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Source(s) of the information:
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Recourse to article 21.5 of the DSU by the Philippines - Report of the Panel

WTO CASES CITED IN THIS REPORT

Short titleFull case title and citation
Argentina – Financial Services Appellate Body Report, Argentina – Measures Relating to Trade in Goods and Services, WT/DS453/AB/R and Add.1, adopted 9 May 2016
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, p. 515
Argentina – Hides and Leather Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather, WT/DS155/Rand Corr.1, adopted 16 February 2001, DSR 2001:V, p. 1779
Argentina – Textiles and Apparel Panel Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/R, adopted 22 April 1998, as modified by Appellate Body Report WT/DS56/AB/R, DSR 1998:III, p. 1033
Australia – Apples Appellate Body Report, Australia – Measures Affecting the Importation of Apples from New Zealand, WT/DS367/AB/R, adopted 17 December 2010, DSR 2010:V, p. 2175
Australia – Automotive Leather II (Article 21.5 – US) Panel Report, Australia – Subsidies Provided to Producers and Exporters of Automotive Leather – Recourse to Article 21.5 of the DSU by the United States, WT/DS126/RW and Corr.1, adopted 11 February 2000, DSR 2000:III, p. 1189
Australia – Salmon Panel Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/R and Corr.1, adopted 6 November 1998, as modified by Appellate Body Report WT/DS18/AB/R, DSR 1998:VIII, p. 3407
Australia – Salmon (Article 21.5 – Canada) Panel Report, Australia – Measures Affecting Importation of Salmon – Recourse to Article 21.5 of the DSU by Canada, WT/DS18/RW, adopted 20 March 2000, DSR 2000:IV, p. 2031
Brazil – Desiccated Coconut Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, p. 167
Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, p. 1527
Brazil – Taxation Panel Reports, Brazil – Certain Measures Concerning Taxation and Charges, WT/DS472/R, Add.1 and Corr.1/ WT/DS497/R, Add.1 and Corr.1, circulated to WTO Members 30 August 2017 [appealed by Brazil on 28 September 2017]
Canada – Aircraft Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, p. 1377
Canada – Aircraft (Article 21.5 – Brazil) Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft – Recourse by Brazil to Article 21.5 of the DSU, WT/DS70/AB/RW, adopted 4 August 2000, DSR 2000:IX, p. 4299
Canada – Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 2000:VI, p. 2985
Canada – Continued Suspension Appellate Body Report, Canada – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS321/AB/R, adopted 14 November 2008, DSR 2008:XIV, p. 5373
Canada – Continued Suspension Panel Report, Canada – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS321/R and Add.1 to Add.7, adopted 14 November 2008, as modified by Appellate Body Report WT/DS321/AB/R, DSR 2008:XV, p. 5757
Canada – Dairy (Article 21.5 – New Zealand and US II) Panel Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the DSU by New Zealand and the United States, WT/DS103/RW2, WT/DS113/RW2, adopted 17 January 2003, as modified by Appellate Body Report WT/DS103/AB/RW2, WT/DS113/AB/RW2, DSR 2003:I, p. 255
Canada – Patent Term Appellate Body Report, Canada – Term of Patent Protection, WT/DS170/AB/R, adopted 12 October 2000, DSR 2000:X, p. 5093
Canada – Periodicals Appellate Body Report, Canada – Certain Measures Concerning Periodicals, WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, p. 449
Canada – Wheat Exports and Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004, DSR 2004:VI, p. 2739
Canada – Wheat Exports and Grain Imports Panel Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/R, adopted 27 September 2004, upheld by Appellate Body Report WT/DS276/AB/R, DSR 2004:VI, p. 2817
Chile – Alcoholic Beverages Appellate Body Report, Chile – Taxes on Alcoholic Beverages, WT/DS87/AB/R, WT/DS110/AB/R, adopted 12 January 2000, DSR 2000:I, p. 281
Chile – Price Band System Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23 October 2002, DSR 2002:VIII, p. 3045 (Corr.1, DSR 2006:XII, p. 5473)
Chile – Price Band System (Article 21.5 – Argentina) Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU by Argentina, WT/DS207/AB/RW, adopted 22 May 2007, DSR 2007:II, p. 513
Chile – Price Band System (Article 21.5 – Argentina) Panel Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU by Argentina, WT/DS207/RW and Corr.1, adopted 22 May 2007, upheld by Appellate Body Report WT/DS207/AB/RW, DSR 2007:II, p. 613
China – Auto Parts Appellate Body Reports, China – Measures Affecting Imports of Automobile Parts, WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, adopted 12 January 2009, DSR 2009:I, p. 3
China – Autos (US) Panel Report, China – Anti-Dumping and Countervailing Duties on Certain Automobiles from the United States, WT/DS440/R and Add.1, adopted 18 June 2014, DSR 2014:VII, p. 2655
China – GOES (Article 21.5 – US) Panel Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States – Recourse to Article 21.5 of the DSU by the United States, WT/DS414/RW and Add.1, adopted 31 August 2015
China – HP-SSST (Japan) / China – HP-SSST (EU) Panel Reports, China – Measures Imposing Anti‑Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP‑SSST") from Japan / China – Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP‑SSST") from the European Union, WT/DS454/R and Add.1 / WT/DS460/R, Add.1 and Corr.1, adopted 28 October 2015, as modified by Appellate Body Reports WT/DS454/AB/R / WT/DS460/AB/R
China – Intellectual Property Rights Panel Report, China – Measures Affecting the Protection and Enforcement of Intellectual Property Rights, WT/DS362/R, adopted 20 March 2009, DSR 2009:V, p. 2097
China – Publications and Audiovisual Products Appellate Body Report, China –Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010, DSR 2010:I, p. 3
China – Rare Earths Appellate Body Reports, China – Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum, WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R, adopted 29 August 2014, DSR 2014:III, p. 805
China – Rare Earths Panel Reports, China – Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum, WT/DS431/R and Add.1 / WT/DS432/R and Add.1 / WT/DS433/R and Add.1, adopted 29 August 2014, upheld by Appellate Body Reports WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R, DSR 2014:IV, p. 1127
China – Raw Materials Appellate Body Reports, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R, adopted 22 February 2012, DSR 2012:VII, p. 3295
China – Raw Materials Panel Reports, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/R, Add.1 and Corr.1 / WT/DS395/R, Add.1 and Corr.1 / WT/DS398/R, Add.1 and Corr.1, adopted 22 February 2012, as modified by Appellate Body Reports WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R, DSR 2012:VII, p. 3501
China – X-Ray Equipment Panel Report, China – Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment from the European Union, WT/DS425/R and Add.1, adopted 24 April 2013, DSR 2013:III, p. 659
Colombia – Ports of Entry Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry, WT/DS366/R and Corr.1, adopted 20 May 2009, DSR 2009:VI, p. 2535
Colombia – Textiles Panel Report, Colombia – Measures Relating to the Importation of Textiles, Apparel and Footwear, WT/DS461/R and Add.1, adopted 22 June 2016, as modified by Appellate Body Report WT/DS461/AB/R
Dominican Republic – Import and Sale of Cigarettes Panel Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, as modified by Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, p. 7425
EC – Approval and Marketing of Biotech Products Panel Reports, European Communities – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, Add.1 to Add.9 and Corr.1 / WT/DS292/R, Add.1 to Add.9 and Corr.1 / WT/DS293/R, Add.1 to Add.9 and Corr.1, adopted 21 November 2006, DSR 2006:III, p. 847
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001, DSR 2001:VII, p. 3243
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, p. 591
EC – Bananas III (Article 21.5 – Ecuador) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas – Recourse to Article 21.5 of the DSU by Ecuador, WT/DS27/RW/ECU, adopted 6 May 1999, DSR 1999:II, p. 803
EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) Appellate Body Reports, European Communities – Regime for the Importation, Sale and Distribution of Bananas – Second Recourse to Article 21.5 of the DSU by Ecuador,WT/DS27/AB/RW2/ECU, adopted 11 December 2008, and Corr.1 / European Communities – Regime for the Importation, Sale and Distribution of Bananas – Recourse to Article 21.5 of the DSU by the United States, WT/DS27/AB/RW/USA and Corr.1, adopted 22 December 2008, DSR 2008:XVIII, p. 7165
EC – Bed Linen (Article 21.5 – India) Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSUby India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, p. 965
EC – Bed Linen (Article 21.5 – India) Panel Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSUby India, WT/DS141/RW, adopted 24 April 2003, as modified by Appellate Body Report WT/DS141/AB/RW, DSR 2003:IV, p. 1269
EC – Chicken Cuts Appellate Body Report, EuropeanCommunities – Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted 27 September 2005, and Corr.1, DSR 2005:XIX, p. 9157
EC – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R, adopted 28 July 2011, DSR 2011:VII, p. 3995
EC – Fasteners (China) Panel Report, European Communities – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/R and Corr.1, adopted 28 July 2011, as modified by Appellate Body Report WT/DS397/AB/R, DSR 2011:VIII, p. 4289
EC – Fasteners (China) (Article 21.5 – China) Appellate Body Report, European Communities – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China – Recourse to Article 21.5 of the DSU by China, WT/DS397/AB/RW and Add.1, adopted 12 February 2016
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, p. 135
EC – Hormones (US) (Article 22.6 – EC) Decision by the Arbitrators, European Communities – Measures Concerning Meat and Meat Products (Hormones), Original Complaint by the United States – Recourse to Arbitration by the European Communities under Article 22.6 of the DSU, WT/DS26/ARB, 12 July 1999, DSR 1999:III, p. 1105
EC – IT Products Panel Reports, European Communities and its member States – Tariff Treatment of Certain Information Technology Products, WT/DS375/R / WT/DS376/R / WT/DS377/R, adopted 21 September 2010, DSR 2010:III, p. 933
EC – Salmon (Norway) Panel Report, European Communities – Anti-Dumping Measure on Farmed Salmon from Norway, WT/DS337/R, adopted 15 January 2008, and Corr.1, DSR 2008:I, p. 3
EC – Sardines Appellate Body Report, European Communities – Trade Description of Sardines, WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, p. 3359
EC – Seal Products Appellate Body Reports, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/AB/R / WT/DS401/AB/R, adopted 18 June 2014, DSR 2014:I, p. 7
EC – Seal Products Panel Reports, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/R and Add.1 / WT/DS401/R and Add.1, adopted 18 June 2014, as modified by Appellate Body Reports WT/DS400/AB/R / WT/DS401/AB/R, DSR 2014:II, p. 365
EC – Selected Customs Matters Appellate Body Report, European Communities – Selected Customs Matters, WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791
EC – Tariff Preferences Panel Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/R, adopted 20 April 2004, as modified by Appellate Body Report WT/DS246/AB/R, DSR 2004:III, p. 1009
EC – Trademarks and Geographical Indications (Australia) Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by Australia, WT/DS290/R, adopted 20 April 2005, DSR 2005:X, p. 4603
EC – Trademarks and Geographical Indications (US) Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by the United States, WT/DS174/R, adopted 20 April 2005, DSR 2005:VIII, p. 3499
EC – Tube or Pipe Fittings Panel Report, European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted 18 August 2003, as modified by Appellate Body Report WT/DS219/AB/R, DSR 2003:VII, p. 2701
EC and certain member States – Large Civil Aircraft Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7
EC and certain member States – Large Civil Aircraft (Article 21.5 – US) Panel Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft – Recourse to Article 21.5 of the DSU by the United States, WT/DS316/RW and Add.1, circulated to WTO Members 22 September 2016 [appealed by European Union on 13 October 2016]
EU – Biodiesel (Argentina) Appellate Body Report, European Union – Anti-Dumping Measures on Biodiesel from Argentina, WT/DS473/AB/R and Add.1, adopted 26 October 2016
EU – Fatty Alcohols (Indonesia) Panel Report, European Union – Anti-Dumping Measures on Imports of Certain Fatty Alcohols from Indonesia, WT/DS442/R and Add.1, adopted 29 September 2017, as modified by Appellate Body Report WT/DS442/AB/R
EU – Footwear (China) Panel Report, European Union – Anti-Dumping Measures on Certain Footwear from China, WT/DS405/R, adopted 22 February 2012, DSR 2012:IX, p. 4585
Guatemala – Cement I Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998, DSR 1998:IX, p. 3767
India – Additional Import Duties Panel Report, India – Additional and Extra-Additional Duties on Imports from the United States, WT/DS360/R, adopted 17 November 2008, as reversed by Appellate Body Report WT/DS360/AB/R, DSR 2008:XX, p. 8317
India – Autos Panel Report, India – Measures Affecting the Automotive Sector, WT/DS146/R, WT/DS175/R, and Corr.1, adopted 5 April 2002, DSR 2002:V, p. 1827
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, p. 9
India – Patents (US) Panel Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, Complaint by the United States, WT/DS50/R, adopted 16 January 1998, as modified by Appellate Body Report WT/DS50/AB/R, DSR 1998:I, p. 41
India – Quantitative Restrictions Appellate Body Report, India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, WT/DS90/AB/R, adopted 22 September 1999, DSR 1999:IV, p. 1763
India – Solar Cells Appellate Body Report, India – Certain Measures Relating to Solar Cells and Solar Modules, WT/DS456/AB/R and Add.1, adopted 14 October 2016
Indonesia – Autos Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R, Corr.1 and Corr.2, adopted 23 July 1998, and Corr.3 and Corr.4, DSR 1998:VI, p. 2201
Japan – Alcoholic Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, p. 97
Japan – DRAMs (Korea) Appellate Body Report, Japan – Countervailing Duties on Dynamic Random Access Memories from Korea, WT/DS336/AB/R and Corr.1, adopted 17 December 2007, DSR 2007:VII, p. 2703
Japan – Film Panel Report, Japan – Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, p. 1179
Korea – Alcoholic Beverages Appellate Body Report, Korea – Taxes on Alcoholic Beverages, WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, p. 3
Korea – Various Measures on Beef Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, p. 5
Mexico – Corn Syrup (Article 21.5 – US) Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSUby the United States, WT/DS132/AB/RW, adopted 21 November 2001, DSR 2001:XIII, p. 6675
Mexico – Taxes on Soft Drinks Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/AB/R, adopted 24 March 2006, DSR 2006:I, p. 3
Russia – Commercial Vehicles Panel Report, Russia – Anti-Dumping Duties on Light Commercial Vehicles from Germany and Italy, WT/DS479/R and Add.1, circulated to WTO Members 27 January 2017 [appealed by Russia on 20 February 2017]
Russia – Tariff Treatment Panel Report, Russia – Tariff Treatment of Certain Agricultural and Manufacturing Products, WT/DS485/R, Corr.1, Corr.2, and Add.1, adopted 26 September 2016
Thailand – Cigarettes (Philippines) Appellate Body Report, Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines, WT/DS371/AB/R, adopted 15 July 2011, DSR 2011:IV, p. 2203
Thailand – Cigarettes (Philippines) Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines, WT/DS371/R, adopted 15 July 2011, as modified by Appellate Body Report WT/DS371/AB/R, DSR 2011:IV, p. 2299
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, p. 2701
Turkey – Textiles Appellate Body Report, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, adopted 19 November 1999, DSR 1999:VI, p. 2345
US – 1916 Act Appellate Body Report, United States – Anti-Dumping Act of 1916, WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X, p. 4793
US – 1916 Act (Japan) Panel Report, United States – Anti-Dumping Act of 1916, Complaint by Japan, WT/DS162/R and Add.1, adopted 26 September 2000, upheld by Appellate Body Report WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, p. 4831
US – Anti-Dumping and Countervailing Duties (China) Panel Report, United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/R, adopted 25 March 2011, as modified by Appellate Body Report WT/DS379/AB/R, DSR 2011:VI, p. 3143
US – Anti-Dumping Methodologies (China) Appellate Body Report, United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China, WT/DS471/AB/R and Add.1, adopted 22 May 2017
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779
US – Carbon Steel (India) Appellate Body Report, United States – Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India, WT/DS436/AB/R, adopted 19 December 2014, DSR 2014:V, p. 1727
US – Carbon Steel (India) Panel Report, United States – Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India, WT/DS436/R and Add.1, adopted 19 December 2014, as modified by Appellate Body Report WT/DS436/AB/R, DSR 2014:VI, p. 2189
US – Certain EC Products Appellate Body Report, United States – Import Measures on Certain Products from the European Communities, WT/DS165/AB/R, adopted 10 January 2001, DSR 2001:I, p. 373
US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012, DSR 2012: XI, p. 5751
US – Continued Suspension Panel Report, United States – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS320/R and Add.1 to Add.7, adopted 14 November 2008, as modified by Appellate Body Report WT/DS320/AB/R, DSR 2008:XI, p. 3891
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III, p. 1291
US – COOL Appellate Body Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July 2012, DSR 2012:V, p. 2449
US – COOL Panel Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as modified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R, DSR 2012:VI, p. 2745
US – Corrosion-Resistant Steel Sunset Review Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, p. 3
US – Countervailing and Anti-Dumping Measures (China) Appellate Body Report, United States – Countervailing and Anti-Dumping Measures on Certain Products from China, WT/DS449/AB/R and Corr.1, adopted 22 July 2014, DSR 2014:VIII, p. 3027
US – Countervailing and Anti-Dumping Measures (China) Panel Report, United States – Countervailing and Anti-Dumping Measures on Certain Products from China, WT/DS449/R and Add.1, adopted 22 July 2014, as modified by Appellate Body Report WT/DS449/AB/R, DSR 2014:VIII, p. 3175
US – Countervailing Duty Investigation on DRAMS Appellate Body Report, United States – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131
US – Countervailing Measures on Certain EC Products (Article 21.5 – EC) Panel Report, United States – Countervailing Measures Concerning Certain Products from the European Communities – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS212/RW, adopted 27 September 2005, DSR 2005:XVIII, p. 8950
US – Customs Bond Directive Panel Report, United States – Customs Bond Directive for Merchandise Subject to Anti-Dumping/Countervailing Duties, WT/DS345/R, adopted 1 August 2008, as modified by Appellate Body Report WT/DS343/AB/R / WT/DS345/AB/R, DSR 2008:VIII, p. 2925
US – Export Restraints Panel Report, United States – Measures Treating Exports Restraints as Subsidies, WT/DS194/R and Corr.2, adopted 23 August 2001, DSR 2001:XI, p. 5767
US – FSC Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations", WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, p. 1619
US – FSC (Article 21.5 – EC) Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations" – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, p. 55
US – FSC (Article 21.5 – EC) Panel Report, United States – Tax Treatment for "Foreign Sales Corporations" – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS108/RW, adopted 29 January 2002, as modified by Appellate Body Report WT/DS108/AB/RW, DSR 2002:I, p. 119
US – Gambling Panel Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005, as modified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII, p. 5797
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, p. 4697
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, p. 4051
US – Large Civil Aircraft (2nd complaint) (Article 21.5 – EU) Panel Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) – Recourse to Article 21.5 of the DSU by the European Union, WT/DS353/RW and Add.1, circulated to WTO Members 9 June 2017 [appealed by the European Union on 29 June 2017]
US – Line Pipe Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea, WT/DS202/AB/R, adopted 8 March 2002, DSR 2002:IV, p. 1403
US – Offset Act (Byrd Amendment) Appellate Body Report, United States – Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January 2003, DSR 2003:I, p. 375
US – Oil Country Tubular Goods Sunset Reviews (Article 21.5 – Argentina) Appellate Body Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina – Recourse to Article 21.5 of the DSU by Argentina, WT/DS268/AB/RW, adopted 11 May 2007, DSR 2007:IX, p. 3523
US – Orange Juice (Brazil) Panel Report, United States – Anti-Dumping Administrative Reviews and Other Measures Related to Imports of Certain Orange Juice from Brazil, WT/DS382/R, adopted 17 June 2011, DSR 2011:VII, p. 3753
US – Poultry (China) Panel Report, United States – Certain Measures Affecting Imports of Poultry from China, WT/DS392/R, adopted 25 October 2010, DSR 2010:V, p. 1909
US – Section 211 Appropriations Act Appellate Body Report, United States – Section 211 Omnibus Appropriations Act of 1998, WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, p. 589
US – Section 301 Trade Act Panel Report, United States – Sections 301-310 of the Trade Act of 1974, WT/DS152/R, adopted 27 January 2000, DSR 2000:II, p. 815
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, p. 2755
US – Shrimp (Article 21.5 – Malaysia) Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/AB/RW, adopted 21 November 2001, DSR 2001:XIII, p. 6481
US – Shrimp (Article 21.5 – Malaysia) Panel Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/RW, adopted 21 November 2001, upheld by Appellate Body Report WT/DS58/AB/RW, DSR 2001:XIII, p. 6529
US – Shrimp (Ecuador) Panel Report, United States – Anti-Dumping Measure on Shrimp from Ecuador, WT/DS335/R, adopted on 20 February 2007, DSR 2007:II, p. 425
US – Shrimp (Thailand) / US – Customs Bond Directive Appellate Body Report, United States – Measures Relating to Shrimp from Thailand / United States – Customs Bond Directive for Merchandise Subject to Anti-Dumping/Countervailing Duties, WT/DS343/AB/R / WT/DS345/AB/R, adopted 1 August 2008, DSR 2008:VII, p. 2385 / DSR 2008:VIII, p. 2773
US – Shrimp (Thailand) Panel Report, United States – Measures Relating to Shrimp from Thailand, WT/DS343/R, adopted 1 August 2008, as modified by Appellate Body Report WT/DS343/AB/R / WT/DS345/AB/R, DSR 2008:VII, p. 2539
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, p. 571
US – Softwood Lumber IV (Article 21.5 – Canada) Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada – Recourse by Canada to Article 21.5 of the DSU, WT/DS257/AB/RW, adopted 20 December 2005, DSR 2005:XXIII, p. 11357
US – Softwood Lumber VI (Article 21.5 – Canada) Appellate Body Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006, and Corr.1, DSR 2006:XI, p. 4865
US – Steel Plate Panel Report, United States – Anti-Dumping and Countervailing Measures on Steel Plate from India, WT/DS206/R and Corr.1, adopted 29 July 2002, DSR 2002:VI, p. 2073
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003, DSR 2003:VII, p. 3117
US – Steel Safeguards Panel Reports, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/R and Corr.1 / WT/DS249/R and Corr.1 / WT/DS251/R and Corr.1 / WT/DS252/R and Corr.1 / WT/DS253/R and Corr.1 / WT/DS254/R and Corr.1 / WT/DS258/R and Corr.1 / WT/DS259/R and Corr.1, adopted 10 December 2003, as modified by Appellate Body Report WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R, DSR 2003:VIII, p. 3273
US – Tax Incentives Panel Report, United States – Conditional Tax Incentives for Large Civil Aircraft, WT/DS487/R and Add.1, adopted 22 September 2017, as modified by Appellate Body Report WT/DS487/AB/R
US – Tuna II (Mexico) Appellate Body Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/AB/R, adopted 13 June 2012, DSR 2012:IV, p. 1837
US – Tuna II (Mexico) (Article 21.5 – Mexico) Appellate Body Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of the DSU by Mexico, WT/DS381/AB/RW and Add.1, adopted 3 December 2015
US – Tuna II (Mexico) (Article 21.5 – Mexico) Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of the DSU by Mexico, WT/DS381/RW, Add.1 and Corr.1, adopted 3 December 2015, as modified by Appellate Body Report WT/DS381/AB/RW
US – Tuna II (Mexico) (Article 21.5 – US) / US – Tuna II (Mexico) (Article 21.5 – Mexico II) Reports of the Panels, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of the DSU by the United States, WT/DS381/RW/USA and Add.1 / United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products – Second Recourse to Article 21.5 of the DSU by Mexico, WT/DS381/RW/2 and Add.1, circulated to WTO Members 26 October 2017 [appealed by Mexico on 1 December 2017]
US – Tyres (China) Appellate Body Report, United States – Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China, WT/DS399/AB/R, adopted 5 October 2011, DSR 2011:IX, p. 4811
US – Underwear Appellate Body Report, United States – Restrictions on Imports of Cotton and Man-made Fibre Underwear, WT/DS24/AB/R, adopted 25 February 1997, DSR 1997:I, p. 11
US – Underwear Panel Report, United States – Restrictions on Imports of Cotton and Man-made Fibre Underwear, WT/DS24/R, adopted 25 February 1997, as modified by Appellate Body Report WT/DS24/AB/R, DSR 1997:I, p. 31
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R, Add.1 to Add.3 and Corr.1, adopted 21 March 2005, as modified by Appellate Body Report WT/DS267/AB/R, DSR 2005:II, p. 299
US – Upland Cotton (Article 21.5 – Brazil) Appellate Body Report, United States – Subsidies on Upland Cotton – Recourse to Article 21.5 of the DSU by Brazil, WT/DS267/AB/RW, adopted 20 June 2008, DSR 2008:III, p. 809
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1, DSR 1997:I, p. 323
US – Zeroing (EC) (Article 21.5 – EC) Appellate Body Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS294/AB/RW and Corr.1, adopted 11 June 2009, DSR 2009:VII, p. 2911
US – Zeroing (EC) (Article 21.5 – EC) Panel Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS294/RW, adopted 11 June 2009, as modified by Appellate Body Report WT/DS294/AB/RW, DSR 2009:VII, p. 3117
US – Zeroing (Japan) (Article 21.5 – Japan) Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan, WT/DS322/AB/RW, adopted 31 August 2009, DSR 2009:VIII, p. 3441
US – Zeroing (Japan) (Article 21.5 – Japan) Panel Report, United States – Measures Relating to Zeroing and Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan, WT/DS322/RW, adopted 31 August 2009, upheld by Appellate Body Report WT/DS322/AB/RW, DSR 2009:VIII, p. 3553

