Thailand - Customs and Fiscal Measures on Cigarettes from the Philippines - Second recourse to article 21.5 of the DSU by the Philippines - Report of the Panel

Thailand – Customs and Fiscal measures on cigarettes

from the Philippines

Second Recourse to Article 21.5 of the DSU by the Philippines

Report OF THE PANEL


TABLE OF CONTENTS


1   INTRODUCTION 17

1.1   Prior proceedings in DS371 17

1.2   Complaint by the Philippines 18

1.3   Panel establishment and composition 19

1.4   Panel proceedings 20

1.4.1   General 20

1.4.2   Third-party access to the confidential Final Report, submissions and exhibits in the first recourse to Article 21.5 20

1.4.3   The Philippines' request for copies of communications between Indonesian and Thai government officials 21

1.4.3.1   Thailand's objection to the Philippines' letter of 24 September 2018 21

1.4.3.2   The Philippines' DSU Article 13 request of 19 October 2018 23

1.4.4   Thailand's objection concerning the Panel's terms of reference 24

2   FACTUAL ASPECTS 25

2.1   Introduction 25

2.2   PMTL and the relevant Thai government agencies 25

2.3   The measures challenged in this proceeding 26

3   PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS 26

4   ARGUMENTS OF THE PARTIES 28

5   ARGUMENTS OF THE THIRD PARTIES 28

6   INTERIM REVIEW 28

7   FINDINGS 29

7.1   Initial considerations 29

7.1.1   Introduction 29

7.1.2   General framework for the Panel's analysis 29

7.1.2.1   General principles of interpretation and standard of review 29

7.1.2.2   Reliance on the Report in the Philippines' first recourse to Article 21.5. 31

7.1.3   Issues relating to jurisdiction and admissibility 35

7.1.3.1   The nexus between the Charges/NoAs and DSB recommendations and rulings 35

7.1.3.1.1   Introduction 35

7.1.3.1.2   Findings in the first recourse to Article 21.5 36

7.1.3.1.3   The 2002-2003 Charges and the 1,052 revised NoAs 37

7.1.3.1.4   Conclusion 39

7.1.3.2   Thailand's allegations of "illegal acts" by PM Indonesia 39

7.1.3.3   The Philippines' alternative claims under Article 7.1 of the CVA 42

7.1.3.3.1   Introduction 42

7.1.3.3.2   Main arguments of the parties 43

7.1.3.3.3   Analysis by the Panel 44

7.1.3.3.3.1   General considerations 44

7.1.3.3.3.2   Article 6.2 of the DSU 46

7.1.3.3.3.3   Timeliness of the Philippines' alternative claim 50

7.1.3.3.4   Conclusion 53

7.1.3.4   The Philippines' standing to challenge measures concerning PMTL's imports from Indonesia 54

7.1.4   Relevance of the presumption of good faith on the part of Thailand and its authorities 55

7.1.4.1   Introduction 55

7.1.4.2   Relevance of the presumption of good faith to accepting the veracity of Thailand's representations 56

7.1.4.3   Relevance of the presumption of good faith to the interpretation of CVA obligations 59

7.1.4.4   Conclusion 62

7.2   The Thai authorities' reliance on the information in the CK-21A forms 63

7.2.1   Introduction 63

7.2.2   The nature of the cost information reported in the CK-21A forms 64

7.2.3   The circumstances surrounding the Thai authorities' reliance on the CK-21A forms 69

7.2.4   Conclusion 75

7.3   The 2002-2003 Criminal Charges 75

7.3.1   General 75

7.3.1.1   Factual description of the Charges 75

7.3.1.1.1   The prior assessments of the entries at issue 75

7.3.1.1.2   Events culminating in the Charges 77

7.3.1.1.3   Section 27 of the Customs Act 78

7.3.1.1.4   The content of the Charges and the Annex 79

