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Industry backs no Thai tariff action, citing supply disruption

INDUSTRY GROUPS have declared their opposition to the potential suspension of tariff concessions on exports from Thailand to the Philippines, warning that regional supply chains could be disrupted and consumer prices might rise.

The Trade department is requesting authorization from the World Trade Organization (WTO) to suspend tariff concessions in retaliation against Thailand in a 13-year trade dispute.

Industry representatives from both the Philippines and Thailand presented their case in a public hearing of the Tariff Commission Wednesday, in which the commission presented the 112 proposed product lines for which concessions could be suspended.

The list includes cars, materials for plastic goods, air-conditioning, and flavor enhancers for food products.

The WTO in March suspended consideration of Philippine retaliation against Thailand, after which the Trade department said it would continue to pursue the matter with the international body.

The Philippines first complained in 2008 of Thailand’s customs valuation of Philippine cigarette exports, which the WTO decided in favor of the Philippines two years later.

The trade department in November 2019 said it sought to impose retaliatory measures against Thailand’s automotive exports to the Philippines for non-compliance with the WTO ruling. But trade representatives from Thailand said that the Philippine request ignores procedural rules, as it was made outside of the timeframe prescribed by the WTO.

The Federation of Thai Industries (FTI) during the hearing listed more than a dozen industries that could be hurt by retaliation, including automotive, air conditioning, food, plastic, and steel companies.

“The Philippines and Thailand are in the network of production from raw materials, intermediate (products) to finished goods. We depend on each other, so by this kind of retaliation… would hurt both sides,” FTI Vice-Chairman Nilsuwan Leelarasamee said.

Raised tariffs could increase the prices of machines for farming and soybean products, resulting in higher consumer prices in the Philippines, he added.

Car industry groups from both countries also pushed back against the proposal.

“Completely built up units from Thailand play a critical role in the automotive market mix. The imposition of additional duty, whether in the form of safeguard or retaliatory measure, will drastically increase the prices of vehicles offered to the market,” Chamber of Automotive Manufacturers of the Philippines, Inc. President Rommel R. Gutierrez said.

The Thai Automotive Industry Association noted that car manufacturers on both sides participate in a sophisticated regional supply chain, the disruption of which could have economic and political consequences.

Philippine Plastics Industry Association, Inc. President Danny Ngo said that the inclusion of Thai exports of materials used by Philippine-based plastics manufacturers will increase the cost of domestic production, making producers here less competitive against finished goods imports.

In response, Trade Assistant Director Angelo Salvador M. Benedictos said that the trade dispute has gone unresolved since it began in 2008.

“The issue has been brewing since 2008… and we have not found any solution despite the fact that the Philippines won the case, won all the appeals,” he said.

“Much has been said to the possible damage to both sides. We have of course thought about all of those and we will try… to minimize whatever the damage — hopefully not to ourselves.”

Mr. Benedictos said that the Philippines will proceed with the suspension once it receives authorization from the Dispute Settlement Body of the WTO and after the Trade department goes through its internal processes. — Jenina P. Ibañez

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