not to give tax credits on purchases that 
may not have taken place, to require proof of purch ase in order to obtain an input tax credit, or to 
deny claims based on inaccurate invoices.  An anal ysis of excess taxation for purposes of Article III:2 
must involve a comparison of the taxes applied on actual, legitimate, docum ented sales of imported 
and domestic products, and WTO Members must be  entitled to establish reporting and record-keeping 
requirements to satisfy themselves th at taxes are imposed and collected  only with respect to legitimate 
sales.  Yet, Thailand claims, the Panel's finding u nder Article III:2 implies that it would be required 
under WTO law to grant input tax credits claimed by resellers even if the resellers cannot prove that 
the purchases for which the credit was claimed actually took place.   
2. Article III:4 of the GATT 1994 
20. Thailand requests the Appellate Body to reve rse the Panel's finding that Thailand acted 
inconsistently with Article III:4 of the GATT 1994 by subjecting imported cigarettes to less 
favourable treatment than that accorded to lik e domestic cigarettes, through the imposition of 
additional VAT-related administrative requirements onl y on resellers of importe d cigarettes.  Thailand 
advances three independent grounds for reversal of this finding:  (i) that the Panel erred in its 
application of Article III:4 to the facts of this di spute and in finding that the Thai measures at issue 
accord less favourable treatment to imported cigarett es;  (ii) that the Panel violated Thailand's due 
process rights, and acted inconsistently with Artic le 11 of the DSU and paragraph 15 of its Working 
Procedures, in accepting and relying upon a piece of ev idence submitted late in the proceedings by the 
Philippines;  and (iii) that the Panel erred in re jecting Thailand's defence under Article XX(d) of the 
GATT 1994. 
(a) Article III:4:  "treatment no less favourable" 
21. Thailand submits that the Panel's analysis and findings do not support a finding of less 
favourable treatment under Article III:4.  Under Article  III:4, the fact that different regulatory regimes 
apply to imported and to like domes tic products is not de terminative of whethe r imported products are 
treated less favourably.  Members have the right to treat imported products differently and, therefore, 
to impose additional or more complicated require ments so long as they do not amount to less 
favourable treatment.  The Panel reached its finding without making any factual findings other than to 
establish the existence of the different requirements themselves.  According to Thailand, in this case 
the Panel simply referred to price elasticity and sw itching patterns as an indication that the additional  WT/DS371/AB/R 
 Page 9 
 
 
 administrative requirements can potentially have a negative impact, and asserted that "an additional 
administrative burden can be linked to the operating co sts of [] businesses", which " could  in turn 
result in modifying the competitive conditions".26  The Panel's finding was thus based entirely on the 
theoretical possibility that the differences " could potentially affect the competitive position of 
imported cigarettes in a negative manner".27  Thailand argues that the Panel, therefore, simply 
identified differences in the regulatory treatment of resales of imported cigarettes and assumed that 
those differences had the potential to affect nega tively the competitive position of such imported 
products.   
22. Thailand points out that the Appellate Body h as found that a measure that accords imported 
products treatment different from that accorded to domestic products "is not necessarily inconsistent 
with Article III:4, as long as the treatment provi ded by the measure is 'no less favourable'."28  The 
Panel's reliance on a "could potentially affect" standard  appears to be founded on the Appellate Body's 
statement in US – FSC (Article 21.5 – EC)  that an examination of less favourable treatment "need not 
be based on the actual effects  of the contested measure in the marketplace".29  The Appellate Body 
also stated in that case, however, that a determination of less favourable treatment " cannot rest on 
simple assertion , but must be found on a careful analysis  of the contested measure and of its 
implications in the marketplace".30  The Panel appears to have consid ered it sufficient to identify any 
conceivable potential negative effect on the competiti ve position of imports and to find a violation of 
Article III:4 on that basis.  As a result, the Panel ma de no attempt to identify how or to what extent the 
minor differences in treatment might in practice in crease costs, or how any increase in costs would 
affect negatively the competitive position of impor ted cigarettes.  Moreover, the Panel failed to 
account for the gains that resellers of imported cigarettes obtain by virtue of the administrative requirements, such as the possibilit y to claim additional input tax credits from VAT paid on utilities, 
administrative expenses, and other services.  Thus, in Thailand's view, the Panel "failed to conduct 
any meaningful analysis of how these differences  affect the competitive position of imports".
31 
23. Thailand also rejects the Panel's reliance on sev eral other WTO cases.  For instance, Thailand 
does not understand the Appellate Body to have suggested, in US – Section 211 Appropriations Act , 
                                                      
26Thailand's appellant's submission, para. 119 (quoting Panel Report, para. 7.736). (emphasis added by 
Thailand) 
27Thailand's appellant's submission, para. 120. (original emphasis)  
28Thailand's appellant's submission, para. 122 (quoting Appellate Body Report, Korea – Various 
Measures on Beef , para. 135;  and referring to Appellate Body Report, EC – Asbestos , para. 100, and Appellate 
Body Report, US – Section 211 Appropriations Act , para. 261). 
29Thailand's appellant's submission, para. 124 (quoting Appellate Body Report, US – FSC 
(Article 21.5 – EC) , para. 215 (original emphasis)).  
30Thailand's appellant's submission, para. 125 (quoting Appellate Body Report, US – FSC 
(Article 21.5 – EC) , para. 215). (emphasis added by Thailand) 
31Thailand's appellant's submission, para. 135. (original emphasis) WT/DS371/AB/R 
Page 10  
 
 that all "additional" requirements are "inherently" less favourable.  To the contrary, the Appellate 
Body emphasized that it is permissible to subject  imported products to diffe rent legal provisions.32  
Moreover, the differential treatment in that case involved two entirely separate administrative 
proceedings, a comparison qualitatively different from the "benign"33 or "very minor"34 differences in 
reporting requirements under Thailand's VAT regi me.  In addition, a lthough the panel in Canada – 
Wheat Exports and Grain Imports  stated that practices not very on erous in commercial terms may still 
be banned when they are likely to put imported products at a competitive disadvantage, Thailand 
argues that the Panel in this dispute never examin ed whether such a likelihood in fact exists for 
imported cigarettes. 
(b) Article 11 of the DSU:  the Panel's Treatment of Exhibit PHL-289 
24. Thailand also contends that the Panel viol ated Thailand's due process rights and acted 
inconsistently with Article 11 of the DSU and pa ragraph 15 of its Working Procedures by accepting 
and relying on Exhibit PHL-289, which was submitted by the Philippines at the last stage of the 
proceedings, without affording Thailand the right to comment on such eviden ce.  Because the Panel 
relied on Exhibit PHL-289 in reaching its findings  under Article III:4, Thailand also requests the 
Appellate Body to reverse the Panel's finding that Thailand acted inconsistently  with that provision. 
25. Thailand submits that Article 11 of the DSU requires panels to protect the due process rights 
of each party to a dispute, including the provision of an adequate opportunity to respond to evidence 
adduced by the other party.  However, Thailand was not afforded the opportunity to comment on 
Exhibit PHL-289, which was submitted by the Phili ppines in its comments on Thailand's responses to 
the Panel's questions after the second substantive meeting.  The Panel's due process violation is 
particularly serious because the Panel stated in its Interim Report that it was basing its finding that 
sales of domestic cigarettes need not be reported in form Por.Por.30 solely on the expert opinion 
contained in Exhibit PHL-289.  Although the Panel deleted this reference from its Report, "Exhibit 
PHL-289 was still the only evidence referred to in the final report".35  As the panel found in Korea – 
Alcoholic Beverages , the rights of the parties under the DSU may be affected by the importance of the 
evidence at issue.36  Therefore, since Exhibit PHL-2 89 was the only evidence upon which the 
Philippines based its prima facie  case, Thailand considers that its due process rights with respect to 
                                                      
32Thailand's appellant's submission, paras. 122 and 137 (referring to Appellate Body Report, US – 
Section 211 Appropriations Act , para. 261). 
33Thailand's appellant's submission, para. 135. 
34Thailand's appellant's submission, para. 137.  
35Thailand's appellant's submission, para. 169. 
36Thailand's appellant's submission, para. 170 (quoting Panel Report, Korea – Alcoholic Beverages , 
para. 10.25).  WT/DS371/AB/R 
 Page 11 
 
 
 Exhibit PHL-289 should have been "accorded the highest importance"37, and that Thailand could not 
have been required to request speci al leave to respond to Exhibit PHL-289 in order to have its due 
process rights respected.   
26. Thailand also alleges that the Panel' s due process violation was "exacerbated"38 by the fact 
that the Panel did not accord considerable deference to Thailand's interpretation of its own law.  This 
is because, in Thailand's view, where the only ev idence suggesting that sales of domestic cigarettes 
need not be reported in form Por.Por.30 was expe rt testimony, and Thailand had informed the Panel 
that these sales had to be reported in that form, the Panel "could have and should have"39 given 
deference to Thailand's inte rpretation of its own law. 
27. Thailand contends that the Panel's relian ce on the Appellate Body's statement in Argentina – 
Textiles and Apparel , that working procedures do not constrain panels with "hard and fast rules on 
deadlines for submitting evidence", is  misplaced for three reasons.40  First, a panel's working 
procedures cannot supersede a panel's due process oblig ations.  Second, the Ap pellate Body made this 
finding in respect of the working procedures of the panel in that dispute, which contained deadlines 
for submitting evidence that were less detailed a nd clear than those specified in the Working 
Procedures adopted by the Panel in this dispute.  Third, the Panel failed to take into account the 
Appellate Body's observation that prima facie evidence must be submitted during the first procedural 
stage of the panel proceedings. 
28. Thailand also argues that the Panel failed to  comply with paragraph 15 of its Working 
Procedures by accepting and relying upon Exhibi t PHL-289.  According to Thailand, under 
Article 12.1 of the DSU, panels are required to co mply with working procedures that are adopted in 
agreement with the parties.  Paragraph 15 of the Panel's Working Procedures es tablishes, as a general 
rule, that evidence cannot be submitted after the firs t substantive meeting, and that evidence may be 
submitted after this deadline onl y in exceptional circumstances, provided that good cause is shown 
and the other party is afforded an opportunity to comment.41  However, the Panel neither rejected 
                                                      
37Thailand's appellant's submission, para. 171. 
38Thailand's appellant's submission, para. 173 (referring to Panel Report, US – Section 301 Trade Act , 
para. 7.19).  
39Thailand's appellant's submission, para. 173. 
40Thailand's appellant's submission, para. 176 (quoting Panel Report, para. 6.125, in turn quoting 
Appellate Body Report, Argentina – Textiles and Apparel , paras. 79 and 80). 
41Paragraph 15 of the Panel's Working Procedures provides: 
The parties shall submit all factual evidence to the Panel no later than the 
first substantive meeting, except with  respect to factual evidence necessary 
for purposes of rebuttals, answers to  questions or comments on answers 
provided by each other.  Exceptions to this procedure will be granted where 
good cause is shown.  In such cases, the other party shall be accorded a 
period of time for comment, as appropriate. WT/DS371/AB/R 
Page 12  
 
 Exhibit PHL-289 as untimely, nor accepted it subject to  a showing of good cause and the provision to 
Thailand of an opportunity to comment.  Moreover, Exhibit PHL-289 cannot be classified as rebuttal 
evidence because it was cruc ial to the Philippines' prima facie  case, and a piece of evidence cannot be 
rebuttal evidence and prima facie  evidence at the same time.  Nor could Exhibit PHL-289 be deemed 
to have been necessary for the Philippines' comment s on Thailand's responses to the Panel's questions, 
since the opportunity to comment on answers provided by the other party is not intended to provide a 
fresh opportunity to rectify or expand prima facie evidence.  Thailand adds that there is no reason 
why the Philippines could not have submitted the expert testimony contained in Exhibit PHL-289 earlier in the proceedings so as to permit Thailand to respond to it. 
(c) Thailand's Defence Under Article XX(d) of the GATT 1994 
29. Thailand requests the Appellate Body to rever se the Panel's finding that Thailand did not 
discharge its burden of establishing its defe nce under Article XX(d) of the GATT 1994 on the 
grounds that the Panel committed legal error in so finding.  Furthermor e, because the Panel's failure to 
conduct the correct legal analysis "effectively depriv ed Thailand of its right to assert its Article XX(d) 
defence"
42, Thailand requests the Appellate Body to reve rse the Panel's finding of inconsistency under 
Article III:4 on the grounds that it is also legally flawed. 
30. Thailand contends that the Panel's reasoning in respect of Thailand's defence under 
Article XX(d) was circular.  Before the Panel, Thailand had argued that, even if the additional 
administrative requirements were found to be incons istent with Article III:4, those requirements are 
justified under Article XX(d) because they are necessary to secure compliance with "the obligation to pay VAT" and to "combat smuggling, including tax avoidance by cont raband and counterfeit 
cigarettes".
43  Although an essential step in the analysis of an Article XX(d) defence is to identify the 
laws or regulations with which the measure at issue is asserted to secure compliance, the Panel in this 
case failed to identify the Thai laws or regula tions with which the additional administrative 
requirements secure compliance.  Instead, in para graph 7.758, the Panel simply referred back to 
Section VII.F.6(b)(ii) of its Report, where it had found the additional administrative requirements to 
be inconsistent with Article III:4.  Therefore, the Panel erroneously conc luded that the additional 
administrative requirements cannot be justified under Article XX(d) because the same additional 
administrative requirements had been found to be in consistent with Article III:4 of the GATT 1994.  
This circular reasoning led the Panel to commit a fundame ntal error of legal analys is in its rejection of 
Thailand's defence under Article XX(d).  Thailand adds that, even if the Panel's cross-reference could 
be rewritten as having intended to be  a reference to the Panel's findi ng under Article III:2, the Panel's 
                                                      
42Thailand's appellant's submission, para. 156. 
43Thailand's appellant's submission, para. 151.  WT/DS371/AB/R 
 Page 13 
 
 
 analysis under Article XX(d) would remain circular, because that finding was based on the same 
additional administrative requirements with resp ect to which Thailand asserted its Article XX(d) 
defence. 
3. Article X:3(b) of the GATT 1994 
31. Thailand requests the Appellate Body to reve rse the Panel's finding that 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  of guarantee decisions.  Thailand contends that 
the Panel erred in concluding that requiring a guarantee in order to obtain the release of goods 
pending a final determination of cu stoms value is "administrative ac tion relating to customs matters" 
within the meaning of Article X:3(b).  In the even t that the Appellate Body rejects this allegation of 
error, Thailand asserts that providing for a right of appeal of guarantee decisions upon the final 
assessment of customs duties satisfies Thaila nd's obligations under Article X:3(b).   
32. With respect to the allegation that the Panel erred in finding that guarantee decisions are 
covered by Article X:3(b), Thailand argues th at:  (i) the ordinary meaning of the phrase 
"administrative action relating to customs matters"  in Article X:3(b) does not include provisional 
measures such as customs guarantees;  (ii) the contex t of Article X:3(b) supports the conclusion that 
the acceptance of guarantees in the sense of Article 13 of the Agreement on Customs Valuation  does 
not fall within the scope of "administrative action re lating to customs matters";  and (iii) the "object 
and purpose of the treaty" supports the conclusion th at the acceptance of guarantees is not within the 
scope of Article X:3(b).     
33. Thailand submits that the ordinary meaning of the phrase "administrative action relating to 
customs matters" in Article X:3(b) does not incl ude provisional measures such as customs guarantees 
for three reasons.  First, dictionary definitions  of the words making up the phrase "administrative 
action relating to customs matters" are not dispositive in  this case.  Because it is inconceivable that all 
government acts relating to customs matters fall within the scope of Article X:3(b), Thailand 
maintains that it is necessary to assess the "surrounding circumstances"44 in order properly to assess 
the common intention of the parties. 
34. Second, referring to the Panel's statement th at "the provisional characteristic of an 
administrative action or determination [may] render su ch an action or determination to fall outside the 
                                                      
44Thailand's appellant's submission, para. 238 (quoting Appellate Body Report, EC – Chicken Cuts , 
para. 175). WT/DS371/AB/R 
Page 14  
 
 scope of Article X:3(b)"45, Thailand alleges that the Panel faile d properly to analyze whether requiring 
a guarantee was of such a provisional character.  Tha iland also refers to the Appellate Body report in 
US – Shrimp (Thailand) / US – Customs Bond Directive  in support of the proposition that a security 
required under the Ad Note to paragraphs 2 and 3 of Article VI of the GATT 1994 is an accessory or 
ancillary obligation.  Because the guarantees in th e present case are also "provisional" and "accessory 
or ancillary" to the final duty liability46, Thailand submits that they should be regarded as a 
component of the final determination of customs duties, rather than as distinct decisions. 
35. Third, Thailand argues that acceptance of the Panel's view that guarantees fall within the 
ambit of Article X:3(b) would "result in unduly interfering with"47 the customs administration's 
decision-making process.  Because a guarantee is intrin sically linked to the determination of the final 
customs value, decisions relating to a guarantee  are within both the technical expertise and 
prerogative of the customs administration.  Ther efore, contends Thailand, allowing a guarantee 
decision to be challenged before the final duty asse ssment would curtail the power of the competent 
official to assess such duty. 
36. Thailand further submits that the context of Article X:3(b) supports the conclusion that 
guarantee decisions do not fall within the scope of Article X:3(b).  Specifically, Thailand refers to 
Article X:1 and Article X:3(a) of the GATT 1994, Articles 11, 12, and 13 of the Agreement on 
Customs Valuation , as well as to Articles 7, 13, and 9.5 of the Agreement on Implementation of 
Article VI of the General Agreement on Tariffs and Trade 1994 (the " Anti-Dumping Agreement ") and 
Articles 2(j) and 3(h) of the Agreement on Rules of Origin .  For Thailand, these provisions support the 
conclusion that the guarantee decisions at issu e do not fall within the scope of the phrase 
"administrative action relating to customs ma tters" in Article X:3(b) of the GATT 1994. 
37. With respect to Article X:1 of the GATT 1994, Thailand argues that, while this provision lists 
several different types of measures, namely, "[l]aws,  regulations, judicial decisions and administrative 
rulings of general application", it contains no reference to guara ntees or other securities.  This 
suggests that the drafters did not intend Article X:3( b) to apply to provisional steps such as guarantee 
decisions.  Thailand also refers to Article 13 of the Agreement on Customs Valuation , which relates to 
the possibility for customs to rele ase goods in exchange for a guar antee.  Because Article 13 itself 
does not contain a reference to a right of appeal ag ainst the imposition of a guarantee, there is no such 
right.  If the drafters had intended to provide for a right to appeal, "they could and would have said 
                                                      
45Thailand's appellant's submission, para. 239 (quoting Panel Report, para. 7.1035). 
46Thailand's appellant's submission, para. 242. 
47Thailand's appellant's submission, paras. 245 and 248 (quoting Panel Report, para. 7.1035).  WT/DS371/AB/R 
 Page 15 
 
 
 so".48  Thailand also refers to Article 11 of the Agreement on Customs Valuation , arguing that this 
Article provides for a right to appeal only with r espect to a determination of customs value and that 
the lack of express provision for an appeal agai nst the taking of a guarantee indicates that the 
negotiators did not intend to provide for the possibility of such appeal.   
38. Thailand also refers to Articles 7, 9.5, and 13 of the Anti-Dumping Agreement .  For Thailand, 
the absence of a right to appeal against either provisional measures or "new shipper" guarantees under 
the Anti-Dumping Agreement  suggests that guarantees taken to secure payment of customs duties do 
not fall within the scope of "administrative action rela ting to customs matters" in Article X:3(b) of the 
GATT 1994.  Thailand also refers to Articles 2(j) and 3(h) of the Agreement on Rules of Origin .  
These provisions stipulate that WTO Members must ensure that " any administrative action which they 
take in relation to the determination of origin is  reviewable promptly by judicial, arbitral, or 
administrative tribunals or procedures".49  Thailand argues that, because the word "any" is used in 
these provisions of the Agreement on Rules of Origin  but not in Article X:3(b) of the GATT 1994, 
certain "administrative action[s]", such as the taki ng of a guarantee, are not within the scope of 
Article X:3(b). 
39. In addition, Thailand argues that considera tions of object and purpose also support the 
conclusion that the acceptance of guarantees is not with in the scope of Article X:3(b).  For Thailand, 
the principle of due process, which the Panel cons idered to be expressed in Article X:3, does not 
compel the conclusion that there must be a right of appeal against provisional steps.  Procedural due 
process is not a technical concept with fixed content unrelated to time, place, and circumstance, but 
must be defined in the light of th e particular circumstances of the case.50  The doctrine of "ripeness" 
and deference to the expertise of an administra tive agency must also be taken into account.51  
Thailand argues that "it does not make practical sen se to require courts to intervene in a decision-
making process within the technical expertise of an administrative agency befo re that agency has had 
an opportunity to consider the issue fully and issue a final decision."52 
40. In the event that the Appellate Body upholds the Panel's finding that requiring a guarantee in 
order to obtain the release of goods pending a fi nal determination of cu stoms value constitutes 
"administrative action relating to customs matters",  Thailand argues that providing for a right of 
appeal upon final assessment of duties none theless satisfies Thailand's obligations under 
                                                      
48Thailand's appellant's submission, para. 256. 
49Thailand's appellant's submission, para. 272. (emphasis added by Thailand) 
50Thailand's appellant's submission, para. 277 (quoting United States Supreme Court, Cafeteria 
Workers v. McElroy , 367 U.S. 886, 895 (1961)). 
51Thailand's appellant's submission, para. 278 (referring to United St ates Supreme Court, Abbott 
Laboratories v. Gardner , 387 U.S. 136 (1967)). 
52Thailand's appellant's submission, para. 278. WT/DS371/AB/R 
Page 16  
 
 Article X:3(b).  Allowing the challenge of a gua rantee before the issuance of the final notice of 
customs value would unduly interfere with the cu stoms administration's decision-making process in 
an area within its technical expertise.  Thailand s ubmits that this concern ca n be reconciled with the 
right of appeal under Article X:3(b) if it were cons idered to be consistent with that provision to 
require importers to await the final determination of customs value before exercising their right of 
appeal in respect of the guarantee.  Thailand ass erts that this point wa s acknowledged by the Panel 
when it stated that it does "not … consider that the existence of interposing steps prior to an 
independent review in itself constitutes a systemic  flaw that prevents Thailand from maintaining 
procedures for prompt review of administrative actions under Article X:3(b)".53  Thailand however 
alleges that the Panel did not explain "why other  interposing steps might not result in a violation of 
Article X:3(b) but an interposing step in the fo rm of a requirement to await the final assessment 
before appealing a guarantee would always  do so".54 
B. Arguments of the Philippines – Appellee  
1. Article III:2 of the GATT 1994 
41. The Philippines requests the Appellate Body to uphold the Panel's finding that Thailand acted 
inconsistently with Article III:2, first sentence, of the GATT 1994.  The Philippines contends that the 
Panel properly based its finding on di fferences in the levels of ta xation that apply to resales of 
domestic and imported cigare ttes resulting from Thailand's de jure  exemption from VAT liability for 
resellers of domestic cigarettes.  The Philippines al so maintains that discriminatory taxation cannot be 
cured by a right to claim an offsetting tax credit, an d that, even if it could, the Panel properly found 
that resellers of imported cigarettes may be de nied a tax credit in defined circumstances under 
Thai law. 
42. The Philippines argues that de jure  discriminatory taxation be tween imported and domestic 
cigarettes constitutes a sufficient basis for a finding of inconsistency under Article III:2.  Article III:2 
requires that goods shall not be subject to internal taxes in excess of those applied to domestic goods 
and, as Thailand acknowledges, the first sentence of  Article III:2 is violated if imported goods are 
subject to "even the slightest difference"55 in taxation.  Moreover, the Philippines argues, de jure  
discrimination arises if it can be demonstrated on the basis of the words of the relevant legislation, 
regulation, or other legal instru ment constituting the measure.   
                                                      
53Thailand's appellant's submission, para. 297 (quoting Panel Report, para. 7.1014).  
54Thailand's appellant's submission, para. 297. (original emphasis) 
55Philippines' appellee's submission, para. 58 (referring to Thailand's appellant's submission, 
footnote 30 to para. 62).   WT/DS371/AB/R 
 Page 17 
 
 
 43. The Philippines considers that the Panel correctly  found that resales of imported cigarettes are 
subject to internal taxes in excess of those applicab le to resales of domestic cigarettes.  Resellers of 
imported cigarettes are obliged to account fully to  Thai fiscal authorities for the VAT liability on 
taxable resales.  The process of securing a tax credit does not mean that resales of imported cigarettes are not subject to tax, but is rather a mechanism for accounting for that tax liability.  The Panel also 
correctly found that, in contrast, resellers of dom estic cigarettes are exempt from VAT on resales of 
cigarettes, and therefore are not subject to any VAT  liability.  Because resales of imported cigarettes 
are subject to a tax rate of seven per cent, whereas resales of domestic cigarettes are subject to zero tax, a comparison of the relative tax burdens sh ows excess taxation based on the origin of the 
cigarettes.  For these reasons, the Philippines maintain s that Thailand errs in arguing that the Panel's 
finding under Article III:2 was based on different ad ministrative requirements, and not on different 
tax burdens. 
44. With respect to Thailand's argument that VAT liability is offset by an input tax credit, the 
Philippines maintains that, having established that im ported cigarettes are subject to VAT in excess of 
that applicable to like domestic cigarettes, the Pa nel was not required to examine the legal conditions 
under which Thailand grants offsetting tax credits.  In Canada – Patent Term , the Appellate Body 
rejected the argument that Canada had met its oblig ation to provide patent protection for 20 years, 
under Article 33 of the Agreement on Trade-Related Aspects of Intellectual Property Rights  (the 
"TRIPS Agreement ").  In that case, Canada granted a 17-year  patent term, which patent holders could 
extend to 20 years by taking specific procedural action.
56  Similarly, Article III:2 of the GATT 1994 
prevents a Member from making its compliance wi th the national treatment obligations depend on 
private party action.  De jure  discrimination cannot be cured by the fact that a private party may take 
action in an attempt to counteract that discrimination.   In the Philippines' view, if a private party fails 
to take all possible action available to it under a Member's law, the adverse consequences of the 
private party's lack of action are the responsibility of the Member. 
45. The Philippines further submits that the Panel correctly found that resellers of imported 
cigarettes are not automatically entitled to a tax cred it to offset the discriminatory obligation to pay 
VAT.  Thailand admitted before the Panel, and accepts on appeal, that a tax credit is available only if 
a reseller of imported cigarettes complies with the relevant administrative requirements.  In particular, 
Thailand accepts that a tax credit is not granted if th e reseller of imported cigarettes:  (i) fails to file 
form Por.Por.30;  (ii) fails to claim a tax credit in form Por.Por.30;  (iii) fails to produce an invoice as 
proof of purchase;  and (iv) fails to produce a comp lete and accurate invoice.  Section 82/5 of the Thai 
                                                      
56Philippines' appellee's submission, para. 73 (referring to Appellate Body Report, Canada – Patent 
Term , paras. 91 and 92). WT/DS371/AB/R 
Page 18  
 