ABBREVIATIONS

AbbreviationDescription
ACWL/Commerce Letters Advisory Centre on WTO Law opinion of 21 May 2012 and related letter of 22 January 2014 from the Thai Ministry of Commerce to Thailand's Attorney General
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
BAT British American Tobacco
BoA Board of Appeals
BoA Ruling Board of Appeals Ruling No. GorOr 112/2555/Por9/2555(3.1) of 16 November 2012
Charges The Charges, Case Black No. Or. 185/2559, 18 January 2016
2002-2003 Charges The Charges, Case Black No. Or. 232/2560, 26 January 2017
Competition Act Competition Act B.E. 2542 (1999)
Customs Act Customs Act B.E. 2469 (1926), as amended
CVA Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994
DSB Dispute Settlement Body
DSI Department of Special Investigations
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
GATS General Agreement on Trade in Services
GATT 1994 General Agreement on Tariffs and Trade 1994
IBA Rules on Evidence International Bar Association, Rules on the Taking of Evidence in International Arbitration, adopted by a resolution of the IBA Council on 29 May 2010
ILC Articles on State Responsibility International Law Commission, Articles on Responsibility of States for Internationally Wrongful Acts, adopted by the ILC at its fifty-third session, in 2001, published in Yearbook of the International Law Commission, 2001, Vol. II, Part Two
JTI Japan Tobacco International
King Power King Power International Co. Ltd.
Ministerial Decision Ministerial Decision Regarding Cases Where Customs Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value
MRSP Maximum Retail Selling Price
Nairobi Convention International Convention on Mutual Administrative Assistance for the Prevention, Investigation and Repression of Customs Offences (signed in Nairobi, 9 June 1977, entered into force 21 May 1980)
OECD Transfer Pricing Guidelines OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Guidelines)
P&GE Profits and general expenses
PM Indonesia Philip Morris Indonesia
PM Philip Morris
PMPMI Philip Morris Philippines Manufacturing Inc.
PMTL / PM Thailand Philip Morris Thailand Limited
RRSP Recommended retail selling price
RSP Retail selling price
SCM Agreement Agreement on Subsidies and Countervailing Measures
September 2012 BoA Ruling Board of Appeals Ruling No. GorOr 81/2555/Por7/2555(4.1) and cover letter No. GorKor 0519(8) (GotOr), 12 September 2012
SPS Agreement Agreement on the Application of Sanitary and Phytosanitary Measures
TBT Agreement Agreement on Technical Barriers to Trade
TFA Trade Facilitation Agreement
THB Thai baht
TRIMs Agreement Agreement on Trade-Related Investment Measures
TRIPS Agreement Agreement on Trade-Related Aspects of Intellectual Property Rights
TSIC Thailand's Standard Industrial Classification
TTM Thailand Tobacco Monopoly
USD United States dollar
VAT Value-added tax
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, UN Treaty Series, Vol. 1155, p. 331
WTO World Trade Organization
WTO Agreement Marrakesh Agreement Establishing the World Trade Organization

1 Introduction

1.1 Complaint by the Philippines

1.1.
The Philippines' complaint in this proceeding, initiated under Article 21.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), concerns the alleged failure by Thailand to comply with the Dispute Settlement Body's (DSB) recommendations and rulings in the original proceeding in Thailand – Customs and Fiscal Measures onCigarettes from the Philippines.
1.10.
On 4 May 2016, the Philippines requested consultations32 with Thailand pursuant to Articles 4 and 21.5 of the DSU, Article XXII:1 of the GATT 1994, Article 19 of the CVA, and paragraph 1 of the Understanding between the Philippines and Thailand of 1 June 2012 regarding Procedures under Articles 21 and 22 of the DSU (Sequencing Agreement)33, with respect to three distinct sets of measures, including:

a. measures related to the BoA's ruling issued on 16 November 2012 regarding 210 entries of Marlboro cigarettes imported by PMTL between January 2002 and January 2003 (the "BoA Ruling");

b. measures related to the criminal charges filed on 18 January 2016 by the Public Prosecutor against PMTL and seven of its current and former employees regarding 272 entries of Marlboro and L&M cigarettes imported by PMTL between July 2003 and June 2006 (the "Charges"); and

c. measures related to the notification requirement concerning the VAT base applicable to cigarette importers.

1.11.
The BoA Ruling was included among Thailand's declared measures taken to comply in its status reports. The Charges were not, and in this proceeding Thailand maintains that they are not a measure taken to comply with the DSB's recommendations and rulings. Thailand's status reports indicated that changes to its VAT administrative rules were among the measures taken to comply, and in this proceeding it has confirmed that the modification of the rules related to the VAT base was introduced in order to implement the DSB's recommendations and rulings in the original dispute.34 These measures are described further below.
1.12.
Consultations were held on 2 June 2016, but the consultations failed to resolve the dispute.

1.2 Panel establishment and composition

1.13.
On 29 June 2016, the Philippines requested the establishment of a compliance panel with standard terms of reference, pursuant to Articles 6 and 21.5 of the DSU, Article XXIII of the GATT 1994, Article 19 of the CVA, and paragraph 1 of the Sequencing Agreement.35 At its meeting on 21 July 2016, the DSB decided, in accordance with Article 21.5 of the DSU, to refer to the original panel, if possible, the matter raised by the Philippines in document WT/DS371/18.36
1.14.
The Panel's terms of reference are the following:

To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by the Philippines in document WT/DS371/18 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.37

1.15.
On 7 December 2016, the Philippines requested the Director-General of the WTO to determine the composition of the panel, pursuant to paragraph 7 of Article 8 of the DSU. On 16 December 2016, the Director-General accordingly composed the Panel as follows38:

Chairperson: Mr Thomas Cottier

Members: Mr Alvaro Espinoza

Mr Alvaro Hansen

1.16.
Australia, Canada, China, the European Union, Japan, the Russian Federation, Singapore, and the United States notified their interest in participating in the Panel proceeding as third parties.

1.3 Panel proceedings

1.3.1 General

1.17.
In this proceeding, the parties prepared and jointly proposed a set of working procedures and partial timetable for the Panel's consideration. After consulting with the parties, the Panel adopted its Working Procedures39 and a partial timetable on 25 January 2017, based on the working procedures and partial timetable proposed by the parties. Following a request to extend one of the deadlines in the timetable, the Panel revised its timetable on 19 June 2017. On 31 August 2017, the Panel issued a revised timetable extending certain remaining deadlines at the request of the parties, and containing the dates related to the issuance of the descriptive part, the Interim Report, and the Final Report.
1.18.
The Panel held its substantive meeting with the parties on 29 and 30 August 2017, including a session with the third parties that took place on 30 August 2017. On 2 November 2017, the Panel issued the descriptive part of its Report to the parties. The Panel issued its Interim Report to the parties on 8 January 2018. The Panel issued its Final Report to the parties on 12 March 2018.

