Over the past year, trade issues have become the talking point in the Philippine auto industry, especially regarding safeguard duties on imported vehicles which make up the good majority of what is sold locally. These issues have already been addressed, but there’s another one that deserves some attention: the retaliatory measures offered on many Thai-made products.
The Philippines and Thailand have been in a trade dispute since 2008 over tobacco products. In fact, the Philippines is the complainant to the WTO because Thailand has taken customs and tax measures against tobacco products exported from the Philippines to Thailand. These practices are inconsistent with the GATT 1994, and the Philippines has therefore gone to the WTO for settlement of a dispute that has been labeled as DS371.
Well, it looks like it’s coming to an end. Thai media reported that the Thai government has a draft agreement with the Philippines to settle the dispute over Thai measures against tobacco products imported from the Philippines. No details have been released on the draft deal itself, but the move is a positive step to prevent any issues moving forward.
So what does this have to do with the Philippine auto industry? For about a year, the Philippine government has been considering trade retaliation against Thailand on a wide variety of products: maize (maize), rice, and many other products, including auto parts.
The DTI has filed a petition with the Tariff Commission (TCI WS No. FTA-2021-DS371-Various Products), and the report is already with NEDA. It aims to suspend tax and tariff concessions on these products in order to bring Thailand to the discussion table.
If Thailand stops what it is doing with Filipino tobacco, the Philippines could withdraw these proposed retaliatory measures. This means that the prices of car parts made in Thailand will not be affected. And as we all know too well, many vehicles built in the Philippines depend on auto parts or CKDs from Thailand.