 Revenue Code57 sets forth other circumstances in which a reseller of imported cigarettes can be 
denied an input tax credit.  Accordingly, the Ph ilippines considers that the Panel properly rejected 
Thailand's argument that a reseller of imported cigare ttes can never incur a net liability on the resale 
of cigarettes, and correctly found that there are ci rcumstances, defined under Thai law, in which a 
reseller of imported cigarettes would not receive a tax credit.   
46. The Philippines also maintains that the Panel properly dismissed Thailand's argument that an 
inconsistency does not arise under Article III:2 if a reseller of imported cigarettes does not obtain a 
tax credit due to the reseller's own failure to exercise its right to claim a tax credit.  It is the Thai 
Government, and not a private reseller, that establis hes the legal conditions that determine whether a 
reseller of imported cigarettes is entitled to offset the discriminatory obligation to pay VAT.  In contrast, resellers of domestic cigarettes are never required to comply with the tax credit requirements 
in connection with resales of dom estic cigarettes, because they are automatically exempt from VAT 
on these sales.  The Philippines argues that, under Article III of the GATT 1994, it is Thailand, and not a private reseller, that is obliged to ensure th at imported cigarettes benefit, in all circumstances, 
from equality of competitive conditions.  
47. The Philippines takes note of Thailand's argument that it should not be obliged to grant a tax 
credit to resellers of imported cigarettes if they cannot demonstrate that the claimed credit results from actual and legitimate purchases of cigarettes.  This, the Philippines asserts, "is the same argument in 
another guise".
58  It is Thailand, and not a private reseller,  that is responsible under Article III:2 for 
establishing a regulatory framework in which importe d goods are not subject to taxation in excess of 
that applied to like domestic cigarettes.  This  does not imply that Members cannot, as a general 
matter, insist that taxpayers comply with legal cond itions to obtain a tax credit.  The reason Thailand's 
VAT system discriminates, the Philippines submits, is because resales of domestic cigarettes are 
de jure  exempt from VAT liability, and are therefore exempt from all requirements relating to tax 
credits.   
2. Article III:4 of the GATT 1994 
48. The Philippines requests the Appellate Body to uphold the Panel's finding that Thailand acted 
inconsistently with Article III:4 of the GATT 1994.   The Philippines further requests the Appellate 
Body to reject Thailand's arguments that the Pane l acted inconsistently with Article 11 of the DSU 
and paragraph 15 of its Working Procedures in ac cepting the expert opinion contained in Exhibit 
                                                      
57Government of the Kingdom of Thailand, The Council of Regency, The Act Promulgating the 
Revenue Code, B.E. 2481 (Panel Exhibit PHL-94). 
58Philippines' appellee's submission, para. 86.   WT/DS371/AB/R 
 Page 19 
 
 
 PHL-289, as well as Thailand's appeal of the Panel's finding on Thailand's defence under 
Article XX(d) of the GATT 1994.   
(a) Article III:4:  "treatment no less favourable" 
49. The Philippines contends that the Panel co rrectly found that Thailand subjects imported 
cigarettes to less favourable treatment than dom estic cigarettes by imposing additional VAT-related 
administrative requirements only on resellers of im ported cigarettes.  "Less favourable treatment" 
within the meaning of Article III:4 is accorded wher e treatment does not ensure effective equality of 
opportunities, and does not protect expectations on the competitive relationship between imported and 
domestic products.  Article III:4 requires that gove rnment regulation on imported and like domestic 
products be "perfectly neutral".59  The Philippines adds that, when government regulation subjects 
imported goods to administrative burdens that ar e not imposed on like domestic goods, this is not 
neutral, and upsets the equality of competitive conditions. 
50. The Philippines considers that the Panel correc tly relied on WTO jurisprudence in support of 
its finding.  For instance, the Appellate Body stated in US – Section 211 Appropriations Act  that 
"even the possibility  that [foreign nationals] face two hurdles is inherently less favourable  than the 
undisputed fact that United States [nationals] face only one".60  Moreover, the panel in Canada – 
Wheat Exports and Grain Imports  found that "less favourable treatment in this case results from the 
imposition of an additional requirement on imported grain t hat does not apply to domestic grain ".61  
Accordingly, to the extent that a Member subject s imported products to administrative requirements 
to which domestic products are not subject, this gi ves rise to unequal treatment, which is inherently 
less favourable for imported products.  This is because the additional requirements prevent traders 
from making a "free choice between like domestic and imported [products] on the basis of purely 
commercial considerations".62  This situation is to be distinguish ed from one in which different sets of 
requirements are imposed on imported and domestic pr oducts.  In such circumstances, the Philippines 
maintains, a panel may be required to conduct a cl oser examination of the measures to determine 
whether the different administrative requirement s disturb the effective equality of competitive 
conditions to the detriment of imported goods and thus constitute less favourable treatment. 
                                                      
59Philippines' appellee's submission, para. 123.  
60Philippines' appellee's submission, para. 125 (quoting Appellate Body Report, US – Section 211 
Appropriations Act , para. 265 (original emphasis)).  
61Philippines' appellee's submission, para. 126 (quoting Panel Report, Canada – Wheat Exports and 
Grain Imports , para. 6.190). (emphasis added by the Philippines) 
62Philippines' appellee's submission, para. 130 (quoting Appellate Body Report, US – FSC 
(Article 21.5 – EC) , para. 219). WT/DS371/AB/R 
Page 20  
 
 51. The Philippines recalls that the Panel found that Thailand subjects resales of imported 
cigarettes to a number of VAT administrative require ments and that such requirements do not apply in 
connection with resales of domestic cigarettes.  It follows from this alone that the treatment accorded 
to imported cigarettes is less favourable, and there is no need to inquire into the "impact of the 
discriminatory treatment" or the "trade effects" of such treatment.63  Thus, Thailand's appeal, which 
focuses on, and finds fault with, the Panel's asse ssment of "the degree of likelihood that any 
differences in treatment will have any negativ e impact on the competitive position of imports"64, is 
misplaced.  In addition, although it was not requi red to do so, the Panel sought further confirmation 
for its finding by examining the ways in which Thailand's discriminatory administrative requirements 
upset the equality of competitive conditions in the Th ai market.  The Panel correctly concluded, on 
the basis of evidence of price elasticity and switchi ng patterns, that the close competitive relationship 
between imported and domestic cigarettes means that  any unequal fiscal treatment is sufficient to 
disturb the equality of competitive conditions.  Moreove r, the Panel correctly linked the effects of the 
additional administrative requirements with the operati ng costs of businesses, and stated that the costs 
of compliance with such administrative require ments could affect business decisions and limit 
opportunities for imported cigarettes.  The Philippi nes considers it noteworthy that more than 
20 per cent of cigarette retailers have opted not to sell imported cigarettes.  Although there is no 
evidence as to why they do not resell imported ciga rettes, these retailers avoid the administrative 
requirements by reselling only domestic cigarettes.  Regarding Thailand's assertion that, by complying 
with the additional requirements, resellers of impor ted cigarettes may obtain certain gains in the form 
of additional tax credits, the Philippines argues that the fact that the obligation to pay VAT may be 
offset in some instances "does not cure the de jure discrimination".65  The Philippines emphasizes that 
WTO jurisprudence clearly establishes that more fa vourable treatment of imported products in some 
instances does not justify less favourab le treatment in other instances. 
(b) Article 11 of the DSU:  the Panel's Treatment of Exhibit PHL-289 
52. With respect to the Panel's acceptance of and reliance on Exhibit PHL-289, the Philippines 
argues that Thailand's due process rights were prope rly respected by the Panel because Thailand had 
opportunities to comment on Exhibit PHL-289 and took advantage of one of them.  The exercise of 
due process rights involves responsibilities for the part y invoking such rights, and parties should bring 
                                                      
63Philippines' appellee's submission, para. 138. 
64Philippines' appellee's submission, para. 136 (quoting Thailand's appellant's submission, footnote 115 
to para. 124). 
65Philippines's appellee's submission, para. 150.  WT/DS371/AB/R 
 Page 21 
 
 
 alleged procedural deficiencies to a panel's at tention at the "earliest possible opportunity".66  Although 
the Philippines submitted the 2000 DG Revenue ruling67 at the second substantive meeting, Thailand 
chose to submit the 1995 DG Revenue ruling68 only in its responses to Panel questions after the 
second substantive meeting.  Conversely, the Ph ilippines submitted Exhibit PHL-289 in its comments 
on those responses, which was the first opportunity after Thailand filed the 1995 DG Revenue ruling.  
In any event, the Philippines ma intains, Thailand was responsible for seeking an opportunity to 
comment on Exhibit PHL-289, but instead opted to object to this evidence only in its comments on 
the Panel's Interim Report, where Thailand made la rgely the same arguments it now raises on appeal. 
53. The Philippines also contends that Exhibit PH L-289 was properly submitted before the Panel, 
in accordance with paragraph 15 of its Working Pr ocedures, because it is rebuttal evidence provided 
in comments on Thailand's answers to Panel questio ns.  The Philippines asserts that Exhibit PHL-289 
was submitted to support the Philippines' comments on the 1995 DG Revenue ruling that had been 
attached to Thailand's responses to Panel questions.  The first sentence of paragraph 15 of the Panel's 
Working Procedures expressly allows the submissi on of evidence with comments on the other party's 
responses to questions.  The expert testimony subm itted in Exhibit PHL-289 stated that its purpose 
was to "provide an opinion on [the 1995 DG Revenue ruling]".69  Had Thailand not submitted the 
1995 DG Revenue ruling, the Philippines would have had no cause to submit this expert testimony.  
Thus, Exhibit PHL-289 falls within the category of evidence set out in the first sentence of paragraph 15 of the Panel's Working Procedures, as opposed to that set out in the second sentence, for 
which a showing of good cause and an opportunity to respond is required.  At any rate, the Philippines 
asserts, if Thailand considered that the evidence was not submitted consistently with paragraph 15, the 
proper course of action for Thaila nd would have been to object immediately to Exhibit PHL-289, 
rather than to wait until its comments on the Interim Report. 
54. The Philippines argues that the Panel did not gi ve decisive weight to Exhibit PHL-289 and 
did not act inconsistently with Article 11 of the DS U.  Rather, the Panel reached its finding that sales 
of domestic cigarettes need not be reported in form  Por.Por.30 based on the totality of the evidence.  
Article 11 of the DSU affords panels a "certain ma rgin of discretion" in assessing the credibility and 
                                                      
66Philippines' appellee's submission, para. 186 (quoting Appellate Body Report, Canada – Wheat 
Exports and Grain Imports , para. 205, in turn quoting Appellate Body Report, US – Carbon Steel , para. 123). 
67Ruling by the Director-General of the Thai Revenue Department, Gor.Kor. 0811/Por.633, 27 January 
2000 (Panel Exhibit PHL-253). 
68Ruling by the Director-General of the Thai Revenue Department, Gor.Kor. 0802/Por.22836, 
10 October 1995 (Panel Exhibit THA-96). 
69Philippines' appellee's submission, para. 200 (quoting Panel Report, para. 6.127). WT/DS371/AB/R 
Page 22  
 
 weight to be ascribed to a given piece of evidence.70  Even in its Interim Report, the Panel did not give 
decisive weight to Exhibit PHL-289, but simply explained that the expert testimony in Exhibit 
PHL-289 confirmed the change in the requirement to report sales of domestic cigarettes in form 
Por.Por.30.  The Panel's use of the word "only" to describe the evidence re lating to the change in 
reporting practice was incorrect, and, following a su ggestion by the Philippines, the Panel corrected 
this mistake in the Panel Report.  In any case, the Philippines consid ers that, under Article 17 of the 
DSU, the Interim Report is not subject to appellate review, and that it is impr oper for Thailand to base 
its appeal on the Panel's findings in the Interim Report. 
(c) Thailand's Defence Under Article XX(d) of the GATT 1994 
55. The Philippines requests the Appellate Body to re ject Thailand's appeal of the Panel's finding 
on Thailand's defence under Article XX(d) of the GATT 1994.  The Panel properly concluded that 
Article XX(d) does not justify one WTO-inconsis tent measure (discriminatory administrative 
requirements on imported cigarettes) on the grounds that it secures compliance with another 
WTO-inconsistent measure (discriminatory taxati on on imported cigarettes).  The Philippines also 
points out that Thailand's arguments with respec t to its Article XX(d) defence were not well 
developed, consisting of a total of six paragra phs in all of its submissions to the Panel. 
56. In the view of the Philippines, the cross-refere nce made by the Panel, in paragraph 7.758 of 
its Report, is a clerical error rather  than, as Thailand claims, a "fundamental"71 error.  There is no 
basis in the Panel's reasoning to suggest that its  substantive examinati on of Thailand's defence 
consisted of a circular analysis of whether th e administrative requirements are necessary to secure 
compliance with those same administrative require ments.  To the contrary, the Panel properly 
articulated the legal standard under Article XX(d)  as involving two different measures, one to be 
justified and the other that must be WTO-consistent.  The Panel also  identified Thailand's argument as 
being that the "administrative requirements" are necessary to secure compliance "with the Thai VAT 
laws".  The Panel therefore correctly assessed whet her the inconsistent measures were necessary to 
secure compliance with different measures.  Thus, the Philippines believes that the Panel's reasoning 
reveals that the cross-reference in paragraph 7.758  was simply a mistake:  the Panel referred to 
Section VII.F.6(b)(ii) of its Report, which deal s with discriminatory administrative requirements, 
instead of to Section VII.E.5(b)(ii), which deals with discriminatory taxation.  Accordingly, the 
Philippines requests the Appellate Body to modify this clerical error, replacing the reference to 
                                                      
70Philippines' appellee's submission, para. 212 (quoting Appellate Body Report, US – Continued 
Zeroing , para. 331, in turn referring to Appellate Body Report, EC – Hormones , para. 132, and Appellate Body 
Report, EC – Sardines , para. 299). 
71Philippines' appellee's submission, para. 238 (referring to Thailand's appellant's submission, 
para. 153).  WT/DS371/AB/R 
 Page 23 
 
 
 "Section VII.F.6(b)(ii)" with a reference to "Sectio n VII.E.5(b)(ii)".  The Philippines further rejects 
Thailand's contention that the Panel's analysis under Article XX(d) would remain circular even if the 
cross-reference were rewritten in this way, b ecause the Panel's finding under Article III:2 of the 
GATT 1994 was based on the discriminatory obligati on to pay VAT, rather than, as Thailand asserts, 
on the discriminatory administrative requirements with respect to which Thailand advanced its 
Article XX(d) defence. 
57. The Philippines also disagrees with Thailand's contention that, should the Appellate Body 
reverse the Panel's finding under Article XX(d), it should also reverse the Panel's finding under 
Article III:4.  The interpretation and/or applicati on of a substantive obligation is distinct from an 
analysis of an exception set out in a separate legal provision, and reversal of a finding under the latter 
does not entail reversal of a finding under the form er.  The Philippines also observes that Thailand has 
not requested the Appellate Body to complete the analysis of its Article XX(d) defence. 
3. Article X:3(b) of the GATT 1994 
58. The Philippines requests the Appellate Body to uphold the Panel's finding that 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 revi ew of guarantee decisions.  The Philippines argues 
that the Panel correctly found that requiring a guarantee in order to obtain the release of goods 
pending a final determination of cu stoms value is "administrative ac tion relating to customs matters" 
within the meaning of Article X:3(b).  The Philippi nes further submits that the Panel correctly found 
that providing for independent review of guarantees only following the final de termination of customs 
value does not satisfy Article X:3(b) of the GATT 1994. 
59. The Philippines contends that the legal char acter and purpose of a customs guarantee, the 
context of Article X:3(b), as well as the object and purpose of Article X:3(b), confirm that guarantee 
decisions constitute "administrative action relatin g to customs matters" within the meaning of 
Article X:3(b).  Guarantees involve a process that is related to, but separate from, the customs valuation process.  A guarantee decision establishes the legal conditions under which an importer may 
withdraw its goods from customs, pending the final asse ssment of the customs value.  Thus, the Panel 
correctly found that a guarantee is a decision that  is "intended to serve the distinct purpose of securing  
the payment of the ultimate actual amount of customs duty pending final determination by customs".72  
For the Philippines, a guarantee is not an integral pa rt of the determination of customs value and does 
not, as Thailand asserts, constitute a provisional decisi on regarding customs value.  Instead, it is a 
                                                      
72Philippines' appellee's submission, para. 287 (quoting Panel Report, para. 7.1040 (original italics;  
underlining added by the Philippines)). WT/DS371/AB/R 
Page 24  
 
 final administrative action establishing the defin ite legal conditions under which the importer may 
withdraw its goods from customs, and has immediate consequences for importers and market access.  
As the panel in Colombia – Ports of Entry recognized, a guarantee is legally distinct from the 
payment obligation that it secures.73  While acknowledging the Appella te Body's statement in  
US – Shrimp (Thailand) / US – Customs Bond Directive  that a guarantee obligation is "ancillary" and 
"intrinsically linked to" the obligation it secures74, the Philippines argues that this does not mean that 
the two obligations become an "indistinguishable whole".75 
60. With respect to the context of Article X:3( b), the Philippines notes that Article 11 of the 
Agreement on Customs Valuation  limits independent review to fi nal "determination[s] of customs 
value", and that Article 13 of the Anti-Dumping Agreement  limits independent review to "final" 
anti-dumping determinations.  The Panel was correct to  conclude that the absen ce of the word "final" 
in Article X:3(b) suggests that independent review under Article X:3(b) "is not necessarily confined to 
final administrative actions".76  The Philippines also endorses the Pa nel's reasoning that the use of the 
term "customs matters" in Article  X:3(b), as opposed to "customs value" in Article 11.1 of the 
Agreement on Customs Valuation , suggests that the scope of Article X:3(b) is broader than that of 
Article 11.1. 
61. The Philippines characterizes as misplaced Thailand's contextual arguments based on 
Article X:1 of the GATT 1994 and Article 12 of the Agreement on Customs Valuation .  In response to 
Thailand's contention that the absence of a referenc e to guarantee decisions in Article X:1 suggests 
that Article X:3(b) of the GATT 1994 does not apply to guarantee decisions, the Philippines notes that 
Thailand has not appealed the Panel's finding th at rules relating to guarantees are covered by 
Article X:1 as rules pertaining to customs valua tion.  Moreover, the Philippines argues that the 
absence of a reference to Article X of the GATT 1994 in Article 12 of the Agreement on Customs 
Valuation  cannot be read to restrict the obligation to provide for independent review pursuant to 
Article X:3(b). 
62. The Philippines also disagrees with Thailand's c ontextual arguments based on Article 7.2 and 
Article 9.5 of the Anti-Dumping Agreement .  For the Philippines, there is a significant difference 
between provisional anti-dumping measures and gua rantees provided pending completion of "new 
                                                      
73Philippines' appellee's submission, para. 290 (quoting Panel Report, Colombia – Ports of Entry , 
para. 7.88).  
74Philippines' appellee's submission, para. 294 (referring to Thailand's appellant's submission, 
paras. 240-243, in turn quoting Appellate Body Report, US – Shrimp (Thailand) / US – Customs Bond Directive , 
para. 231). 
75Philippines' appellee's submission, para. 295. 
76Philippines' appellee's submission, para. 301 (quoting Panel Report, para. 7.1034). (emphasis added 
by the Philippines)  WT/DS371/AB/R 
 Page 25 
 
 
 shipper" reviews under the Anti-Dumping Agreement , on the one hand, and a customs guarantee, on 
the other hand.  Both a provisional anti-dumping measure and a "new shipper" guarantee can be 
imposed for only a short period.  Once the aut hority completes the relevant proceeding, the 
provisional measure or security is automatically removed and replaced by a definitive anti-dumping 
measure.  In contrast, the Philippines maintain s, a customs guarantee may be imposed for an 
indefinite period of time, and thus has the potential of imposing long-term costs on the importer.     
63. The Philippines submits that the object and purpos e of Article X:3(b) confirms the Panel's 
conclusion that a customs guarantee is administrativ e action relating to customs matters falling within 
the scope of Article X:3(b).  The Panel was corr ect in stating that the underlying objective of 
Article X:3(b) is the preservation of due process right s for affected parties, and in finding that a 
guarantee decision can cause an immediate commercially adverse impact on importers if the level of a 
guarantee is excessive.  The Philippines disagrees with Thailand that, because customs guarantee 
decisions are only provisional measures, they are not "ripe" for independent review, and that courts 
should therefore not intervene in a decision-making pr ocess that falls within the technical expertise of 
an administrative agency.  Thailand itself has illust rated, in another dispute, the importance of 
permitting a challenge to a guarantee decision for due process reasons, when it successfully 
challenged in WTO dispute settlement a guarantee imposed by the United States to cover potential 
liability for definitive anti-dumping duties.77  There was no suggestion in that case that such review 
prejudiced or unduly interfered with the ability of the United States Department of Commerce to 
assess final anti-dumping duties.  The Philippines adds that, irrespective of the level of a guarantee or 
the basis for its determination, customs author ities are required to determine the customs value 
consistently with the relevant provisions of the Agreement on Customs Valuation , and that customs 
law is not so complex and difficult that governme ntal actions must be immune from scrutiny by 
independent tribunals.  By interpreting Article X: 3(b) to encompass custom s guarantees, the Panel 
ensured that importers are entitled to seek independe nt review to contest the amount of a guarantee, 
thereby preserving the competitive opportunities that Article X of the GATT 1994 protects. 
64. Finally, the Philippines takes issue with Tha iland's conditional appeal requesting that, if a 
guarantee decision is considered to be an "admin istrative action relating to customs matters", the 
Appellate Body find that the provision of a ri ght of appeal upon final assessment of customs duties 
nonetheless satisfies Thailand's obligations under Artic le X:3(b).  Under Thai law, no independent 
tribunal enjoys jurisdiction to hear a challenge to a guarantee decision separat ely from the appeal of a 
final assessment of customs value.  The Panel was correct to find that permitting review of guarantee 
                                                      
77Philippines' appellee's submission, para. 319 (referring to Appellate Body Report, US – Shrimp 
(Thailand) / US – Customs Bond Directive , paras. 258-260). WT/DS371/AB/R 
Page 26  
 
 decisions only after the final determination of cust oms value has been issued  does not comply with 
Article X:3(b).  Such a system is not a system for the prompt review and correction of guarantee 
decisions, but only a system of review of customs valuation determinations.  If an importer decides 
not to import goods because a guarantee imposes too gr eat a financial burden, there would never be a 
final determination of customs value, and it woul d thus be impossible for an importer to obtain 
independent review of a guarantee decision.  Even in situations in which importation occurs and a 
final customs valuation determina tion is made, the requirement to await that determination before 
pursuing independent review of a guarantee results in unnecessary delays.   
65. The Philippines disagrees with Thailand's argumen t that, since the Panel found that it is, in 
principle, acceptable under Article X:3(b) to requir e that importers pursue internal review before 
seeking independent review of a customs valuation determination, it must also be permissible to 
compel importers to await a final customs value dete rmination before seeking independent review of a 
guarantee decision.  A requirement first to seek inte rnal review of a customs valuation determination 
does not create a lacuna in the review system, thereby making independent review of a final determination impossible in certain situations.  In contrast, requiring importers to await a final 
customs value determination before seeking independ ent review of a guarantee decision does give rise 
to such a lacuna.  In addition, the Philippines c ontends that, while internal review of a customs 
valuation determination may contri bute to the resolution of the valuation issue, waiting for the 
issuance of the final customs value determinati on does not contribute to the prompt review and 
correction of a guarantee decision.   
C. Arguments of the Third Participants 
1. Australia 
66. Australia submits that, in examining Thaila nd's appeal under Article III:2 of the GATT 1994, 
the Appellate Body must first examine the threshold issue of whether the Panel correctly identified the 
measure at issue.  Australia considers that the Panel was unclear as to whether this was the VAT 
scheme per se , or whether the measure comprises the mechan isms used to collect the VAT.  Australia 
considers it difficult to separate each component  of Thailand's VAT regime, and observes that 
whether a sale of a product is exempt from VAT, or whether a reseller may apply for input tax credits 
to relieve itself of the tax burden, is relevant a nd indistinguishable from the tax regime itself.   
67. Referring to the reasoning of the panel in Argentina – Hides and Leather , and the GATT 
panel in US – Malt Beverages , Australia submits that the administrative nature of Thailand's tax 
collection mechanism does not mean a priori  that it falls outside the scope of the first sentence of  WT/DS371/AB/R 
 Page 27 
 
 
 Article III:2 of the GATT 1994.  In the circumstanc es of this case, the administrative requirements are 
a collection mechanism that affects the calc ulation of the cumulative VAT burden.  The 
non-fulfilment of the administrative requirements for resellers of imported cigarettes directly results 
in a higher tax burden, whereas resellers of dom estic cigarettes are fully exempt from paying VAT.  
Accordingly, the collection mechanism itself cons titutes a "tax" for the purposes of Article III:2 as it 
potentially results in a higher cumulative tax burde n on the reseller of imported cigarettes.  As for 
whether the tax burden on imported cigarettes is "in excess" of that on domestic cigarettes, Australia 
submits that the additional administrative requirement s applicable to resellers of imported cigarettes, 
and the inherent risk of a higher tax burden if these requirements are not met, should be taken into 
account.  Noting Thailand's acknowledgment that "a risk of excess taxation may give rise to a violation of Article III:2"
78, Australia points out that, when a clai m for input tax credit by a reseller is 
rejected, the actual tax burden is higher, whereas th is risk is not faced by resellers of domestic 
cigarettes, which are automatically exempt from VAT.   
68. With respect to Thailand's arguments that th e Panel erred in finding that the additional 
administrative requirements accord "less favourable treatment" within the meaning of Article III:4 of 
the GATT 1994, Australia disagrees with Thailand's contention that "the right to treat imported 
products differently may include the right to impo se additional or more complicated requirements so 
long as they do not amount to 'less favourable' treatment".79  Rather, panels and the Appellate Body 
have found merely that different treatment is not  sufficient for a finding of inconsistency with 
Article III:4.  While emphasizing that any determinat ion of less favourable treatment must be made on 
a case-by-case basis, Australia requests the Appellate  Body to take account of the broader systemic 
implications of the threshold for a finding of inco nsistency under Article II I:4.  For Australia, the 
Panel's finding of less favourable treatment base d on its view that the measures "could potentially 
affect", or "may potentially modify", the conditions  of competition seems to imply a lower threshold 
than that used by the panels in China – Publications and Audiovisual Products  ("may reasonably be 
expected")80 and India – Autos  ("is more than likely").81   
69. Regarding Thailand's appeal under Article XX( d) of the GATT 1994, Australia expresses 
concern that the Panel failed to identify clearly bot h the GATT-inconsistent measure and the "laws or 
regulations" with which the GATT-inconsistent measu re secures compliance.  This apparent failure 
                                                      
78Australia's third participant's submission, para. 19 (quoting Thailand's appellant's submission, 
para. 81). 
79Australia's third participant's submission, para. 24 (quoting Thailand's appellant's submission, 
para. 129). (underlining added by Australia) 
80Australia's third participant's submission, para. 26 (quoting Panel Report, China – Publications and 
Audiovisual Products , para. 7.1471). 
81Australia's third participant's submission, para. 27 (quoting Panel Report, India – Autos , para. 7.201). WT/DS371/AB/R 
Page 28  
 
