$1.4-B tag for RP-Thai trade row

BY KRISTINE L. ALAVE, BusinessWorld Reporter A trade dispute between Manila and Bangkok is brewing, with Thailand seeking $1.4 billion in compensation over a Philippine decision to prolong safeguard duties on imported glass and even threatening to file a case before the World Trade Organization (WTO). Officials from both sides confirmed that Bangkok had formally objected to a three-year extension of safeguard duties, ordered by Manila last November upon the request of the country’s sole local glass manufacturer, Asahi Glass Philippines, Inc. Ramon Vicente T. Kabigting, head of the Bureau of International Trade Relations under the Department of Trade and Industry, said Thailand asked the Philippines to "refrain" from extending the safeguard duties during a bilateral meeting at the sidelines of last month’s Association of Southeast Asian Nations summit in Cebu. Thai Commerce officials claimed the safeguard duties, which expired in October, violated WTO rules, Mr. Kabigting said. An official from the Thai Embassy in Manila confirmed that Bangkok had objected to the extension, calling it a protectionist measure and saying the Thai government would elevate the case to the WTO. "Yes, we are protesting and we are asking for compensation," said Malou de Leon, the embassy’s marketing director, in a phone interview. "We are going to raise this to the WTO as a hindrance to trade," she added. But Mr. Kabigting disagreed, saying "we are aware of our rights and obligations under the WTO." Thai Commerce Minister Krirkkrai Jirapaet raised the issue of the safeguard duties to Trade Secretary Peter B. Favila during the Asia-Pacific Economic Cooperation summit in Hanoi, Vietnam last November. Mr. Kabigting said Bangkok was demanding $1.4 billion for the "damage" caused by the Philippine safeguard duties on the Thai glass industry. "They said we have affected and could be affecting $1.4 billion from 2006-2009," the official said. Although the Trade department has yet to check Bangkok’s claims, Mr. Kabigting said Manila was "curious" on how Bangkok arrived at the sum. He described the $1.4-billion price tag as "out of the ball park," noting that Thailand’s total flat glass trade with the Philippines amounted to only a little over $1 million over the past five years. The Thai embassy’s Ms. De Leon said there was still no formal reply from the Philippine government. But there is a proposal to compensate Thailand through goods instead of money. The Philippines can give preferential tariff treatment to certain Thai commodities, she explained. Asked what these Thai products are, the embassy official said the matter was "still under negotiations." In November, the Trade department extended the safeguard duties on float, mirrored, and figured glass for another three years with the expiry of a 2004 order protecting Asahi Glass Philippines, a subsidiary of Japan’s Asahi Glass Co. Ltd., from the influx of cheap imports. Imported clear float glass is charged an additional P3,971 per metric ton (MT) while tinted float glass is charged P5,016 /MT. For figured glass, the safeguard duty is P2,274.30/MT and for glass mirrors, P4,384.25/MT. With the help of the safeguard measures versus imported glass, Asahi Glass was able to post P154 million and P326.8 million in profits in 2004 and 2005, following a P1.3-billion loss in 2002.