The Philippines has notified WTO of its decision to impose safeguard measure on Thailand’s motor vehicle exports to the country in retaliation for the imposition of discriminatory tax, which runs into millions of US dollars, on Philippine tobacco exports for the past several years, in what could be “double whammy” effect on Thai car exports to the country.

The recently filed retaliatory safeguard measure is on top of the earlier Philippine notification to the WTO to impose safeguard measure on imported motor vehicles from various countries, including Thailand, because the surges in car imports have caused serious injury to the domestic motor vehicle manufacturing industry and employment.

This particular safeguard measure is targeted to all countries, but the new WTO notification on trade retaliation is only targeted against Thailand’s motor vehicle exports to the Philippines.

Should this happen, Thailand motor vehicle exports to the Philippines could suffer twice as much safeguard duty. At present, Thailand’s motor vehicle exports to the Philippines have zero duty already.

Trade and Industry Secretary Ramon M. Lopez said they have submitted “notice to proceed” to WTO last week stressing that after the country’s long wait for Thailand to comply with the WTO decision and appeals to align its discriminatory tax on Philippine tobacco, “It is now time to retaliate.”

The DTI has yet to do some computation on how much Thailand should compensate for the Philippines but said it could run into “millions of US dollars.”

The compensation for these “undue tax collection” would be in the form of safeguard duty to be imposed on imported cars from Thailand, the largest motor vehicle exporter to the Philippines.

“We are doing a computation as to how much compensation and how long,” he said adding they will also determine what models would be slapped with the punitive duty, if it would be pick-up trucks only or other models as well.

While Thailand ignored DTI’s “ultimatum” letter sent last year informing them of the planned retaliatory trade remedy, Lopez revealed that Thailand has already corrected the discriminatory tax imposition on new Philippine tobacco exports.

Thailand did not also inform the Philippines on the tax rectification they made on tobacco exports starting this year.

“Moving forward they have corrected the tax already,” Lopez said.

However, Lopez stressed that such gesture does not constitute compliance as damage had had already been done on the country’s past tobacco exports, mainly from Philip Morris Philippines.

“Even if they’ve corrected moving forward, it will not count. The issue is still the past,” he said.

“This is just our way to implement the rules,” he said.

Should this happen, Thailand motor vehicle exports to the Philippines could suffer twice as much safeguard duty. At present, motor vehicle exports from any ASEAN countries have zero tariff already.

Aside from Thailand, other countries that export huge volume of CBU passenger cars to the Philippines include Indonesia (21-41% share), Korea (8-11%), Japan (7-8%), India (2-9%) and China (1-3%). China’s notable volume was observed during the POI. In 2019 (Jan-Sept), China’s share climbed to 12 percent. For light commercial vehicles, Thailand and Indonesia were the major sources.

Source: Manila Bulletin