 "compromised [the Panel's] ability to consider the [Article] XX(d) defence".82  The Panel should have 
considered whether the administrative mechanism for the implementation of VAT was designed to 
secure compliance with Thailand's VAT regime.  In  Australia's view, the design of that measure 
appears, at least in part, to secure such compliance.   Moreover, in determining whether the measure is 
"necessary", consideration should have been given to  the range of possible alternative measures that 
could secure compliance with Thailand's VAT regime.  Australia notes, in this regard, the Philippines' 
argument before the Panel that Article XX(d) ca nnot justify "both the VAT-related administrative 
requirements imposed on resellers of imported cigare ttes and the exemption accorded to resellers of 
domestic cigarettes".83 
70. Australia supports Thailand's view that the acc eptance of a guarantee is a provisional decision 
that does not fall within the scope of Article X:3( b) of the GATT 1994.  Guarantees are interlocutory 
decisions made pending a final customs valuation de termination, and are difficult to distinguish from 
that final determination.  In the absence of an express  reference to a right to appeal at an interlocutory 
stage, no such right should be read into Article X:3(b).  Noting the Panel's statement that it could 
"think of a situation where the provisional characteri stics of an administrative action or determination 
would render such an action or determination to fa ll outside the scope of Article X:3(b)", Australia 
argues that the Panel then failed to consider wh ether the acceptance of guarantees for the payment of 
customs duties may be such a situation.84  Requiring external review of a provisional decision to 
accept a guarantee could effectively pre-empt and interfere with the final customs valuation 
determination to be taken by the re levant domestic agency.  Australia submits that, so long as the right 
to appeal the final determination is capable of ove rturning any stage of the process, then there should 
be no right of appeal of individua l, interlocutory stages in that process unless such a right is expressly 
provided for, which is not the case under Article X:3(b).   
2. European Union 
71. With respect to Thailand's appeal under Artic le III:2 of the GATT 1994, the European Union 
understands the measure at issue to consist of the VAT exemption on the resale of domestic cigarettes, 
as compared to the additional administrative require ments that are imposed on imported cigarettes in 
order to obtain the same level of tax burden.  The European Union considers that there is a de jure  
violation of Article III:2 of the GATT 1994 wh en, for domestic products only, an automatic 
exemption from VAT is embedded in the design and structure of the measure, but the same automatic 
result is not granted with respect to imported produc ts.  The European Union disagrees with Thailand 
                                                      
82Australia's third participant's submission, para. 32. 
83Australia's third participant's submission, para. 35. (original underlining) 
84Australia's third participant's submission, para. 39 (quoting Panel Report, para. 7.1035).  WT/DS371/AB/R 
 Page 29 
 
 
 that, in order to be found inconsistent with Article  III:2, first sentence, a measure needs to lead to a 
higher tax rate for imported products.  Rather, as the panel stated in Argentina – Hides and Leather , 
the "tax burden" need not be th e tax itself, but can also be derived from "aspects of broader tax 
systems" that are covered by the disciplines of Article III:2.85  The European Union adds that the use 
of the term "indirectly" in Article III:2 supports th e view that the scope of this provision includes 
situations, like the present case, where the measure at  issue contains elements that adversely affect 
only imported products, by increasing their overall tax burden, as compared to domestic products. 
72. The European Union also disagrees with Thaila nd's contention that the analysis of a measure 
under the first sentence of Article III:2 must consis t of a mathematical exercise.  Such a narrow 
interpretation would give WTO Members the possibility to circumvent the norm of Article III:2.  Moreover, it is not appropriate to draw a distinc tion between "substantive" tax measures, such as the 
tax rate, and "measures of tax administration", such as the measures at issue in the present case.  The 
European Union insists that a tax burden can  also be of a non-mathematical nature. 
73. The European Union observes that Thailand's appeal under Article III:4 of the GATT 1994 
appears to raise the issue of whet her, in an analysis under that provision, panels must engage in a 
detailed analysis in order to establish that the measure at issue will affect the competitive position of 
imported cigarettes in a negative manner, or whethe r an analysis based on the possibility that the 
measure at issue could  affect the competitive position of imported cigarettes can suffice to find an 
inconsistency.  The Appellate Body has stated that, in establishing inconsistency with Article III:4, the 
actual effects of a measure in the marketplace need not be shown.  Instead, it is sufficient to show that 
"such a measure is likely to lead to that result".
86  Previous measures have also been found to be 
inconsistent with Article III:4 wh en they create a mere "incentive"87 to favour domestic products, or 
"may be reasonably expected"88 to modify the conditions of competition.  Accordingly, it seems to be 
sufficient for a panel to determine on the basis of th e available elements of fact that the measure will 
probably  negatively affect the conditions of competition.   Without expressing a view on the Panel's 
finding under Article III:4, the European Union enc ourages the Appellate Body to review that finding 
in accordance with this case law, and to consider the extent to which the facts before the Panel (that is, 
the accumulation of all the requirements imposed on the resellers of imported cigarettes) allow a 
                                                      
85European Union's third participant's submission, para. 18 (quoting Panel Report, Argentina – Hides 
and Leather , footnote 449 to para. 11.152). 
86European Union's third participant's submission, para. 27 (referring to Appellate Body Report,  
US – FSC (Article 21.5 – EC) , para. 215). 
87European Union's third participant's submission, para. 28 (referring to Appellate Body Report,  
US – FSC (Article 21.5 – EC) , para. 212;  and Panel Report, India – Autos , paras. 7.195-7.198 and 7.201).  
88European Union's third participant's submission, para. 29 (referring to Panel Report, China – 
Publications and Audiovisual Products , para. 7.1471). WT/DS371/AB/R 
Page 30  
 
 reasonable expectation, or, in other words, lend cr edence to the conclusion, that the imported products 
will be treated less favourably. 
74. Concerning Thailand's appeal in respect of th e Panel's acceptance of Exhibit PHL-289, the 
European Union submits that the first issue that the Appellate Body needs to resolve is whether 
Exhibit PHL-289 is rebuttal evidence or not.  If it  is not, then the Panel infringed its Working 
Procedures by admitting this item of untimely ev idence without requiring good cause and without 
affording Thailand the right to comment thereon.  Article 11 of the DSU requires panels actively to 
respect parties' due process rights.  Thus, if  the Panel accepted and relied upon Exhibit PHL-289 
contrary to its Working Procedures, it should, at a minimum, have afforded Thailand an opportunity to comment.  If the Panel failed to do so, then this  defect cannot be cured by arguing that such an 
opportunity was provided during interim review.  The Appellate Body need not address the content of 
the Interim Report since the issue on appeal is wh ether the Panel's finding in its Report that VAT 
registrants need not report resales of domestic ciga rettes in form Por.Por.30  was based exclusively on 
Exhibit PHL-289.  Finally, the European Union obser ves that, even if the Appellate Body agrees with 
Thailand regarding the Panel's treatment of Exhib it PHL-289, Thailand bears the burden of explaining 
why and how the ultimate finding made by the Pa nel under Article III:4 was fully dependent on the 
Panel's factual finding regarding the reporting of resales of domestic cigarettes in form Por.Por.30. 
75. Regarding Thailand's appeal under Article XX (d) of the GATT 1994, the European Union 
considers the relevant question to be whether the me asure at issue secures compliance with other laws 
or regulations which are not WTO-inconsistent.  The measure at issue in this dispute is the different 
treatment applied to imported cigarettes versus  domestic cigarettes, that is, the additional 
administrative requirements imposed on imported cigare ttes.  The laws or regulations with which the 
measure at issue aims to secure compliance are Thailand's VAT laws.  Since the GATT-inconsistent 
measure at issue is part of the VAT regime, the European Union considers that the Panel properly 
concluded that the laws or regulations with whic h the measure at issue secures compliance, namely, 
the laws comprising the Thai VAT regime, are also WTO-inconsistent. 
76. The European Union submits that the Panel correctly found that decisions on the imposition 
of guarantees pursuant to Article 13 of the Agreement on Customs Valuation fall within the scope of 
"administrative action relating to customs matter s" in Article X:3(b) of the GATT 1994.  The 
characterization of an action as "provisional" or "fin al" is not crucial to bring that action within the 
scope of Article X:3(b).  Rather, the key issue is wh ether the administrative action at issue has a direct 
and individual material effect on the importer.  The European Union contends that neither the text of 
Article X:3(b), nor that of the other paragraphs of Article X, make a distinction between "provisional"  WT/DS371/AB/R 
 Page 31 
 
 
 and "final" administrative actions.  This contrasts with other provisions in the GATT 1994, such as 
Article XV:2, which explicitly refer to "final" measu res.  The European Unio n also agrees with the 
Panel's reasoning that the due process objective underly ing Article X:3(b) supports an interpretation 
of the term "administrative action" that is not  limited to final administrative determinations.  
77. Furthermore, the European Union views the imposition of a guarantee as being separate and 
distinct from a customs value determination.  Like  a determination of the value of imported goods, the 
imposition of a guarantee is one component of the imposition and co llection of customs duties.  
However, imposing a guarantee is not a component of determining the customs value.  Instead, it is a 
separate and distinct action, constituting "administr ative action" in the sense of Article X:3(b).  The 
European Union also disputes Thailand's asserti on that the imposition of a guarantee cannot be 
reviewed effectively without knowing the final dut y liability, as well as Thailand's reliance upon the 
Appellate Body report in US – Shrimp (Thailand) / US –  Customs Bond Directive .  The Appellate 
Body did not, in that dispute, rule out that, un der certain circumstances, a guarantee could constitute 
"specific action against dumping" pursuant to Article 17.4 of the Anti-Dumping Agreement .89  In the 
view of the European Union, the same reasoning supports the view that a guarantee pursuant to 
Article 13 of the Agreement on Customs Valuation  may constitute "administrative action relating to 
customs matters" within the meaning of Article X:3(b) of the GATT 1994.   
78. Finally, in the event that the Appellate Body  upholds the Panel's finding that the acceptance 
of a guarantee under Article 13 of the Agreement on Customs Valuation  constitutes an "administrative 
action relating to customs matters" within the me aning of Article X:3(b) of the GATT 1994, the 
European Union considers that a system which requi res a final customs value determination in order 
to appeal the imposition of a guarantee is contrary to Article X:3(b).  Thailand's concerns about an 
appeal of a guarantee interfering with the custom s administration's decision-making process are 
unfounded.  Courts are in a position fully to revi ew customs authorities' decisions.  Furthermore, 
courts may not need to review the final customs va lue determination, but could limit their analysis to 
reviewing the basis for establishing the amount of the guarantee, thus not interfering with the customs administration's decision-making process.  The Eur opean Union adds that, once the final customs 
value is established, an appeal against the impos ition of a guarantee becomes irrelevant because the 
guarantee effectively ceases to exist. 
                                                      
89European Union's third participant's submission, para. 64 (referring to Appellate Body Report,  
US – Shrimp (Thailand) / US – Customs Bond Directive , paras. 230 and 231). WT/DS371/AB/R 
Page 32  
 
 3. United States 
79. With respect to Thailand's appeal of the Pane l's finding of less favourable treatment under 
Article III:4 of the GATT 1994, the United States argues that, while a complainant need not 
demonstrate the actual trade impact of a measure , it must establish that the measure modifies the 
conditions of competition for importe d products.  The United States questions whether mere risk that 
a change to the conditions of competition might oc cur would fulfil that requirement, given that a 
finding of less favourable treatment cannot be based on mere assertion or speculation.90   
80. As regards Thailand's appeal concerning the Pane l's treatment of Exhibit PHL-289, the United 
States observes that the Panel's Working Procedur es expressly allowed for the submission of factual 
evidence, even after the first substantive meeting,  for the purposes of rebuttals, answers to questions, 
or comments on answers to questions.  The United States takes no view on whether the evidence at issue can properly be considered to have been submitted for these pur poses.  In any event, while it 
could have done so, the Panel was not required as  a matter of due process to offer Thailand an 
opportunity to comment on Exhibit PHL-289.  Furt hermore, Thailand did in fact respond to the 
evidence as part of the interim review, and the Panel took Thailand's response into account in its 
evaluation of the evidence.  Accordingly, it is not clear to the United States what due process right of 
Thailand was not respected.  The United States also re calls that Article 11 of the DSU affords panels a 
degree of discretion regarding the treatment of evidence, and that working procedures "do not 
constrain panels with hard and fast rules on deadlines for submitting evidence".
91 
81. The United States takes no position on whether Th ailand has acted inconsistently with the 
obligations of Article X:3(b) of the GATT 1994.  The United States observes, however, that the Panel 
did not accept Thailand's categorizati on of "provisional" ve rsus "non-provisional" customs measures, 
and thus did not make a broad finding about such classes of measures, nor seek to define the precise 
types of measures falling within the scope of Article X:3(b).  Instead, the United States maintains, the 
Panel properly examined whether the guarantees at i ssue constitute "administrative action relating to 
customs matters", and, if so, whether Thailand faile d to provide for the prompt review and correction 
of such action.  This is the same question that  is presented on appeal.  The United States further 
considers that, contrary to Thailand's arguments on  appeal, neither the Appellate Body report in  
US – Shrimp (Thailand) / US – Customs Bond Directive , nor the provisions of the Agreement on 
Customs Valuation or the Anti-Dumping Agreement , are relevant in answering this question.  With 
respect to the issue of whether a measure satisfies the obligation to provide for "prompt review and 
                                                      
90United States' closing statem ent at the oral hearing. 
91United States' opening statement at the oral  hearing (quoting Appellate Body Report, Argentina – 
Textiles and Apparel , para. 80).  WT/DS371/AB/R 
 Page 33 
 
 
 correction", the United States agrees with both Thaila nd and the Panel that such an evaluation requires 
a case-by-case analysis, and with the Panel that what  it means for action to be taken "promptly" will 
depend on the factual context of the specific measure at issue in a dispute. 
III. Issues Raised in This Appeal 
82. The following issues are ra ised in this appeal: 
(a) With respect to the Panel's findings un der Article III of the GATT 1994 concerning 
Thailand's treatment of resellers of imported  cigarettes, as compared to its treatment 
of resellers of like domestic cigarettes: 
(i) whether the Panel erred in finding th at Thailand acts inconsistently with 
Article III:2, first sentence, of the GATT 1994 by subjecting imported cigarettes to value added tax ("VAT") liability in excess of that applied to 
like domestic cigarettes; 
(ii) whether the Panel erred in finding th at Thailand acts inconsistently with 
Article III:4 of the GATT 1994, and, in particular: 
- whether the Panel erred in finding that Thailand accords less 
favourable treatment to imported ci garettes than to like domestic 
cigarettes; 
- whether the Panel failed to ensure due process and, thus, to comply 
with its duty under Article 11 of the DSU to make an objective assessment of the matter, by accepting and relying on Exhibit PHL-289 without affording Thailand an opportunity to comment on 
that evidence;  and 
- whether the Panel erred in re jecting Thailand's defence under 
Article XX(d) of the GATT 1994 to the Panel's finding of inconsistency under Article III:4;  and 
(b) Whether the Panel erred in its interpretation and application of Article X:3(b) of the 
GATT 1994 in finding that Thailand acts incons istently with its obligation, under that 
provision, to maintain or institute independe nt tribunals or procedures for the prompt 
review of guarantee decisions. WT/DS371/AB/R 
Page 34  
 
 IV. Article III of the GATT 1994 
A. Introduction 
83. The Philippines alleged before the Panel that Thai law discriminates between resellers of 
imported cigarettes and resellers of domestic cigarettes in a manner inc onsistent with Article III:2 and 
Article III:4 of the GATT 1994.  According to th e Philippines, Thailand acts inconsistently with 
Article III:2, first sentence, because Thailand impos es VAT liability on imported cigarettes in excess 
of that applied to like domestic cigarettes thr ough an exemption from VAT for resales of domestic 
cigarettes.92  The Philippines also claimed that Thailand acts inconsistently with Article III:4 because 
its VAT system accords less favourable treatment to imported cigarettes by imposing more onerous administrative requirements on resellers of imported cigarettes than on resellers of like domestic 
cigarettes.   
84. In respect of both claims, the Panel found in favour of the Philippines
93, and Thailand appeals 
those findings.  Before examining Thailand's appeal , we describe relevant aspects of Thailand's VAT 
regime, and identify the measures that the Panel found to be inconsistent  with Article III:2 and 
Article III:4, respectively, of the GATT 1994. 
B. Overview of the Measures at Issue 
1. The Measure Challenged Under Article III:2 of the GATT 1994 
85. For purposes of the Philippines' claim under Article III:2 of the GATT 1994, the Panel 
considered various provisions  of Thailand's VAT regime.94 
86. Thailand administers VAT pursuant to Chapte r IV of the Act Promulgating the Revenue 
Code95 (the "Thai Revenue Code").96  The Thai Revenue Code provides that, as a general rule, every 
                                                      
92The Philippines also claimed that, in the determination of the tax base for imported cigarettes, 
Thailand acts inconsistently with Article III:2, fi rst sentence, of the GATT 1994 by subjecting imported 
cigarettes to VAT liability in excess of that applied to lik e domestic cigarettes.  The Panel found in favour of the 
Philippines in respect of this claim, and Thailand has not appealed this finding. (Panel Report, para. 8.3(a)) 
93Panel Report, para. 8.3(b) and (c).  
94The Panel stated that the Thai measures specifica lly identified in the Philippines' panel request are 
"Sections 81 and 82/7 of the Thai Revenue Code, Section 3(1) of Royal Decree No. 239, and Order of Revenue 
Department No. Por. 85/2542".  The Panel explained that in the course of the dispute the parties also referred to 
other provisions pertaining to the imposition of, and exem ption from, VAT liability. (Panel Report, para. 7.572) 
95Government of the Kingdom of Thailand, The Council of Regency, The Act Promulgating the 
Revenue Code, B.E. 2481 (Panel Exhibit PHL-94). 
96Panel Report, para. 7.573 (referring to Chapter IV, "Value Added Tax", consisting of Sections 77-90 
of the Thai Revenue Code).     WT/DS371/AB/R 
 Page 35 
 
 
 VAT registrant97 in the distribution chain for a product incurs liability in respect of VAT.98  The VAT 
rate generally applicable to sales of products in Thailand is seven per cent ad valorem .99  F or  m os t  
products, VAT is determined by applying this rate to the actual selling price of the product at each 
stage of the supply chain.100  VAT must be reported on a monthly basis in tax form Por.Por.30.101  
Pursuant to Section 82/3 of the Thai Revenue C ode, in each tax month sellers are entitled to deduct 
the "input tax", paid upon purchase of the goods from the previous seller, from the "output tax" 
collected from the next purchaser of the goods.102  VAT liability under Thai law in respect of a sales 
transaction thus consists of the amount to be pa id after subtracting input tax from output tax.103  When 
output tax exceeds input tax, the tax payable is equa l to the difference between the two.  When input 
tax exceeds output tax, the difference is treated as a ta x credit, and the seller is entitled to receive a tax 
refund or to apply that credit in future VAT assessments.104 
87. With respect to sales of cigarettes, however, Thailand's VAT system operates differently in 
two main respects.  First, instead of applying the tax rate against the actual sales price, VAT is 
determined for each stage of the supply chain for ciga rettes, starting with the first sale of cigarettes in 
Thailand by Thailand Tobacco Monopoly ("TTM") or an  importer, by applying the seven per cent rate 
to the maximum retail selling price ("MRSP"), a refe rence price fixed by the Thai Government for 
each brand of cigarettes.105  This means that, because VAT is based on the same fixed price at each 
stage of the supply chain, the amount of VAT assess ed is the same for each sales transaction along 
that chain.  Moreover, because the VAT paid by a rese ller of cigarettes to a prior seller in the form of 
input tax is the same as the amount that the reselle r collects from a subsequent purchaser in the form 
of output tax, these amounts will, subject to complia nce with certain administrative requirements, be 
offset, resulting in a VAT liability of zero.  
88. Second, Thai law provides for an exemption from VAT for all sales of domestic cigarettes by 
resellers in the distribution chain for domestic cigare ttes.  Thus, resellers of domestic cigarettes incur 
                                                      
97VAT obligations under the Thai Revenue Code apply to VAT registrants.  Section 85 of the Thai 
Revenue Code requires that all sellers file an applica tion for VAT registration before commencing a business of 
selling goods or providing services.  Section 81 of the Thai Revenue Code exempts from VAT registration 
businesses engaged in sales only of VAT-exempt good s, and businesses with annual sales of less than 
1.8 million baht. (Panel Report, paras. 7.687-7.689 and footnote 1243 thereto)  
98Panel Report, paras. 7.574 and 7.580 (referring to, inter alia , Thai Revenue Code, Section 82 and 
Section 82/3).   
99Panel Report, para. 7.457. 
100Panel Report, footnote 947 to para. 7.460. 
101Panel Report, paras. 7.634 and 7.652.  
102Panel Report, para. 7.579.   
103Panel Report, paras. 7.580 and 7.628.  
104Panel Report, para. 7.581.  
105Panel Report, para. 7.460 and footnote 947 thereto, and paras. 7.577 and 7.578 (referring to Thai 
Revenue Code, Section 79/5 and Section 82/7).  Altho ugh cigarettes cannot be sold at prices exceeding the 
MRSP, they may be sold at prices below the MRSP. ( Ibid., para. 7.463) WT/DS371/AB/R 
Page 36  
 
 no VAT liability because of an exemption provided pu rsuant to Section 81(1)(v) of the Thai Revenue 
Code, Section 3(1) of Thailand's Royal Decree issued under the Thai Revenue Code106 ("Royal 
Decree No. 239"), and Thailand's Order of  Revenue Department No. Por. 85/2542107 ("Order 
No. Por. 85/2542").108    
89. Section 81(1)(v) of the Thai Revenue Code provides: 
Section 81.  There shall be exempt from value added tax the 
following transactions: 
(1) Sale of goods not for export or provision of services as 
follows: 
… 
(v) Sale of goods or provision of services designated by 
a Royal Decree.109 (footnote omitted) 
90. Section 3(1) of Royal Decree No. 239 provides: 
Section 3.  There shall be exem pt from value added tax for the 
following businesses:  
(1) Sale of cigarettes produced by a manufacturer which is an 
organization of a government where the seller is not such manufacturer who produces such cigarettes ...
110 
91. As the Panel explained, because TTM is the onl y manufacturer of cigarettes in Thailand, and 
an organization of the Thai Government, these provi sions exempt resellers of TTM brand cigarettes 
from VAT.111  The Panel thus concluded that, in respect  of sales of domestic cigarettes, TTM is 
subject to VAT, whereas resellers of domestic cigarettes are not.112   
                                                      
106Government of the Kingdom of Thailand, Royal Decree Issued Under the Revenue Code Governing 
Exemption from Value Added Tax (No. 239) B.E. 2534 (Panel Exhibit PHL-217). 
107Government of the Kingdom of Thailand, Order of Revenue Department No. Por. 85/2542, 
Re Computation of Tax Base for Impor tation and Sale of Tobacco According to Category and Type Prescribed 
by Director-General and Approved by Minister under Section 79/5 of Revenue Code, and Preparation of Tax 
Invoice in Case of Sale of Tobacco under Section 86/5(2) of Revenue Code (Panel Exhibit PHL-95).  
108Panel Report, para. 7.591. 
109See Panel Report, para. 7.584. 
110Panel Report, para. 7.585. 
111Panel Report, para. 7.585.  Order No. Por. 85/2542 also confirms that, with respect to the first 
purchaser of cigarettes from TTM, there is an exemption from VAT in accordance with Section 81(1)(v) of the 
Thai Revenue Code. ( Ibid., para. 7.586) 
112Panel Report, paras. 7.590 and 7.591.   WT/DS371/AB/R 
 Page 37 
 
 
 92. In respect of imported cigarettes, the Panel stated: 
No such exemption is available for imported cigarettes.  As such, 
when the wholesaler subsequently resells imported cigarettes to the retailer, for example, the wholesaler incurs a VAT liability of 7 per cent of the MRSP.  This VAT liability arises at each subsequent 
transactional stage until consumers purchase imported cigarettes. Each agent subject to VAT in th e imported cigarettes distribution 
chain can claim a refund of the VAT amounts paid in excess, based 
on the amount of VAT credits acquired upon the purchase of cigarettes from a previous seller, by  filing form Por.Por.30 with the 
Thai authorities.
113 (footnote omitted) 
93. Finally, the Panel referred to certain "[o]ther  relevant provisions" that it examined, including 
Section 82/5 of the Thai Revenue Code, which sets  out instances in which VAT registrants are not 
allowed to deduct input tax in com puting tax liability under Section 82/3.114  Section 82/5 provides for 
the denial of a tax credit in  the following six instances: 
(i) a tax invoice is absent or cannot be produced to prove that input 
tax has been collected, except wh ere there is a reasonable excuse 
according to the rules and conditions prescribed by the Director-General;   
(ii) a tax invoice contains information which is incorrect or 
inadequate in the matter of subs tance according to the rules and 
conditions prescribed by the Director-General;   
(iii) the input tax is not directly connected with the business carried 
on by a supplier according to the rules and conditions prescribed by 
the Director-General;   
(iv) the input tax originated from entertainment expenses or expenses 
of a similar nature according to the rules and conditions prescribed 
by the Director-General;   
(v) input tax under a tax invoice issued by a person not authorized to 
do so under Division 10;  or 
(vi) input tax designated by the Director-General with the approval of 
the Minister.
115  
94. In sum, in evaluating the Philippines' Article III: 2 claim in respect of resellers of cigarettes, 
the Panel considered several provisions under Thai la w collectively.  The Panel first identified that 
resellers of imported cigarettes are liable for VAT under Section 82/7 of the Thai Revenue Code, and 
that resellers of domestic cigarettes are exempt fro m VAT liability pursuant to Section 81(1)(v) of the 
                                                      
113Panel Report, para. 7.591.   
114Panel Report, subheading VII.E.3(d) and para. 7.593.  
115Panel Report, para. 7.593. WT/DS371/AB/R 
Page 38  
 
 Thai Revenue Code, Section 3(1) of Roya l Decree No. 239, and Order No. Por. 85/2542.116  
Recognizing that VAT liability consists of output tax minus input tax117, the Panel then proceeded to 
evaluate whether an input tax credit is "automati cally" available to resellers of imported cigarettes.118  
The Panel found that such resellers would not obtain an  input tax credit if they fail to satisfy certain 
conditions, namely:  (i) to complete and file form Po r.Por.30;  (ii) to produce a complete and accurate 
tax invoice in respect of a transaction (or to satis fy other conditions under Section 82/5 of the Thai 
Revenue Code);  or (iii) to meet other record-keeping requirements.119  On this basis, the Panel 
concluded that "resellers of domestic cigarettes are de jure  exempt from the VAT liability, whereas 
the same exemption is not granted to resellers  of imported cigarettes as tax credits do not 
automatically and irrevocably offset tax liabilities incurred by [resellers] of imported cigarettes in 
every case."120   
95. Accordingly, the measure that the Panel analyzed under Article III:2 of the GATT 1994 
consists of an exemption from VAT liability for rese llers of domestic cigarettes, together with the 
imposition of VAT on resellers of im ported cigarettes when they do not satisfy prescribed conditions 
for obtaining input tax credits necess ary to achieve zero VAT liability. 
2. The Measure Challenged Under Article III:4 of the GATT 1994 
96. For purposes of the Philippines'  claim under Article III:4 of the GATT 1994, the Panel also 
considered a series of provisions of Thailand's VAT regime.121   
97. Pursuant to Section 81/2 of the Thai Revenue Code, businesses exempt from VAT are also 
exempt from compliance with the provisions of Chapte r IV of the Thai Revenue Code.  Consequently, 
because resellers of domestic cigarettes are exempt from VAT, they are also relieved of the obligation 
to comply with VAT-related administrativ e requirements contained in Chapter IV.122  The Panel 
addressed various requirements that, according to th e Philippines, apply only to resellers of imported 
cigarettes, and not to resellers of domestic ciga rettes.  The Panel concluded that three sets of 
                                                      
