[WTO Case Review Series No.14] Thailand—Customs and Fiscal Measures on Cigarettes from the Philippines (DS371): More stringent discipline of GATT on internal regulation restricting competitive opportunities for imports

The background of this dispute is the internationalization of supply chains within the Association of Southeast Asian Nations Free Trade Area (ASEAN FTA). As a result of trade liberalization in the ASEAN, companies can choose their place of production as they find most suitable, and export products to the place of consumption. This phenomenon makes it easy to discern trade restrictive measures taken by the country of import. The Thailand--Cigarettes dispute illustrates how and to what extent measures of the import country can be questioned by the World Trade Organization (WTO) law. This case involves WTO compatibility of measures ranging from customs valuation, internal taxation, administrative requirement concerning taxation to publication, and administration of trade regulations. It is interesting to note that the Panel considered it sufficient to identify any potential adverse effect on the competitive condition of imported products to find a violation of Article III:4 of the General Agreement on Tariffs and Trade (GATT). In one reading of this Panel Report, one might argue that Article III:4 of GATT requires removing any measure restrictive of competitive opportunities of imports. However, this reading is unfounded because Article III protects equality of competition between national and imported products.