1.3.2 Preliminary ruling requests related to the scope of this Article 21.5 proceeding

1.19.
On 12 January 2017, Thailand submitted a request for a preliminary ruling that the Philippines' claims relating to the Charges are outside of the scope of this compliance proceeding. On 1 February 2017, as part of its first written submission, the Philippines provided its response to the substance of Thailand's preliminary ruling request, in which it argued that the jurisdictional issues raised by Thailand's request should be addressed in the Panel's report at the same time as the merits of the dispute; the Philippines requested in the alternative that, if the Panel were inclined to make an early ruling, there should be an additional hearing for that purpose. On 16 February 2017, Thailand filed its rebuttal submission on the preliminary ruling request, in which it reiterated its initial request, and proceeded to elaborate40 on an additional ground for finding that the criminal charges are outside of the scope of this proceeding.
1.20.
The timetable adopted by the Panel provided for the Philippines to file its rebuttal submission to the preliminary ruling request on 2 March 2017. However, given that the timetable provided that any request for a preliminary ruling was to have been filed no later than 12 January 2017, and was to be the subject to two rounds of submissions by the parties41, the Philippines requested, on 22 February 2017, that the Panel rule that: (i) Thailand's rebuttal submission raised a new ground of request that was not part of Thailand's preliminary ruling request of 12 January 2017; and that (ii) the Philippines need not address this new ground for a preliminary ruling request in its own rebuttal submission. The Philippines requested in the alternative that, if the Panel were to consider that Thailand's new ground should be addressed on a preliminary basis, then the Panel should establish a separate preliminary procedure for consideration of that question. The Philippines also requested that, pending the Panel's decision on this matter, the Panel should immediately suspend the deadline of 2 March 2017 for the submission of the Philippines' response to Thailand's new ground for a preliminary ruling request.
1.21.
On 23 February 2017, Thailand responded that the Panel should reject the aforementioned requests by the Philippines. Thailand further observed that the Philippines' letter of 22 February 2017 contained not only a procedural objection to Thailand's "new ground" but also a substantive response thereto, and thus the Philippines had given itself an additional opportunity to present substantive comments. Thailand requested that the Panel strike from the Panel record the substantive comments that the Philippines made in its letter of 22 February, because they were made outside the procedural stages contemplated in the Panel's timetable.
1.22.
In a communication dated 24 February 2017, the Panel informed the parties as follows:

The Panel recalls that paragraph 8 of the Working Procedures provides that it "may decide to rule on any preliminary request at an early stage of the proceedings, or may instead defer its ruling to a later stage of the proceedings". Having carefully considered the submissions already received from the parties, the Panel is not persuaded that it would be appropriate to rule on the issues raised by Thailand's preliminary ruling request at an early stage of the proceedings. The Panel hereby informs the parties of its decision to address those issues together with the merits so as to ensure that the parties (and third parties) have an appropriately extensive opportunity to exchange views on the issues raised as part of the main proceedings, and will defer its ruling on those issues until the issuance of the Report.

The Panel considers that its decision to defer ruling on the issues raised by the preliminary ruling request until the issuance of the Report renders moot the Philippines' various requests relating to the preliminary ruling procedure, including: (i) the Philippines' conditional request, in its first written submission, for a separate hearing on the issues raised by the preliminary ruling request; (ii) the Philippines' request, in its letter of 22 February 2017, that the Panel rule on which issues fall within the scope of the preliminary ruling procedure; (iii) the Philippines' additional request that the Panel immediately suspend the deadline for its rebuttal submission on the preliminary ruling request, pending the aforementioned ruling; and (iv) the Philippines' conditional and alternative request that the Panel establish a separate preliminary procedure for consideration of the "new ground" introduced by Thailand in its 16 February 2017 submission.

The Panel notes that the Philippines provided, at paragraphs 26-36 of its "procedural objection" dated 22 February 2017, substantive argumentation on whether the measures in question constitute a "measure taken to comply". Insofar as the Philippines wishes for the Panel to consider the substantive argumentation set forth in paragraphs 27-36 of its letter, the Panel invites the Philippines to reiterate those arguments in the rebuttal submission that it is expected to file on 2 March 2017.

1.3.3 Request for leave to correct typographical errors in a submission

1.23.
On 6 February 2017, the Philippines informed the Panel that it had identified a number of typographical errors in its first written submission filed on 1 February 2017, and requested the Panel's approval to submit a revised version of its first written submission that would correct these typographical errors. The Panel invited Thailand to indicate whether it had any objection to the Philippines' request. Thailand indicated that it did not. The Panel invited the Philippines to file the revised version of its first written submission, and the Philippines did so on 9 February 2017.

1.3.4 Procedural ruling requests related to lawyer-client privilege

1.24.
On 9 May 2017, Thailand requested that the Panel decline to rule on the Philippines' claims relating to the Charges. Thailand requested that the Panel make this ruling as a consequence of the Philippines' decision to include, as part of its second written submission filed on 12 April 2017, certain materials including "confidential, internal Thai government memorandum to which was attached lawyer-client privileged legal advice from Thailand's legal advisors in this dispute"42 pertaining to the Charges. Thailand further requested: (i) that the Panel instruct the Philippines to take appropriate action to rectify an inconsistency between the content of a related exhibit and the associated description in the Philippines' second written submission; (ii) that pending the Panel's decision on this matter, the Panel should postpone the deadline of 12 May 2017 for the submission of Thailand's second written submission; and (iii) that, once the Philippines had provided its response, Thailand be given the right to file a rebuttal submission on this issue.
1.25.
On 10 May 2017, the Panel informed the parties as follows:

Thailand has not explained why there is a need to postpone the upcoming deadlines while its procedural ruling request is pending before the Panel. Taking account of the impact that such postponement would have on subsequent steps in the timetable, the Panel declines Thailand's request to postpone the upcoming deadlines.

The Panel wishes to clarify and assure Thailand that as a Party to the dispute it is under no obligation to disclose, justify, or explain any confidential legal advice that it has received, either in its second written submission or at any other subsequent phase of these proceedings.

1.26.
In light of Thailand's request that it be given the right to file a rebuttal submission, the Panel allowed for two rounds of submissions by the parties on the issues raised by Thailand's request for a procedural ruling concerning the submission of lawyer-client privileged legal advice.43 In the set of written questions sent to the parties on 14 June 2017 in advance of the substantive meeting, the Panel included several questions to Thailand aimed at clarifying the scope and legal bases for its requests, and soliciting both parties' views on the need to rule on this matter prior to the hearing. Thailand subsequently clarified that it was requesting not only that the Panel abstain from making legal findings on the Philippines' claims concerning the Charges, but also that the Panel exclude Exhibit PHL-150 from the record.44 The parties expressed opposing views on the need to rule on this issue prior to the meeting.45
1.27.
Following a thorough exchange of arguments on this matter between the parties, on 2 August 2017 the Panel sent a communication which informed the parties and third parties as follows:

The Panel has carefully considered Thailand's requests relating to the ACWL/Commerce Letters and the related arguments of the parties. The Panel considers that it is in the interest of due process and the efficient conduct of the proceedings to rule on Thailand's requests prior to the substantive meeting with the parties. The Panel hereby informs the parties that, for reasons to be elaborated in its Report:

1. The Panel considers that Thailand has failed to demonstrate that its due process rights have been violated, that the Philippines has not acted in good faith, or that the Panel is prevented from making an objective assessment of the matter, as a consequence of the Philippines submitting the ACWL/Commerce Letters to the Panel;

2. The Panel therefore declines Thailand's request that, as a consequence of the Philippines submitting the ACWL/Commerce Letters to the Panel, the Panel should decline to rule on the Philippines' claims relating to the Charges; and

3. For the same reasons, the Panel declines Thailand's request that the Panel order the Philippines to withdraw Exhibit PHL-150 and the related references in the Philippines' second written submission.

1.28.
At the meeting of the Panel with the parties on 29 and 30 August 2017, Thailand reacted to the Philippines' opening statement by reiterating its objection to the Philippines' reference to the ACWL/Commerce Letters. This triggered a further exchange of arguments on this matter between the parties at the meeting, and in their subsequent responses to questions and comments thereupon.46

1.3.5 Amicus curiae submissions

1.29.
On 15 May 2017, the Panel received an unsolicited amicus curiae submission47 from a group of US business associations.48 On 17 May 2017, the Panel forwarded this submission to the parties and third parties. The Panel invited the parties to provide any comments that they wished to make on this amicus curiae submission by 6 June 2017. The Panel also noted that the submission referred to prior statements made by several Members participating as third parties in this proceeding. The Panel indicated that if any third parties wished to make comments, they could do so in the context of their written submissions scheduled for 24 May 2017.
1.30.
On 30 May 2017, the Panel forwarded to the parties and third parties two more amicus curiae submissions that it had subsequently received, on 29 May 2017 and 30 May 2017.49 The Panel invited the parties to provide any comments that they wished to make on these submissions by 6 June 2017. The Panel informed the parties and third parties that, moving forward, any further amicus curiae submissions that it received in this proceeding would be immediately forwarded to the parties and third parties. The Panel indicated that the parties and third parties would be free, if they so wished, to integrate any comments that they wished to make on any such briefs in their oral statements at the meeting or in their responses to questions.
1.31.
The Panel subsequently received two more amicus curiae submissions, which were forwarded to the parties and third parties.50 The Philippines incorporated all the amicus curiae submissions received as exhibits to ensure that they are on the record of this proceeding.51

1.3.6 Second recourse to Article 21.5 by the Philippines

1.32.
On 4 July 2017, the Philippines requested additional consultations with Thailand. This "Second Recourse to Article 21.5 of the DSU by the Philippines"52 concerns another set of criminal charges filed by the Public Prosecutor, on 26 January 2017, against PMTL and one of its former employees (the 2002-2003 Charges).53 According to the Philippines' request for consultations, these charges relate to 780 entries of cigarettes imported by PMTL between January 2002 and August 2003.54 The entries of cigarettes covered by the Charges filed on 26 January 2017 are different from the entries of cigarettes covered by the Charges that were filed on 18 January 2016, and which are at issue in this first recourse to Article 21.5 of the DSU.
1.33.
On 21 February 2018, the Philippines submitted a revised request for consultations that "replaces and supersedes" the consultations request dated 4 July 2017.55 According to this revised request for consultations, the measures subject to the "Second recourse to Article 21.5 of the DSU by the Philippines" include both the 2002-2003 Charges and also certain revised Notices of Assessment for underpayment of taxes and duties covering 1052 entries of cigarettes imported between 2001-2003.56
1.34.
The 2002-2003 Charges were filed on 26 January 2017, approximately six months after this compliance Panel was established. According to the Philippines' revised request for consultations, the 1052 Notices of Assessment in question were received by PMTL on 29 November 2017. At no point in the present proceeding has the Philippines requested that this compliance Panel rule on the 2002-2003 Charges or the 1052 Notices of Assessment. As of the date of the issuance of the Final Report to the parties, the Philippines' "Second recourse to Article 21.5 of the DSU" had not progressed beyond the consultations phase. Accordingly, neither the 2002-2003 Charges nor the 1052 Notices of Assessment are a measure at issue in this first recourse to Article 21.5 of the DSU.

1.3.7 Request for leave to comment on the comments on the draft descriptive part of the Panel Report

1.35.
On 15 November 2017, the parties provided their comments on the draft descriptive part of the Panel Report in accordance with the timetable adopted by the Panel. On 17 November 2017, the Philippines requested leave to comment on Thailand's comments on the draft descriptive part of the Panel Report. The Panel invited Thailand to provide its views on the Philippines' request, and following that, on 20 November 2017, Thailand communicated its objection to the Philippines' request.
1.36.
On 22 November 2017, the Panel informed the parties as follows:

[T]he Interim Report, which is scheduled to be issued to the parties on 8 January 2018, will incorporate the descriptive part of the Report and any changes made thereto in the light of the parties' comments on the draft descriptive part of the Panel Report. The Panel notes that when the parties submit their requests to review precise aspects of the Interim Report on 29 January 2018, they are free to request the Panel to review any changes that have been made to the descriptive part of the Report. Accordingly, the Panel considers it unnecessary for the parties to provide comments on one another's comments on the draft descriptive part before the issuance of the Interim Report, or separately from their requests to review precise aspects of the Interim Report. Therefore, the Panel declines the Philippines' request.

2 Factual aspects

2.1 Introduction

2.1.
This section briefly describes the activities of relevant entities, including the foreign and domestic companies involved in the Thai cigarette market, and relevant Thai government agencies. It then briefly sets out the measures at issue, by reference to facts that are not in dispute. Detailed facts, including the background and content of the challenged measures, are further elaborated in the context of the Findings in Section 7 of this Report.

2.2 PMTL and the relevant Thai government agencies

2.6.
The Thai Revenue Department, which also operates within the Ministry of Finance, is responsible for the administration and collection of various forms of taxes, including VAT.66

2.3 The measures challenged in this proceeding

2.7.
The measures at issue in this compliance proceeding include the following:

a. the BoA Ruling, including:

i. various substantive aspects of the customs valuation determination in the BoA Ruling issued on 16 November 2012;

ii. various procedural aspects relating to the BoA Ruling, including the BoA's alleged failure, prior to the issuance of the BoA Ruling, to communicate to PMTL its grounds for considering that the relationship between the buyer and seller influenced the price and provide an opportunity to PMTL to respond to those grounds, and the BoA's alleged failure, after issuance of the BoA Ruling, to provide reasons or an explanation to PMTL, in writing, as to how the customs value was determined; and

iii. the 180 Revised Notices of Assessment issued in January 2013 pursuant to the BoA Ruling issued on 16 November 2012.

b. the Charges, including:

i. various substantive aspects of the customs valuation determination allegedly contained in the Charges; and

ii. Thailand's alleged disclosure to the Thai media of the declared transaction values for entries covered by the Charges.

c. measures related to the notification requirement concerning the VAT base applicable to cigarette importers, including:

i. the notification requirement, arising under Notification 187 and Order Por. 145-2555, for importers of cigarettes to notify in June of each year the average actual market price valid as of the date of notification; and

ii. Thailand's failure to publish the rule that it has allegedly adopted permitting the recommended retail selling price to be notified as a proxy for the average actual market price.

3 Parties' requests for findings and recommendations

3.1.
Regarding the first set of measures challenged by the Philippines, related to the BoA Ruling, the Philippines requests the Panel to find that:

a. the BoA acted inconsistently with Articles 1.1 and 1.2(a) of the CVA by rejecting PMTL's declared transaction values without a valid basis, and in particular that:

i. the BoA acted inconsistently with Article 1.2(a), second sentence, by failing to properly examine the circumstances surrounding the sale of the cigarettes to PMTL because the BoA compared PMTL's profit and general expenses (P&GE) rates to a benchmark range of P&GE rates using a flawed industry comparator group, used flawed methods to establish the P&GE benchmark range, and followed a flawed approach to conducting the comparison between PMTL's rates and the benchmark range of P&GE rates; and

ii. the BoA acted inconsistently with Article 1.2(a), third sentence, by failing to communicate to PMTL its grounds for considering that the relationship influenced the price, and by failing to give PMTL an opportunity to respond.

b. the BoA acted inconsistently with Article 5.1 of the CVA in applying the deductive method to determine an alternative customs value, and in particular that:

i. the BoA acted inconsistently with Article 5.1(a)(i) by failing to deduct an appropriate amount in respect of P≥

ii. the BoA acted inconsistently with Article 5.1(a)(ii) by failing to deduct an appropriate amount in respect of transport costs; and

iii. the BoA acted inconsistently with Article 5.1(a)(iv) by failing to deduct an appropriate amount in respect of provincial taxes payable.

c. the BoA acted inconsistently with Article 11.3 of the CVA by failing to provide sufficient reasons for the decision; and

d. the BoA acted inconsistently with Article 16 of the CVA by failing to provide an explanation of how the customs value was determined.