116Panel Report, paras. 7.621 and 7.622.  
117Panel Report, para. 7.628.  
118Panel Report, para. 7.632. 
119Panel Report, para. 7.634.  
120Panel Report, para. 7.644.  
121The Philippines identified the following relevant provisions in connection with Thailand's 
VAT-related administrative requirements:  Sections 81 and 82/7 of the Thai Revenue Code;  Royal Decree 
No. 239;  and Order No. Por. 85/2542. (Panel Report, para. 7.649) 
122Panel Report, paras. 7.688-7.690.  WT/DS371/AB/R 
 Page 39 
 
 
 VAT-related administrative requirements impose an a dditional administrative burden only on resellers 
of imported cigarettes.123   
98. First, Section 83/1 of the Thai Revenue Code imposes on every VAT registrant the obligation 
to file a tax return, namely, form Por.Por.30, on a monthly basis regardless of the type of goods sold 
and/or services provided.124  Resellers of goods subject to VAT, such as imported cigarettes, are 
therefore required to file form Por.Por.30.  Resellers of exclusively VAT-exempt goods, such as 
domestic cigarettes, are not required to be VAT registrants and are therefore exempt from this 
requirement.125  When a reseller sells both domestic ciga rettes and other goods subject to VAT, that 
reseller is, by virtue of its sales of the latter, under an obligation to file form Por.Por.30.  The Panel 
found, however, that such a reseller is not requi red to report its sales of VAT-exempt domestic 
cigarettes in that form.126  The Panel therefore concluded that  resellers of imported cigarettes are 
subject to a heavier administrative burden in respec t of the obligation to complete and submit form 
Por.Por.30 because:  (i) a reseller of domestic cigarettes who carries exclusively VAT-exempt goods, 
and therefore is not required to register for VAT,  is exempted from the obligation to file form 
Por.Por.30, whereas the same exemption is not provide d to resellers of imported cigarettes;  and (ii) a 
cigarette reseller who is a VAT registrant need  not report sales of domestic cigarettes when 
completing form Por.Por.30.127  In this Report, we refer collectivel y to this first set of requirements as 
the "requirements relating to form Por.Por.30". 
99. Second, Section 87 of the Thai Revenue Code requires resellers of imported cigarettes to 
prepare and maintain input tax and output tax records, and goods and raw materials records.128  
Resellers of imported cigarettes are also subject to an obligation to file re venue and expense reports, 
from which resellers of exclusively domestic cigarettes are exempt.129  Thus, the Panel concluded that 
resellers of imported cigarettes, but not resellers of domestic cigarettes, are subject to an obligation to 
fill out and file reports.130  The Panel further found that Section 87/3 of the Thai Revenue Code 
                                                      
123The Philippines also alleged before the Panel that resellers of imported cigarettes are subject to tax 
invoice-related requirements and auditing procedures to which resellers of domestic cigarettes are not subject.  
Regarding the requirement to prepare and keep tax invoices, the Panel found that the Philippines did not respond to Thailand's argument that sales receipts, which both VAT registrants and non-VAT registrants must maintain, 
may serve as tax invoices, and that the Philippines did not fully explain its argument that the use of the MRSP as 
the tax base would make the requirement to prepare a tax invoice more burdensome for resellers of imported 
cigarettes. (Panel Report, paras. 7.706 and 7.707)  With respect to the auditing procedures, the Panel found that 
resellers of both imported and domestic cigarettes are subject to similar procedures. ( Ibid., para. 7.718) 
124Panel Report, para. 7.686. 
125Panel Report, para. 7.694.  
126Panel Report, para. 7.703.  
127Panel Report, para. 7.704.   
128Panel Report, para. 7.654. 
129Panel Report, para. 7.710.  
130Panel Report, para. 7.715.  WT/DS371/AB/R 
Page 40  
 
 requires resellers of imported cigarettes to main tain more information for accounting and auditing 
purposes than that required of resellers of domestic cigarettes.131  In this Report, we refer collectively 
to this second set of requirements as the "reporting and record-keeping requirements". 
100. Third, Sections 89 and 90 of the Thai Reve nue Code subject VAT registrants to various 
penalties and other sanctions associated with the fa ilure to comply with VAT-related administrative 
requirements set out in Chapter IV of the Thai Revenue Code.132  Resellers of goods that are subject to 
VAT, such as imported cigarettes, are therefore s ubject to these penalties and other sanctions, whereas 
resellers of exclusively domestic cigarettes are not.  In this Report, we refer collectively to this third 
set of requirements as the "penalties and other sanctions". 
101. In sum, the Panel found that Thailand imposes these three sets of requirements only on 
resellers of imported cigarettes.133  With the exception of the issue of whether sales of domestic 
cigarettes must be reported in form Por.Por.30, di scussed below in section IV.D.2 of our Report, the 
participants do not contest on appeal the Panel's findings that the requirements relating to form 
Por.Por.30, the reporting and record-keeping require ments, and the penalties and other sanctions are 
imposed only on resellers of imported cigarettes,  and not on resellers of domestic cigarettes.134 
102. Accordingly, the measure that the Panel analyzed under Article III:4 of the GATT 1994 
consists of an exemption from three sets of VAT-r elated administrative requirements for resellers of 
domestic cigarettes, together with the imposition of these administrative requirements on resellers of imported cigarettes.   
103. Based on the foregoing, we now turn to assess  Thailand's claims of error on appeal under 
Article III:2 and Article III:4 of the GATT 1994. 
                                                      
131Panel Report, para. 7.717.   
132Panel Report, paras. 7.719, 7.720, and 7.722.  The Panel analyzed these penalties and other sanctions 
as part of the additional administrative requirements at issue, and neither participant has challenged this 
approach.  We observe that they ar e not administrative requirements as su ch, but rather the consequence of 
failing to comply with VAT-related administrative requirem ents.  Nonetheless, like the Panel, we address the 
penalties and other sanctions as among th e relevant additional administrative requirements for purposes of our 
Report.  
133Panel Report, para. 7.722.  
134The Panel did not make any finding regarding the extent to which cigarette resellers sell exclusively 
domestic, exclusively imported, or both domestic and imported cigarettes, nor regarding the extent to which the 
distribution channels for domestic and imported cigarettes in Thailand overlap.  Although the Panel 
acknowledged evidence addu ced by the Philippines that more than 20 per cent of cigarette resellers in Thailand 
do not sell imported cigarettes, the Panel considered that the Philippines had not demonstrated why 
the 68,000 businesses concerned decided not to sell imported cigarettes, and also took note of Thailand's 
argument that many of those businesses are exempt from VAT liability by virtue of their low annual turnover. (Panel Report, paras. 7.725 and 7.727, and footnote 1300 to para. 7.736)  Pursuant to Section 81/1 and 
Section 81/2 of the Thai Revenue Code, small businesse s (that is, businesses with annual sales of less than 
1.8 million baht) are exempt from all obligations under Chapter IV of the Thai Revenue Code. ( Ibid., 
para. 7.689 and footnote 1243 thereto)  WT/DS371/AB/R 
 Page 41 
 
 
 C. Article III:2 of the GATT 1994 
104. Thailand appeals the Panel's finding that:   
… regarding the VAT exemption fo r domestic cigarette resellers, 
Thailand acted inconsistently with  Article III:2, first sentence by 
subjecting imported cigarettes to a VAT liability in excess of that applied to like domestic cigarettes by granting the exemption from the VAT liability only to dom estic cigarette[] resellers.
135   
105. Thailand raises two principal issues on appeal.  First, Thailand claims that the Panel erred 
because the measures that it found to be inconsiste nt with Article III:2, first sentence, of the 
GATT 1994 are not fiscal measures subject to the scope of that provision.  Rather, according to Thailand, the measures entail only administrative requirements that fall within the scope of 
Article III:4, rather than Article III:2.  Second, Th ailand claims that, even if the measures fall within 
the scope of Article III:2, they do not subject importe d cigarettes to taxes in ex cess of those applied to 
domestic cigarettes.  In Thailand's view, inconsis tency with Article III:2 cannot arise due to an 
obligation to comply with the administrative forma lity of filing a tax form, or a limitation on the 
availability of tax credits only for transac tions that are documented and legitimate. 
106. The Philippines argues that the Panel correctly  established under Article III:2 that imported 
cigarettes are subject to taxation in excess of that applied to like domestic cigarettes.  The Philippines 
considers that the Panel could have  limited its analysis and simply found that resellers of imported 
cigarettes are subject to VAT liability, whereas rese llers of domestic cigarettes, through a complete 
exemption from VAT, are not.  The Philippines adds that, although the Panel did not need to do so, 
the Panel undertook further analysis and correctly fo und the existence of a discriminatory tax because 
resellers of imported cigarettes, in defined ci rcumstances under Thai law, may not satisfy the 
conditions necessary to offset VAT liability.  The Philippines reject s Thailand's argument that the 
administrative formalities associated with VAT liability cannot give rise to excess taxation under 
Article III:2.   
107. Before we turn to evaluate the substance of Thailand's claim of error on appeal, we consider it 
necessary to recall the measure that the Panel found to be inconsistent with Article III:2, first 
sentence, of the GATT 1994.  Thailand asserts that it is beyond dispute that Thailand's VAT rate is 
seven per cent for both imported and domestic ciga rettes, and that the Panel found that the full amount 
                                                      
135Panel Report, para. 8.3(b); see also para. 7. 644.  In assessing the Philippines' claim under 
Article III:2, the Panel undertook a two-step analysis to determine:  (i) whether the imported and domestic 
products at issue are "like";  and (ii) whether the challenged measure subjects the imported products to an 
internal tax or charge in excess of that applied to like domestic products. ( Ibid., para. 7.569)  In respect of 
likeness, the Panel found that the imported cigarettes at issue are "like" domestic cigarettes within the same price segments. ( Ibid., paras. 7.451 and 7.597)  Thailand has not appealed this finding.   WT/DS371/AB/R 
Page 42  
 
 of VAT is collected from both the domestic producer and importers at the time of the first sale.136  
Thus, Thailand argues, the Panel's finding was not based on the tax burden under Thai VAT law, but 
instead was based solely on the difference in the "a dministrative requirements" for resales of imported 
and domestic cigarettes, and the consequences of  failure to comply with those requirements.137   
108. We consider that Thailand's description of the measure analyzed by the Panel under 
Article III:2 as "administrative requirements" in  respect of VAT is both under-inclusive and 
over-inclusive.  The description is under-inclu sive because it does not account for the complete 
exemption from VAT for resales of domestic cigarettes, and therefore disregards that VAT liability will, when certain conditions prescribed under Thai  law are not met, be incurred by resellers of 
imported cigarettes, but never by resellers of dom estic cigarettes.  For this reason, Thailand's 
observation that the domestic producer and importer pay the same VAT amount is incomplete because 
it disregards that, under Thai law, subsequent r esellers of imported cigare ttes, but not subsequent 
resellers of domestic cigarettes, may also incu r VAT liability.  At the same time, Thailand's 
description is over-inclusive because the relevant m easure for purposes of the Panel's consideration of 
the Philippines' Article III:2 claim does not include  all of the administrative requirements evaluated 
by the Panel in respect of the Philippines' Article III:4 claim.
138  As we have explained, the relevant 
measure analyzed by the Panel under Article III:2 consists of an exemption from VAT liability for 
resellers of domestic cigarettes, together with  the imposition of VAT on resellers of imported 
cigarettes when they do not satisfy prescribed cond itions for obtaining input tax credits necessary to 
achieve zero VAT liability.139   
109. On the basis of this understanding of Thailand's measure, we now turn to Thailand's appeal of 
the Panel's finding under Article III:2,  first sentence, of the GATT 1994. 
110. Article III of the GATT 1994, entitled "National Treatment on Internal Taxation and 
Regulation", sets out obligations that prohibit th e application by Members of internal tax and 
regulatory measures in a manner affording protecti on to domestic production.  The various provisions 
                                                      
136Thailand's appellant's submission, para. 73 (referring to Panel Report, para. 7.590). 
137Thailand's appellant's submission, paras. 74 and 75.  
138In its Article III:2 analysis, the Panel identified provisions under Thai law that specify conditions for 
obtaining an input tax credit.  The Panel considered that a reseller of imported cigarettes would be subject to 
VAT if it did not properly fill out and f ile form Por.Por.30, or did not, as specified in Section 82/5(1) and (2) of 
the Thai Revenue Code, produce a complete and accurate ta x invoice in respect of a transaction. The Panel also 
stated that an input tax credit would not be available if certain reporting and record-keeping requirements were 
not satisfied, or if the conditions specified in Section 82/5 of the Thai Revenue Code were not met. (Panel Report, para. 7.634)  In contrast, we note that, in its consideration of the Philippine s' claim under Article III:4, 
the Panel evaluated various administrative requirement s in addition to the requirements relating to form 
Por.Por.30, but did not examine the conditions specified in Section 82/5 of the Thai Revenue Code. 
139See supra , para. 95.   WT/DS371/AB/R 
 Page 43 
 
 
 of Article III thus operate to ensure that Me mbers provide equality of competitive conditions for 
imported products in relation to domestic  products in their internal markets.140 
111. The first sentence of Article III:2 provides: 
The products of the territory of any Member imported into the 
territory of any other Member shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in 
excess of those applied, directly or indirectly, to like domestic 
products. 
112. Article III:2, first sentence, thus serves to pr ohibit the imposition of discriminatory internal 
taxes or other internal charges on imported versus like domes tic products.  Thailand's appeal calls for 
us to address two issues:  whether Thailand's measure  falls within the scope of the first sentence of 
Article III:2;  and, if so, whether the taxes or  charges applied to imported products pursuant to 
Thailand's measure are "in excess of" those applied to like domestic products.  Article III:2, first 
sentence, concerns circumstances where imported a nd like domestic products are subject "directly or 
indirectly" to internal taxes or other internal char ges "of any kind".  This language suggests that the 
provision applies to a broad range of measures.
141  Regarding the requirement of "not … in excess of", 
the Appellate Body has clarified that a finding of in consistency under Article III:2, first sentence, is 
not conditional on a "trade effects test", and that even the smallest amount of "excess" is too much.142  
For purposes of our consideration of Thailand's app eal, a measure that subjects products to internal 
taxes or other internal charges may be examined und er Article III:2, first sentence, of the GATT 1994.  
When such a measure subjects imported products to tax es or charges in excess of those applied to like 
domestic products, it will be in consistent with the first sentence of Article III:2. 
113. Thailand argues that, because the relevant measure relates only to administrative 
requirements, and the financial consequences of non-compliance with those requirements, it should 
have been evaluated by the Panel under Article III:4, not Article III:2, of the GATT 1994.  According 
to Thailand, administrative requirements related to th e collection of taxes, or consequences arising out 
of failure to comply with those requirements, are no t subject to the disciplines of Article III:2, "even if 
the failure to comply with those administrative re quirements may have financial consequences for an 
                                                      
140Appellate Body Report, Japan – Alcoholic Beverages II , pp. 16-18, DSR 1996:I, 97, at 109-111.  See 
also Appellate Body Report, Korea – Alcoholic Beverages , paras. 119 and 127;  and Appellate Body Reports, 
China – Auto Parts , para. 161. 
141Appellate Body Report, Canada – Periodicals , p. 19, DSR 1997:I, 449, at 464-465. 
142Appellate Body Report, Japan – Alcoholic Beverages II , p. 23, DSR 1996:I, 97, at 115.    WT/DS371/AB/R 
Page 44  
 
 imported product".143  The Philippines argues that the Panel properly found that Thailand's measure 
falls within the scope of Article III:2. 
114. We have already explained that we do not accep t Thailand's characterization of the measure 
that was challenged by the Philippines, and found by th e Panel to be inconsistent  with Article III:2, as 
administrative requirements.  For the reasons set  out above, we also do not accept Thailand's position 
that the measure at issue does not relate to the respective tax burdens imposed on imported and 
domestic cigarettes.  Thailand's measure subjects resellers of imported cigarettes to VAT when they 
do not satisfy prescribed conditions for obtaining i nput tax credits necessary to achieve zero VAT 
liability.  Whether such conditions are satisfied t hus has a direct consequence for the amount of tax 
liability imposed on imported cigarettes.  Conversel y, a complete exemption from VAT ensures that 
there can never be any VAT liability for resellers in respect of their sales of domestic cigarettes.  We 
therefore agree with the Panel that Thailand's m easure affects the respective tax liability imposed on 
imported and like domestic cigarettes, and accordi ngly reject Thailand's claim that the measure 
consists solely of administrative requirements that are not subject to the disciplines of Article III:2, 
first sentence, of the GATT 1994.144 
115. Thailand also argues that, even if the Panel we re correct to examine Thailand's measure under 
Article III:2, the Panel erred in finding that Tha iland acted inconsistently with that provision.  
Thailand contends that it cannot be WTO-inconsistent to require reselle rs to complete "administrative 
formalities"145 in order to obtain input tax credits neces sary to achieve zero VAT liability.  Thailand 
adds that none of the six situations set out  in Section 82/5 of the Thai Revenue Code146 involves a 
situation in which a reseller could be denied an in put tax credit on the basis of an actual, legitimate 
purchase of cigarettes for resale.  In contrast, th e Philippines argues that, if resellers of imported 
cigarettes cannot obtain an input tax credit, this is  the legal consequence of the regulatory framework 
established by Thailand.  The Philip pines maintains that resellers of domestic cigarettes are never 
subject to that consequence because they are automatically exempt from VAT liability on such sales.   
                                                      
143Thailand's appellant's submission, para. 71.       
144We note that even if a measure at issue consiste d solely of administrative requirements, we do not 
exclude the possibility that such requirements may have a bearing on the respective tax burdens on imported and 
like domestic products, and may theref ore be subject to Article III:2.  Although Thailand may be correct in 
stating that prior WTO reports have examined measures consisting of "administrative requirements relating to 
the sale of imported products" under Article III:4 (Thailand 's appellant's submission, para. 69), this does not in 
our view demonstrate that, if such requ irements subject imported and like domestic products to internal taxes or 
other internal charges, the same measures, or certain aspe cts of the same measures, could not also be scrutinized 
under Article III:2. (See Panel Report, Argentina – Hides and Leather , para. 11.143 (finding that administrative 
measures concerning the pre-payment of tax "qualify as  tax measures [that] fall to be assessed under 
Article III:2")) 
145Thailand's appellant's submission, para. 91.  
146See supra , para. 93.  WT/DS371/AB/R 
 Page 45 
 
 
 116. Thailand does not dispute that resellers of imported cigarettes incur VAT liability when they 
do not satisfy conditions to obtain an input tax credit147, or that a measure that creates a risk of excess 
taxation may give rise to a violation of Article III:2, first sentence.148  Rather, Thailand argues that 
requiring resellers to satisfy administrative require ments in respect of VAT does not present a risk 
related to the calculation of the tax burden, and therefore cannot give rise to a violation under 
Article III:2.  We consider, however, that a proper c onception of Thailand's measure clarifies that it is 
not the mere imposition of administrative requireme nts that creates a differential tax burden, but 
rather that only resellers of imported cigarettes w ill incur  VAT liability as a consequence of failing to 
offset output tax.  Resellers of imported ciga rettes are subject to VAT liability in defined 
circumstances under Thai law, whereas resellers of domestic cigarettes, due to a complete exemption 
from VAT, are not.  Based on this understanding of the measure, we therefore agree with the Panel 
that Thailand subjects imported cigarettes to internal  taxes in excess of those applied to like domestic 
cigarettes, within the meaning of Article III:2, first sentence, of the GATT 1994.  
117. Thailand also argues that the conduct of private parties in relation to the challenged measure 
cannot form the basis for establishing a violation of Article III:2.  As Thailand puts it, a system of 
offsetting input tax against output tax cannot be said to be WTO-inconsistent "simply because private 
parties are required to comply with certain admi nistrative requirements", or because it compels 
resellers "to limit claims for input tax credits  to actual, legitimate purchases" of cigarettes.149  
Thailand argued at the oral hearing that resellers of imported cigarettes will owe VAT only when they 
have not legitimately purchased cigarettes, or wh en they make mistakes in their filing for VAT.150  It 
is not clear to us, based on the Panel's findings rega rding the operation of Thailand's measure, that the 
situations in which resellers of imported ciga rettes will incur VAT liability are limited to those 
identified by Thailand.  In any event, we do not consider that Thailand's measure precludes a finding 
of inconsistency with Article III:2 due to the fact that resellers of imported cigarettes may take action 
to avoid the imposition of VAT liability.  In our view , the availability of such a course of action does 
not alter the legal assessment of whether, under Thai  law, imported cigarettes are subject to internal 
taxes or other internal charges in excess of those applied to domestic cigarettes.  As we have explained, Thailand's measure provides for circum stances in which resellers of imported cigarettes 
will be subject to VAT liability, to which resellers of domestic cigarett es will never be subject.  In this 
respect, we agree with the Panel's reliance on Korea – Various Measures on Beef , where the Appellate 
                                                      
147Thailand's appellant's submission, para. 97.  See also Thailand's responses to Panel Questions 137 
and 138. 
148Thailand's appellant's submission, paras. 80-82 (referring to GATT Panel Report, US – Tobacco , 
para. 97). 
149Thailand's appellant's submission, para. 90. 
150Thailand's responses to questioning at the oral hearing.  WT/DS371/AB/R 
Page 46  
 
 Body stated, in the context of its Article III:4 anal ysis, that "the intervention of some element of 
private choice does not relieve Korea of responsibility under the GATT 1994 for the resulting 
establishment of competitive conditions less favourable  for the imported product than for the domestic 
product".151 
118. We also disagree with Thailand's suggestion that  the Panel's finding would limit the ability of 
WTO Members to ensure the proper administration of their tax regimes.152  Again, the Panel 
considered that Thailand's measure was inconsistent  with Article III:2, first sentence, not because it 
prescribed conditions for obtaining tax credits, but rather because those conditions applied only in 
respect of resellers of imported cigarettes, and di d not "automatically and irrevocably offset tax 
liabilities incurred by [those resellers] in every case".153  WTO Members remain free "to administer 
and collect internal taxes as they see fit", so long as they do so "in conformity with Article III:2".154  
Imposing legal requirements that result in tax lia bility on imported products when resellers do not 
satisfy prescribed conditions necessary to avoid that liability, but which never result in tax liability on 
like domestic products, is inconsistent with the requirements of Article III:2, first sentence. 
119. For the foregoing reasons, we uphold  the Panel's finding, in para graph 8.3(b) of the Panel 
Report, that Thailand acts inconsistently with Ar ticle III:2, first sentence, of the GATT 1994 by 
subjecting imported cigarettes to VAT liability in exc ess of that applied to like domestic cigarettes.155 
D. Article III:4 of the GATT 1994 
120. Thailand appeals the Panel's finding that: 
… regarding the VAT exemption fo r domestic cigarette resellers, 
Thailand acted inconsistently w ith Article III:4 by subjecting 
imported cigarettes to less favourab le treatment compared to like 
domestic cigarettes by imposing additional administrative 
requirements, connected to VAT liabilities, on imported cigarette 
resellers.156   
121. The Panel's finding under Article III:4 of the GATT 1994 concerned an exemption from three 
sets of VAT-related administrative requirements for resellers of domestic cigarettes, together with the 
                                                      
151Panel Report, para. 7.637 (quoting Appellate Body Report, Korea – Various Measures on Beef , 
para. 146).   
152Thailand's appellant's submission, paras. 96, 97, and 104. 
153Panel Report, para. 7.644. 
154Panel Report, Argentina – Hides and Leather , para. 11.144.  The Panel stated that Thailand did not 
assert a defence under Article XX to the alleged violation of Article III:2 of the GATT 1994. (Panel Report, 
para. 7.642) 
155See also Panel Report, para. 7.644. 
156Panel Report, para. 8.3(c);  see also para. 7.738.  WT/DS371/AB/R 
 Page 47 
 
 
 imposition of these administrative requirements on resellers of imported cigarettes.  These three sets 
of administrative requirements consist of:  (i) require ments relating to form Por.Por.30;  (ii) reporting 
and record-keeping requirements;  a nd (iii) penalties and other sanctions.157  We refer to these 
requirements collectively as the "additional administrative requirements". 
122. Thailand advances three indepe ndent grounds for reversal of the Panel's finding under 
Article III:4.  First, Thailand argues that the Pane l's analysis of "treatment no less favourable" was 
insufficient as a matter of law to support a findi ng that Thailand acted inconsistently with 
Article III:4.  Second, Thailand claims that the Pa nel erred in accepting a nd relying upon an exhibit 
submitted late in the proceedings by the Philippi nes—Exhibit PHL-289—and thus violated Article 11 
of the DSU, Thailand's due process rights, and pa ragraph 15 of the Panel' s Working Procedures.  
Third, Thailand alleges that, because the Panel failed to conduct a correct legal analysis in respect of 
Thailand's defence under Article XX(d) of the GATT  1994, the Panel "effectively deprived" Thailand 
of the opportunity to justify the additional admi nistrative requirements as necessary to secure 
compliance with the Thai VAT laws.  We address these issues in turn. 
1. Article III:4:  "treatment no less favourable" 
123. In its appeal of the Panel's finding that impor ted cigarettes are treated less favourably than 
like domestic cigarettes, Thailand argues that differen ces in treatment are "not necessarily inconsistent 
with Article III:4, as long as the treatment provided by the measure is 'no less favourable'"158, and that 
a determination of less favourable treatment " cannot rest on simple assertion , but must be founded on 
a careful analysis of the contested measure and of its implications in the marketplace".159  According 
to Thailand, however, the Panel b ased its finding on a "mere assertion"160 or a "theoretical 
possibility"161 that the differences in treatment found by the Panel " could affect costs and could 
potentially affect  the competitive position" of imported cigarettes.162  Thailand adds that the Panel 
failed to conduct " any meaningful analysis"163 of how the differences in treatment might, in practice, 
increase costs, or how the measures at issue "constr ained" or "restricted" the choices available to 
traders in such a manner as to affect the comp etitive conditions for impor ted cigarette resellers.164   
                                                      
157See supra , Section IV.B.2. 
158Thailand's appellant's submission, para. 122 (quoting Appellate Body Report, Korea – Various 
Measures on Beef , para. 135). 
159Thailand's appellant's submission, para. 125 (quoting Appellate Body Report, US – FSC 
(Article 21.5 – EC) , para. 215). (emphasis added by Thailand) 
160Thailand's appellant's submission, para. 142. 
161Thailand's appellant's submission, para. 120. 
162Thailand's appellant's submission, para. 120. (original emphasis) 
163Thailand's appellant's submission, para. 135. (original emphasis) 
164Thailand's appellant's submission, para. 140.  WT/DS371/AB/R 
Page 48  
 