7.3.1.1.5   The explanation of how the "actual" value/price was determined 79

7.3.1.1.6   The criminal proceedings 81

7.3.1.2   Claims and order of analysis 81

7.3.1.3   Claims not pursued 82

7.3.2   Existence of a challengeable measure 82

7.3.2.1   Introduction 82

7.3.2.2   Main arguments of the parties 83

7.3.2.3   Analysis by the Panel 85

7.3.2.3.1   General considerations 85

7.3.2.3.2   Existence of a distinct measure 88

7.3.2.3.3   Existence of a determination for purposes of the CVA 89

7.3.2.3.4   Speculation on future measures or events 90

7.3.2.3.5   The issues of making a prima facie case and conducting a de novo review 91

7.3.2.4   Conclusion 92

7.3.3   Applicability of the CVA to the Charges 92

7.3.3.1   Introduction 92

7.3.3.2   Main arguments of the parties 93

7.3.3.3   Analysis by the Panel 95

7.3.3.3.1   General considerations 95

7.3.3.3.2   The agency that filed the Charges 96

7.3.3.3.3   The meaning of the Charges 102

7.3.3.3.3.1   Introduction 102

7.3.3.3.3.2   The issues in dispute 103

7.3.3.3.3.3   The issue of the "actual price" as merely an approximate reference value 107

7.3.3.3.3.4   The issue of the "actual price" as the "price actually paid or payable" 111

7.3.3.3.3.5   Conclusion 114

7.3.3.3.4   The consequences of the Charges 115

7.3.3.3.5   The "intention to defraud" aspect of the Charges 118

7.3.3.4   Conclusion 119

7.3.4   Claims under Articles 1.1 and 1.2(a), second sentence, and Articles 6 and 7 of the CVA 119

7.3.4.1   Introduction 119

7.3.4.2   Analysis by the Panel 120

7.3.4.2.1   General considerations 120

7.3.4.2.2   Claims under Article 1.1 and Article 1.2(a), second sentence 122

7.3.4.2.2.1   Claim under Article 1.2(a), second sentence 123

7.3.4.2.2.2   Alternative claim under Article 1.1 125

7.3.4.2.3   Claims under Article 6.1 and/or Article 7.1 126

7.3.4.2.3.1   Claim under Article 6.1 126

7.3.4.2.3.2   Alternative claim under Article 7.1 127

7.3.4.3   Conclusion 128

7.3.5   Claim regarding sequential application of valuation methods 129

7.3.5.1   Introduction 129

7.3.5.2   Main arguments of the parties 129

7.3.5.3   Analysis by the Panel 130

7.3.5.3.1   General considerations 130

7.3.5.3.2   Review of the 2002-2003 Charges 131

7.3.5.4   Conclusion 133

7.3.6   Claim under Article 1.2(a), third sentence, of the CVA 133

7.3.6.1   Introduction 133

7.3.6.2   Main arguments of the parties 134

7.3.6.3   Analysis by the Panel 135

7.3.6.3.1   General considerations 135

7.3.6.3.2   The applicability of Article 1.2(a), third sentence, to the Public Prosecutor 137

7.3.6.3.3   The communications between the DSI and PMTL 138

7.3.6.4   Conclusion 142

7.3.7   Article XX of the GATT 1994 142

7.3.7.1   Introduction 142

7.3.7.2   Main arguments of the parties 143

7.3.7.3   Analysis by the Panel 144

7.3.7.3.1   Applicability of Article XX of the GATT 1994 to the CVA 144

7.3.7.3.2   Justification under Article XX(a) or XX(d) 147

7.3.7.4   Conclusion 149

7.4   The 1,052 revised Notices of Assessment (NoAs) 149

7.4.1   Introduction 149

7.4.2   Main arguments of the parties 150

7.4.3   Analysis by the Panel 152

7.4.3.1   General considerations 152

7.4.3.2   The termination of the measures 155

7.4.3.3   Reintroduction of the same or materially similar measures 159

7.4.3.4   The practical value of additional findings in the event of reintroduction 161

7.4.4   Conclusion 162

8   CONCLUSIONS AND RECOMMENDATIONS 163