EU and US v.

PH
WTO Dispute Settlement Case No. DS403
Read more: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds403_e.htm
Distilled Spirits case, facts:
14 January 2010: EU and US requested
consultations with the Philippines with respect
to the taxation of imported distilled spirits by
the Philippines. EU joined in the consultations
on 27 January.
The US considers that the Philippines' taxes on
distilled spirits discriminate against imported
distilled spirits by taxing them at a substantially
higher rate than domestic spirits.
 The measure at issue is an excise tax on distilled spirits;
low tax applied to PH spirits and higher taxes on
imported spirits
In the PH, all domestic distilled spirits (mostly gins,
brandies, rums, vodkas, whiskies and tequila-type
spirits) are made from one of the designated raw
materials, cane sugar, whereas the vast majority of
imported spirits are made from non-designated
materials (e.g. cereals or grapes). Consequently, all
domestic spirits are subject to the low flat tax, while the
vast majority of imported spirits are subject to one of
the higher tax rates, 10 to 40 times higher.
Issue:
The United States considers that these measures are
inconsistent with Article III:2 of the General Agreements on
Tariffs and Trade (GATT) 1994, to wit:

The products of the territory of any contracting party imported

into the territory of any other contracting party 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. Moreover, no contracting
party shall otherwise apply internal taxes or other internal
charges to imported or domestic products in a manner contrary
to the principles set forth in paragraph 1.
Article III, GATT
National Treatment on Internal Taxation and Regulation