 124. In response, the Philippines submits that treat ment is less favourable if it does not "ensure 
effective equality of opportunities"165 between imported products and dom estic products, and that this 
equality of opportunities is upset when govern ment regulation is not "perfectly neutral".166  The 
Philippines contends that, when government regulati on subjects imported products to burdens that are 
not imposed on like domestic products, the treatment  of imported and like domestic products is 
unequal and, accordingly, "'inheren tly less favorable' for imported goods".167  On this basis, the Panel 
correctly found that, because resellers of importe d cigarettes must comply with three additional 
administrative requirements that are not imposed on resellers of domestic cigarettes, the treatment accorded to imported cigarettes was "inherently less favourable".
168  The Philippines adds that, even 
though it was not necessary for it to do so, the Panel sought further confirmation for its finding of less favourable treatment by examining the ways in  which Thailand's additional administrative 
requirements upset the equality of competitive conditi ons in the Thai market.  The Panel considered 
evidence of price elasticity and switching patterns and found that domestic and imported cigarettes 
operate in a close competitive relationship in the Th ai market, such that the additional administrative 
requirements can potentially have a negative impact on the competitive position of imported 
cigarettes.  The Philippines points out that the add itional administrative requirements can be linked to 
the operating costs of businesses, thereby dist urbing the equality of competitive conditions. 
125. We begin our analysis with the text of Ar ticle III:4 of the GATT 1994, which provides in 
relevant part: 
The products of the territory of any Member imported into the 
territory of any other Member shall be accorded treatment no less 
favourable than that accorded to like products of national origin in 
respect of all laws, regulations and requirements affecting their 
internal sale, offering for sale, pur chase, transportation, distribution 
or use.   
126. Article III:4 forms part of the broader framework  set out in Article III, which ensures that 
Members provide equality of competitive conditions for imported products in relation to domestic 
products.
169  Like the other paragraphs of Article III, the obligation prescribed under Article III:4 is 
informed by the general principle set out in Article  III:1 that internal measures should not be applied 
                                                      
165Philippines' appellee's submission, para. 121 (quoting, inter alia , Panel Report, Canada – Autos , 
paras. 10.78 and 10.84). 
166Philippines' appellee's submission, para. 123. 
167Philippines' appellee's submission, para. 129 (referring to Appellate Body Report, US – Section 211 
Appropriations Act , para. 265). 
168Philippines' appellee's submission, para. 137 (referring to Appellate Body Report, US – Section 211 
Appropriations Act , para. 265).  
169See Appellate Body Report, Japan – Alcoholic Beverages II , p. 16, DSR 1996:I, 97, at 109.    WT/DS371/AB/R 
 Page 49 
 
 
 so as to afford protection to domestic production.170  In the context of Article III:4, this means that, 
where there is less favourable treatment of imported products, th ere is protection to domestic 
production.171   
127. Article III:4 consists of three elements that must be demonstrated in order to establish 
inconsistency with this provision, namely:  (i) that the imported and domestic products are "like 
products";  (ii) that the measure at issue constitut es a law, regulation, or requirement affecting the 
internal sale, offering for sale, purchase, transportation,  distribution, or use of the products at issue;  
and (iii) that the treatment accorded to imported produc ts is less favourable than that accorded to like 
domestic products.172  Thailand's appeal concerns only the Pa nel's finding in respect of the third 
element, namely, the no less favourable  treatment standard in Article III:4.173 
128. The phrase "treatment no less favourable" in Article III:4 has been interpreted by the 
Appellate Body in prior disputes.  In Korea – Various Measures on Beef , the  Appellate Body 
explained that the analysis of whether imported products are treated less favourably must ascertain whether the measure at issue "modifies the conditions of competition in the relevant market to the 
detriment of imported products".
174  The Appellate Body also stated that "[a] formal difference in 
treatment between imported and like domestic products  is … neither necessary, nor sufficient, to 
show a violation of Article III:4".175  Accordingly, the mere fact that a Member draws regulatory 
distinctions between imported and like domestic products is, in itsel f, not determinative of whether 
imported products are treated less favourab ly within the meaning of Article III:4.176  Rather, what is 
relevant is whether such regulatory differences di stort the conditions of competition to the detriment 
of imported products.  If so, then the differential tr eatment will amount to treatment that is "less 
favourable" within the meaning of Article III:4. 
129. The analysis of whether imported products are a ccorded less favourable treatment requires a 
careful examination "grounded in close scrutiny of the 'fundamental thrust and effect of the measure 
itself'"177, including of the implications of the meas ure for the conditions of competition between 
                                                      
170See Appellate Body Report, Japan – Alcoholic Beverages II , p. 18, DSR 1996:I, 97, at 111.   
171See Appellate Body Report, EC – Asbestos , para. 100. 
172Appellate Body Report, Korea – Various Measures on Beef , para. 133. 
173The Panel found that the imported  cigarette brands Marlboro and L&M are "like" Thai domestic 
cigarettes within the meaning of Article III:4 of the GATT 1994. (Panel Report, para. 7.662)  Likewise, the 
Panel found that the Thai regulations at issue, containing the additional administrative requirements, can be considered as affecting the internal sale of imported cigarettes within the meaning of Article III:4 of the 
GATT 1994. ( Ibid., para. 7.665)  Neither of these findings is appealed. 
174Appellate Body Report, Korea – Various Measures on Beef , para. 137. (original emphasis)   
175Appellate Body Report, Korea – Various Measures on Beef , para. 137.  
176Appellate Body Report, EC – Asbestos , para. 100.   
177Appellate Body Report, US – FSC (Article 21.5 – EC) , para. 215 (quoting Appellate Body Report, 
Korea – Various Measures on Beef , footnote  44 to para. 142).  WT/DS371/AB/R 
Page 50  
 
 imported and like domestic products.  This analysis need not be based on empirical evidence as to the 
actual effects of the measure at issue in the intern al market of the Member concerned.  Of course, 
nothing precludes a panel from taking such evidence of actual effects into account. 
130. The implications of the contest ed measure for the equality of competitive conditions are, first 
and foremost, those that are discernible from the d esign, structure, and expected operation of the 
measure.  For instance, where a Member's legal system applies a single regulatory regime to both 
imported and like domestic products, with the sole di fference being that an additional requirement is 
imposed only on imported products, the existence of this additional requirement may provide a 
significant indication that imported products are treated less favourably.  Because, however, the examination of whether imported products are tr eated less favourably "cannot rest on simple 
assertion"
178, close scrutiny of the measure at issue w ill normally require further identification or 
elaboration of its implications for the conditions of  competition in order properly to support a finding 
of less favourable treatment under Article III:4 of the GATT 1994. 
131. The Panel found that the additional administrativ e requirements imposed only on resellers of 
imported cigarettes "could potentially affect" the c onditions of competition for imported cigarettes  
in a negative manner.179  In its analysis, the Panel began by observing that, in previous disputes,  
a simple administrative authorization scheme180, a differentiated distribution scheme181, or the mere 
possibility that non-nationals have to defend their pate nt claims in two jurisdictions rather than only 
one182, were all situations found to constitute "add itional administrative burdens" that accord less 
favourable treatment.183  The Panel then observed that the rela tive market shares held by imported and 
domestic cigarettes in the Thai market and an ec onometric study submitted by the Philippines show a 
certain degree of price elasticity and switching patter ns.  The Panel considered that this would also 
indicate that the additional administrative require ments "can potentially have" a negative impact on 
the competitive position of imported cigarettes in the Thai market.184  Furthermore, the Panel reasoned 
that, because the burden associated with the additi onal administrative requirements can be linked to 
the operating costs of suppliers of imported ci garettes, this could limit business opportunities for 
                                                      
178Appellate Body Report, US – FSC (Article 21.5 – EC) , para. 215.  
179Panel Report, para. 7.734. 
180Panel Report, para. 7.732 (referring to Panel Report, Canada – Wheat Exports and Grain Imports , 
paras. 6.184 and 6.213). 
181Panel Report, para. 7.732 (referring to Appellate Body Report, Korea – Various Measures on Beef , 
paras. 143-151;  and  GATT Panel Report, US – Malt Beverages , paras. 5.32 and 5.35). 
182Panel Report, paras. 7.730 and 7.732 (referring to Appellate Body Report, US – Section 211 
Appropriations Act , para. 265). 
183Panel Report, para. 7.732. 
184Panel Report, para. 7.735.  WT/DS371/AB/R 
 Page 51 
 
 
 imported cigarettes to the extent that cigarette s uppliers seek to reduce costs by avoiding resales of 
imported cigarettes.185   
132. On appeal, Thailand contends that the Panel e rred and applied an incorrect standard of less 
favourable treatment because its finding was based on the "theoretical possibility" that the "differences  could affect costs and could potentially affect the competitive position of imported 
cigarettes in a negative manner"
186, and that the Panel failed to engage in any meaningful analysis as 
to the implications of the measure in the market place, or how the differe nces affect the competitive 
position of imported cigarettes.  Although Thailand  does not contest the Panel's finding that the 
additional administrative requirements are impos ed only on resellers of imported cigarettes187, 
Thailand characterizes these requirements as "benign"188 or "very minor"189 differences in treatment, 
and argues that "the right to treat imported products differently may include the right to impose 
additional or more complicated requirements so long as they do not amount to 'less favourable' 
treatment".190   
133. We observe that the regulatory "differences" at  issue stem from the fact that resellers of 
imported cigarettes must comply with the additional administrative requirements, whereas resellers of 
domestic cigarettes are exempt from such requirements.  Thus, in this dispute, the sole difference in 
regulatory treatment consists  of requirements applied only to imported cigarettes.  The uncontested 
fact that resellers of imported cigarettes are subj ect to certain administrative requirements, whereas 
resellers of like domestic cigarettes are not, itself provides a significant indication that imported 
cigarettes are accorded less favourable treatment. 
134. With respect to the standard of less favourable  treatment under Article III:4, we observe that, 
in its third participant's submission, Australia express es concern with the Panel's apparent use of a test 
of whether the measure at issue "may potentially modify" the conditions of competition to the detriment of imported products.  Aust ralia argues that previous panels have used a more rigorous legal 
standard of less favourable treatment, namely, wh ether a measure "may reasonably be expected"
191 or 
"is more than likely"192 to modify adversely the conditions of competition.  In our view, however, an 
                                                      
185Panel Report, para. 7.736. 
186Thailand's appellant's submission, para. 120. (original emphasis) 
187Thailand confirmed at the oral h earing that, on appeal, it contests on ly the evidentiary basis for the 
Panel's finding that resellers of imported cigarettes are not  required to report resales of domestic cigarettes in 
form Por.Por.30.  That issue is addressed below in the c ontext of Thailand's claim under Article 11 of the DSU. 
188Thailand's appellant's submission, para. 135. 
189Thailand's appellant's submission, para. 137. 
190Thailand's appellant's submission, para. 129. 
191Australia's third participant's submi ssion, para. 26 (quoting Panel Report, China – Publications and 
Audiovisual Products , para. 7.1471). 
192Australia's third participant's submission, para. 27 (quoting Panel Report, India – Autos , para. 7.201). WT/DS371/AB/R 
Page 52  
 
 analysis of less favourable treatment should not be  anchored in an assess ment of the degree of 
likelihood that an adverse impact  on competitive conditions will materi alize.  Rather, an analysis 
under Article III:4 must begin with careful scrutiny of the measure, including consideration of the 
design, structure, and expected operation of the me asure at issue.  Such scrutiny may well involve 
—but does not require—an assessment of the contested measure in the light of evidence regarding the 
actual effects of that measure in the market.  In  any event, there must be in every case a genuine 
relationship between the measure at issue and its  adverse impact on competitive opportunities for 
imported versus like domes tic products to support a finding that imported products are treated less 
favourably. 
135. Furthermore, we do not agree with Thailand that  the Panel's use of the word "potentially" 
reveals that the Panel found less favourable treatme nt based only on a remo te, unsubstantiated, or 
"theoretical possibility" that differences in regul atory treatment could affect the conditions of 
competition for imported cigarettes.  The Pane l referred to the Appellate Body Report in US – FSC 
(Article 21.5 – EC) to note that an examination of whether a measure involves less favourable 
treatment "need not be based on the actual effects of the contested measure in the marketplace".193  
The Panel understood this statement to mean that "the contested measure in the marketplace can be 
assessed on its potential effects on the competitive conditions of the imported product concerned".194  
We consider that, when read in the context of this  reasoning, it is clear that the terms "potentially" and 
"potential effects" were intended to reflect the Pa nel's recognition that it was not required to inquire 
into the "actual effects" of the a dditional administrative requirements. 
136. In addition, we observe that the Panel did identify further implications of the additional 
administrative requirements in the Thai market affecting the competitive position of imported and 
domestic cigarettes.  In particular, the Panel ob served that an econometric study submitted by the 
Philippines suggested a "certain degree of price elasticity and switching patterns" between imported 
and domestic cigarettes, and that th is was an indication that the additional administrative requirements 
"can potentially have a negative impact on the comp etitive position of [imported] cigarettes in the 
market".195  On appeal, Thailand alleges that the Pane l itself acknowledged that this evidence was 
                                                      
193Panel Report, para. 7.730 (quoting Appellate Body Report, US – FSC (Article 21.5 – EC) , para. 215 
(original emphasis)). 
194Panel Report, para. 7.730. (original emphasis) 
195Panel Report, para. 7.735.  This evidence was provided by the Philippines, and consists of a study 
conducted by an economics professor regarding cross-price elasticity between imported and domestic cigarettes 
in Thailand between 2007 and 2009.  In particular, this study noted that "the estimated increase of market share 
of domestic cigarettes pursuant to an increase in the re lative [retail selling price] of imported cigarettes strongly 
suggests that the two products are close substitutes in the eyes of Thai consumers". ( Ibid., para. 7.446 (quoting 
Panel Exhibit PHL-149, p. 9))  WT/DS371/AB/R 
 Page 53 
 
 
 "uneven".196  Furthermore, adds Thailand, the no less favourable treatment analysis under Article III:4 
presupposes that imported and domestic products have b een considered "like", and that, consequently, 
imported and domestic products subject to an Article III:4 analysis will always have "'some' degree of 
competitive relationship with each other".197   
137. As we see it, the Panel did not acknowledge that the econometric evidence before it was 
"uneven".  Instead, the Panel merely took note of Thailand's contention that "switching patterns are 
uneven across various pairs of domestic and foreign brands".198  Furthermore, the Panel did not err in 
relying upon this econometric evidence for its finding of less favourable treatment under Article III:4.  
The Panel used this evidence merely to confirm  that the additional administrative requirements may 
have a negative impact on imported cigarettes rela tive to domestic cigarettes, as these products are in 
close competition with each other in the Thai market.199  Taking a specific example, the Panel 
considered that the additional administrative re quirements imposed only on resellers of imported 
cigarettes may affect business decisions of cigare tte suppliers because "an additional administrative 
burden can be linked to the operating costs of th eir businesses", which would, in turn, modify the 
conditions of competition to the detriment of imported cigarettes.200  Although Thailand criticizes the 
Panel for this "cursory" statement201, we consider that the Panel sought merely to identify that the 
"potential operating costs associated with the add itional administrative requirements" may influence 
business decisions in a market where pr oducts compete closely with each other.202  In our view, it was 
reasonable for the Panel to conclude that complia nce with the additional administrative requirements 
will involve some costs that resellers of importe d cigarettes, and not resellers of like domestic 
cigarettes, must bear, taking account of, inter alia , economic evidence relating to the market. 
138. Accordingly, we are not persuaded by Thaila nd's arguments that the Panel made its finding 
"without making any factual findings other than to establish the existence of the different requirements themselves".
203  The Panel assessed certain implica tions of these measures in the Thai 
market by referring to econometric evidence indicati ng a close competitive relationship, and also by 
                                                      
196Thailand's appellant's submission, para. 114 (quoting Panel Report, footnote 1299 to para. 7.735). 
197Thailand's appellant's submission, para. 132. 
198Panel Report, footnote 1299 to para. 7.735.   
199At paragraph 7.735 of its Report, the Panel stated:  (i) that TTM holds a 78 per cent market share, 
whereas imported cigarettes account for the remaining 22 pe r cent;  (ii) that the eco nometric evidence adduced 
by the Philippines suggests a certain degree of elasticity and switching patterns between imported and domestic cigarettes;  and (iii) that, "[i]n our view, this would also indicate that additional administrative requirements, 
albeit slight, imposed only on imported cigarettes can potentially have a negative impact on the competitive 
position of these cigarettes in the market". 
200Panel Report, para. 7.736. 
201Thailand's appellant's submission, para. 134. 
202Panel Report, para. 7.736. 
203Thailand's appellant's submission, para. 119. WT/DS371/AB/R 
Page 54  
 
 noting that the additional administrative requirements carry certain operating costs.204  We note that, 
although the Panel could have inquire d further into the implications of Thailand's measure for the 
conditions of competition, the mere fact that the additional administrative requirements are imposed 
on imported cigarettes, and not on like domestic cigare ttes, provides, in itself, a significant indication 
that the conditions of competition are adversely modified to the detriment of imported cigarettes.  We therefore consider that the Panel's analysis was su fficient to support its finding that the additional 
administrative requirements modify the conditions of competition to the detriment of imported 
cigarettes. 
139. Finally, Thailand claims that the Panel failed to  address Thailand's argument that resellers of 
imported cigarettes gain certain "financial advant ages" by virtue of the additional administrative 
requirements.
205  In particular, Thailand argues that r esellers of imported cigarettes may claim 
"additional input tax credits for VAT paid on u tilities, administrative expenses and other services 
consumed on the basis of the ratio of th eir VAT sales to their VAT-exempt sales".206  However, we 
observe that Thailand submitted this argument only in  response to Panel questions following the first 
substantive meeting, and in a few other instances ther eafter, and that Thailand produced no evidence 
to substantiate its assertion.  Therefore, we do not see any basis for Thaila nd's contention on appeal 
that the Panel should have given greater considerati on to this argument in conducting its substantive 
analysis.207 
140. Accordingly, we reject Thailand's contention on appeal that the Panel's findings and "analysis 
of less favourable treatment are not sufficient as a matter of law to support a finding of a violation of 
                                                      
204In addition, we note that other Panel findings shed further light on the implications of the additional 
administrative requirements in the Thai market.  The Panel found that failure to comply with the requirements 
relating to form Por.Por.30 and the reporting and record-keeping requirements may lead to denial of tax credits. 
(Panel Report, para. 7.634)  Moreover, the Panel found that resellers of imported cigarettes may be subject to certain penalties and other sanctions if they fail to co mply with the VAT-related administrative requirements. 
(Ibid., paras. 7.719 and 7.722)  By contrast, these economic risks are not borne by resellers of domestic 
cigarettes. 
205Thailand's appellant's submission, para. 136. 
206Thailand's appellant's submission, para. 136.  
207We also note that the GATT Panel in US – Section 337 Tariff Act held that: 
[T]he "no less favourable" treatment requirement of Article III:4 has to be 
understood as applicable to each individual case of imported products.  The 
Panel rejected any notion of balancing more favourable treatment of some 
imported products against less favourable treatment of other imported 
products.  If this notion were accepted,  it would entitle a contracting party to 
derogate from the no less favourable treatment obligation in one case, or 
indeed in respect of one contractin g party, on the ground that it accords 
more favourable treatment in some other case, or to another contracting party.  Such an interpretation would lead to great unce rtainty about the 
conditions of competition between imported and domestic products and thus 
defeat the purposes of Article III.  
(GATT Panel Report, US – Section 337 Tariff Act , para. 5.14)  WT/DS371/AB/R 
 Page 55 
 
 
 Article III:4".208  We therefore find that the Panel did not err in conc luding, in paragraph 7.738 of the 
Panel Report, that Thailand accords less favourable treatment to imported cigarettes than to like 
domestic cigarettes. 
2. Article 11 of the DSU:  the Panel's Treatment of Exhibit PHL-289 
141. We now turn to Thailand's request to revers e the Panel's finding of  inconsistency with 
Article III:4 of the GATT 1994 on the grounds that th e Panel failed to comply with Article 11 of the 
DSU.  According to Thailand, the Panel failed to ensure due process and to make an objective 
assessment of the matter by accepting and relying on Exhibit PHL-289 without affording Thailand 
any opportunity to respon d to that evidence.   
142. Before considering the merits of Thailand's claim of error, we consider it useful to set out the 
circumstances that have given rise to this issu e on appeal.  Exhibit PHL-289 was submitted by the 
Philippines at the last stage of the proceedings before  the Panel and consists of  an expert opinion from 
a Thai tax lawyer.  The opinion concerns the issu e of whether, as a matter of Thai law, VAT 
registrants reselling domestic cigarettes are require d to report their sales of domestic cigarettes in 
form Por.Por.30.  This issue was contested thr oughout the Panel proceedings, with the Philippines 
arguing that VAT registrants are obliged to report only resales of imported, not domestic, cigarettes, 
and Thailand arguing that resales of both importe d and domestic cigarettes must be reported.  
As explained above209, the Panel ultimately agreed with the Philippines.210  The requirement to report 
resales of imported cigarettes, but not resales of like domestic cigarettes, in form Por.Por.30 was thus one of the additional administrative requirements exam ined by the Panel in its Article III:4 analysis.
211  
143. Prior to the submission of Exhibit PHL-289, each party had adduced several exhibits in 
support of its position on whether or not resales of  domestic cigarettes must be reported in form 
Por.Por.30.  Thailand submitted form Por.Por.30, al ong with the instructions provided to taxpayers on 
how to complete that form212, as well as certain examples of form Por.Por.30 actually filed by VAT 
                                                      
208Thailand's appellant's submission, para. 117. 
209Supra , para. 98. 
210Panel Report, para. 7.703. 
211Thailand's Article 11 claim with respect to Exhi bit PHL-289 relates only to the Panel's finding in 
paragraph 7.704 that VAT registrants need not include information on resales of domestic cigarettes in form 
Por.Por.30, and does not concern the Panel's finding in  the same paragraph, that resellers of exclusively 
domestic cigarettes are exempt from the requirement to file form Por.Por.30.  Nor does Thailand's objection to Exhibit PHL-289 concern the other additional administrative requirements that the Panel found to be imposed 
only on resellers of imported cigarettes. 
212Form Por.Por. 30 (Thai monthly VAT form) (Panel Exhibit THA-42), submitted by Thailand with its 
answers to the Panel's questions follo wing the first substantive meeting. WT/DS371/AB/R 
Page 56  
 
 registrants.213  With its second written submission, the Philippines submitted an expert opinion214 and 
a ruling by the Director-General of the Thai Re venue Department issued in 2000 (the "2000 DG 
Revenue ruling").215  The Philippines further attached a second expert opinion to its opening statement 
at the second substantive meeting of the Panel with the parties.216  In its questions following the 
second substantive meeting, the Panel specifically  requested Thailand to comment on the 2000 DG 
Revenue ruling provided by the Philippines.217  In responding to that question, Thailand submitted an 
excerpt from a 2006 textbook on the Thai Revenue Code218 (the "2006 textbook"), and a ruling by the 
Director-General of the Thai Revenue Departme nt issued in 1995 (the "1995 DG Revenue ruling").219  
On 8 December 2009, each party submitted its co mments on the other party's answers to Panel 
questions following the second substantive meeting.  Th is was the last stage of the proceedings before 
the Panel.  In its comments, the Philippines responded to Thailand's evidence, and in particular to the 
1995 DG Revenue ruling, and in doing so submitted a third expert opinion (Exhibit PHL-289), which 
is the evidence at the centr e of this issue on appeal.220   
144. The Panel's Interim Report was i ssued to the parties on 30 June 2010.  In its comments on the 
Interim Report, Thailand requested the Panel to  revise its analysis under Article III:4 of the 
GATT 1994 and to find that resales of domestic cigarettes are required to be reported in form 
Por.Por.30.221  Among the arguments put forth by Thailand in support of this request was that the 
Panel should not have relied upon Ex hibit PHL-289.  Thailand stressed that this exhibit had been 
provided only "at the last opportunity afforded to the parties to submit their views"222, and that 
paragraph 15 of the Panel's Worki ng Procedures required evidence, including Exhibit PHL-289, to be 
submitted no later than the first substantiv e meeting of the Panel with the parties.223  In dismissing 
Thailand's request, the Panel observed that nothing  in the DSU or its Working Procedures precluded 
the Panel "from accepting evidence submitted by a party at the latest stage of the proceedings".224  
The Panel also read the first sentence of the opinion in Exhibit PHL-289 as "suggesting that the 
                                                      
213TTM and Re-seller Forms Por.Por.30 (Panel Exhib it THA-89 (BCI)), submitte d by Thailand with its 
opening statement at the s econd substantive meeting. 
214Expert statement by Mr. Piphob Veraphong, 17 July 2009 (Panel Exhibit PHL-207). 
215Revenue Ruling Gor.Kor. 0811/Por.633, 27 January 2000 (Panel Exhibit PHL-253).   
216Expert Statement by Mr. Piphob Veraphong, 1 September 2009 (Panel Exhibit PHL-254). 
217In Panel Question 142(2), the Panel requested Thailand to comment on the "DG Excise's ruling, 
provided by the Philippines at the second substantive meeting (Exhibit PHL-253)". 
218Excerpt of page 4-266 of Textbook on the Revenue Code  by Professor Paichit Rojanavanich, 
Chumporn Sensai, and Saroch Thongpracum, B.E. 2549 (2006) (Panel Exhibit THA-95). 
219Revenue Department Ruling Gor.Kor. 0802/Por.22836, 10 October 1995 (Panel Exhibit THA-96). 
220Expert Statement by Mr. Piphob Veraphong, 8 December 2009 (Panel Exhibit PHL-289). 
221Thailand's comments on the Interim Report, para. 63.  Thailand's comments were submitted to the 
Panel on 14 July 2010. 
222Panel Report, para. 6.122 (quoting Thailand's comments on the Interim Report, para. 48).   
223Panel Report, para. 6.122. 
224Panel Report, para. 6.125.  WT/DS371/AB/R 
 Page 57 
 
 
 intended purpose of this evidence was to rebut Th ailand's arguments in relation to [the 1995 DG 
Revenue ruling]".225  Accordingly, since Exhibit PHL- 289 was evidence necessary for purposes of 
rebuttal or comments provided by parties, the Pa nel concluded that accepting this evidence was in 
accordance with paragraph 15 of its Working Procedures. 
145. On appeal, Thailand argues that the Panel vi olated Thailand's due process rights and acted 
inconsistently with Article 11 of the DSU by  accepting and relying on Exhibit PHL-289 without 
affording Thailand the right to comment on that evid ence.  Thailand points to several considerations 
as establishing such a violation, which may be gro uped into two main lines of argument.  First, 
Thailand emphasizes that due process requires that par ties be provided with an adequate opportunity 
to respond to evidence adduced by the other party.  Given the significance of Exhibit PHL-289 to the 
Panel's finding regarding the requirement to report sal es of domestic cigarettes in form Por.Por.30, 
Thailand considers that its due process rights with r espect to that piece of evidence should have been 
"accorded the highest importance".226  Thailand adds that the Panel's failure to ensure due process was 
"exacerbated" by the fact that the Panel did not ac cord deference to Thailand's interpretation of its 
own law.227  Second, Thailand contends that the Pa nel's acceptance of Exhibit PHL-289 was not 
consistent with paragraph 15 of  its Working Procedures.  In Thailand's view, because Exhibit 
PHL-289 was not rebuttal evidence, it should have b een submitted no later than the first substantive 
meeting, or accepted only after having require d the Philippines to show good cause and having 
afforded Thailand a right of response.  
146. The Philippines, for its part, argues that the Pa nel complied with its duties under Article 11 of 
the DSU.  According to the Ph ilippines, the Panel respected both Thailand's due process rights and 
paragraph 15 of the Panel's Wo rking Procedures.  Thailand did have opportunities to comment on 
Exhibit PHL-289, and took advantage of one of them  during interim review.  The Philippines stresses 
that Thailand did not seek an opportunity to comment on Exhibit PHL-289 at the time that it was 
submitted, and that Thailand did not submit its own evidence, the 1995 DG Revenue ruling, at the 
earliest opportunity, but only in its responses to Pane l questions after the second substantive meeting.  
The Philippines further maintains that the Panel did not give decisive weight to Exhibit PHL-289, in 
either the Interim Report or the Panel Report.  For the Philippines, moreover, the expert opinion 
contained in Exhibit PHL-289 constitutes evidence that is covered by the first, rather than the second, 
sentence of paragraph 15 of the Panel's Working Procedures.  Accordingly, the Panel was not 
required, pursuant to paragraph 15, to determin e that the Philippines had shown good cause for the 
admission of Exhibit PHL-289, nor to afford Thailand  an opportunity to respond to that evidence. 
                                                      