3.2.
Thailand requests that the Panel reject the Philippines' claims, and find that:

a. the BoA established a reasonable methodology for comparing P&GE rates in determining whether the relationship between PMTL and the exporter influenced the price, and the Philippines has failed to demonstrate that the BoA's application of the methodology in the facts and circumstances of the case was unreasonable and therefore its claims under Articles 1.1 and 1.2(a) of the CVA should be rejected;

b. the BoA reasonably determined the amounts to deduct for P&GE, provincial taxes and transport costs when determining the revised customs value, and the Philippines has failed to demonstrate that the BoA's approach in the facts and circumstances of the case was unreasonable and therefore its claims under Article 5 of the CVA should be rejected; and

c. the BoA Ruling satisfied the requirements of Article 11.3 of the CVA, was not subject to the additional procedural requirements of the third sentence of Article 1.2(a) or Article 16 of the CVA, and in the event the BoA was subject to Article 1.2(a), third sentence, and Article 16, it satisfied those requirements.

3.3.
Regarding the second set of measures challenged by the Philippines, related to the Charges, the Philippines requests that the Panel find that:

a. the Charges are inconsistent with Articles 1.1 and 1.2(a) of the CVA because they reject PMTL's declared transaction values without a valid basis, and in particular that the Public Prosecutor acted inconsistently with Article 1.2(a), second sentence, by failing to properly examine the circumstances surrounding the sale of the cigarettes to PMTL because the Public Prosecutor relied on an invalid comparison between PMTL's import prices and King Power's duty-free purchase prices, insofar as the Public Prosecutor relied on the other grounds mentioned in the DSI's April 2009 Memorandum of Allegation they were equally invalid, and the Public Prosecutor drew arbitrary distinctions between those entries which were included in the Charges and those which were excluded;

b. the Charges violate Article 2.1(a) and (b) and/or Article 3.1(a) and (b) of the CVA by improperly treating King Power's purchase prices as transaction values for "identical" or "similar" goods, taking into account how these terms are defined in Article 15.2(a) and (b) of the CVA; and

c. Thailand violated Article 10 of the CVA by improperly disclosing business confidential information associated with the Charges that PMTL had provided for the purpose of customs valuation.

3.4.
Thailand requests that the Panel reject the Philippines' claims, and find that:

a. the Panel should decline to rule on the Philippines' claims relating to the Charges as a consequence of the Philippines' decision to put before the Panel confidential documents, including confidential, lawyer-client privileged legal advice received by Thailand from its legal advisers in this dispute;

b. the Philippines is precluded from challenging the Charges in this compliance proceeding because it challenged essentially the same measure in the original dispute and failed to make a prima facie case of WTO-inconsistency;

c. the Charges do not have a sufficiently "close nexus" with the matters covered by the DSB's recommendations and rulings or the BoA Ruling of 12 September 2012, and therefore they are not a "measure taken to comply" with the DSB's recommendations and rulings within the meaning of Article 21.5 of the DSU;

d. the Charges are not a matter "ripe" for adjudication, as they constitute merely an allegation of criminal conduct, and not a judgment by the Criminal Court;

e. contrary to the Philippines' misreading of the Charges, they actually allege customs fraud by PMTL and the references to King Power's prices in the accompanying Annex only serve to establish a possible benchmark for a fine in the event of a conviction, and therefore Articles 1, 2 and 3 of the CVA do not apply because the Charges do not determine "the value of goods for the purpose of levying ad valorem customs duties" within the meaning of Article 15.1(a) of the CVA, are not a measure taken by the "customs administration", and nothing in the CVA regulates the manner in which WTO Members can conduct criminal proceedings to address customs fraud;

f. even if the Panel were to accept the Philippines' position that the Charges are covered by the CVA and inconsistent with the provisions thereof, Thailand submits that such inconsistency with the CVA is justified under the general exceptions in Article XX(a) and Article XX(d) of the GATT 1994; and

g. the Philippines has failed to demonstrate that Thailand violated Article 10 of the CVA by disclosing PMTL's transaction values to the media.

3.5.
Regarding the third set of measures challenged by the Philippines, related to the requirement on importers to notify the average actual market price of cigarettes on the date of notification for the purpose of determining the VAT base, the Philippines requests the Panel to find that:

a. Thailand's failure to publish the general rule that cigarette importers may notify recommended retail selling prices under Notification 187 and Order Por. 145-2555, as opposed to the average actual market prices, violates Article X:1 of the GATT 1994;

b. the requirement under Notification 187 and Order Por. 145-2555 for cigarette importers to notify the average actual market prices of cigarettes on the date of notification violates Article III:4 of the GATT 1994 by according less favourable treatment to imported cigarettes than like domestic cigarettes; and

c. the requirement under Notification 187 and Order Por. 145-2555 for cigarette importers to notify the average actual market prices violates Article X:3(a) of the GATT 1994 by imposing an unreasonable notification requirement on such importers.

3.6.
Regarding the third set of measures challenged by the Philippines, Thailand requests that the Panel reject the Philippines' claims under Article X:1, Article III:4 and Article X:3(a) of the GATT 1994 because they are all premised on an inaccurate description of the operation of Thailand's VAT rules, and in particular that:

a. the Philippines has failed to demonstrate that the Thai Revenue Department's acceptance of recommended retail selling prices to satisfy the requirement under Notification 187 and Order Por. 145-2555 to notify the VAT base is a rule of general application that falls within the scope of Article X:1 of the GATT 1994;

b. the Philippines has failed to demonstrate that the notification requirement under Notification 187 and Order Por. 145-2555 accords imported cigarettes "less favourable treatment" within the meaning of Article III:4 of the GATT 1994; and

c. the Philippines has failed to demonstrate that Notification 187 and Order Por. 145-2555 provide for the "administration" of laws, regulations, decisions and rulings of the kind described in Article X:1 of the GATT 1994, and the Philippines' claim of "unreasonable" administration is premised on the misconception that compliance with Notification 187 and Order Por. 145-2555 cannot be achieved without contravening Thai competition law.

3.7.
The Philippines requests that, pursuant to Article 19.1 of the DSU, the Panel "reiterate the recommendation that the DSB request Thailand to bring its measures into conformity with its obligations under the covered agreements".67
3.8.
Thailand requests that the Panel reject the Philippines' claims in this dispute in their entirety.

4 Arguments of the parties

4.1.
The parties' arguments are reflected in their executive summaries, provided to the Panel in accordance with paragraph 23 of the Working Procedures adopted by the Panel (see Annex B).

5 Arguments of the third parties

5.1.
The arguments of Australia, Canada, the European Union, Japan, and the United States are reflected in their executive summaries, provided in accordance with paragraph 24 of the Working Procedures adopted by the Panel (see Annex C). China, the Russian Federation, and Singapore did not submit written or oral arguments to the Panel.

6 Interim review

6.1 Introduction

6.1.
On 8 January 2018, the Panel issued its Interim Report to the parties. On 29 January 2018, the Philippines and Thailand each submitted written requests for the Panel to review aspects of the Interim Report. On 19 February 2018, each party submitted comments on the other's requests for review. Neither party requested an interim review meeting.
6.2.
In accordance with Article 15.3 of the DSU, this section of the Report sets out our response to the parties' requests for review of precise aspects of the Report made at the interim review stage. We discuss the parties' requests for substantive modifications below, in sequence according to the sections and paragraphs to which the requests pertain.
6.3.
In addition to the substantive requests that are discussed below, various corrections or improvements of a typographical or editorial nature were made to the Report, including but not limited to those suggested by the parties in their interim review comments. Both parties identified a number of instances in which drafting improvements could be made to enhance clarity or precision, in respect of which no objection was made by the other party. In those instances we made the requested drafting improvements, and in the interest of brevity refrain from listing such changes below.
6.4.
As a consequence of adding several new paragraphs and footnotes in response to the parties' comments on the Interim Report, the numbering of the paragraphs and footnotes in the Final Report has changed from the numbering in the Interim Report. The discussion below refers to the numbering in the Final Report.

6.2 General parameters guiding our consideration of the parties' requests for additional findings on certain arguments or issues

6.5.
Both parties have made requests that we address certain arguments or issues that are not strictly necessary to resolving the dispute in the light of the findings that we have made. We consider it useful to briefly set out the general parameters that guide our consideration of such requests.
6.8.
In exercising our judgement on whether to address certain arguments or disputed issues that are not strictly necessary to resolve in the light of our other findings, we have sought to balance considerations of judicial economy against the equally important interests of contributing to the clarification of WTO law and assisting the parties in arriving at a prompt settlement of the dispute.

6.3 Descriptive part

6.9.
We note that Section 1.3.6 of the Report provides a brief factual description of the "Second recourse to Article 21.5 of the DSU by the Philippines", with a view to distinguishing the measures at issue in this proceeding. This Section of the Report was included in the Interim Report issued to the parties on 8 January 2018, and the description that it contained was based on the Philippines' request for consultations filed on 4 July 2017. On 21 February 2018, two days after the parties' final opportunity to provide comments on the Interim Report, the Philippines filed a revised request for consultations in connection with the "Second recourse to Article 21.5 of the DSU by the Philippines", which "replaces and supersedes" the Philippines' request made on 4 July 2017.74 We have revised the brief factual description in Section 1.3.6 to reflect the revised consultations request filed on 21 February 2018.

6.4 The ACWL/Commerce letters and lawyer-client privilege

6.10.
Thailand submits that paragraph 7.47 responds to an argument that it did not make, insofar as it suggests that Thailand argued that a defending Member may be entitled to refuse to provide material that was labelled "confidential". In this regard, Thailand recalls that its argument concerns documents that are labelled "confidential" and include lawyer-client privileged material. In these circumstances, Thailand requests the Panel to either delete paragraph 7.47, or to at a minimum clarify that the Panel does not intend to suggest that a Member could be compelled to provide lawyer-client privileged material that was not otherwise disclosed. The Philippines does not object to amending the third sentence of paragraph 7.47 to reflect Thailand's position that its argument was that a Member must consent to the use of information that it designates as confidential and lawyer-client privileged, but it considers that paragraph 7.47 should be retained, as the Panel's point in the paragraph still stands. We have revised paragraph 7.47 to reflect the parties' comments.

