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Cablegate: Thai Alcohol Valuation Dispute Moves to Wto

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PP RUEHWEB

DE RUEHBK #0426 0390924
ZNR UUUUU ZZH
P 080924Z FEB 08
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC PRIORITY 1766
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEHGV/USMISSION GENEVA PRIORITY 1965

UNCLAS BANGKOK 000426

SIPDIS

INFO ASEAN MEMBER COLLECTIVE
USMISSION USEU

SIPDIS

STATE FOR EAP/MLS AND EB
STATE PASS TO USTR
TREASURY FOR OASIA
COMMERCE FOR EAP/MAC/OKSA

E.O. 12958: N/A
TAGS: ECON ETRD EINV TH

SUBJECT: Thai alcohol valuation dispute moves to WTO

REF A: 07 Bangkok 5405
REF B: 07 Bangkok 2535

1. (SBU) Summary. After a customs valuation dispute remained
unresolved after over one year of discussions with Royal Thai
Customs officials, the EU in January requested formal consultation
at the WTO over the valuation of imported distilled spirits. The
Philippines has now also requested WTO consultations over Custom's
valuation of imported cigarettes for similar reasons. U.S.
companies have only a small role in the distilled spirits dispute,
but are a major player in the Philippines case. Thai officials view
their valuation method as a tool to fight corruption, but hope for a
quick solution. End Summary.

2. (SBU) Alcohol and tobacco producers, including Diageo, Pernod
Ricard, Bacardi, Brown & Foreman, and Phillip Morris, have had a
longstanding dispute with Customs over the valuation of imported
distilled spirits and cigarettes. Customs has used a "deductive
valuation" method instead of accepting the invoiced value, which the
companies argue is against WTO rules. The EU has documented over
500 cases of Thai Customs' using a method other than transaction
value for imported spirits. Customs has said that the deductive
valuation method is necessary to prevent companies from using
artificially low intra-company transfer prices instead of the true
transaction price.

3. (SBU) Over the past year, both the U.S. and the EU have pressed
Thai Customs on the alcohol valuation issue multiple times at
multiple levels of government but the issue is still outstanding.
The EU last month decided to request consultations at the WTO and
the Philippines requested consultations this week.

4. (SBU) Natina Santiyanont, the Director of the Thai Customs
valuation office, told us that the current valuation method was
developed after a Thai Police investigations unit uncovered a
corruption scandal in which customs officers were complicit in
agreeing to allow companies to value imports at artificially low
intra-company transfer prices. From her standpoint, the current
valuation method of imported distilled spirits is aimed at combating
corruption and tax evasion, and is consistent with WTO rules which
allow for deductive valuation when the declared transaction value is
questionable. The affected firms have argued that deductive
valuation is only a last resort and that Thai Customs failed to try
intermediate valuation methods.

5. (SBU) Pimchanok Vonkhorporn, Director of the Department of Trade
Negotiations in the Ministry of Commerce, said that she was not
surprised that the EU moved forward on WTO consultations but hoped
for a quick resolution. She said they are in discussions with the
Thai Ministry of Finance (which oversees Customs) to prepare
documents for the WTO and continue to work with the EU delegation in
Bangkok prior to the WTO consultation which will likely take place
next month. Pimchanok said it is possible that there was a
"misunderstanding" among Customs officials about the rules and
regulations applicable to alcohol imports, but said that any
solution would have to apply to cigarettes as well so that the same
valuation method is used for both.

John

© Scoop Media

 
 
 
 
 
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