225Panel Report, para. 6.127. 
226Thailand's appellant's submission, para. 171. 
227Thailand's appellant's submission, para. 173.  WT/DS371/AB/R 
Page 58  
 
 147. We note that Thailand couches its claim under Article 11 of the DSU as a "due process 
claim".228  Due process is a fundamental principle of WTO dispute settlement.229  It informs and finds 
reflection in the provisions of the DSU.230  In conducting an objective as sessment of a matter, a panel 
is "bound to ensure that due process is respected".231  Due process is intrinsica lly connected to notions 
of fairness, impartiality, and the rights of partie s 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 balan ced and orderly manner, according to established rules.  The 
protection of due process is thus a crucial means of guaranteeing the legitimacy and efficacy of a 
rules-based system of adjudication.  
148. Panel working procedures should both embody and reinforce due process.  Article 12.1 of the 
DSU states that panels "shall" follow the worki ng procedures set out in Appendix 3 to the DSU 
"unless the panel decides otherwise after consulti ng the parties to the dispute".  The working 
procedures adopted by a panel must conform to the DSU.232  As the Appellate Body has previously 
observed, the use by panels of detailed, standa rdized working procedures promotes fairness and the 
protection of due process.233  The inclusion by a panel in its working procedures of a rule that is 
inconsistent with due process would be a clear sign th at such panel has failed to ensure the protection 
of due process.  At the same time, even when th e working procedures are themselves sound, a panel's 
failure to adhere to those procedures may be per tinent to, albeit not necessarily determinative of, the 
issue of whether such panel has failed to ensure th e protection of due process in a given instance.   
149. We also recall that panel proceedings consist of two main stages, the first of which involves 
each party setting out its "case in chief, including a full presentation of the facts on the basis of 
submission of supporting evidence", and the second d esigned to permit the rebuttal by each party of 
                                                      
228Thailand's response to questioning at the oral hearing. 
229The Appellate Body has held that "the protection of due process is an essential feature of a 
rules-based system of adjudication, such as that es tablished under the DSU", and that "due process is 
fundamental to ensuring a fair and or derly conduct of dispute settlement pr oceedings". (Appellate Body Reports, 
Canada – Continued Suspension / US – Continued Suspension , para. 433;  and Appellate Body Report, 
Thailand – H-Beams , para. 88, respectively.  See also Appellate Body Report, Chile – Price Band System , 
para. 176) 
230See Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , para. 107.  See also Appellate 
Body Report, India – Patents (US) , para. 94;  and Appellate Body Report, Chile – Price Band System , para. 176. 
231Appellate Body Report, Chile – Price Band System , para. 176.   
232We observe that, in India – Patents (US) , the Appellate Body held that, while "panels enjoy some 
discretion in establishing their own working procedures, this discretion does not extend to modifying the 
substantive provisions of the DSU". (Appellate Body Report, India – Patents (US) , para. 92.  See also Appellate 
Body Report, US – FSC (Article 21.5 – EC) , para. 241) 
233See Appellate Body Reports, Canada – Continued Suspension / US – Continued Suspension , 
para. 434;  Appellate Body Report, Argentina – Textiles and Apparel , footnote 68 to para. 79;  Appellate Body 
Report, EC – Bananas III , para. 144;  and Appellate Body Report, India – Patents (US) , para. 95.  WT/DS371/AB/R 
 Page 59 
 
 
 the arguments and evidence submitted by the other parties.234  Nonetheless, the submission of 
evidence may not always fall neatly into one or the ot her of these categories, in particular when panels 
themselves, in the exercise of their fact finding au thority, seek to pursue specific lines of inquiry in 
their questioning of the parties.  In this respect, we  wish to reiterate that due process will best be 
served by working procedures that provide "for appr opriate factual discovery at an early stage in 
panel proceedings"235, and that "[d]ue process may be of pa rticular concern in cases where a party 
raises new facts  at a late stage of the panel proceedings."236  Furthermore, when the particular 
circumstances of specific disputes present situations that are not explicitly regulated by their working 
procedures, panels, in the exercise of their contro l over the proceedings, and subject to the constraints 
of due process and the DSU, enjoy a margin of  discretion to deal with such situations.237 
150. As a general rule, due process requires that each party be afforded a meaningful opportunity 
to comment on the arguments and evidence adduced  by the other party.  This was expressly 
acknowledged by the Appellate Body in Australia – Salmon  when it stated that "[a] fundamental tenet 
of due process is that a party be provided with an  opportunity to respond to claims made against it".238  
At the same time, due process may also require a pa nel to take appropriate account of the need to 
safeguard other interests, such as an aggrieved party' s right to have recourse to an adjudicative process 
in which it can seek redress in a timely manner, and the need for proceedings to be brought to a close.  
These interests find reflection in the provisions of the DSU, including Article 3.3, which calls for 
"[t]he prompt settlement" of WTO disputes, as this is "essential to the effective functioning of the 
WTO and the maintenance of a proper balance betw een the rights and obligations of Members".  
Likewise, Article 12.2 of the DSU provides that "[p]anel procedures should provide sufficient flexibility so as to ensure high-quality panel re ports, while not unduly delaying the panel process".  
Furthermore, "in the interests of due process, part ies should bring alleged procedural deficiencies to 
the attention of a panel at the earliest possible opportunity".
239  Accordingly, ensuring 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.  In  our view, panels are best situated to determine 
how this balance should be struck in any given pr oceeding, provided that they are vigilant in the 
protection of due process and remain within the bou nds of their duties under Article 11 of the DSU.   
                                                      
234Appellate Body Report, Argentina – Textiles and Apparel , para. 79.  See also Appellate Body 
Report, US – FSC (Article 21.5 – EC) , para. 240. 
235Appellate Body Report, India – Patents (US) , para. 95. 
236Appellate Body Report, US – Gambling , para. 271. (original emphasis) 
237Appellate Body Report, EC – Hormones , footnote 138 to para. 152. 
238Appellate Body Report, Australia – Salmon , para. 278.  See also ibid., para. 272; and Appellate 
Body Report, US – Gambling , para. 270. 
239Appellate Body Report, US – Carbon Steel , para. 123.  See also Appellate Body Report,  
US – Gambling , para. 269;  Appellate Body Report, US – FSC , para. 166;  and Appellate Body Report, 
Mexico – Corn Syrup (Article 21.5 – US) , para. 50. WT/DS371/AB/R 
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 151. We begin our analysis of the Panel's treatmen t of Exhibit PHL-289 by examining Thailand's 
arguments concerning paragraph 15 of the Pa nel's Working Procedures, which provides: 
The parties shall submit all factual evidence to the Panel no later than 
the first substantive meeting, excep t with respect to factual evidence 
necessary for purposes of rebuttals, an swers to questions or comments 
on answers provided by each other. Ex ceptions to this procedure will 
be granted where good cause is shown. In such cases, the other party shall be accorded a period of time for comment, as appropriate.
240 
152. We note at the outset that, although it alleges that the Panel failed to comply with this 
paragraph, Thailand is not seeking from us an independent finding that the Panel violated 
paragraph 15 of its Working Procedures.  Rather , Thailand invokes this pr ovision to support its 
contention that the Panel violated  Thailand's due process rights and failed to comply with its duties 
under Article 11 of the DSU.241   
153. We read paragraph 15 as addressing two categories of evidence.  The first encompasses 
evidence that is submitted no later than the first s ubstantive meeting, as well as evidence that, albeit 
submitted at a later stage, is necessary for purposes of  rebuttal, answers to questions, or comments on 
answers to questions.  The second category of eviden ce is residual.  It comprises evidence that does 
not fall within the scope of the first sentence.  For the second category of evidence, the submitting 
party must show good cause and the other party must be accorded an opportunity to comment. 
154. Thailand contends that Exhib it PHL-289 cannot be characterized as evidence necessary for 
purposes of rebuttal, or comments on Thailand's answ ers to Panel questions, because it was evidence 
adduced in support of the Philippines' prima facie  case and, in particular, to establish that resales of 
domestic cigarettes need not be reported in form Po r.Por.30.  Yet, as explained above, the Philippines 
had previously submitted the 2000 DG Revenue ruling and two expert opinions in support of this 
assertion.  Then, in response to a specific request  by the Panel to comment on the 2000 DG Revenue 
ruling, Thailand submitted the 1995 DG Revenue ruling to show that resales of domestic cigarettes 
must be reported in form Por.Por.30.  The Philippines, in turn, responded in its comments on 
Thailand's answers by submitting Exhibit PHL-2 89 to show that the 2000 DG Revenue ruling 
reflected the current state of Thai law.  As we see it, Exhibit PHL-289 was submitted to explain the discrepancies between the 1995 DG Revenue ruling a nd the 2000 DG Revenue ruling.  As such, this 
exhibit was "factual evidence necessary for purpo ses of rebuttals … or comments on [Thailand's] 
answers" within the meaning of the first sentence of paragraph 15.  Thus, the Panel's acceptance of 
                                                      
240Panel Report, Annex A-1.  The Panel, pursuant to Article 12.1 of the DSU, adopted its own Working 
Procedures following consultation with the parties. 
241Thailand's response to questioning at the oral hearing.  WT/DS371/AB/R 
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 Exhibit PHL-289 without requiring the Philippines to show good cause or affording Thailand an 
opportunity to comment thereon was not inconsiste nt with paragraph 15 of the Panel's Working 
Procedures.242 
155. However, the fact that the Panel's treatment of Exhibit PHL-289 was not inconsistent with 
paragraph 15 of its Working Pro cedures is, in our view, not disp ositive of whether Thailand's due 
process rights were respected and, accordingly, of  whether the Panel complied with its duties under 
Article 11 of the DSU.  As set out above, due pro cess generally demands that each party be afforded a 
meaningful opportunity to comment on evidence adduced by the other party.  At the same time, a number of different considerations will need to be f actored into a panel's effort to protect due process 
in a particular dispute, and these may include the n eed for a panel, in pursui ng prompt resolution of 
the dispute, to exercise control over the proceedings  in order to bring an end to the back and forth 
exchange of competing evidence by the parties.  In  the context of this dispute, there are several 
considerations that are germane to our assessment of Thailand's claim under Article 11 of the DSU.  
These include:  the conduct of the parties;  the le gal issue to which the evidence related and the 
circumstances surrounding the submi ssion of the evidence relating to th at issue;  and the discretion 
afforded under the DSU to panels in their handl ing of the proceedings and appreciation of the 
evidence. 
156. With respect to the conduct of  the parties, we observe that Thailand adduced two items of 
evidence, including the 1995 DG Revenue ruling, in response to a specific question posed by the 
Panel following the second substantive meeting.  Exhibit PHL-289 was then submitted by the 
Philippines at the earliest subsequent opportunity, that is, in its comments on Thailand's answers to 
Panel questions.
243  Although this was the last stage in the Panel proceedings, the Philippines would 
have had no reason to produce the expert testimony c ontained in Exhibit PHL-289 at an earlier stage, 
given that this evidence was introduced to rebut  the 1995 DG Revenue ruling.  Moreover, Thailand 
did not object to Exhibit PHL-289 when it was subm itted, but rather seven months later, in its 
comments on the Panel's Interim Report.  Although we  are mindful that the parties' submission of 
comments on each other's responses to the Panel's questions marked the last step in the Panel 
proceedings, we do not consider that this precl uded Thailand from objecting to Exhibit PHL-289 in a 
                                                      
242We note that the first sentence of paragraph 15 appears to allow for the submission of factual 
evidence at the very last stage of th e proceedings, that is, in a party's co mments on the other party's answers to 
questions by the Panel following the second substantive meeting.  A party's submission of factual evidence so 
late in the proceedings should be unusual. 
243Philippines' appellee's submission, paras. 189-192.  WT/DS371/AB/R 
Page 62  
 
 timely fashion, and requesting that the Panel eith er reject that evidence or give Thailand an 
opportunity to respond to that evidence.244   
157. Thailand alleges that the due process violati on is "more serious" because "Exhibit PHL-289 
was the 'only evidence' supporting"245 the Panel's finding that resales of domestic cigarettes need not 
be reported in form Por.Por.30, and that "the parties' rights under the DSU may be affected by the importance of the evidence at issue".
246  In response, the Philippines argues that the Panel did not 
attach "decisive weight"247 to Exhibit PHL-289, but instead reached its finding based "on several 
pieces of evidence constituting the tota lity of the evidence before it".248 
158. We recall that the issue of whether a VAT registrant is required to report resales of 
VAT-exempt goods, such as domestic cigarettes, in  form Por.Por.30 was contested between the 
parties throughout the proceedings, and each adduced  several pieces of evidence in support of its 
position.  Thus, at the time that Exhibit PHL-289 was submitted by the Philippines, both Thailand and 
the Panel would have been aware that it related to a key and highly disputed issue.  In determining 
that resales of domestic cigarettes need not be repor ted in form Por.Por.30, the Panel explained that 
this finding was "based on [its] careful examin ation of all the evidence in its totality".249  I n  i t s  
analysis, the Panel referred to the 2006 textbook,  as well as the 1995 DG Revenue ruling, which had 
been adduced to show that resales of VAT-exempt  products must be reported in form Por.Por.30.250  
The Panel also observed that the 2000 DG Revenue ruling, together with the second expert opinion 
submitted by the Philippines, indicated that busin esses selling VAT-exempt domestic cigarettes do not 
have to report those sales in form Por.Por.30.251  The Panel further noted that the third expert opinion 
submitted by the Philippines—Exhibit PHL-289—explaine d that the differences in the rulings issued 
in 1995 and 2000 reflect "a change in DG Revenue's  approach to the requirements for completing 
Form Por.Por.30".252 
                                                      
244Although the Philippines asserts that Thailand had, and took advantage of, the opportunity to 
respond to Exhibit PHL-289 in its comments on the Interim Report, we do not consider that this constituted an 
appropriate opportunity to respond.   
245Thailand's appellant's submission, para. 170. 
246Thailand's appellant's submission, para. 170 (referring to Panel Report, Korea – Alcoholic 
Beverages , para. 10.25). 
247Philippines' appellee's submission, para. 209. 
248Philippines' appellee's submission, para. 221. 
249Panel Report, para. 7.703.  Thailand's assertion that Exhibit PHL-289 was the only evidence upon 
which the Panel based its finding that sales of domestic cigarettes need not be reported in form Por.Por.30 is 
also based on a statement made by the Panel in its Inte rim Report that was not included in the Panel's final 
Report.  We do not consider that it is  appropriate, in these appellate pro ceedings, for Thailand  to rely upon a 
statement made by the Panel in its Interim Report but which was redacted from the Panel Report.  
250Panel Report, para. 7.698. 
251Panel Report, para. 7.699. 
252Panel Report, para. 7.700 and footnote 1253 thereto.  WT/DS371/AB/R 
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 159. The above overview of the evidence considered by the Panel indicates that Exhibit PHL-289 
was not the only evidence supporting the Panel's finding that resales of domestic cigarettes need not 
be reported in form Por.Por.30.253  If anything, the main support for the Panel's finding seems to have 
been found in the 2000 DG Revenue ruling, whic h the Panel apparently found compelling because it 
confirmed that "income exempted under Section 81 n eed not be reported in Form Por.Por.30 for the 
calculation of VAT".254   
160. In the light of the above, we do not consider that the Panel's treatment of Exhibit PHL-289 
amounted to a violation of due process.  Thailand could have requested an  opportunity to respond 
when the Philippines submitted the exhibit in question, but it did not.255  Although Exhibit PHL-289 
was submitted very late in the proceedings, this ev idence did not raise or relate to a new issue, 
previously unknown to Thailand or unexplored by  the Panel, and it was not the only evidence 
supporting the Panel's conclusion that  resales of domestic cigarettes need not be reported in form 
Por.Por.30.  The Panel could have chosen to refu se to accept Exhibit PHL-289 or to afford Thailand 
an opportunity to respond to it.  It did not do  so.  However, taking into account all of the 
circumstances, we consider that the Panel did not fail to protect due process in this case.256  
                                                      
253We take note of Thailand's additional argument that the Panel's failure to respect Thailand's due 
process rights was "exacerbated" by the fact that the Panel failed to give "due deference" to Thailand's 
interpretation of its own law. (Thailand's appellant's submission, para. 173)  In our view, the panel in China – 
Intellectual Property Rights correctly recognized that, "objectively, a Member is  normally well-placed to 
explain the meaning of its own law", but that this does not relieve a party of its burden to adduce arguments and 
evidence necessary to sustain its pro posed interpretation. (Panel Report, China – Intellectual Property Rights , 
para. 7.28)  Further, a panel's duties under Article 11 of the DSU require it to cond uct an objective assessment 
of all such arguments and evidence.  In this dispute, the Panel observed, in the context of its Article III:4 
analysis, that "Thailand should normally be in a position to explain the nature" of obligations under Thai law but that, to the extent that the parties disagree on the content of such obligations, the Panel was "required to 
objectively examine the question at issue based on the text of the concerned provision[s] as well as on the 
evidence before [the Panel]". (Panel Report, para. 7.684 (footnote omitted))  We see no error in the Panel's approach. 
254Panel Report, para. 7.701. 
255We are not suggesting that the fact  that Thailand did not expressly request an opportunity to respond 
to Exhibit PHL-289 automatically imp lies that it cannot succeed in its claim that the Panel failed to ensure due 
process.  At the same time, Thailand's failure to request an opportunity to respond is a consideration relevant to 
our overall assessment of whether, in the circumstances of  this case, the Panel's condu ct denied due process to 
Thailand.  We observe, in this regard, that when confronted with an issue similar to the one raised here, the 
panel in China – Auto Parts  rejected "China's argument that the Panel should, sua sponte , have accorded a 
period of time for other parties to comment on Exhibit CDA-48", and stated that "it is China, not the Panel , that 
should have initiated an opportunity to submit comments on Exhibit CDA-48." (Panel Reports, China – Auto 
Parts , para. 6.22 (emphasis added))  We disagree with these statements to the extent that they imply that only 
the conduct of the party receiving evid ence submitted by the other party late  in the proceedings is relevant in 
determining whether due process was protected.  In our view, both that party and the panel to which the 
evidence is submitted have a responsibility to consider whether an opportunity to respond to that evidence would be useful or necessary, and to conduct themselves accordingly. 
256We wish to emphasize, however, that we do not co nsider that the mere char acterization of evidence 
as rebuttal evidence means that  no due process concerns can arise in s ituations where a panel does not afford a 
party an opportunity to respond to such rebuttal evidence. WT/DS371/AB/R 
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 161. For all of these reasons, we find that Thailand has not established that the Panel failed to 
ensure due process and, thus, to comply with it s duty under Article 11 of the DSU to make an 
objective assessment of the matter by accepting a nd relying on Exhibit PHL-289 without having 
afforded Thailand an opportunity  to comment on that evidence. 
3. Thailand's Defence Under Article XX(d) of the GATT 1994 
162. Thailand also appeals the Panel's finding that: 
… Thailand has not discharged its burden of showing that the 
administrative requirements and the imposition of penalties for failure to complete VAT filing requirements are necessary to secure compliance with the Thai VAT laws within the meaning of 
Article XX(d) of the GATT 1994.
257 
163. The Panel made this finding in response to Tha iland's efforts to invoke Article XX(d) of the 
GATT 1994 to defend the additional administrative  requirements found to be inconsistent with 
Article III:4.  Article XX(d) enables Members to jus tify measures found to be  inconsistent with the 
provisions of the GATT 1994 if they can estab lish that such measur es are "necessary to secure 
compliance with laws or regulations which are not inconsistent with the provisions of this 
Agreement", and provided that the application of  such measures is also consistent with the 
requirements of the chapeau of Article XX.  Thus, in order to make out an Article XX(d) defence, 
a respondent must, inter alia , identify "laws or regulations whic h are not inconsistent" with the 
GATT 1994, and establish that the measure found to be GATT-inconsistent is "necessary" to secure 
compliance with such "laws or regulations".   
164. Thailand requests us to reverse the Panel's finding under Article XX(d).  Thailand does not 
challenge the substance of the Panel's reasoning on Thailand's defence, as such.  Rather, Thailand 
contends that a reference contained in the sente nce of the Panel Report immediately preceding the 
Panel's finding reveals that the Panel "committed a funda mental error of legal analysis in its rejection 
of Thailand's defence under Article XX(d)".258  That sentence reads: 
As addressed in Section VII.F.6(b)(ii) above, however, we found that 
the Thai VAT laws that Thailand purports to secure compliance with 
through the administrative requirement[s] at issue, were not WTO 
consistent.259 (original italics;  underlining added) 
                                                      
257Panel Report, para. 7.758. 
258Thailand's appellant's submission, para. 153. 
259Panel Report, para. 7.758.  WT/DS371/AB/R 
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 165. Thus, by means of a cross-reference to Sec tion VII.F.6(b)(ii) of its Report, the Panel 
expressed the view that Thailand had not identified "laws or regulations which are not inconsistent" 
with the GATT 1994, but only VAT laws that the Pa nel had already found to be GATT-inconsistent.  
As Thailand's asserted Article XX(d) defence could not  succeed if the laws or regulations with which 
the measures at issue purportedly secure compliance are themselves GATT-inconsistent, the Panel, in 
the very next sentence of its Report, reached the finding set out above. 
166. Section VII.F.6(b)(ii) of the Panel Report comprises paragraphs 7.729 through 7.738.  It 
contains the Panel's analysis of "[w]hether imported cigarettes are s ubject to less favourable treatment 
than domestic cigarettes within the meaning of Article III:4"260, and culminates with the Panel's 
conclusion that "Thailand acted inc onsistently with Article III:4 by subjecting imported cigarettes to 
less favourable treatment compared to like domestic cigarettes through the VAT-related 
administrative requirements imposed only on resellers of imported cigarettes ."261 
167. Thailand argues that the Panel's reference to Section VII.F.6(b)(ii) shows that the Panel 
identified as the "laws or regulations" with wh ich the inconsistent measure purportedly secures 
compliance the very same measure that the Panel had f ound to be inconsistent with Article III:4 of the 
GATT 1994.  Thus, the Panel's cros s-reference signifies, according to Thailand, that the Panel 
rejected Thailand's Article XX(d) defence to the violation of Article III:4 on the grounds that it had 
already found that the additional administrative re quirements violate Article III:4.  Such circular 
reasoning constitutes, in Thailand's view, a "fundame ntal error" by the Panel that "effectively 
deprived Thailand of its right to assert its Article XX (d) defence" to the finding of inconsistency with 
Article III:4.  For this reason, Thailand submits th at the Panel's Article III:4 finding "is also legally 
flawed"262, and should also be reversed. 
168. The Philippines, on the other hand, considers the cross-reference made by  the Panel to be a 
mere clerical error.  The Ph ilippines sees no basis in the Panel' s reasoning to suggest that its 
examination of Thailand's defen ce consisted of a circular analysis of whether the additional 
administrative requirements are necessary to secu re compliance with those same administrative 
requirements.  The Philippines high lights that the Panel properly articulated the legal standard under 
Article XX(d) and identified Thailand's argument as be ing that the "administrative requirements" are 
necessary to secure compliance "with the Thai VAT laws".  Thus, the Philippines believes that other 
elements of the Panel's reasoning disclose that the cross-reference in paragraph 7.758 was simply a 
mistake, and that the Panel really intended to refer to Section VII.E.5(b)(ii) of its Report, which deals 
                                                      