6.5 The Board of Appeals Ruling

6.11.
The Philippines notes that the Panel uses the terms "customs administration" and "customs authority" interchangeably throughout the Report, and queries whether the Panel would prefer to adopt the term "customs administration" consistently throughout the Report. Thailand does not comment on the Philippines' request. In considering this request, we note the following: the original panel appears to have used the terms "customs administration" and "customs authority" interchangeably to describe entities performing customs valuation within the meaning of the CVA75; the Appellate Body in the original proceeding used the term "customs authority" to refer to such entities76; the Philippines itself in the course of this proceeding has used the terms interchangeably77; and certain of the issues raised by the parties touch on the scope of the term "customs administration" as it appears explicitly in certain provisions of the CVA.78 We therefore do not consider our use of the term "customs authority" to be inappropriate or unwarranted, and decline the Philippines' request.
6.12.
The Philippines highlights that, during the course of the proceeding, Thailand asserted that "the Panel should apply the same standard of review that governs panels in disputes arising under the Anti-Dumping Agreement, namely, Article 17.6 of that Agreement".79 The Philippines notes that, in addressing the standard of review under the CVA in paragraphs 7.85 to 7.87, the Panel did not expressly address Thailand's argument. In the Philippines' view, addressing this argument would clarify the relevant standard of review for fact-finding under the CVA. Thailand does not comment on the Philippines' request. In accordance with the Philippines' request, we have added paragraph 7,110 to address this issue.
6.13.
The Philippines notes that the final sentence of paragraph 7,141 concerning the Panel's discussion of whether the P&GE rates of companies included in the industry group were obtained in respect of sales of goods of the same class or kind as those sold by PMTL, refers to a comparison between products, and a comparison between companies, and uses the term "apt comparison". The Philippines suggests, first, clarifying that the relevant methodology entails a comparison with P&GE rates obtained (by a company) in sales of certain products, and not a comparison of P&GE rates obtained by companies selling those products. The Philippines also suggests that the Panel should clarify its use of the term "apt comparison". Thailand does not comment on the Philippines' request. In the interest of clarity, we have revised the final sentence of paragraph 7,141.
6.16.
The Philippines agrees with the Panel's conclusion in paragraph 7,171that an authority should communicate to the importer its exclusion of a company from the comparator group on the basis that it is a loss-making company. The Philippines considers, however, that a customs administration or administrative tribunal within the administration may have access to information about private companies that importers do not have, and consequently suggests that the panel's findings reflect the nature of the consultative process, and that the burden placed on an importer will depend on the particular circumstances of the case (including whether relevant information is in the hands of the importer or the authority). Thailand objects to the Philippines' request on the grounds that the panel's discussion is comprehensive, and the revision is both unnecessary and goes beyond the scope of the Panel's reasoning. In the interests of resolving any unintended ambiguities, we have made minor revisions to paragraph 7,171, and added a footnote to that paragraph.
6.17.
Thailand requests that paragraph 7,195, concerning the parties' arguments with respect to the BoA's calculations of the P&GE figures for the companies in the industry group,be revised, because it incorrectly implies: (i) that the explanation provided by Thailand was insufficient to respond to the arguments that had been made by the Philippines at that point; and (ii) that Thailand offered no further explanation of these calculations once the Philippines raised further alleged anomalies. The Philippines objects to Thailand's request, on the basis that the paragraph in question accurately captures the fact that Thailand did not provide a full and transparent explanation of the BoA's figures in its first written submission. Without prejudice to the accuracy of the statement itself, in the interest of avoiding unintentional ambiguity, we have removed the relevant sentence of this paragraph, as requested by Thailand. We do not consider that the removal of this sentence alters in any way our factual description of the parties' exchange of views on this issue, nor our substantive findings regarding this process, as captured in paragraph 7,201.
6.18.
Thailand requests the Panel to revise paragraphs 7,200and7,219, concerning the BoA's determination of the numerator and denominator used to calculate the P&GE rates for companies included in the industry group. Thailand requests that these paragraphs be revised to reflect that the explanation provided by Thailand was not contested by the Philippines, and consequently there is no dispute, or lack of clarity, as to how the BoA performed its calculation. The Philippines objects to Thailand's request, on the grounds that the Panel's description is accurate, given the explanation, as contained in paragraph 7,200, that the BoA relied on two different ways of defining income when calculating the numerator as opposed to the denominator. The Philippines highlights that Thailand has not objected to this characterization of the facts. As an initial matter, we note that Thailand's explanation for why the BoA used different definitions is set forth in full in paragraph 7,198. We do not consider that the accuracy of the statement that "the BoA used different definitions of income in determining the numerator and denominator" is in any way refuted or called into question by the alleged reasons for adopting such different definitions. In this respect, we note that Thailand has not objected to the description of the facts in paragraph 7,200, namely that the BoA included extraordinary income in its "definition" of income for inclusion in the numerator, but excluded such extraordinary income in its "definition" of income when determining the denominator. We therefore decline Thailand's request.
6.19.
Thailand requests that paragraph 7,206, concerning the P&GE rates used by the BoA in respect of PMTL, be revised to reflect the fact that PMTL requested the BoA to use several different rates (as explained in paragraph 7,226). The Philippines objects to Thailand's request, noting the different contexts of the two paragraphs, highlighting that PMTL's request to use the first P&GE rate was on the understanding that the BoA was conducting a different methodology to examine the circumstances of sale, and emphasizing that the relevant BoA Minutes state repeatedly that the rate requested by PMTL was the rate of 18.47%. In the light of the parties' comments, we have added a sentence to the relevant footnote to paragraph 7,206.
6.20.
Thailand requests that the Panel revise paragraph 7,215, concerning the explanation "on the record" of the BoA's determination as to how the BoA determined a benchmark range of 9.8% to 15.08%. Thailand requests that the Panel reflect in this paragraph that the determination of the range by calculating two standard errors of the mean, and the confidence level of 95%, appears in evidence "on the record", as reflected in Exhibit PHL-54. The Philippines objects to Thailand's request, in light of the Panel's finding that Exhibit PHL-54 is not part "of the record" of the determination. We agree with the Philippines, and refer Thailand to footnote 429 in which we explain why we do not consider that Exhibit PHL-54 can be considered "on the record" of the BoA's determination. We therefore decline Thailand's request.
6.21.
Thailand requests that the Panel remove the phrase "using a Ouija board" in the penultimate sentence of paragraph 7,218, and argues that doing so would not change the point the Panel is trying to make in that paragraph. The Philippines disagrees, and submits that this reference to a comparison of the BoA's methodology to an arbitrary "methodology", such as a Ouija board, helps to illustrate the flaws in Thailand's logic. The Philippines requests that, if the Panel were to modify the reference to a "Ouija board", it should replace it with the "spinning wheel" analogy used by the original panel, to preserve the Panel's point. We have revised the wording of paragraph 7,218in the light of the parties' comments.
6.22.
Thailand requests that the Panel replace its reference to the "adjusted" P&GE rate of 18.47% in paragraph 7,219with the term "hypothetical". The Philippines disagrees, and submits that the word "adjusted" is appropriate, given that the term "unadjusted" has been consistently used by the original panel, the parties, and the compliance Panel, to refer to a P&GE rate calculated using PMTL's audited financial statements, adjusted to reflect PMTL's declared transaction value. The Philippines further submits that the use of the word "hypothetical" in either paragraph 7,219 or paragraph 7,206 does not seem to be appropriate, as the relevant P&GE rate is calculated based on real figures, namely PMTL's audited accounts and declared transaction values. On the basis of the parties' observations regarding the references to "adjusted" and "unadjusted" P&GE rates, we have revised all references by the Panel to P&GE rates in order to unambiguously identify the figures on which they were based (i.e. the transaction values as declared by PMTL, or the revised customs values as determinedby the Thai Customs Department). Such changes appear in paragraphs 7,206, 7,219, 7,226 and 7,230, as well as footnote 573. In the course of making this change, we also aligned the wording of the third and fourth sentences of paragraph 7,230 ("should have") to harmonize these statements with the wording used in the last sentence of paragraph 7,206 ("could have"). We have not altered our description, in paragraph 7,185, of the Philippines' characterization of these P&GE rates as adjusted/unadjusted.
6.23.
The Philippines recalls that the parties exchanged arguments regarding the proper interpretation of the term "inconsistent with", for the purposes of determining whether an importer's P&GE rates are "inconsistent with" those of the industry group. The Philippines notes that the panel does not address this aspect of the parties' argumentation, and considers that clarification of the relevant legal standard that the BoA should have applied would add weight to the Panel's findings. The Philippines submits that such findings could follow paragraph 7,226. Thailand does not comment on the Philippines' request. We have revised paragraph 7,228 to reflect our approach to this issue.
6.24.
Thailand considers that paragraphs 7,262to7,266misrepresent Thailand's arguments that the procedural obligations of Article 1.2(a), third sentence, of the CVA do not apply to appeals tribunals such as the BoA. Specifically, Thailand considers that these paragraphs incorrectly suggest that Thailand considers that the procedural obligations of Article 1.2(a) "do not apply at all to appellate tribunals such as the BoA", and requests that the Panel correctly reflect its argument "that these obligations do not apply mutatis mutandis to appeals".82 The Philippines has no comments on the Thailand's request. We consider that Thailand's request to revise paragraph 7,262 is helpful, in that it identifies an issue as to terminology that has the potential to create confusion. First, while Thailand submits that the discussion incorrectly suggests that Thailand argued that the procedural obligations of Article 1.2(a) "do not apply at all to appellate tribunals such as the BoA", in our view that is indeed an accurate characterization of Thailand's arguments in its submissions.83 We do not understand Thailand to have argued that the obligations in the third sentence of Article 1.2(a) are partially applicable to appeals tribunals such as the BoA, in the sense that some aspects of the procedural obligations in Article 1.2(a) may apply to the BoA but that other aspects may not be applicable in the same manner to the BoA. Nor do we understand Thailand to have argued that in some circumstances the procedural obligations in Article 1.2(a), third sentence, may apply to the BoA but that in other circumstances those obligations may not be applicable to the BoA. It has not framed its argument in such terms, nor has it specified precisely what aspects of the obligations in Article 1.2(a), third sentence, would or would not apply to the BoA, or in what circumstances the obligations in Article 1.2(a), third sentence, would not apply to the BoA. Thailand's argument is that Article 1.2(a), third sentence, of the CVA is inapplicable to appeals tribunals such as the BoA, inter alia because it would not make sense to subject such tribunals to the exact same procedures that apply in the context of an initial customs valuation determination. We further understand Thailand to argue that even if this is incorrect, and the procedural obligations in Article 1.2(a), third sentence, do apply to such tribunals, then in the circumstances of this case, this obligation was satisfied since PMTL was aware that the BoA was conducting a comparison of P&GE rates, and because PMTL had an "open-ended opportunity" to communicate with the BoA. We address that second issue, including Thailand's arguments in relation to that second issue, below in Section 7.2.3.3.3. Second, we consider that confusion is likely to arise from the manner in which Thailand employs the term "mutatis mutandis" to qualify its view of the applicability of Article 1.2(a), third sentence, to the BoA.84 We have therefore made adjustments to paragraphs 7,246, 7,255, 7,262, and 7,268 that aim to fairly and accurately characterize Thailand's argument while avoiding any potential confusion.
6.25.
The Philippines requests that the Panel include, in its summary of the Philippines' arguments in paragraph 7,324, the Philippines' argument that had PMTL been given the opportunity to provide further evidence of its payment of provincial taxes, it could have provided evidence from its SAP accounting system and statements from its customers confirming that PMTL paid the provincial tax on their behalf. The Philippines also considers that it would add weight to the panel's findings to address this point in its summary of the Philippines' arguments. Thailand does not comment on the Philippines' request. To comprehensively reflect the Philippines' arguments on this issue, we have added a reference to these aspects of its argumentation in paragraph 7,324 of Section 7.2.6.2, entitled "Main arguments of the parties", and have also reflected the citations to the Philippines' arguments during the proceeding in the footnote to paragraph 7,368, where we address this argument. However, we consider that paragraph 7,368, and the footnote thereto, sufficiently captures our consideration of this argument, and we therefore decline the Philippines' request to further revise our findings.
6.26.
Thailand considers that the final sentence of paragraph 7,349, which concerns the BoA's determination of the total amount of provincial tax payable by PMTL in 2002,does not explain Thailand's argument with sufficient clarity. Thailand suggests the following revision to the final sentence of this paragraph: "For its part, Thailand agrees with the distinction made by the original panel, but argues that in this case, because the provincial tax is not applied in all provinces, the amount of provincial taxes payable cannot be determined without additional evidence of provincial taxes paid." The Philippines objects to Thailand's request, arguing that the Panel's description is accurate, and Thailand's revision inaccurate, because through the course of the proceeding Thailand gave a number of reasons why, in its view, the BoA required additional evidence of provincial taxes paid. In light of the parties' concerns, we have revised the relevant sentence of paragraph 7,349 to quote Thailand's own explanation, as provided in its first written submission.