Article III:1 provides: The contracting parties recognize that

internal taxes and other internal charges, and laws,
regulations and requirements affecting the internal sale,
offering for sale, purchase, transportation, distribution or
use of products, and internal quantitative regulations
requiring the mixture, processing or use of products in
specified amounts or proportions, should not be applied to
imported or domestic products so as to afford protection to
domestic production.
Ruling:
The Panel found that because imported spirits are taxed less
favourably than domestic spirits, the Philippine measure,
while facially neutral, is nevertheless discriminatory and thus
violates the obligations under the first and second sentences
of Article III:2 of GATT.
First sentence violation: Through its excise tax, the Philippines
subjects imported distilled spirits made from non-designated raw
materials to internal taxes in excess of those applied to like
domestic distilled spirits made from the designated raw materials;
Second sentence violation: PH applied dissimilar taxes on imported
distilled spirits and on directly competitive or substitutable
domestic distilled spirits, so as to afford protection to Philippine
production of distilled spirits.
 PH v. Thailand
WTO Dispute Settlement Case No. DS371
Read more: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds371_e.htm
Cigarettes case
7 February 2008: PH requested consultations
with Thailand concerning a number of Thai
fiscal and customs measures affecting
cigarettes from the Philippines. Such measures
include Thailand's customs valuation practices,
excise tax, health tax, TV tax, VAT regime, retail
licensing requirements and import guarantees
imposed upon cigarette importers.
PHs claims under Article III, GATT
PH argued that Thailand determined the tax base for VAT on
imported cigarettes in such a way that the VAT on imported
cigarettes is in excess of that imposed on like domestic
cigarettes, in violation of the first sentence of Article III:2.
PH further claimed that imported cigarettes are also subject to
VAT liability in excess of that applied to like domestic
cigarettes, in violation of the first sentence of Article III:2, as
the VAT exemption is only given to domestic cigarette resellers.
They also claim this violates Article III:4 because it provides
less favorable treatment for imported products than for like
domestic products.
Article III: 4, GATT
The products of the territory of any contracting party imported
into the territory of any other contracting party 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, purchase, transportation, distribution or use.
The provisions of this paragraph shall not prevent the
application of differential internal transportation charges
which are based exclusively on the economic operation of the
means of transport and not on the nationality of the product.
Thailands arguments:
Thailand argued that in deciding the tax base for VAT, it had
applied a general methodology in the same manner to both
imported and domestic cigarettes. Further, under Thai law,
resellers of domestic cigarettes are exempt from a VAT
liability and the related administrative
requirements. Thailand argued that this exemption given
only to resellers of domestic cigarettes did not result in an
excess tax as resellers of imported cigarettes receive tax
credits for the potential liabilities.
PH claims under Article X, GATT:
PH challenged the Thai government system under which certain
government officials simultaneously served on the board of TTM, a state-
owned domestic cigarette manufacturer.
According to PH, this is inconsistent with the obligations under
Article X:3(a) to administer customs matters in a reasonable and
impartial manner. PH also alleged that Thailand acted inconsistently with
Article X:3(a) through the alleged unreasonable delays caused in the
administrative review process for appeals against customs
determinations.
Furthermore, PH argued that the determinations by Thai Excise of the tax
base for VAT as well as its use of a guarantee value in calculating the
excise, health and television taxes, are non-uniform, unreasonable and
partial, and therefore in violation of Article X:3(a).
 PH further claimed that Thailand failed to maintain an independent
tribunal or process for the prompt review of administrative actions
relating to customs matters, particularly customs value decisions
and guarantee decisions, inconsistently with the obligations under
Article X:3(b).
PH also claimed that Thailand violates Article X:1, GATT, which
requires the publication of trade laws and regulations of general
application (due process obligation).
Article X:3 (a) and (b), GATT
a) Each contracting party shall administer in a uniform, impartial and
reasonable manner all its laws, regulations, decisions and rulings of the kind
described in paragraph 1 of this Article.
(b) Each contracting party 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 unless 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 agency may take steps to obtain a review of the matter
in another proceeding if there is good cause to believe that the decision is
inconsistent with established principles of law or the actual facts.
Article X:1, GATT
Publication and Administration of Trade Regulations
Laws, regulations, judicial decisions and administrative rulings of general
application, made effective by any contracting party, pertaining to the
classification or the valuation of products for customs purposes, or to rates of
duty, taxes or other charges, or to requirements, restrictions or prohibitions on
imports or exports or on the transfer of payments therefor, or affecting their sale,
distribution, transportation, insurance, warehousing inspection, exhibition,
processing, mixing or other use, shall be published promptly in such a manner as
to enable governments and traders to become acquainted with them.
Agreements affecting international trade policy which are in force between the
government or a governmental agency of any contracting party and the
government or governmental agency of any other contracting party shall also be
published. The provisions of this paragraph shall not require any contracting
party to disclose confidential information which would impede law enforcement
or otherwise be contrary to the public interest or would prejudice the legitimate
commercial interests of particular enterprises, public or private.
Issues:
(1) The Philippines claims that Thailands VAT regime on
both imported and domestic cigarettes are inconsistent
with Article III:2 of GATT, first and second sentence and
Article III:4.
(2) The Philippines claims that Thailand administers these
measures in a partial and unreasonable manner and
thereby violates Article X:3(a) and (b) of GATT. PH also
claims that Thailand violates the due process obligation
under Article X:1, GATT, which requires the publication of
trade laws and regulations of general application.
Ruling, first issue (Article III violations):
Panel concluded that Thai Excise had deviated from its general
methodology in determining the tax base for VAT for imported
cigarettes, while at the same time applying this methodology to
domestic cigarettes. This resulted in excess taxation for imported
cigarettes in a manner contrary to Article III:2, first sentence of
GATT.
The mere possibility of imported cigarettes being subject to an
internal tax in excess of that which is applied to domestic cigarettes
was inconsistent with Thailand's obligations under Article III:2.
The Panel found therefore that these specific aspects of the Thai
VAT regime violated Thailand's obligations under Articles III:2 and
III:4 of the GATT 1994.
Ruling, second issue (Article X violations):
Panel concluded that the PH failed to establish that appointing government
officials to serve on the board of TTM was an unreasonable and partial
administration of Thai customs and tax laws within the meaning of Article
X:3(a).
The Panel, however, found that Thailand acted inconsistently with
Article X:3(a) through the delays caused in the administrative review process.
As for PHs claim on the use of a guarantee value in calculating the Excise,
Health and Television taxes, the Panel concluded that the Thai government's
use of the guarantee value as the tax base and the absence of an automatic
refund mechanism for these taxes, concern the substantive aspects of such
laws and regulations rather than the manner in which they are put into
practical effect. Accordingly, the Panel found that the Philippines' claim
under Article X:3(a) in respect of the administration of Thai Excise, Health and
Television taxes was improperly brought under Article X:3(a).
 The Panel found that Thailand violated Article X:3(b) by failing to
maintain an independent tribunal for the prompt review of the
concerned administrative actions relating to customs matters. The
Panel also found that 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.
The Panel also agreed with PH that Thailand violated Article X:1 by
failing to publish laws and regulations pertaining to the
determination of a VAT for cigarettes and the release of a
guarantee imposed in the customs valuation process.