260Panel Report, heading to Section VII.F.6(b). 
261Panel Report, para. 7.738. (emphasis added) 
262Thailand's appellant's submission, para. 156. WT/DS371/AB/R 
Page 66  
 
 with discriminatory taxation, rather than to Section VII.F.6(b)(ii) of its Report, which deals with the 
discriminatory administrative requirements.  A ccordingly, the Philippines requests the Appellate 
Body to modify this clerical error, replacing the reference to "Section VII.F.6(b)(ii)" with a reference 
to "Section VII.E.5(b)(ii)".   
169. Like the participants, we, too, consider the Pane l's reference to Section VII.F.6(b)(ii) to be 
erroneous.  Read literally, this cross-reference mean s that the Panel considered that the additional 
administrative requirements could not be justified as necessary to secure compliance with those same 
additional administrative requirements because the a dditional administrative requirements had already 
been found to be inconsistent with  Article III:4.  This would be a ma nifestly incorrect approach to the 
analysis of Thailand's Article XX(d) defence.   
170. The Panel's analysis and disposition of Th ailand's defence under Ar ticle XX(d) of the 
GATT 1994 was extremely brief.  In just over a page, the Panel set out the text of the provision, 
identified the order of analysis, the burden of proo f, and the requisite elemen ts of an Article XX(d) 
defence.  In a single paragraph, including the cross -reference to Section VII.F.6(b)(ii) quoted above, 
the Panel applied this analysis to the facts before it.   The brevity of this analysis has not itself been 
challenged on appeal.  Yet it does mean that the Panel' s reasoning offers few clues as to the details of 
the analytical steps taken by the Panel.  Thus, ev en accepting the Philippines' assertions that the Panel 
properly identified the legal standard to be app lied under Article XX(d) a nd the elements of the 
defence advanced by Thailand, we do not see suffi cient reasoning to enable us to conclude with 
confidence that, although the Panel in fact referred to  its finding in Section VII.F.6(b)(ii), it intended 
to refer to its finding in Section VII.E.5(b)(ii) of its Report, or indeed to any other Section of its 
Report.  The reference to Section VII.F.6(b)(ii) was an obvious error, but it is not clear, on the basis of 
the Panel Report, what would have  been the correct reference.  
171. Accordingly, due to the obvious error in the penultimate sentence of paragraph 7.758 of the 
Panel Report, we are compelled to reverse the Panel's finding, in that para graph, that Thailand did not 
discharge its burden of demonstrating that the a dditional administrative requirements are necessary to 
secure compliance with the Thai VAT laws within the meaning of Article XX(d) of the GATT 1994. 
172. Thailand contends that, in the event that we re verse this finding by the Panel, we should also 
reverse the Panel's finding that the additional ad ministrative requirements are inconsistent with 
Article III:4 because the Panel "effectively deprived Thailand of its right to assert its Article XX(d)  WT/DS371/AB/R 
 Page 67 
 
 
 defence" to that finding.263  Thailand does not refer to any prov ision of the DSU or other covered 
agreement, nor to any jurisprudence, in support of this position.   
173. We have difficulties understanding why the Panel' s disposition of the Philippines' claim under 
Article III:4 should depend on the Pa nel's disposition of Thailand's defe nce under Article XX(d).  It is 
true that, in examining a specific measure, a panel may be called upon to analyze a substantive 
obligation and an affirmative defence, and to apply both to that measure.  It is also true that such an 
exercise will require a panel to find and apply a "line of equilibrium"264 between a substantive 
obligation and an exception.  Yet this does not rende r that panel's analyses of the obligation and the 
exception a single and integrated one.  On the contrary , an analysis of whether a measure infringes an 
obligation necessarily precedes, and is distinct from, the "further and separate" assessment of whether 
such measure is otherwise justified.265  Thus, we reject Thailand's request to reverse the Panel's 
Article III:4 finding on the grounds that the Panel erre d in its analysis of Thailand's Article XX(d) 
defence. 
174. In circumstances where it has reversed panel fi ndings and legal interpre tations, the Appellate 
Body has, within the limits of its jurisdiction, consistently sought to  "facilitate the prompt settlement 
of the dispute"266 by completing the legal analysis of relevant issues.267  The same considerations 
impel us to seek to do the same in this appeal.  A ccordingly, we consider whet her we are able to rule, 
ourselves, on Thailand's defence under Article XX(d) of the GATT 1994. 
175. Article XX(d) of the GATT 1994 provides: 
General Exceptions 
Subject to the requirement that such measures are not applied in a 
manner which would constitute a mean s of arbitrary or unjustifiable 
discrimination between countries wher e the same conditions prevail, 
or a disguised restriction on international trade, nothing in this Agreement shall be construed to pr event the adoption or enforcement 
by any Member of measures: 
.... 
                                                      
263Thailand's appellant's submission, para. 156. 
264Appellate Body Report, US – Shrimp , para. 159. 
265In US – Gasoline, the Appellate Body cautioned against confusing "the question of whether 
inconsistency with a substantive rule existed, with the further and separate question  … as to whether that 
inconsistency was nevertheless justified". (Appellate Body Report, US – Gasoline , p. 23, DSR 1996:I, 1, at 21 
(emphasis added).  See also GATT Panel Report, US – Section 337 Tariff Act , para. 5.9) 
266Appellate Body Report, US – Hot-Rolled Steel , para. 235. 
267To the extent that completion of the legal analysis requires the Appellate Body to rely upon facts, the 
Appellate Body can complete the analysis only if "factual findings of the panel" and/or "undisputed facts in the 
panel record" provide a sufficient factual basis to perform the requisite legal analysis. (See Appellate Body Report, EC – Asbestos , para. 78) WT/DS371/AB/R 
Page 68  
 
 (d) necessary to secure compliance with laws or regulations 
which are not inconsistent w ith the provisions of this 
Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of 
Article II and Article XVII, the protection of patents, trade 
marks and copyrights, and the prevention of deceptive 
practices[.] 
176. Article XX(d) is one of the limited and conditi onal "General Exceptions" that allow Members 
pursuing certain public policy objectives to deroga te from the substantive obligations in the 
GATT 1994, including the national treatment obligations set out in Article III.
268  In order to justify an 
otherwise GATT-inconsistent measure, a Member  invoking Article XX(d) as a defence bears the 
burden of establishing that the cond itions prescribed therein are met.269 
177. A Member will successfully discharge that burden and establish its Article XX(d) defence 
upon demonstration of three key elements, namely:  (i) that the measure at  issue secures compliance 
with "laws or regulations" that are themselves cons istent with the GATT 1994;  (ii) that the measure 
at issue is "necessary" to secure such compliance;  and (iii) that  the measure at issue meets the 
requirements set out in the chapeau of Article XX.  Furthermore, when Article XX(d) is invoked to 
justify an inconsistency with Article III:4, what must be shown to be "necessary" is the treatment 
giving rise to the finding of less favourable treatment.270  Thus, when less favourable treatment is 
found based on differences in the regulation of impor ts and of like domestic products, the analysis of 
an Article XX(d) defence should focus on whethe r those regulatory differences are "necessary" to 
secure compliance with "laws or regula tions" that are not GATT-inconsistent. 
178. In all of its submissions before the Panel, Tha iland devoted just six paragraphs to justifying 
the additional administrative requirements, and provided little or no elaboration of the necessary 
elements of its asserted defence under Article XX(d).  We see at least four critical flaws in Thailand's 
presentation of its Article XX(d) defence to the Panel. 
179. First, in putting forth its defence, Thaila nd sought to justify administrative requirements 
relating to VAT liability generally, rather than to justify the differential treatment afforded to 
imported versus domestic cigarettes under its measure .  Second, Thailand failed to identify precisely 
the "laws or regulations" with which the measu re at issue purportedly secures compliance, and 
engaged in no effort to establish that such laws and regulations are consistent with the GATT 1994.  
                                                      
268See Appellate Body Report, US – Gasoline , p. 24, DSR 1996:I, 1, at 22;  and Appellate Body 
Report, US – Shrimp , para. 156. 
269See Appellate Body Report, Korea – Various Measures on Beef , para. 157. 
270See GATT Panel Report, US – Section 337 Tariff Act , para. 5.27.  WT/DS371/AB/R 
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 Even assuming that the vague references made by Thailand in its submissions to the Panel271 could be 
construed as identifying relevant  laws or regulations with wh ich the additional administrative 
requirements seek to ensure compliance, Thailand's arguments with respect to, third, "necessity" and, 
fourth, the chapeau of Article XX,  were patently underdeveloped.272  With respect to the necessity 
test, Thailand asserted that the "reporting requi rements are necessary ... to the enforcement of 
Thailand's VAT system"273, and that the additional administrative requirements are necessary "in that 
it is difficult to see how Thailand could administer its VAT system without requiring VAT payers to 
maintain and submit input and output reports , the VAT Form Por.Por. 30 and the other 
requirements".274  Thailand provided no further elabor ation of these assertions and adduced no 
evidence in support of them.275  As for the chapeau of Article XX,  Thailand referred to it only once.  
In its entirety, this reference consisted of Tha iland's argument that, "[g]iven that these measures are 
applied to all products, im ported or domestic, subject to VAT, th ey are not applied in a manner that 
constitutes an arbitrary or unjustifiable discrimination or a disguised restriction on international 
                                                      
271Thailand made loose references to:  "Thailand's VA T law" (Thailand's first written submission to the 
Panel, para. 260);  "Thailand's VAT system, as established under Chapter 4 of Thailand's Revenue Code" ( ibid.);  
and the "normal reporting requirements of its VAT a nd other tax laws" (Thailand's response to Panel 
Question 139, para. 147).  These references encompass a myriad of provisions of Thai law addressing various matters.  In one instance, Thailand also argued that  the "penalties [] ensure compliance with the normal 
reporting requirements of its VAT and other tax laws  especially where … thos e reporting requirements 
contribute to the fight against smuggling of cigarettes". (Thailand's response to Panel Question 139, para. 147)  
This argument seems to have been advanced in order to justify the penalties under Article XX(d) in the event 
that the Panel considered such penalties to constitute "exc ess tax" under Article III:2 of the GATT 1994.  It is 
unclear to us whether Thailand sought to assert the same defence in the event that, as the Panel ultimately found, the penalties were inconsistent with Article III:4. 
272That the defence by Thailand was largely unelaborate d with respect to "necessity" is likely due to the 
fact that it is difficult to make detailed arguments to demonstrate the "necessity" of a measure under Article XX(d) in the absence of a clea r identification of the laws or regu lations with which that measure is 
purportedly necessary to secure compliance. 
273Thailand's second written submission to the Panel, para. 177. 
274Thailand's first written submission to the Panel, para. 260. (original emphasis)  Thailand added that 
the additional administrative requiremen ts "are necessary, as that term has been interpreted by the Appellate 
Body in Brazil – Retreaded Tyres " (Thailand's second written submission to the Panel, para. 177), and, in a 
footnote, quoted a statement by the Appellate Body in that report, that a measure is necessary if it is "apt to 
make a material contribution to the achievement of its objective" (Thailand's second written submission to the 
Panel, footnote 139 to para. 177 (quoting Appellate Body Report, Brazil – Retreaded Tyres , para. 150)). 
275We recall that the issue of "whether a measure is 'necessary' should be determined through 'a process 
of weighing and balancing a series of factors'" (Appellate Body Report, Korea – Various Measures on Beef , 
para. 164) and that "two factors that, in most cases, will be relevant to a panel's determination of the 'necessity' 
of a measure [are] the contribution of the measure to the realization of the ends pursued by it [and] the 
restrictive impact of the measure on intern ational commerce" (Appellate Body Report, US – Gambling , 
para. 306).  Moreover, a panel's analysis of "neces sity" must include consideration of "whether a 
WTO-consistent alternative measure which the Member c oncerned could 'reasonably be expected to employ' is 
available". (Appellate Body Report, Korea – Various Measures on Beef , para. 166)  See also Appellate Body 
Report, Brazil – Retreaded Tyres , paras. 142 and 143. WT/DS371/AB/R 
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 trade".276  This cannot suffice to establish that the ad ditional administrative requirements fulfil the 
requirements of the chapeau of Article XX.277 
180. In our view, therefore, the arguments and evid ence put forward by Thailand fail, on their face, 
to establish the requisite elements of an Article XX(d) defence.  Accordingly, we find that Thailand 
failed to make out a prima facie  defence and, therefore, failed to establish that the additional 
administrative requirements are justified under Article XX(d) of the GATT 1994.  
4. Conclusion 
181. In the light of the above, we uphold  the Panel's finding, in paragraph 8.3(c) of the Panel 
Report, that Thailand acts inconsistently with it s obligations under Article III:4 of the GATT 1994 by 
subjecting imported cigarettes to treatment less favourable than that accorded to like domestic 
cigarettes.278 
V. Article X:3(b) of the GATT 1994 
A. Introduction 
182. Thailand appeals the Panel's findi ng that Thailand acts inconsistently with Article X:3(b) of 
the GATT 1994 by failing to maintain or institute in dependent review tribunals or procedures for the 
prompt review of guarantee decisions.279  
183. The Panel considered, first, the meaning of  the phrase "administrative action relating to 
customs matters" in Arti cle X:3(b).  The Panel found that the imposition of a guarantee by the Thai 
Customs Department ("Thai Customs") is "adminis trative action relating to customs matters" within 
the meaning of Article X:3(b).280  Second, the Panel considered whether Thailand maintains or 
instituted tribunals or procedures for the prompt  review and correction of guarantee decisions 
in accordance with Article X:3(b) and found that the Thai system does not comply with that obligation.
281 
                                                      
276Thailand's first written submission to the Panel, para. 260. 
277Furthermore, we are uncertain what  Thailand meant to refer to when it stated that "these measures 
are applied to all products, imported or domestic, subject to VAT", since the measures that had to be justified 
under Article XX(d) and the chapeau of Article XX were  the additional administrative requirements, which are 
not applied to resellers of domestic cigarettes. 
278See also Panel Report, para. 7.738. 
279Panel Report, paras. 7.1087 and 8.4(g). 
280Panel Report, para. 7.1053. 
281Panel Report, para. 7.1087.  WT/DS371/AB/R 
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 184. On appeal, Thailand requests us to rever se the Panel's finding that Thailand acts 
inconsistently with Article X:3(b).  Thailand contends that the Panel erred in concluding that requiring 
a guarantee in order to obtain the release of goods  pending a final determination of customs value is 
"administrative action relating to customs matters" w ithin the meaning of Article X:3(b).  In the event 
that we reject this allegation of error and uphol d the Panel's finding that requiring a guarantee falls 
within the scope of Article X:3(b), then Thailand fu rther submits that providing for a right of appeal 
of a guarantee decision upon final assessment of duties satisfies Thailand's obligations under 
Article X:3(b). 
185. The Philippines contends that the Panel correctly  found that the guarantee decisions at issue 
constitute "administrative action re lating to customs matters" within the meaning of Article X:3(b).  
The Philippines requests us to uphold this finding by the Panel and to reject Thailand's contention that 
providing for a right of appeal upon final assessment  of duties satisfies Thailand's obligations under 
Article X:3(b).    
B. Article X:3(b) of the GATT 1994 
186. Article X:3(b) stipulates that WTO Members shall maintain judicial, arbitral or administrative 
tribunals or procedures for the "prompt review a nd correction of administrative action relating to 
customs matters."  On appeal, Thailand's claims of  error relate to the Panel's interpretation and 
application, in the context of guarantee decisions , of the phrases "administrative action relating to 
customs matters" and "prompt review" in Article X:3(b). 
187. Before turning to our analysis we briefly set  out our understanding of the operation of the 
measure at issue based on the findings of the Panel and on the Panel record.  Section 112 of Thailand's 
Customs Act (the "Thai Customs Act")282 provides that in the event of doubt as to the amount of duty 
applicable to a specific good, customs officials may undertake a detailed examination.  In such 
circumstances, the goods in question may be re leased from customs pending the final assessment of 
duty liability, provided that the importer pays "the amount of the duty declared in the entry by the importer or the exporter" and pr ovided that "an additional sum of  money covering the maximum duty 
payable on the goods" is deposited as a guarantee.
283  If, for example, Thai Customs questions 
whether the importer's declared price is an appropria te basis for customs valua tion, then Thai Customs 
may examine the matter further.  During the examin ation process, the importer is entitled to withdraw 
                                                      
282Government of the Kingdom of Thailand, The Customs Act, B.E. 2469 (Panel Exhibit PHL-20). 
283Panel Report, para. 7.1017 (quoting Thai Customs Act, Section 112). WT/DS371/AB/R 
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 the goods against payment of a guarantee.284  Section 112 further stipulates that the guarantee may be 
given in the form of a cash deposit or, provided that the Director-General of Thai Customs so 
approves, it may be given in the form of a "guarantee … of the Ministry of Finance or a bank". 
188. Once final duty liability has been established, Thai Customs issues  a notice of assessment.  If 
the final duty liability exceeds the duty paid on the d eclared value at the time of entry of the goods, 
and the guarantee has been given in the form of a cash deposit, then the amount by which it exceeds 
the declared duty shall be paid  immediately from the cash deposit.285  In the event that a guarantee 
from a bank or the Ministry of Finance has been gi ven, the importer or exporter shall pay the amount 
that exceeds the declared duty with in 30 days after the date of receiving the notice of assessment.  If 
the declared duty paid or the cash deposit exceeds  the amount specified in the notice of final 
assessment, the excess amount, together with inte rest, is to be refunded to the importer.286 
189. Both the importer and the exporter have the right to challenge the final duty assessment 
before a Board of Appeals (the "BoA") within 30 da ys from the date of the receipt of the notice of 
assessment, pursuant to Section 112 sexies  of the Thai Customs Act.287  
190. The Panel found that guarantee decisions can be appealed to the Thai Tax Court only when:  
(i) the importer has been provided with a notice of assessment regarding the final customs value of the 
goods concerned;  and (ii) the importer has challenged that notice before the BoA.288  We understand 
that the Philippines' claim under Article X:3(b) w ith respect to appeals of guarantee decisions as well 
as the Panel's finding with respect thereto, focused on  the first of these two mandatory steps, that is, 
on the requirement under Thai law to await the issuan ce of the notice of assessment before being able 
                                                      
284Panel Report, para. 7.971.  The guarantee must be in an amount equal to the difference between the 
declared c.i.f. price and a (higher) c.i.f. price provisionally fixed by Thai Customs, plus taxes calculated on the basis of the higher, provisional, c.i.f. price. 
285Panel Report, para. 7.856 (quoting Thai Customs Act, Section 112 bis). 
286Panel Report, para. 7.857 (quoting Thai Customs Act, Section 112 quater ). 
287In findings that are not subject to appeal, the Pane l concluded that the BoA cannot be considered to 
be free of control or influence from Thai Customs, principa lly because it is staffed, at  least partially, with Thai 
Customs agents, thus creating the possi bility that individuals involved in taking customs decisions might also 
participate in the review of those same decisions. (Panel Report, paras. 7.1003-7.1005)  Accordingly, the Panel 
considered that the BoA cannot be considered to be a tribunal independent of the agencies entrusted with administrative enforcement within the meaning of Article X:3(b). ( Ibid., para. 7.1006) 
288Although Thailand contended that guarantee decisions could be appealed directly to the Thai Tax 
Court without a prior appeal to the BoA, the Panel, based on evidence submitted by the Philippines, found otherwise. (Panel Report, paras. 7.1072-7.1083;  see also para. 7.91)    WT/DS371/AB/R 
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 to appeal a guarantee decision.289  Furthermore, we understand the Philippines' claim to relate to 
guarantee decisions regardless of whether security is provided by means of a cash deposit or by means 
of a guarantee from a bank or the Ministry of Finance.  Finally, with respect to the obligation under 
Article X:3(b), we note that the Philippines' clai m and the Panel's findings focused on whether the 
Thai system ensures "prompt" review rather th an on what constitutes "review and correction" of 
guarantee decisions. 
1. The Meaning of "administrative action relating to customs matters" and 
"prompt review and correction" in Article X:3(b) 
191. Article X:3(b) of the GATT 1994 provides as follows: 
Each Member shall maintain, or institute as soon as practicable, 
judicial, arbitral or administrative tribunals or procedures for the purpose, inter alia , of the prompt review and correction of 
administrative action relating to customs matters.  Such tribunals or procedures shall be independent of  the agencies entrusted with 
administrative enforcement and their decisions shall be implemented 
by, and shall govern the practice of, such agencies unl ess an appeal is 
lodged with a court or tribunal of superior jurisdiction within the time 
prescribed for appeals to be lodged by importers;  Provided  that the 
central administration of such agen cy may take steps to obtain a 
review of the matter in another proceeding if there is good cause to 
believe that the decision is inconsis tent with established principles of 
law or the actual facts. (original italics) 
192. We begin our analysis of the ordinary meani ng of the phrase "administrative action relating to 
customs matters" by considering dictionary defin itions of the individual wo rds making up this phrase.  
The word "action" is defined, inter alia , as "[a] thing done, a deed, an act", and as "an act or decision 
by an executive or legislative body (as of a government or a political party) or by a supranational agency".
290  The word "administrative" is defined as "of or relating to the executive branch of a 
government" and "of or relating to a government agency".291  Thus, "administrative action" refers to 
acts or decisions of the executive branch of a government, or of a government agency. 
                                                      
289We note the Panel's finding that delays in the Bo A appeal proceedings at issue illustrate that the 
interposing process leading to the review by the Thai Tax Court has the "systemic capacity to impede a prompt  
review by an independent tribunal of administrative actions". (Panel Report, para. 7.1015 (original emphasis))  
Based on evidence of excessive delays in multiple cas es, the Panel concluded that there was a "capacity for 
delays in the system", and therefore concluded that Thailand acts inconsistently with its obligation under 
Article X:3(b) of the GATT 1994. ( Ibid.)   
290Webster's Third New International Dictiona ry of the English Language, Unabridged, P. Babcock 
Gove (ed.) (Merriam-Webster Inc., 1976), p. 21. 
291Merriam Webster's Dictionary of Law , L.P. Wood (ed.) (Merriam-Webster Inc., 1996), p. 13. WT/DS371/AB/R 
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 193. Furthermore, the word "customs " is defined as "duties levied upon imports as a branch of the 
public revenue; the department of the Civ il Service employed in levying these duties".292  We also 
note that the International Convention on the Simplification and Harmonization of Customs 
Procedures , as amended293 (the " Revised Kyoto Convention ") defines the word "customs" in the 
context of Chapter 2 of the General Annex to that Convention.294  It refers to the government service 
responsible for the administration of customs law and the collection of duties and taxes and which 
also has responsibility for the application of other laws and regulations "rel ating to the importation, 
exportation, movement or storage of goods".295  Moreover, we observe that the term "matter", when 
used with a qualification is defined as "[a] thing,  affair, subject, etc., of the kind denoted by, or 
pertaining to the thing denoted by the qualification."296  
194. Turning to the term "relating to", we note that "relate to" is defined, inter alia , as "[h]ave 
some connection with, be connected to".297  The Panel also referred to the Appellate Body's 
interpretation of the term "related to" in the context of Article XX of the GATT 1994, where the 
Appellate Body found that for a measure to be "rel ated to" a particular objective, there must be a 
rational relationship between the measure and the objective pursued.298  For such a rational 
relationship to exist, the measure must not be di sproportionately wide in its scope and reach in 
relation to its objective.  Similarly, in the context of Article X:3(b), we consider that measures must 
have a rational connection with customs matters to fall within the scope of that provision.     
195. Next, we consider the phrase "administrative action relating to customs matters" in its 
context.  We note that the second sentence of Artic le X:3(b) refers to "agencies entrusted with 
administrative enforcement".  This suggests that "adm inistrative action" in the sense of Article X:3(b) 
is action by agencies that "enforce", that is, "apply" relevant rules.  The reference to "appeals to be 
lodged by importers" suggests that the relevant administ rative action is action that affects "importers".   
                                                      
292The Oxford English Dictionary , 2nd  edn, J.A. Simpson and E.S.C. Weiner (eds) (Clarendon Press, 
Oxford, 1989), Vol. IV, p. 167. 
293International Convention on the Simplification and Harmonization of Customs Procedures , done at 
Kyoto, 18 May 1973, 950 UNTS 269, as amended by the Protocol of Amendment to the International 
Convention on the Simplification and Harmonization of Customs Procedures , done at Brussels, 26 June 1999, 
2370 UNTS 27. 
294The "General Annex" is the set of provisions app licable to all the customs procedures and practices 
referred to in the Convention (see Article 1 of the Revised Kyoto Convention ). 
295See also Panel Report, para. 7.1027 (quoting the Revised Kyoto Convention , Chapters 2 and 10 of the 
General Annex). 
296The Oxford English Dictionary , 2nd  edn, J.A. Simpson and E.S.C. Weiner (eds) (Clarendon Press, 
Oxford, 1989), Vol. IX, p. 481. 
297Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 2, p. 2519.  
298Panel Report, para. 7.1028 (referring to Appellate Body Report, US – Shrimp , para. 141).  WT/DS371/AB/R 
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 196. We also consider relevant the cont ext provided by Article 11.1 of the Agreement on Customs 
Valuation .  It stipulates: 
The legislation of each Member shall provide in regard to a 
determination of customs value for the right of appeal, without 
penalty, by the importer or any other person liable for the payment of 
the duty. 
197. This provision imposes an obligation with respect  to a specific kind of administrative action, 
namely, with respect to the determination of cu stoms value.  As we see it, the more specific 
description of one type of administra tive action in Article 11.1 of the  Agreement on Customs 
Valuation , and the absence of any similar qualification in Article X:3(b) of the GATT  1994 , suggest 
that the obligation contained in Article X:3(b) is not limited to particular types of customs-related 
"administrative action". 
198. We note Thailand's assertion that Articles 7, 9.5, and 13 of the Anti-Dumping Agreement 
"provide[] important context in considering whet her the imposition of a guarantee under Article 13 of 
the [ Agreement on Customs Valuation ] is an 'administrative action relating to customs matters'".299  
Thailand argues that the lack of any right to app eal against either provisional anti-dumping measures 
or "new shipper" guarantees under the Anti-Dumping Agreement  suggests that guarantees within the 
meaning of Article 13 of the Agreement on Customs Valuation  do not fall within the scope of 
"administrative action relating to customs ma tters" in Article X:3(b) of the GATT 1994.300   
199. Thailand has not explained why these provisions of the Anti-Dumping Agreement  constitute 
context relevant to the interpretation of the phrase "administrative action relating to customs matters", 
and we are not convinced that they do.  We see significant conceptual differences between ordinary 
customs duties and anti-dumping duties.  These di fferences speak against considering the above 
provisions of the Anti-Dumping Agreement as relevant context for the interpretation of Article X:3(b) 
of the GATT 1994.  The Anti-Dumping Agreement  specifically regulates questions relating to 
situations of what is widely understood as " unfair trade".  These rules authorize a response by 
importing Members to offset the effects of dumpi ng and re-establish a "level playing field".  
Article X:3(b), in contrast, is not a specific rule targ eting "unfair" trade practices.  Rather, it relates to 
customs matters in general.  The conceptual differences between anti-dumping duties and ordinary 
customs duties are reflected in the different disciplin es that apply in respect of the imposition of each 
type of duty.  For example, the imposition of anti-dumping duties requires as a prerequisite, inter alia , 
                                                      
299Thailand's appellant's submission, para. 266. 
300Thailand's appellant's submission, para. 270. WT/DS371/AB/R 
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 a determination of injury by the importing Member.  In contrast, ordinary customs duties may, within 
tariff bindings, be applied without  any such determination.   
200. Even if we were to consider the above provisions of the Anti-Dumping Agreement  as relevant 
context for the interpretation of the phrase "admin istrative action relating to customs matters" in 
Article X:3(b) of the GATT 1994, we do not see th at these provisions support Thailand's position.  
We do not consider it evident that the customs gua rantees at issue should be equated with provisional 
anti-dumping measures and "new shipper" guarantees provided in the context of an anti-dumping 
determination.  Furthermore, Article 13 of the Anti-Dumping Agreement  uses language that differs 
from the language of Article X:3(b) of the GATT 1994, and which makes clear that the review is 
limited to "final" determinations and determinati ons of review proceedings under Article 11 of the 
Anti-Dumping  Agreement .  The absence of any such express limitation in Article X:3(b) suggests, if 
anything, that the phrase "administrative action rela ted to customs matters" is not limited in the way 
Thailand contends.  
201. Consequently, we consider that these provisions do not shed light on the ordinary meaning of 
the phrase "administrative action relating to customs matters" in Article X:3(b).  Instead, reading the 
phrase "administrative action relating to customs matters" in the light of Article X:3(b) as a whole and 
in the context of Article 11.1 of the Agreement on Customs Valuation  points to a common intention of 
WTO Members not to limit the obligation contained in Article X:3(b) to particular types of customs-related "administrative action". 
202. Finally, we turn to consider the phrase "admin istrative action relating to customs matters" in 
the light of the object and purpose of the treaty.  A basic object and purpose of the GATT 1994, as reflected in Article X:3(b), is to ensure due pro cess in relation to customs matters.  The Appellate 
Body referred to this due process objective in EC – Selected Customs Matters .
301  In that vein, the 
panel in EC – Selected Customs Matters  stated that Article X:3(b) seeks to "ensure that a trader who 
has been adversely affected by a decision of an administrative agency has the ability to have that 
adverse decision reviewed."302  In addition, relating more broadl y to Article X:3 of the GATT 1994, 
the Appellate Body has found that this provision establishes certain minimum standards for transparency and procedural fairness in Members' administration of their trade regulations.
303  While 
recognizing WTO Members' discretion to design a nd administer their own laws and regulations, 
Article X:3 also serves to ensure that Members afford the protection of due process to individual traders.  As we see it, the obligation under Article X:3(b) to maintain tribunals or procedures for the 
                                                      