6.6 The Criminal Charges

6.27.
Regarding paragraph 7,479, which lists the legal consequences of the Charges that do not result from the DSI investigation, the Philippines requests adding the following: (i) an offence under Section 27 of the Customs Act can be prosecuted only after the Public Prosecutor has issued charges, which the Panel mentions as a consequence of the Charges in paragraph 7,595 of its Report; and (ii) the Charges result in the accused's potential liability for fines over USD 2.35 billion. With respect to the first consequence mentioned by the Philippines, Thailand notes that it is redundant because the legal consequences cited by the Panel in paragraph 7,479 already reflect the fact that the Charges trigger Thailand's ability to prosecute. With respect to the second part of the proposed addition, Thailand considers that it is not relevant to the Panel's analysis because the list of consequences contains direct and actual legal consequences for the accused, whereas the fine that may be imposed is, in contrast, a potential consequence. We agree with the points made by Thailand in its comments on the Philippines' request, and therefore we have not revised paragraph 7,479 in the manner requested by the Philippines.
6.28.
Thailand requests revising the first sentences of paragraphs 7,497and7,538to clarify that the quoted passage is not Thailand's argument, but the Philippines' mischaracterization of what Thailand argued. In this regard, Thailand states that it has not argued that "the lack of overlap is decisive" for purposes of determining whether there is a substantive connection between the 272 entries subject to the Charges and the 118 entries subject to the DSB's recommendations and rulings. The Philippines submits that its characterization of Thailand's argument is correct. We consider that these sentences are drafted in a manner that makes clear that the quoted passage is the Philippines' characterization, not the Panel's characterization, of Thailand's argument. Furthermore, we note that the Philippines' comments on Thailand's request make clear that the Philippines stands by that characterization of Thailand's arguments. Therefore, we have not adjusted the text of paragraphs 7,497 and 7,538. However, we have supplemented paragraph 7,537, which presents Thailand's arguments on this point, to reflect Thailand's clarification that the lack of overlap is not "decisive" and is "only one of the several factors presented by Thailand demonstrating the lack of close nexus".
6.29.
With reference to the Panel's conclusion at paragraph 7,549regarding the effects of the Charges for the purpose of the "close nexus" test, the Philippines requests that the Panel explicitly address its argument that the Charges "aggravate the WTO-inconsistencies that Thailand has been instructed by the DSB to resolve", and in this way "undermine compliance" and "circumvent" the DSB's recommendations and rulings because they "perpetuate the problem" addressed in those recommendations and rulings. Thailand does not comment on the Philippines' request. Although we are not required to address each and every argument advanced by the parties, we consider that the change requested by the Philippines would serve to make explicit that which is already implicit in our reasoning. Therefore, we have added language to paragraph 7,549 connecting the existing reasoning in that paragraph to the Philippines' argumentation.
6.30.
In paragraph 7,578 the Panel quotes a particular portion of Thailand's response to Panel question No. 39, and Thailand requests that the Panel instead quote a different portion of Thailand's response "in order better to reflect Thailand's response to the Panel's question". The Philippines submits that the Panel should reject Thailand's request because it does not explain why its preferred quote better reflects its response, and because the Panel is entitled to quote the elements of Thailand's argument that the Panel considers to be most relevant to the particular aspect of the Panel's reasoning at stake. We have supplemented the existing text of paragraph 7,578 by including the quotation requested by Thailand.
6.31.
ThePhilippines proposes that a new paragraph, summarizing its argument that the Charges should not be understood as alleging customs fraud in the sense that the Panel describes in the first sentence of paragraph 7,631, be included following paragraph 7,631. In its view, this would be helpful to clarify this aspect of the parties' disagreement over the nature of the Charges. Thailand considers that the fairly lengthy summary of arguments proposed by the Philippines breaks the structure of the Panel's narrative in this section. In this regard, Thailand observes that in paragraph 7,631 the Panel clarifies only that the disagreement between the parties does not relate to the concept of customs fraud, but to whether the Charges constitute an allegation of customs fraud, and is not meant to be an exhaustive summary of the parties' arguments on this aspect. Thailand also points out that a summary of the Philippines' arguments is unnecessary because these arguments are explained and addressed by the Panel in the subsequent sub-sections of the Panel's report (as well as in the parties' executive summaries). We agree with the points made by Thailand in its comments on the Philippines' request, and therefore we have not added the new paragraph proposed by the Philippines.
6.32.
The Philippines also proposes the following amendment to paragraph 7,631, fourth sentence: "Thailand does not specifically contest the Philippines' understanding on this point the nature of customs fraud in relation to the declared value, […]". The Philippines asserts that this amendment would add clarity to the Panel's reasoning. Thailand objects to this request, being of the view that the current wording of paragraph 7,631 is sufficiently clear; in its view, by indicating that Thailand does not specifically contest the Philippines' understanding "on this point", the Panel's narrative makes clear that it is referring to the issue described immediately above in that same paragraph and there is no need, therefore, to rephrase something that the Panel already described. We agree with the point made by Thailand in its comments on the Philippines' request, and therefore we have not introduced this amendment.
6.33.
The Philippines suggests a revision to the statement, in paragraph 7,642, that insofar as the "plain meaning" of the term "customs administration" is "inconclusive", the object and purpose of the covered agreements should guide the Panel to avoid interpretations that would enable Members to circumvent or evade their obligations. In the Philippines' view, this could be read to suggest a degree of uncertainty regarding the interpretation of the term "customs administration", and in any event recalls that a panel is entitled to take into account the object and purpose of a covered agreement regardless of whether or not the plain meaning is "inconclusive". Thailand does not comment on the Philippines' request. We have adjusted the wording of this sentence in paragraph 7,642 in the light of the Philippines' comment, and made a similar change to the wording of a similar sentence found at paragraph 7,671.
6.35.
The Philippines notes that paragraph 7,652, which refers to a statement by the Appellate Body regarding the allocation of the burden of proof in the context of the examination of the respondent's municipal law, could be read to suggest that the Philippines is making an "as such" challenge against a Thai "municipal law". The Philippines suggests an alternative quote to describe the Philippines' burden to introduce evidence as to the scope and meaning of the legal instruments that it challenges. Thailand considers that the Philippines misses the point. In its view, the Philippines is challenging the Charges on their face, and not as they may be applied once the Thai Criminal Court has heard all of the evidence, and in this context the Panel's reference to "as such" (or de jure) is correct and should be maintained. We have retained the reference to the Appellate Body's statement, because we consider that it reflects a general principle that is applicable not only to the manner in which a panel should approach claims relating to the WTO-consistency of a municipal law in the form of a statute or a regulation, but also to the manner in which a panel should approach claims relating to the WTO-consistency of municipal legal instruments such as the Charges. We have adjusted the wording of paragraph 7,652 to that effect, and with a view to avoiding any suggestion that the Philippines is making an "as such" challenge against any provision of Thai legislation in the context of the Charges.
6.36.
The Philippines requests a revision to paragraph 7,659, which states that "an allegation of customs fraud could be made without ever seeking to determine the customs value of the importer's goods" and then refers to a hypothetical example given by Thailand involving the discovery of a second invoice suggesting that declared value is less than the amount actually paid. The Philippines expresses its concern that the Panel's reasoning here could suggest that the CVA would "never apply" in this situation, and then recalls that the Decision Regarding Cases Where Customs Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value elaborates on certain procedures that apply in such situations and submits that in making these obiter remarks, the Panel is addressing the legal consequences of a hypothetical example that the Panel has found does not correspond to the facts in this dispute. Thailand objects to the Philippines' request to revise this paragraph for the same reasons expressed above with respect to the Philippines' comment on paragraph 7,649. We note that paragraph 7,659 refers to Thailand's example only as a simple hypothetical meant to illustrate how there could be situations in which the customs administration may never have conclusive evidence of the price actually paid by the importer, but could nonetheless come into possession of proof that the declared value was less than the price actually paid by the importer. Paragraph 7,659 does not say or imply that the CVA would be "necessarily inapplicable" in the case of Thailand's hypothetical example nor more generally in cases where an importing Member doubts whether the declared value is the "transaction value". Accordingly, we are not persuaded that there is any need to revise this paragraph.
6.37.
The Philippines requests a revision to paragraph 7,660, which concludes that the terms of Section 27 of the Customs Act do not always require that the authorities engage in custom valuation determinations, such that any and all Charges brought pursuant to Section 27 do not necessarily fall within the purview of the CVA. The Philippines recalls that Section 27 provides that "[f]or each offence that there shall be a fine of four times the amount of price of the goods including duty or to imprisonment for a term of not exceeding ten years, or to both". The Philippines requests that the Panel: (i) clarify that the terms of Section 27 do not always require that the authorities engage in customs valuation determinations "in order to establish the constituent elements of an offence"; and (ii) include a clarification that, even in the situation where the constituent elements of the offense in a particular case under Section 27 do not involve customs valuation, if Thailand were to establish a fine that is calculated on the basis of the value of the goods, the CVA applies to that valuation exercise. Thailand requests that the substance and text of paragraph 7,660 remain as they are. Thailand submits that the Philippines' comment goes beyond the scope of interim review, as it "addresses the WTO consistency of Section 27 of the Customs Act 'as such', that is, its WTO consistency in general terms beyond the specific manner in which it was applied in the Charges". Thailand also suggests that it is internally contradictory to suggest that where something "do[es] not involve a customs valuation", the CVA would nevertheless "appl[y] to that valuation exercise". In addition, it reiterates its position that the CVA does not apply when calculating a benchmark for a possible criminal fine. We consider that the Philippines' requests are aimed at stating explicitly that which is already implicit in the text of paragraph 7,660 when read in conjunction with our observations in paragraph 7,662. Therefore, we have made the clarifications requested by the Philippines.
6.38.
With reference to paragraph 7,662, both the Philippines and Thailand recall that the parties disputed the use of the term "price" in the Charges and advanced arguments addressing Section 2 and Section 103 of the Customs Act, and request that the Panel address those arguments in this regard. We note that paragraph 7,662 implicitly rejects Thailand's argument that Section 103 of the Customs Act is the relevant provision for the calculation of a criminal fine, and that Section 103, and not Section 2, is therefore the correct context for understanding the term "price" as used in the Charges. We agree with the parties that the basis for rejecting Thailand's argument should be set out explicitly. We have added a footnote to paragraph 7,662 explaining that we agree with the Philippines that it is clear from the terms of the Charges that they refer to the "price" for the purpose of establishing the constituent elements of the crime under Section 27 of the Customs Act, and not for "for the purpose of fixing the amount of any fine or penalty".
6.40.
The Philippines requests an amendment to paragraph 7,703, whichaddresses the legal standard under the CVA for regarding goods as "identical or similar" to the goods being valued, in order to state more explicitly that the close physical similarity of goods is not sufficient to make the goods identical or similar for valuation purposes under Articles 1, 2, or 3 of the CVA. The Philippines observes that, as reflected in the record, this point continues to be an issue of contention, and even a source of confusion, in the ongoing criminal proceedings in Thailand. Thailand considers that the Philippines' request is unwarranted given that the Panel already made a finding of violation under Articles 1, 2, and 3 of the CVA, as requested by the Philippines. In its view, the Philippines is essentially asking the Panel not only to find a violation, but to do so by addressing every argument the Philippines made. However, Thailand recalls that nothing in the DSU obliges WTO panels to address all arguments advanced by the parties. We agree with Thailand that we are not required to address all arguments advanced by the parties, at least insofar as it would not alter the overall conclusion reached in respect of the claim at issue. Having said that, we consider that the change requested by the Philippines merely makes more explicit what is already implicit in our reasoning. Accordingly, we have revised paragraph 7,703 as requested by the Philippines.
6.41.
The Philippines observes that the footnoteto paragraph 7,703refers to Article 2.4 of the Anti-Dumping Agreement as contextual support for the need to take into account the differential impact of fiscal charges or duties under the CVA, and suggests that the Panel could anchor this aspect of its interpretation in context drawn from the CVA. To this end, the Philippines recalls that it has referenced a number of provisions of the CVA as context supporting the requirement to adjust for factors that affect price-comparability, including Articles 1.2(b), 2 and 3 of the CVA. Thailand does not comment on the Philippines' request. We have adjusted this footnote in the light of the Philippines' request.
6.42.
The Philippines observes that paragraph 7,712refers to the Public Prosecutor's "decision to examine the circumstances of sale" in respect of 272 entries subject to the Charges, and its decision to exclude from that examination the 18 WTO entries, but recalls that the 18 WTO entries were included in the DSI's examination and in its two recommendations to prosecute, and they were also included in the Public Prosecutor's examination until just before the Charges were issued. The Philippines requests an amendment to reflect that the Public Prosecutor's decision-making is arbitrary because, after the examination, the Public Prosecutor decided to accept the transaction values for the 18 WTO entries (deferring to the customs administration's decision sitting as the BoA) but decided to reject it for the 272 entries subject to the Charges, even though the circumstances of sale were identical for 111 of the entries, and highly similar for the remaining entries. Thailand submits that the Panel's conclusion is sufficiently clear as it stands in paragraph 7,712, and that if accepted by the Panel, the Philippines' formulation would go beyond the Panel's conclusion, and would in fact change the nature of the Panel's finding as to what conduct by the Public Prosecutor was "arbitrary". We have reviewed paragraph 7,712 in the light of the parties' comments, and consider that the amendment suggested by the Philippines entails a more precise articulation of the premise of our reasoning. We have therefore made this change.
6.43.
Regarding paragraphs 7,720and7,721,thePhilippines notes that the Panel's findings with respect to the other grounds set out in the Memorandum of Allegation are limited. The Philippines considers that it would be helpful for the Panel to provide further reasoning as to why these grounds do not constitute a valid basis to reject transaction value, and proceeds to reiterate its arguments to that effect. Thailand requests that the Panel clarify the meaning of its finding that the rejection of the transaction value "cannot be justified on the basis of the grounds contained in the Memorandum of Allegations", and in particular whether the Panel is finding that (i) the Charges are inconsistent with the CVA in relation to the grounds mentioned in the Memorandum of Allegation (in addition to its other findings of inconsistency under the CVA); or (ii) it is not ruling on the CVA-inconsistency of the Charges in relation to the grounds mentioned in the Memorandum of Allegation. In this regard, Thailand seeks clarification that the Panel is not ruling on the WTO consistency of the content of the Memorandum of Allegation. Thailand considers that the Philippines' request for additional substantive findings are without merit, because it considers that the Panel correctly characterized the Philippines' comments regarding the Memorandum of Allegation as "conditional", as they were made in anticipation that Thailand could seek to defend the Public Prosecutor's rejection of PMTL's declared transaction values on the grounds indicated therein; and as the Panel found, this condition precedent did not occur and, hence, the Panel concluded that the rejection of the transaction value cannot be justified on the basis of the grounds mentioned in the Memorandum of Allegation. We recall that the Philippines has advanced a single claim under Articles 1.1 and 1.2(a), which is that the Public Prosecutor's rejection of the declared transaction valuein the Charges was inconsistent with Articles 1.1 and 1.2(a) of the CVA because the Public Prosecutor lacked a valid basis to reject the declared transaction value. In support of that claim, the Philippines has presented arguments relating to: (i) the comparison with King Power; (ii) the arbitrary inclusion/exclusion of entries; and (iii) the additional grounds for rejecting PMTL's transaction values contained in the 2009 Memorandum of Allegation. We understand both parties to agree that these aspects and factual circumstances of the Charges do not necessarily require that the Panel make three separate and distinct findings in relation to the obligation in Article 1.2(a), second sentence, as these are simply arguments in support of a single claim, namely that the Charges allegedly violated the obligation in Article 1.2(a) to engage in a proper examination of the circumstances of sale.85 In response to the parties' comments, we have revised paragraph 7,721 to reflect our views on the parties' arguments concerning the grounds set out in the Memorandum of Allegation. However, we emphasize that our finding therein does not constitute a separate finding of inconsistency, but rather a finding in respect of one aspect of the parties' arguments that is nonetheless relevant to our ultimate finding of inconsistency as set out in paragraph 7,722.
6.44.
The Philippines notes that in paragraph 7,731, the Panel provides a single conclusion in which it makes findings with respect to the Philippines' claims under Articles 1.1, 1.2(a) second sentence, 2.1 and 3.1 of the CVA. The Philippines requests that the Panel provide separate conclusions in each of the sections dealing with the Philippines' separate claims under the CVA. Thailand does not comment on the Philippines' request. We note that the Philippines has advanced one claim under Articles 1.1 and 1.2(a), second sentence, regarding the rejecting of PMTL's transaction values, which we address together in Section 7.3.6.2.2 under the heading "Claim under Articles 1.1 and 1.2(a), second sentence, of the CVA", and another set of two alternative claims under Articles 2.1 and 3.1 regarding the determination of an alternative customs value, which we address together as alternative claims in Section 7.3.6.2.3 under heading "Claims under Articles 2.1 and/or 3.1 of the CVA". We understand the Philippines to request that instead of presenting our conclusions on the claims considered in these two subsections together at the end of the analysis in paragraph 7,731 under the heading "Conclusion", we should separate the conclusions contained therein and instead present them as conclusions within, and at the end of, Sections 7.3.6.2.2 and 7.3.6.2.3. We note that these conclusions are already separated in paragraph 8.2(a) and (b) of the Conclusions and Recommendations section of the Report, and it is not apparent to us that the change requested by the Philippines is necessary. However, insofar as the Philippines' request is motivated by the concern that grouping these conclusions together in a single paragraph could be read as suggesting that they are not independent claims or findings, we agree that it may be useful to first present these conclusions as separate conclusions within Sections 7.3.6.2.2 and 7.3.6.2.3. We have done so, and we have also adjusted the language in paragraph 7,731 to state explicitly that these are two distinct sets of claims.
6.46.
Thailand asks the Panel to modify paragraph 7,784, which sets forth the Panel's understanding that the article from the Bangkok Post must have been based on the information contained in the Annex to the Charges because the comparison between PMTL's import prices with those of King Power in the article mirrors the comparison in the Annex to the Charges, to reflect the fact that it is not clear that the information in the Bangkok Post was necessarily based on the Annex to the Charges. Thailand observes that, while the Panel is saying that this is the first time that King Power's import prices were disclosed and compared to PMTL's import prices, this is incorrect because King Power's import prices and the comparison with those of PMTL also appear in several past press articles, including the DSI press release from September 2009 (Exhibit PHL-90-B), and press articles from 2006 and 2009. For that reason, Thailand requests the Panel to modify the paragraph at issue and reflect this. The Philippines submits that the Panel is correct that the information in the Bangkok Post necessarily demonstrates knowledge of some of the information contained in the Annex to the Charges, and there is no basis to modify paragraph 7,784as Thailand suggests. We consider that Thailand's request for modification proceeds on an incorrect premise. The Panel does not proceed on the premise that this is the first time that King Power's import prices were disclosed and compared to PMTL's import prices. Rather, as explained in paragraph 7,784, the Panel reasons that the article from the Bangkok Post must have been based on the information contained in the Annex to the Charges because the comparison between PMTL's import prices with those of King Power in the article mirrors the comparison in the Annex to the Charges. Thailand has not sufficiently explained why, absent knowledge of the fact that the Charges are based on a comparison between the prices of King Power and the PMTL as set forth in the confidential Annex, that information would be included in a press article reporting on the Charges.
6.47.
Thailand requests that the Panel delete the third sentence of paragraph 7,789, which reads: "We agree with the Philippines that this evidences a consistent pattern by Thailand of disclosing PMTL's confidential information, contrary to Article 10 of the CVA." Thailand considers that this statement amounts to a legal finding of inconsistency with Article 10 of the CVA of an alleged measure that was not before the Panel, and notes that the Panel itself stated, in paragraph 7,787, that "it would be outside of our terms of reference to make any findings of inconsistency under Article 10 with respect to the DSI press releases from September 2009 and August 2011, and we make no such findings". The Philippines submits that there is no basis to construe the Panel's statement in paragraph 7,789 as amounting to a "legal finding of inconsistency with Article 10". The Philippines notes that the Panel expressly notes that Thailand's prior disclosures were not identified as measures, and are therefore outside its terms of reference. In this regard, the Philippines observes that, instead of finding that Thailand's "'consistent pattern' of behavior" constitutes a "measure", the Panel explains that Thailand's previous conduct constitutes relevant factual circumstances, which have "probative value" to the question before it, namely whether, in January 2016, Thai officials disclosed PMTL's transaction values to the press. In order to avoid any ambiguity, we have revised paragraph 7,789.

6.7 The VAT notification requirement

6.48.
Thailand requests the Panel to specify in paragraph 7,798 of the section on the factual background that "the Revenue Department reserves the right to verify whether the notified price is, in fact, the average actual purchase price". The Philippines does not object to Thailand's request. We note that in the course of this proceeding the parties disagreed on the precise content of the Revenue Department's practice. As discussed in paragraph 7,881, "according to the Philippines, in the course of audit, the Revenue Department would be comparing the notified RRSP against the RRSP in force on the date of notification; according to Thailand, the Revenue Department would be comparing the notified RRSP against the average actual market price on the date of notification." To resolve this disagreement, we have found in paragraphs 7,881 to 7,884 that the Revenue Department reserves the right to verify whether the notified price reflects the average actual market price. Since the factual issue that Thailand would like us to reflect inparagraph 7,798 is contested by the parties, we consider that it is more appropriate to address it in the context of the Philippines' claim under Article X:1 of the GATT 1994 rather than in the section on the factual background, which reflects uncontested facts. We therefore decline Thailand's request to modify paragraph 7,798. Instead, to accommodate Thailand's concern we have modified the wording of paragraph 7,883. We have also added a reference to Thailand's response to Panel question No. 117 in the footnote to paragraph 7,883.
6.49.
The Philippines requests us to delete paragraph 7,800of the Interim Report, included in Section 7.4.1.3 ("Claims not pursued") of the Interim Report. This paragraph stated that the Philippines has not pursued a claim under Article III:4 of the GATT 1994 against TTM's exemption from the competition law. The Philippines submits that, in its panel request, it did not identify TTM's exemption from Thai competition law as a "measure" taken to comply; rather, according to the Philippines, it identified TTM's exemption from competition law as a factual circumstance relevant to the Philippines' claims regarding discrimination under the VAT notification requirement. The Philippines requests the Panel to delete paragraph 7,800 and Section 7.4.1.3 of the Interim Report or, alternatively, to specify that the Philippines mentioned TTM's exemption from Thai competition law both in its panel request and its submissions as a relevant factual circumstance, but did not identify the exemption as a measure taken to comply. Thailand disagrees with the changes requested by the Philippines and reiterates its request for additional findings under Article III:4 of the GATT taking into account the amended competition law. We do not consider Section 7.4.1.3 of the Interim Report to be essential to our analysis and therefore have deleted it from the Final Report. To reflect this deletion, we have modified the language of paragraphs 7,800 and 7,801.
6.50.
Regarding the Panel's decision to examine Thai competition law as it existed on the date of the establishment of the Panel, as set out in Section 7.4.2.2,Thailand requests the Panel to make an additional finding taking into account the amendment to Thailand's competition law that entered into force on 5 October 2017. Specifically, Thailand submits that Thailand's VAT measures and Thailand's amended competition law are not inconsistent with Article III:4 of the GATT 1994 because cigarette importers and the producer of domestic cigarettes face the same requirements for purposes of notifying the VAT base as neither of them benefits from an exemption from Thai competition law. Thailand argues that the Panel's terms of reference extend to the amendment of the competition law and that knowing whether Thailand's VAT notification requirement is WTO-consistent in light of the current regulatory framework would help to secure a positive solution to the dispute. According to Thailand, in the absence of such findings, the parties would be compelled to start new compliance proceedings to resolve their disagreement as to whether the VAT measures have been brought into compliance. The Philippines suggests that, instead of making additional findings, the Panel exercise judicial economy over the Philippines' claim under Article III:4 of the GATT. For the reasons set forth at paragraphs 7,808 to 7,811, including in particular the potential utility of the Panel presenting the parties' arguments and making factual findings that could assist the Appellate Body on appeal, we have accepted Thailand's request and have accordingly modified paragraphs 7,807 to 7,811, and 7,950. We have added the summaries of the parties' arguments regarding the amendment in Section 7.4.5.2, and have made additional findings in Section 7.4.5.4 ("Legislative changes in the course of the proceeding"), at paragraphs 7,969 to 7,977.
6.51.
With regard to Section 7.4.2.3.2,Thailand requests that the Panel reflect the fact that the Philippines has not produced any evidence of instances where the RRSP differed from the actual retail prices used by retailers. In response, the Philippines points to paragraph 7,829 of the Interim Panel Report, which states, "[w]e recognize that the Philippines has not identified any instances in which PMTL's recommended price differed from the actual retail selling price". The Philippines submits that there is no basis to revise Section 7.4.2.3.2. We consider that paragraph 7,829 indeed adequately reflects the issue raised by Thailand and thus no additional language is necessary.
6.52.
The Philippines recalls the Panel's finding that the Revenue Department has adopted an unpublished administrative ruling that cigarette importers can notify RRSPs under Notification 187 and Order Por. 145-2555 to the extent that they reflect the average actual market prices. The Philippines then refers to the Panel's statement in paragraph 7,926made in the context of the analysis under Article X:3(a) thatthe unpublished administrative ruling "gives no guarantee that the Revenue Department … will not impose penalties in the event of a divergence between the RRSP and the average actual market price" andsuggests an amendment to reflect that even if published, the unpublished administrative ruling creates no legal certainty for importers that they are complying with the VAT notification requirement correctly. Thailand submits that paragraph 7,926 adequately reflects the consequences of the unpublished administrative ruling and that it is unnecessary to insert additional language regarding the unpublished administrative ruling, an aspect relevant to the claim under Article X:1, not Article X:3(a). As we explained in paragraph 7,926, the administrative ruling constitutes part of Thailand's administration of the VAT rules and thus has to be taken into account in the analysis under Article X:3(a). We therefore agree with the Philippines and consider it appropriate to explain fully the consequences of the administrative ruling in the context of our analysis under Article X:3(a). Accordingly, we have modified paragraph 7,926 and added paragraph 7,931.
6.53.
With regard to the Panel's analysis under Article III:4 of the GATT 1994, the Philippines suggests an amendment to paragraph 7,959to reflect that, even if the Revenue Department's administrative ruling is published, an importer cannot rely on this informal rule to establish its formal compliance with the VAT notification requirement and to eliminate the uncertainty and legal jeopardy facing importers. The Philippines explains that the Revenue Department accepts RRSPs only to the extent that they reflect the average actual market prices and therefore the informal rule would not protect importers in the event of a divergence between the RRSP and the average actual market price. Thailand considers that the additional language regarding the administrative ruling suggested by the Philippines is unnecessary for the Panel's findings under Article III:4 since this part of the Panel Report does not deal with Article X:1 of the GATT 1994. We recall that under Article III:4 Thailand argued that the practice of notifying RRSPs "applies equally to both TTM and the importers".86 We therefore consider that the discussion of the Revenue Department's practice, which we found to be an administrative ruling within the meaning of Article X:1, is appropriate for our examination of the claim under Article III:4. We have modified paragraph 7,959 accordingly.

7 Findings

7.1 Initial considerations

7.1.1 Introduction

7.1.
The Philippines' complaint in this proceeding, initiated under Article 21.5 of the DSU, concerns the alleged failure by Thailand to comply with the DSB's recommendations and rulings in the original proceeding in Thailand – Customs and Fiscal Measures onCigarettes from the Philippines (DS371).87
7.2.
In Section 1 above, we recalled the panel and Appellate Body findings in the original proceeding, listed Thailand's declared measures taken to comply, recapitulated the procedural rulings that we made in the course of the proceeding, and specified the three sets of measures challenged by the Philippines in this proceeding. In Section 2 above we identified the relevant governmental and corporate entities implicated by the measures, and in Section 3 we set forth the parties' requests for findings in relation to those measures.
7.3.
Before turning to our analysis of the measures at issue in this Article 21.5 compliance proceeding, we address several preliminary issues at the outset, including the jurisdiction of the Panel, Thailand's request for a preliminary ruling in respect of certain evidence submitted by the Philippines, and the relevance of Thailand's developing country status to our objective assessment of the matter.

7.1.2 Jurisdiction of the Panel

7.1.2.1 The scope of Article 21.5 compliance proceedings

7.4.
Article 21.5 of the DSU provides, in relevant part:

Where there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings [of the DSB] such dispute shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel.

7.5.
Panels and the Appellate Body have explained that the object and purpose of Article 21.5 is to provide for expedited procedures to determine whether a Member has properly implemented the recommendations and rulings of the DSB in the dispute.88 The Appellate Body has made clear that, compared to the original panel proceedings, Article 21.5 proceedings "do not concern just any measure".89 The mandate of a panel established under Article 21.5 is limited to an examination of "measures taken to comply with the recommendations and rulings" of the DSB.90 These are "measures which have been, or which should be, adopted by a Member to bring about compliance with the recommendations and rulings of the DSB".91 Thus, the scope of Article 21.5 proceedings depends on (i) the existence of relevant recommendations and rulings of the DSB, and (ii) the existence (or otherwise) of measures taken to comply with those recommendations and rulings.
7.6.
It is well established that a panel is entitled to consider the issue of its jurisdiction on its own initiative, and must satisfy itself of its jurisdiction in any dispute that comes before it.92 Therefore, even where the respondent declares that a measure is one taken to comply, we do not a priori exclude the possibility that there might be circumstances where a compliance panel would consider it necessary to conduct its own assessment of whether that "declared" measure taken to comply falls within its jurisdiction. Having said this, we are not aware of any case to date in which a compliance panel has conducted its own assessment of whether a "declared" measure taken to comply by the respondent falls within the scope of a compliance panel proceeding.93 Accordingly, where a respondent declares that a challenged measure is one "taken to comply", and that measure is subsequently challenged by the complainant in an Article 21.5 compliance proceeding, a compliance panel may be expected to proceed on that shared understanding, unless there are extraordinary circumstances compelling a panel to conduct its own independent assessment.
7.7.
Where there is a disagreement between the parties about whether a measure that is not a "declared" measure taken to comply nevertheless falls within the scope of a compliance proceeding, the panel must make an objective and independent assessment of that issue. The starting point is that inherent in proceedings under Article 21.5 of the DSU is "the need to balance important systemic interests"94 and ensure due process for both the complainant and respondent. Expanding the scope of a compliance proceeding to cover older measures not challenged by the complainant in the context of the original proceeding, and to include measures other than those declared by the respondent to be a measure "taken to comply", may be necessary to ensure prompt and thorough verification of compliance, and to ensure due process to the complainant. However, expanding the scope of a compliance proceeding in this way can also compromise due process for the respondent insofar as it circumvents the ordinary dispute settlement process by enabling a complainant to obtain a finding of non-compliance and potentially seek retaliation without the respondent having had a reasonable period of time in which to bring any inconsistent measures into compliance.95
7.8.
The scope of a panel's jurisdiction with respect to what measures and claims it may consider in an Article 21.5 compliance proceeding has been addressed by a number of panels and the Appellate Body, and several fundamental principles have emerged from these decisions. On the one hand, in the interest of ensuring prompt and thorough verification of compliance and due process for the complainant, it is now accepted that nothing in Article 21.5 limits the scope of a compliance panel's mandate to considering only certain claims in relation to, or certain aspects of, a measure taken to comply. In other words, a measure taken to comply with the DSB's recommendations and rulings is "a new and different measure" that must be examined in its totality, and an Article 21.5 panel must, in principle, examine all claims of inconsistency regarding the new measure, including those claims that are new and different from those raised in the original proceeding.96 Thus, a complainant can challenge all aspects of a new measure taken to comply, not only those aspects related to issues covered by the original proceeding.97 Furthermore, a panel is not limited, in conducting its review under Article 21.5, to examining the measures taken to comply from the perspective of the claims, arguments and factual circumstances related to the measure that was the subject of the original proceeding.98
7.9.
On the other hand, with a view to avoiding the circumvention of the ordinary dispute settlement process and protecting the due process rights of the respondent, it is well established that an Article 21.5 proceeding must be narrower in scope than an original proceeding, in particular with respect to the types of measures at issue.99 Two fundamental limitations warrant emphasis at the outset of our findings.
7.10.
First, a compliance panel proceeding is not an opportunity to "re-litigate" issues that were addressed, or that could have been addressed, in the original proceeding.100 The Appellate Body has concluded that, in the context of a compliance proceeding, a complainant may be precluded from bringing the same claim with respect to an aspect of the respondent's measure that is unchanged from the original dispute.101 An unchanged aspect of the original measure that the respondent does not have to change, and does not change, in complying with the recommendations and rulings of the DSB thus should not be susceptible to challenge in a compliance proceeding.102 This limitation applies where a complainant: (i) could have challenged the unchanged measure (or unchanged aspect thereof) in the original proceeding but chose not to; or (ii) did challenge the unchanged measure (or aspect thereof) in the original proceeding, but failed to establish a prima facie case.103
7.11.
Second, even if a new measure is not one that was challenged or that could have been challenged in context of the original proceeding, it will still not necessarily fall within the jurisdiction of a compliance panel. To determine whether a new measure that is not one of the "declared" measures taken to comply is nonetheless a "measure taken to comply" for the purpose of Article 21.5 of the DSU, the Appellate Body has articulated a "nexus-based test"104, or "close nexus analysis".105 This test requires an examination of how the measure at issue relates to the respondent's declared measure(s) taken to comply, and to the DSB's recommendations and rulings in the original proceeding. The Appellate Body has noted that:

Some measures with a particularly close relationship to the declared "measure taken to comply", and to the recommendations and rulings of the DSB, may also be susceptible to review by a panel acting under Article 21.5. Determining whether this is the case requires a panel to scrutinize these relationships, which may, depending on the particular facts, call for an examination of the timing, nature, and effects of the various measures. This also requires an Article 21.5 panel to examine the factual and legal background against which a declared "measure taken to comply" is adopted.106 (emphasis added)

7.12.
The "close nexus" analysis, therefore, consists of examining whether, in terms of timing, nature and effects, the disputed measure is sufficiently connected with the declared measures taken to comply and with the DSB's recommendations and rulings.
7.13.
Based on the foregoing, if we were to find that any of the challenged measures (or aspects thereof) could have been challenged in the original proceeding, or were already challenged in the original proceeding, then we would find that the Philippines is precluded from challenging those same measures (or aspects thereof) in this proceeding. Furthermore, if we were to find that any of the challenged measures that are not a declared measure taken to comply only have general links, associations, similarities or connections to general matters addressed in the original proceeding107, then we would find that the Philippines is precluded from challenging those measures in this proceeding.

7.1.2.2 The measures at issue in this proceeding

7.14.
As explained in Section 2.3 above, the Philippines has challenged three sets of measures in this Article 21.5 compliance proceeding, namely (i) measures related to the BoA Ruling of 16 November 2012 (the BoA Ruling); (ii) measures related to the criminal charges filed on 18 January 2016 by the Public Prosecutor against PMTL and seven of its current and former employees (the Charges); and (iii) measures related to the notification requirement concerning the VAT base applicable to cigarette importers. It is uncontested that each of the challenged measures is specifically identified in the Philippines' request for establishment of a panel, in accordance with the requirements of Article 6.2 of the DSU. As elaborated below, it is also uncontested that most of these measures fall within the scope of this Article 21.5 compliance proceeding.
7.15.
As regards the first set of measures, it is uncontested that all of the challenged measures related to the BoA Ruling fall within the scope of this compliance panel proceeding. The BoA Ruling itself is one of Thailand's declared measures taken to comply with the DSB's recommendations and rulings in the original proceeding.108 More specifically, the original panel found that Thailand acted inconsistently with Articles X:3(a) and (b) of the GATT 1994 by virtue of delays in the administrative review proceedings before the BoA in relation to outstanding appeals relating to customs valuation109, and the parties agree that the BoA Ruling issued on 16 November 2012 is a "measure taken to comply" with the DSB's recommendations and rulings under Articles X:3(a) and (b) of the GATT 1994.110 Taking into account the absence of any disagreement between the parties, we conclude that the BoA Ruling is a "measure taken to comply" falling within the scope of this proceeding.
7.16.
Additionally, the Philippines has challenged 180 Revised Notices of Assessment that were issued in January 2013, pursuant to the BoA Ruling issued on 16 November 2012. The Philippines explains that they "derive mechanically from the BoA Ruling and are, therefore also measures taken to comply", because they are "a means of assessing and collecting outstanding customs duties due on the customs values determined in the Ruling".111 Thailand does not contest that understanding. Taking into account the absence of any disagreement between the parties, we conclude that the 180 Revised Notices of Assessment constitute "measures taken to comply" falling within the scope of this proceeding.
7.17.
Regarding the second set of measures, Thailand maintains that the Philippines is precluded from challenging the Charges in this compliance proceeding because it challenged essentially the same measure in the original dispute and failed to make a prima facie case of WTO-inconsistency. Thailand also argues that the Charges do not have a sufficiently close nexus with the matters covered by the DSB's recommendations and rulings or the BoA Ruling of 12 September 2012, and therefore they are not a "measure taken to comply" with the DSB's recommendations and rulings within the meaning of Article 21.5 of the DSU. We will address the parties' arguments on these issues in the context of our assessment of the Charges further below.112
7.18.
We recall that, in addition to the Charges themselves, the challenged measures include Thailand's alleged disclosure to the Thai media of the declared transaction values for entries covered by the Charges. Thailand argues that the Philippines has failed to demonstrate that Thai officials disclosed PMTL's transaction values to the media, but Thailand does not contest the premise that the alleged disclosure of PMTL's import prices to the press in January 2016 is a measure that falls within the scope of this compliance proceeding. We recall that the original panel found that Thailand acted inconsistently with Article 10 of the CVA by disclosing PMTL's import prices to the Thai media.113 In this proceeding, the Philippines claims that Thai officials did so again in connection with the issuance of the Charges in January 2016, and that this subsequent disclosure represents another violation of Article 10.114 Taking into account the absence of any disagreement on Thailand's part, we consider that there is a sufficiently close nexus between the challenged measure (i.e. the alleged disclosure of PMTL's import prices to the press) and the DSB's recommendations and rulings in the original proceeding, such that the Philippines' claim against this measure is within our jurisdiction. This is without prejudice to our assessment of the merits of the Philippines' claim, and in particular whether or not the Philippines has proven its allegation that Thai officials disclosed PMTL's import prices to the press in January 2016, and thereby substantiated this element of its claim under Article 10 of the CVA. That is an issue that goes to our assessment of the merits of the Philippines' claim, and we do not consider it in the context of determining whether we have jurisdiction in respect of the claim under Article 10 of the CVA.
7.19.
Regarding the third set of measures, it is uncontested that all of the challenged measures related to the VAT notification requirement fall within the scope of this compliance proceeding. In the original proceeding, the panel found that Thailand had acted inconsistently with Article III:2 of the GATT 1994 by subjecting imported cigarettes to a VAT liability in excess of that applied to like domestic cigarettes, by means of the calculation of the government-mandated MRSPs that were used as the VAT base.115 In response to the DSB's recommendations and rulings, Thailand modified its VAT regime, and declared these modifications to be a measure taken to comply.116 Thailand promulgated the challenged measures – Notification 187 and Order Por. 145-2555 – on 31 August 2012 and 30 November 2012, respectively. The Philippines argues that since Notification187 and Order Por. 145‑2555directly replace Thailand's earlier framework for calculating the VAT base through MRSPs, they have "the necessary connections – to both Thailand's declared measures taken to comply and to the subject-matter of the dispute", to be "measures taken to comply".117 Thailand has not contested this understanding. Rather, Thailand confirms that it "implemented the recommendations and rulings of the DSB regarding its VAT tax base by changing the tax base for VAT on cigarettes from the old 'maximum retail selling price' to the average actual retail selling price for each brand, as notified by the producer/importer to the Revenue Department".118 In the absence of any disagreement on Thailand's part, we agree with the Philippines that the VAT notification requirement arising from Notification 187 and Order Por145-2555 are "measures taken to comply" falling within the scope of this proceeding.
7.20.
Additionally, we observe that the Philippines' claim under Article X:1 of the GATT 1994 regarding Thailand's failure to publish the rule that it has allegedly adopted, of permitting the recommended retail selling price to be notified as a proxy for the average actual market price, is intrinsically linked to Notification 187 and Order Por. 145-2555. Thus it is closely connected to these measures taken to comply, and to the DSB's recommendations and rulings, in the sense that it only exists in the context of those measures. Thailand argues that the Philippines has failed to demonstrate that the Revenue Department has adopted such a rule, but Thailand does not contest the premise that its failure to publish the rule that it has allegedly adopted is a measure falling within the scope of this compliance proceeding. In the absence of any disagreement on Thailand's part, we consider that the measure challenged by the Philippines, i.e. the failure to publish the alleged practice of permitting the recommended retail selling price to be notified as a proxy for the average actual market price, is a "measure taken to comply" falling within the scope of this proceeding. Of course, this is without prejudice to our assessment of the merits of the Philippines' claim, and in particular whether or not the Philippines has proven its allegation that the Revenue Department has adopted a rule permitting the recommended retail selling price to be notified as a proxy for the average actual market price. That is an issue that goes to our assessment of the merits of the Philippines' claim under Article X:1.