301Appellate Body Report, EC – Selected Customs Matters , para. 302. 
302Panel Report, EC – Selected Customs Matters,  para. 7.536.  
303See Appellate Body Report, US – Shrimp , para. 183.  WT/DS371/AB/R 
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 prompt review and correction of administrative action relating to customs matters is an expression of 
this due process objective of Article X:3.  In the li ght of the above considerat ions, we see no error in 
the Panel's intermediate finding that "administra tive action relating to customs matters" encompasses 
"a wide range of acts applying legal instrument s that have a rational relationship with customs 
matters".304    
203. Next, we address the meaning of the phrase "prompt review and correction" in Article X:3(b).  
The word "prompt" is defined as "ready, quick; done, performed, etc., without delay".305  In addition, 
the due process objective reflected in Article X:3 of the GATT 1994 suggests that "prompt review and 
correction" is to be understood as re view and correction of administrativ e action that is performed in a 
quick and effective manner and without delay.  What  is quick or performed without delay depends on 
the context and particular circumstances, including the nature of the specific type of action to be 
reviewed and corrected.  Whether a system does or does not ensure prompt review thus cannot be 
determined in the abstract.  We therefore agree with the Panel that the nature of the specific 
administrative action at issue informs the meani ng of the word "prompt" in the particular 
circumstances of a Member's domestic system.306 
204. We further note that Article X:3(b) refers to "review and correction" of administrative action.  
The word "review" is defined as "[a]n inspection, an examinati on", or in the legal context as 
"[c]onsideration of a judgment, sentence, et c., by some higher court or authority".307  T h e  w o r d  
"correction" is defined as "[t]he actio n of putting right or indicating errors".308  The reference to 
"correction" indicates that Article X:3(b) requires more than mere declaratory action or ex post  review 
of whether administrative action conforms to domest ic law or not.  Compliance with the obligation to 
maintain tribunals or procedures for the "correc tion" of administrative action relating to customs 
matters requires that Members ensure that thei r system of review provides for the relevant 
administrative action to be set right.   
205. Finally, we note that Article X:3(b) does not prescribe one particular type of review or 
correction of administrative action relating to customs matters.  Instead it refers to "judicial, arbitral or 
                                                      
304Panel Report, para. 7.1029. 
305Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 2, p. 2367.  See also Panel Report, para. 7.1085. 
306Panel Report, para. 7.1086.  We also note the Pa nel's statement, elsewhere in its Report, that 
"showing specific instances where prompt review was not provided could nonetheless help to prove a violation 
of Article X:3(b) to the extent that the non-promptness in the review process concerned can be linked to a 
systemic flaw in the tribunal or pr ocedure maintained by a Member." ( Ibid., para. 7.997) 
307Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 2, p. 2566. 
308Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 527. WT/DS371/AB/R 
Page 78  
 
 administrative tribunals or procedures".  This sugge sts that there are a variety of ways in which a 
Member may comply with the obligation of mainta ining tribunals or procedures for prompt review 
and correction of administrative action re lating to customs matters, provided that, inter alia , such 
tribunals and procedures are indepe ndent of the agencies entrusted w ith administrative enforcement as 
required by the second sentence of Article X:3(b).   
2. Application of Article X:3(b) to the Facts of the Dispute 
(a) Administrative Action Relating to Customs Matters 
206. We now turn to consider whether the Panel correctly found that decisions by Thai Customs on 
the guarantees required in order to have goods re leased pending a final duty assessment constitute 
"administrative action relating to customs matters".  The Panel noted the participants' agreement that 
customs valuation determinations fall within the sc ope of "administrative act ion relating to customs 
matters" in Article X:3(b).309  On appeal, as before the Panel, th e participants' disagreement concerns 
whether the imposition of a guarantee as a security to cover ultimate duty lia bility in exchange for 
release of the goods also falls within the scope of Article X:3(b). 
207. We recall that, pursuant to Section 112 of the Thai Customs Act, customs officials may, in 
case of doubt as to the amount of duty applicable to a specific good, undertake a detailed examination.  
In that event, the goods in question may be re leased from customs pending the final assessment of 
duty liability, provided that the importer pays the d eclared duty and that a cash deposit or guarantee 
covering the maximum duty payable on the goods is given.310     
208. We note that the Panel took into account th e following definition of "guarantee" from Black's 
Law Dictionary :  "[s]omething given or existing as security, su ch as to fulfill a future engagement or a 
condition subsequent."311  Read in the light of the present case, the "future engagement" is the 
payment of ultimate customs duties.  We further note, as did the Panel, that Article 13 of the 
Agreement on Customs Valuation  refers to the concept of "guarantee"  in relation to customs valuation.  
The first sentence of Article 13 refers to different  forms in which a guarantee may be provided.  The 
second sentence, while stipulating an obligation for Members to provide for the possibility to obtain 
the release of goods pending a final determination of  customs value, leaves considerable discretion to 
Members in determining the form of the guarantee to be provided.  Thus, we understand that, in 
customs matters, guarantees include legal instruments of different forms, provided in order to secure 
                                                      
309Panel Report, para. 7.992. 
310Panel Report, para. 7.1017 (quoting Thai Customs Act, Section 112).  See supra , paras. 187 and 188. 
311Panel Report, footnote 1752 to para. 7.1037 (quoting Black's Law Dictionary , 7th edn, 
B.A. Garner (ed.) (West Group, 1999), p. 711).  WT/DS371/AB/R 
 Page 79 
 
 
 the payment of ultimate customs duties.  We also observe that the decisions of customs authorities 
imposing or accepting guarantees may relate, inter alia , to the amount or to the form of the security 
being provided.     
209. The customs guarantee decisions at issue in th is dispute are actions taken by Thailand's 
customs authorities.312  As such, they are acts of the ex ecutive branch of government and thus 
constitute administrative action in the sense of Arti cle X:3(b).  Furthermore, because they serve to 
secure the payment of ultimate customs duties, th ese guarantee decisions are connected to "customs 
matters" and thus fall within the scope of Article X:3(b). 
210. On appeal, Thailand submits that the imposition of a guarantee does not constitute 
"administrative action" within the meaning of  Article X:3(b) because it constitutes only an 
administrative step of a provisional nature.  Thailand asserts that the Appellate Body's statement in 
US – Shrimp (Thailand) / US – Customs Bond Directive  that "taking security for the full and final 
payment of duties should be viewed as a component  of the imposition and collection of anti-dumping 
or countervailing duties" suggests that the Appellate  Body characterized a security as a "provisional 
measure".313  Thailand submits that the A ppellate Body's rationale in US – Shrimp (Thailand) / US – 
Customs Bond Directive  applies equally to the guarantees at  issue in this dispute.     
211. We disagree with Thailand.  In our vi ew, the Appellate Body's statement in US – Shrimp 
(Thailand) / US – Customs Bond Directive , that securities under the Ad Note to paragraphs 2 and 3 of 
Article VI of the GATT 1994 are accessory to final duty liability, does not stand for the proposition 
that such securities are "provisional"  measures.  The fact that two le gal instruments, in that case, the 
security and the imposition of anti-dumping duties, are interlinked, does not, without more, suggest that one of the two instruments is necessarily prov isional in nature.  There, the Appellate Body 
explained that the "security [was] intended to pr ovide a protection against the non-payment risk that 
might arise from the differences between the amount collected at the time of importation and the 
liability that may be finally determined."
314  This statement is consistent  with the view that a security 
is a final and not a provisional measure with respect to that intention to avoid the risk of non-payment.   
212. The Panel referred to this part of  the Appellate Body report in US – Shrimp (Thailand) / US – 
Customs Bond Directive , and concluded that, in the particular circumstances of customs valuation, the 
imposition of a guarantee is intende d to serve the distinct purpose of securing the payment of the 
                                                      
312In the following paragraphs, when referring to the Thai system, and unless otherwise indicated, we 
use the word "guarantees" to cover both cash deposits and guarantees from a bank or the Ministry of Finance, within the meaning of Section 112 of the Thai Customs Act. 
313Thailand's appellant's submission, para. 240 (quoting Appellate Body Report, US – Shrimp 
(Thailand) / US – Customs Bond Directive , para. 231).  
314Appellate Body Report, US – Shrimp (Thailand) / US – Customs Bond Directive , para. 221. WT/DS371/AB/R 
Page 80  
 
 ultimate amount of customs duty pending a fina l determination of duty liability by customs.315  We 
agree with that characterization of  the guarantee.  With respect to  the purpose of securing payment of 
customs duties, the guarantee is the final meas ure, not merely an intermediate step.   
213. Thailand also argues that Article X:1 of th e GATT 1994 lists several different types of 
measures, such as "[l]aws, regulations, judicial decisions and administrative rulings of general 
application", but contains no refe rence to guarantees and other securiti es.  For Thailand, this suggests 
that the drafters did not intend Article X:3(b) to apply to guarantee decisions.316  We are not 
persuaded by this argument.  It is built on the prem ise that Article X:1 and Artic le X:3(b) relate to the 
same types of measures.  However, this is not n ecessarily so.  Article X:1 and Article X:3(b) of the 
GATT 1994 stipulate distinct obligations.  Both u se general, albeit differe nt language.  Neither 
provision uses the word "guarantee".  Therefore, we see no basis for an assumption that the obligation 
of Article X:3(b) extends only to measures falling w ithin the scope of Article X:1 of the GATT 1994. 
214. Finally, Thailand argues that the concept of due process does not compel the conclusion that 
there must be a right of appeal against guarantee decisions.  Thailand submits that guarantee decisions 
are not final administrative acts but constitute merely in termediate steps on the way towards a final 
customs valuation decision and that, as such, they do not constitute "adminis trative action relating to 
customs matters" in the sense of Article X:3(b).  Thailand refers to the doctrine of "ripeness", 
reflecting the concept of deference to the expertise of an administrative agency.  Thailand argues that 
it does not make practical sense to require courts to  intervene in a decision-making process within the 
technical expertise of an administrative agency, be fore that agency has had an opportunity fully to 
consider the issue and render a final decision.317  
215. As already noted above, we do not consider that  a guarantee is merely an intermediate step 
within the administrative procedure leading up to the final assessment of customs duty.  Rather, a 
requirement to provide a guarantee in exchange fo r release of the goods has an administrative content 
of its own.  As the Panel correctly found, the guarantee is a device allowing, on the one hand, the 
importer to withdraw their goods from customs, a nd, on the other hand, securing the payment of the 
ultimate customs duty.318  It is a final, and not an intermediate , administrative act with respect to these 
particular objectives.  The fact that a guarantee provides security for a claim stemming from another 
                                                      
315Panel Report, para. 7.1039 (referring to Appellate Body Report, US – Shrimp (Thailand) / US – 
Customs Bond Directive , para. 221). 
316Thailand's appellant's submission, para. 253. 
317Thailand's appellant's submission, para. 278 (referring to United States Supreme Court, Abbott 
Laboratories v. Gardner , 387 U.S. 136 (1967)). 
318Panel Report, paras. 7.1039 and 7.1040.  WT/DS371/AB/R 
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 administrative action does not change the fact that  the imposition of a guarantee is an administrative 
action in its own right.   
216. For these reasons, we agree with the Panel th at the "imposition of a guarantee is an 
'administrative action relating to customs matte rs' within the meaning of Article X:3(b)".319   
(b) Prompt Review and Correction 
217. In the event that we uphold the Panel's finding th at guarantee decisions fall within the scope 
of "administrative action relating to customs matters ", then Thailand appeals the Panel's finding that 
Thailand's provision of a right of appeal against guarantee decisions at the time when the notice of 
final assessment is issued does not satisfy the obligation in Article X:3(b).320  Because we have agreed 
with the Panel that guarantee decisions fall within  the scope of "administrative action relating to 
customs matters" within the meaning of Article X: 3(b), the condition on which this part of Thailand's 
appeal is predicated is fulfilled.  Consequently, we  now turn to consider whether the Panel erred in 
finding that Thailand's provision of a right of appeal against the imposition of a guarantee only at the 
time when the notice of final assessment is issu ed does not satisfy the obligation prescribed in 
Article X:3(b). 
218. In its assessment of whether the availability of an  appeal of a guarantee decision to the Thai 
Tax Court following the issuance of the notice of assessment satisfies Article X:3(b), the Panel 
considered that the question of whether a Member  provides for prompt review and correction of 
administrative action has to be considered in the light of the nature of the specific administrative 
action concerned.321  The Panel also took into account that guarantee decisions could, depending on 
the situation, entail a heavy fina ncial burden on importers.  With respect to the present dispute, the 
Panel observed that there is no time-frame for the issu ance of a notice of assess ment, and that in some 
cases this has taken "up to 10 months".322  The Panel also noted that fo llowing the issuance of a final 
assessment, an importer must first exhaust an appeal to the BoA before it can appeal to the Thai Tax 
Court.323  In the context of the Philippines' claim pur suant to Article X:3(b) relating to guarantee 
decisions, neither the Philippines nor the Pane l addressed the length of time taken for BoA 
proceedings.324  The Panel then found that if a system does not make available the review of a 
                                                      
319Panel Report, para. 7.1053. 
320Thailand's appellant's submission, para. 294. 
321Panel Report, para. 7.1086. 
322Panel Report, para. 7.1084.   
323Panel Report, paras. 7.1072-7.1083;  see also para. 7.91.   
324Elsewhere in its Report, in the context of a claim by the Philippines under Article X:3(a), the Panel 
observed that specific appeals of customs valuation decisions lodged by PM Thailand between 2000 and 2002 took, on average, two years and six months for the BoA to complete. (Panel Report, para. 7.953) WT/DS371/AB/R 
Page 82  
 
 guarantee decision until the final assessment has b een made in respect of the customs duty, an 
importer may face a situation where it will not be able  to withdraw imported goods due to a guarantee 
value set at an excessively high level.325  The Panel concluded that this is not compatible with the 
obligation under Article X:3(b) to maintain i ndependent tribunals or procedures for the prompt  review 
of the concerned administrative action.326 
219. Above, we have set out the reasons why we agree with the Panel that the nature of the specific 
administrative action at issue informs the meani ng of the word "prompt" in the particular 
circumstances of any given case.  Turning to the s ituation in this dispute, we consider that the 
character of a guarantee is relevant in determining wh at can be regarded as "prompt" with respect to 
the review of guarantee decisions.  As set out above, a "guarantee" is  defined as "[s]omething given or 
existing as security, such as to fulfill a futu re engagement or a condition subsequent".327  T h i s  
definition clarifies a key element of a guarantee, name ly, its relation to a future event.  A guarantee is 
tied to, but distinct from, the fulfilment of an enga gement or condition in the future.  Accordingly, a 
guarantee is effective as a security from the time it is given up to the time when the engagement or condition is fulfilled.  Once the future condition is fulfilled, the guarantee no longer serves as a 
security.     
220. We also recall our above consideration that th e due process objective reflected in Article X:3 
of the GATT 1994 suggests that "prompt review a nd correction" is to be understood as review and 
correction of administrative action that is perfo rmed in a quick and effective manner and without 
delay.  It follows that the mechanism for the re view of administrative action relating to customs 
matters must permit review to be ti mely and effective.  In the particular circumstances of a guarantee, 
which is effective as a security from the time it is given until the time when the engagement or 
condition is fulfilled, we consider that, for a review to be considered timely and effective, it must at 
least be possible to challenge the guarantee during the time it serves as a security.  This is so because 
it is during the period of time that a guarantee is required that importers are most affected by the 
guarantee decision.    
221. In the present case, the Panel understood Thailand's measure to operate in a way that allows a 
challenge of the guarantee decision only once the no tice of assessment is issued and the BoA has 
reviewed that final assessment.  As set out above, Thai law provides that once the ultimate duty has 
been established, and if the ultimate duty liability  exceeds the duty paid on the declared value at the 
time of entry of the goods, the amount by which it exceeds the declared duty shall be paid 
                                                      
325Panel Report, para. 7.1087. 
326Panel Report, para. 7.1087. 
327Black's Law Dictionary , 7th edn, B.A. Garner (ed.) (West Group, 1999), p. 711.  WT/DS371/AB/R 
 Page 83 
 
 
 immediately from the cash deposit if cash was deposited as security.328  In the event that a guarantee 
by a bank or the Ministry of Finance has been given, the importer or exporter shall pay the amount 
that exceeds the declared dut y within 30 days after the date of receiving the notice of assessment.  If 
the duty initially paid or the cash deposit exceed s the amount specified in the notice of final 
assessment, the excess amount, together with in terest, is to be refunded to the importer.329  Thus, with 
the fulfilment of the condition—in this case paymen t of the ultimate duty—the security function of 
the guarantee ceases.330  In providing that a guarantee can only be challenged once the notice of 
assessment has been issued, Section 112 of the Th ai Customs Act invariably delays review of 
guarantee decisions and thereby shields guarantee d ecisions from challenge throughout the period in 
which they serve as a security and in which traders are most affected by these decisions.331  W e  
recognize that, where security has been given in the form of a guarantee by a bank or the Ministry of 
Finance, such a guarantee could be challenged with in the short time period between the issuance of a 
notice of assessment and payment of the ultimate du ty.  Even in such ca ses, however, the review 
system maintained by Thailand imposes delays that  are essentially coextensive with the lifetime of a 
guarantee's security function.  Thus, this system does not ensure prompt review of the relevant 
administrative action. 
222. For the above reasons, we find  no error in the Panel's conclusion that Thailand's system for 
the review of guarantee decisions is not compatib le with the obligation un der Article X:3(b) to 
provide for the prompt review of administrative action relating to customs matters because such 
review is not available until after the final assessme nt of customs duty has been made.  Consequently, 
we uphold  the Panel's finding, in paragraph 8.4(g)  of the Panel Report, that Thailand acts 
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 of guarantee decisions.332 
                                                      
328Panel Report, para. 7.856 (quoting Thai Customs Act, Section 112 bis). 
329Panel Report, para. 7.857 (quoting Thai Customs Act, Section 112 quater ). 
330This occurs either immediately up on issuance of the notice of asse ssment when security has been 
given in the form of a cash deposit, or upon full payment of the assessed duty within 30 days when security has been given in the form of a guarantee by  a bank or the Ministry of Finance. 
331We also note that the fact that a guarantee decisi on cannot be challenged before the issuance of the 
notice of assessment may in certain cases prevent an importer from obtaining release of goods from customs 
pending determination of final customs duties or may even lead an importer to cancel a transaction, for instance, 
where the amount of a guarantee is so high that the im porter is unable to provide it.  (See Panel Report, 
para. 7.1086;  and Philippines' appellee's submission, para. 312) 
332See also Panel Report, para. 7.1087. WT/DS371/AB/R 
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 VI. Findings and Conclusions 
223. For the reasons set out in this Report, the Appellate Body: 
(a) with respect to the Panel's findings under Article III of the GATT 1994 concerning 
Thailand's treatment of resellers of imported  cigarettes, as compared to its treatment 
of resellers of like domestic cigarettes: 
(i) upholds  the Panel's finding, in paragraph 8.3(b) of the Panel Report333,  
that Thailand acts inconsistently with  Article III:2, first sentence, of the 
GATT 1994 by subjecting imported cigarettes to VAT liability in excess of 
that applied to like domestic cigarettes; 
(ii) with respect to the Panel's findings under Article III:4 of the GATT 1994: 
- finds that the Panel did not err in concluding, in paragraph 7.738 of 
the Panel Report, that Thailand accords less favourable treatment to 
imported cigarettes than to like domestic cigarettes; 
- finds that Thailand has not establishe d that the Panel failed to ensure 
due process and, thus, to comply with its duty under Article 11 of the 
DSU to make an objective assessment of the matter, by accepting and relying on Exhibit PHL-289 without affording Thailand an 
opportunity to comment on that evidence;  
- reverses the Panel's finding, in pa ragraph 7.758 of the Panel Report, 
regarding Article XX(d) of the GATT 1994;  but finds that Thailand 
failed to establish that its measure is justified under Article XX(d) of 
the GATT 1994;  and 
- upholds the Panel's finding, in pa ragraph 8.3(c) of the Panel 
Report334, that Thailand acts inconsistently with Article III:4 of the 
GATT 1994 by subjecting imported cigarettes to less favourable treatment than that accorded to like domestic cigarettes;  and  
                                                      
333See also Panel Report, para. 7.644. 
334See also Panel Report, para. 7.738.  WT/DS371/AB/R 
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 ANNEX I 
 
WORLD TRADE  
ORGANIZATION   
WT/DS371/8 
23 February 2011 
 (11-0961) 
 Original:   English 
   
THAILAND – CUSTOMS AND FISCAL MEASURES ON CIGARETTES 
FROM THE PHILIPPINES 
 
Notification of an Appeal by Thailand 
under Article 16.4 and Article 17 of the Understanding on Rules 
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 20(1) of the Working Procedures for Appellate Review  
 
  The following notification, dated 22 February 2011, from the Delegation of Thailand, is being 
circulated to Members. 
_______________ 
 
  Pursuant to Articles 16.4 and 17 of the Understanding on Rules and Procedures Governing 
the Settlement of Disputes  ("DSU") and Rule 20 of the Working Procedures for Appellate Review , 
Thailand hereby notifies the Dispute Settlement Body of its decision to appeal to the Appellate Body 
certain issues of law and legal interpre tation covered in the Panel Report entitled Thailand – Customs 
and Fiscal Measures on Cigarettes from the Philippines  (WT/DS371/R), which was circulated on 
15 November 2010 (the "Panel Report").  Pursuant to Rules 20(1) and 21(1) of the Working 
Procedures for Appellate Review , Thailand is simultaneously filing this Notice of Appeal and its 
Appellant's Submission with the Appellate Body Secretariat.  
  
 As described below, Thailand appeals certain of the Panel's findings on measures related to 
Thailand's Value Added Tax ("VAT") regime for ci garettes, as well as Thailand's regime for the 
acceptance of guarantees to secure the importer’s ul timate liability for customs duties pending final 
determination of the customs value of imported goods.  
  
 Thailand seeks review by the Appellate Body  of the following errors of law and legal 
interpretation by the Panel in the Panel Report:  
I. The Panel's finding under Article III:2 of the GATT 1994 
 
1. The Panel erred in law in finding a violatio n of Article III:2, first sentence, of the 
GATT 1994, not on the basis of the fiscal burdens imposed on imported and domestic products under 
Thai VAT law, but solely on the basis of the administrative requirements of Thailand's VAT system WT/DS371/AB/R 
Page 88  
 
 and the consequences of non-compliance with those requirements.
1  The administrative requirements 
of Thailand’s VAT system and the consequences of  non-compliance are measures that fall within the 
scope of Article III:4, not Article III: 2, first sentence, of the GATT 1994. 
 
2. Even if the Panel were correct to address the administrative requirements of Thai VAT law 
under Article III:2, first sentence, of the GATT 1994, th e Panel erred in law in finding a violation of 
Article III:2 solely on the basis of administrativ e requirements whereby resellers must file a VAT 
form declaring and offsetting their VAT credits a nd liabilities on re-sales of imported cigarettes for 
each month and whereby VAT credits are granted onl y with respect to actual, documented purchases 
of goods such as imported cigarettes.2  These requirements cannot, as a matter of law, lead to taxation 
of imported products in excess of that imposed on domestic products within the meaning of 
Article III:2, first sentence. 
 
II. The Panel's finding under Articles III:4 and XX(d) of the GATT 1994 
 
3. The Panel erred in law in finding that certain  additional administrative requirements for re-
sales of imported cigarettes amounted to less favourab le treatment of imported products within the 
meaning of Article III:4 of the GATT 1994 on the basi s of a finding solely that these administrative 
requirements could potentially affect the compe titive position of imported cigarettes that is not 
supported by its factual analysis and findings.3 
 
4. The Panel erred in law in rejecting Thailand' s defence under Article XX(d) of the GATT 1994 
to the Philippines' claim under Article III:4 on the ground that it had already found the measures with 
respect to which Thailand asserted the defence (the additional administrative requirements for re-sales 
of imported cigarettes) to be inconsis tent with Article III:4 of the GATT 1994.4  Instead, the Panel 
should have looked first at whether the laws with  respect to which Thailand sought to achieve 
compliance were otherwise c onsistent with the GATT 1994.5 
 
5. The Panel erred in law by accepting and relying on evidence that was submitted at the last 
opportunity for the parties to submit their views to the Panel and that was the only evidence to support 
one aspect of the Panel's finding under Article III:4 and upon which Thaila nd had no opportunity to 
comment.6  The Panel acted inconsistently with Artic le 11 of the DSU and paragraph 15 of its 
Working Procedures and also failed to protect Thailand's due process rights by accepting and relying 
on this evidence.7 
 
III. The Panel's finding under Article X:3(b) of the GATT 1994 
 
6. The Panel erred in law in finding that the pr ovisional step of accepting a guarantee in the 
circumstances provided for in Article 13 of the Agreement on Implementation of Article VII of the 
General Agreement on Tariffs and Trade 1994 ("CVA" ) constitutes an "administrative action relating 
to customs matters" within the meaning of and subjec t to a right of review under Article X:3(b) of the 
GATT 1994.8  
                                                      
1See Panel Report, paras. 6.98-6.120, paras. 7.568-7.644, and para. 8.3(b).  This appeal does not 
include the Panel's separate finding under Article III:2, first sentence, in paragraphs 7.567 and 8.3(a) of the Panel Report. 
2See Panel Report, paras. 6.98-6.120; paras. 7.613-7.637; and 8.3(b). 
3See Panel Report, paras. 7.724-7.738 and para. 8.3(c). 
4See Panel Report, paras. 7.749-7.758. 
5See Panel Report, paras. 7.738 and para. 8.3(c). 
6See Panel Report, paras. 6.122-6.128, paras. 7.684-7.704, and para. 8.3(c). 
7See Panel Report, paras. 6.122-6.128, paras. 7.684-7.704, and para. 8.3(c). 
8See Panel Report, paras. 7.1016-7.1053 and para. 8.4(g).  WT/DS371/AB/R 
 Page 89 
 
 
 7. Even if the Panel were correct  that the acceptance of a guarantee under Article 13 of the CVA 
constitutes an "administrative action relating to customs matters" within the meaning of 
Article X:3(b), the Panel erred in law in finding th at providing a right of review of the taking of a 
guarantee at the time of the final determination of duty liability cannot satisfy the obligation in 
Article X:3(b).9 
 
Thailand respectfully requests the Appellate Body to reverse the findings of the Panel 
identified in this Notice of Appeal. 
 
 
__________ 
 
 
 
                                                      
9See Panel Report, paras. 7.1054-7.1087, and para. 8.4(g).