7.1.3 The ACWL/Commerce letters and lawyer-client privilege

7.1.3.1 Introduction

7.21.
In its second written submission, the Philippines referred to a May 2013 legal opinion prepared for Thailand by the Advisory Centre on WTO Law (ACWL), Thailand's legal counsel in this proceeding.119 The Philippines stated that the legal opinion "directly contradicts the position that Thailand now takes before the Panel that the CVA does not, a priori, apply to customs enforcement actions taken by municipal law enforcement agencies".120 The Philippines submitted the ACWL opinion, as well as a related letter by the Ministry of Commerce, as Exhibit PHL-150 (the ACWL/Commerce Letters).
7.22.
On 9 May 2017, Thailand filed a "request for a procedural ruling regarding the violation of its due process rights", in which it requested that the Panel decline to rule on the Charges as a consequence of the Philippines submitting "lawyer-client privileged legal advice from Thailand's legal advisors".121 While Thailand's request is framed as a request for a procedural ruling regarding its "due process rights", Thailand has stated that "it has, primarily, asked the Panel to make a ruling under Article 11 of the DSU that its ability to make an objective assessment of the matter has been compromised".122 In response to a question from the Panel, Thailand has clarified that the three distinct grounds for its request are that: (i) Thailand's "due process" rights have been violated; (ii) the Philippines has not acted "in good faith"; and (iii) the Panel is prevented from making an "objective assessment of the matter" because the "objectivity of the panel is tainted".123
7.23.
As already indicated in the descriptive part of the Report124, we considered that it was in the interests of due process and the efficient conduct of the proceedings to rule on Thailand's request prior to the substantive meeting with the parties. On 2 August 2017, we informed the parties and third parties that, for reasons to be elaborated in our Report, we had concluded that Thailand had failed to demonstrate: that its due process rights had been violated; that the Philippines had not acted in good faith; or that the Panel was prevented from making an objective assessment of the matter as a consequence of the Philippines submitting the ACWL/Commerce Letters to the Panel. The Panel therefore rejected Thailand's request that, as a consequence of the Philippines submitting the ACWL/Commerce Letters to the Panel, the Panel should decline to rule on the Philippines' claims relating to the Charges. For the same reasons, the Panel declined Thailand's request that the Panel exclude Exhibit PHL-150 from the record and strike the related references from the Philippines' second written submission.
7.24.
Thailand reacted to the Philippines' opening statement at the substantive meeting with the Panel by reiterating its objection to the Philippines' reference to the ACWL/Commerce Letters. This triggered a further exchange of arguments on this matter between the parties at the meeting and in their subsequent responses to questions and comments thereupon. As part of this further exchange of arguments, Thailand requested the Panel "to explain clearly in its ruling whether it considers that the Philippines' good faith/due process obligations and the Panel's due process obligations extended merely to inquiring whether the Philippines acted legally", and if not, Thailand "requests the Panel to explain clearly what additional steps were required of the Philippines and where it took those steps in this case".125 The Philippines responded that Thailand's "unsolicited comment" on an issue "closed by the Panel's ruling of 2 August 2017" seems "to demand findings from the Panel that Thailand may use to support some theory for an appeal", and "amounts to little more than an invitation to the Panel to provide an advisory opinion on a topic not properly briefed by the parties".126
7.25.
We note that Thailand has made this request for additional clarification prior to seeing our reasoning for our ruling on its request, as elaborated in the Report. Our ruling on the ACWL/Commerce Letters, and the reasons that we elaborate below in support of that ruling, form an integral part of this Report. In accordance with Article 15.2 of the DSU, both parties have the right to request the Panel to review "precise aspects" of the Report in the context of the interim review phase of the proceeding. Those requests may extend to precise aspects of the reasoning that we have elaborated below in support of our ruling on the ACWL/Commerce Letters. While nothing requires that a disputing party wait until it has seen a panel's interim report before asking a panel to address or clarify certain points in its reasoning, we consider that it would be more efficient and fruitful to address any requests that either party wishes to make in connection with precise aspects of our reasoning on the ACWL/Commerce Letters in the context of the interim review phase of the proceeding.

7.1.3.2 Main arguments of the parties

7.26.
Thailand submits that "the privileged nature of communications between a Member and its legal advisors is an essential component of the Member's right to access and use legal advice to defend itself in dispute settlement proceedings", and that "the importance of the lawyer-client privilege is recognized in most legal systems around the world".127 Thailand accepts that the privileged/confidential nature of legal advice "may of course be waived by the party receiving the advice", but maintains that "tribunals are naturally generally very reluctant to deem or imply waivers where there has been no express waiver" and that "waivers of essential due process rights must be express and clear".128 Thailand considers that the Philippines failed to act in good faith under Article 3.10 of the DSU by submitting the documents to the Panel129, that "Thailand's essential due process right to defend itself fully before the Panel has been violated", and that the Philippines' actions "have compromised the Panel's ability to undertake an objective assessment of the matter as stipulated in Article 11 of the DSU and the Panel can no longer make an objective assessment".130
7.27.
Thailand submits that notwithstanding the Public Prosecutor's disclosure of the ACWL/Commerce Letters to PMTL in May 2016, these documents continued to be subject to lawyer-client privilege for purposes of WTO dispute settlement proceedings because "it is clear that Thailand never consented, expressly or even impliedly, to the use of these documents by the Philippines in WTO proceedings".131 Thailand asserts that, under Thai law, the right to access documents, as exercised by PMTL in the context of Thai criminal proceedings, is "normally for the purpose only of enabling a party to defend itself in the instant Thai court proceedings [and] …. is normally understood to mean that the documents would not be shared publicly or used for another purpose, such as separate proceedings between different entities in an international forum".132 Thailand suggests that this understanding also explains why the Public Prosecutor chose to disclose the documents at issue even though he had a choice to refuse to do so.133 Thailand further recalls that the Thai Criminal Court issued an interim order on 27 June 2016 requiring that any documents in the case be kept confidential, and submits that it is not relevant that the Public Prosecutor did not designate the Commerce/ACWL Letters as meriting special protection.134 Furthermore, Thailand stresses that the documents were clearly labelled "confidential" and clearly include material that would normally be considered to be lawyer-client privileged.135 Based on the foregoing, Thailand considers that the Philippines' assertion that "there was no reason for the Philippines to consider that Thailand regarded the ACWL/Commerce Letters as secret, confidential, or protected by law" is "simply inaccurate".136
7.28.
The Philippines submits that it would be outside of the Panel's terms of reference to find that it did not act in good faith137, and that, in any event, it is "evident that the Philippines has acted in good faith".138 The Philippines submits that, if lawyer-client privilege amounts to a WTO due process right, the nature of that right must be understood in light of the general principles applicable to privilege.139 The Philippines submits that it is well established that privilege is waived by the party's disclosure of a lawyer-client communication to a third party that is outside the lawyer-client relationship, and thus the Public Prosecutor's choice to disclose the ACWL/Commerce Letters waived any lawyer-client privilege attached to those documents.140 In addition, the Philippines submits that the Panel "is perfectly capable of making an objective assessment of the claims regarding the Charges irrespective of the arguments and evidence provided by the two parties", and the ACWL/Commerce Letters do "not taint the Panel's own understanding and evaluation of the law".141 The Philippines states that it "is surprised to find itself having to defend its use of two documents … that the Thai Public Prosecutor, an agent of the Thai government, chose to disclose to a third party, and did so without asserting that the documents are confidential or privileged, and without imposing any restrictions on the use of those documents".142 The Philippines submits that nothing in Thai law prohibited PMTL from sharing the ACWL/Commerce Letters with the Philippines143, and that the consequences of disclosing the ACWL/Commerce Letters to third parties outside the lawyer-client relationship are not cured by the fact that the Commerce Letter was stamped confidential.144

7.1.3.3 Analysis by the Panel

7.1.3.3.1 General considerations

7.29.
Thailand's "request for a procedural ruling regarding the violation of its due process rights" is said to be warranted as a consequence of the Philippines submitting "lawyer-client privileged legal advice from Thailand's legal advisors".145 The concept of lawyer-client privilege, and the extent to which it can be waived, are thus central to our consideration of Thailand's request.146 As an initial matter, the Panel notes that issues of due process, including questions regarding lawyer-client privilege and the good faith conduct of WTO Members, are fundamental to the substantive obligations of the Members as well as the dispute settlement system as a whole. The questions raised as a result of Thailand's request, in our view, implicate significant due process considerations concerning both parties to this dispute, and merit serious consideration. In light of this, we emphasize that the decision by the Panel to reject Thailand's procedural ruling request was made following careful consideration of the parties' extensive arguments on the questions raised by Thailand's request, and focusing on the particular factual circumstances surrounding the disclosure of the ACWL/Commerce Letters.
7.30.
The WTO has not elaborated any rules governing lawyer-client privilege, and thus there are no directly applicable legal provisions or guidelines expressly addressinglawyer-client privilege that we can refer to in order to resolve the issues raised by Thailand. Furthermore, there is very limited prior WTO jurisprudence to guide our analysis. In EC – Seal Products, the only previous WTO dispute settlement proceeding in which a similar issue arose, the complainants agreed to a request from the respondent to withdraw the material at issue.147 In that case, all parties appeared to accept that the legal opinions at issue were "classified documents under the applicable regulations of the European Union and [which had] not been authorized by the EU Council for public disclosure".148 The panel in that case considered that it was not necessary for it "to pronounce on the legal status of the documents or the relevance thereof", and that, given the complainants' willingness to remove the documents, it was not necessary "to determine whether the European Union would [have suffered] any impairment in its ability to defend itself in [those] proceedings were the documents to remain in the record".149 The panel further considered that, in light of the complainants' agreement to withdraw the documents from the record and their undertaking to refrain from making any reference thereto in those proceedings, "the complainants' due process rights would not [have been] affected by the removal of the two exhibits from the record".150
7.31.
We note that the panel in EC – Tariff Preferences found itself in somewhat analogous circumstances when confronted with a procedural issue on which the DSU is silent, and we find its approach instructive. In that case, the responding party requested that the panel clarify whether, as a matter of principle, the same legal counsel could represent simultaneously a complaining party and a third party and, if so, under what conditions.151 The panel first noted that the WTO has not elaborated any rules governing the ethical conduct of legal counsel representing WTO Members in particular disputes, and that therefore there were no directly applicable legal provisions or guidelines to which it could refer to resolve the issue. The panel also observed that it was not aware of any previous GATT or WTO dispute in which a panel or the Appellate Body had addressed the type of "conflict of interest" issue raised by the European Communities.152 The panel observed that, whereas issues of confidentiality and of measures necessary to maintain such confidentiality were addressed in certain prior proceedings, "the factual settings and the rulings in those earlier cases [were] not apposite to the issues raised by the European Communities".153 In such circumstances, the panel in EC – Tariff Preferences considered that:

[F]lowing from its terms of reference and from the requirement, in Article 11 of the DSU, to "make an objective assessment of the matter before it … ", as well as the requirement, pursuant to Article 12 of the DSU, to determine and administer its Working Procedures, the Panel has the inherent authority – and, indeed, the duty – to manage the proceeding in a manner guaranteeing due process to all parties involved in the proceeding and to maintain the integrity of the dispute settlement system. With specific reference to issues raised in the instant case, it is incumbent on the Panel to clarify whether the ACWL's joint representation of India and Paraguay poses any ethical concerns of the kind raised by the European Communities. At the same time, and although the European Communities asks the Panel for a ruling whether, as a matter of principle, the same legal counsel can represent simultaneously a party and a third party and, if so, under what conditions, the Panel considers that it cannot rule on such issues in the abstract, but only as they relate to the specific case before it.154

7.32.
Thus, in the absence of directly applicable WTO rules expressly governing "conflicts of interest" in respect of legal representation, the panel in EC – Tariff Preferences proceeded to identify and apply general principles contained in the DSU relating to confidentiality, as well as "common elements to ethical rules of conduct in many jurisdictions [that] are equally appropriate to dealing with issues of representational conflict of interest in the WTO dispute settlement context".155 We consider that a similar approach is warranted in the circumstances of this case. As elaborated further below, the parties appear to agree that the Panel's analysis should apply or at least be informed both by general principles of WTO dispute settlement – including a panel's duty to make an objective assessment of the matter, the principle of due process, and the principle of good faith – as well as general principles applicable to the concept of lawyer-client privilege reflected in the practice of other international courts and tribunals.156 We do not consider that either applies to the exclusion of the other, or that it would be correct to establish any hierarchy between these sets of principles.
7.33.
The Appellate Body has linked principles of due process to Article 11 of the DSU. The Appellate Body has stated, for example, that in conducting an "objective assessment" of a matter under Article 11 of the DSU, a panel "is bound to ensure that due process is respected".157 We recall that in the original proceeding, the Appellate Body explained the basis for this as follows:

Due process is intrinsically connected to notions of fairness, impartiality, and the rights of parties to be heard and to be afforded an adequate opportunity to pursue their claims, make out their defences, and establish the facts in the context of proceedings conducted in a balanced and orderly manner, according to established rules. The protection of due process is thus a crucial means of guaranteeing the legitimacy of and efficacy of a rules-based system of adjudication.158

7.34.
With regard to "good faith", Article 3.10 of the DSU establishes that "all Members will engage in these procedures in good faith in an effort to resolve the dispute". The Appellate Body has said that by complying with the requirements of the DSU in good faith, complaining Members "accord to the responding Members the full measure of protection and opportunity to defend, contemplated by the letter and spirit of the procedural rules".159
7.35.
Given that the relevant WTO dispute settlement rules and procedures are silent on the issue of lawyer-client privilege, we consider that it is appropriate to review wider international practice in this regard.160 We do so with a view to identifying common principles that may be equally appropriate to dealing with issues of lawyer-client privilege in the WTO dispute settlement context. In this respect, we note that lawyer-client privilege is specifically regulated in the procedural rules of certain international courts and tribunals.
7.36.
The International Bar Association Rules on the Taking of Evidence in International Arbitration161 provide that an international arbitral tribunal shall exclude any document from evidence or production if there exists a "legal impediment or privilege under the legal or ethical rules determined by the Arbitral Tribunal to be applicable".162 However, those rules also indicate that tribunals must also take into account "any possible waiver of any applicable legal impediment or privilege by virtue of consent, earlier disclosure, affirmative use of the Document, statement, oral communication or advice contained therein, or otherwise".163
7.37.
The Rules of Procedure and Evidence of the International Criminal Court provides that "communications made in the context of the professional relationship between a person and his or her legal counsel shall be regarded as privileged, and consequently not subject to disclosure".164 However, the same provision states that this general rule applies unless "the person consents in writing to such disclosure", or "the person voluntarily disclosed the content of the communication to a third party, and that third party gives evidence of that disclosure".165 The same rule is replicated in the Rules of Procedure and Evidence of the International Criminal Tribunal for the former Yugoslavia166, the International Criminal Tribunal for Rwanda167, the Special Court for Sierra Leone168, and the Special Tribunal for Lebanon.169 In applying this rule, international criminal tribunals have confirmed that disclosure of a communication to a third party may waive lawyer-client privilege. The International Criminal Court has confirmed that privilege would be waived where communications are disclosed, because "the content of communications made in the context of the professional relationship … would be revealed".170 Similarly, the International Criminal Tribunal for Rwanda has found that "[a]ttorney/client privilege … was waived by the accused when he communicated to persons other than his counsel, the content and nature of the documents".171
7.38.
The Permanent Court of Arbitration (PCA) has recognized that "[t]he attorney-client privilege, which is widely applied in domestic legal systems, has been recognized in public international and international commercial arbitration rules and arbitral awards".172 The PCA has also confirmed that disclosure of a communication to a third party may waive lawyer-client privilege:

[L]egal communications which would qualify for privilege … may lose their privilege if the party entitled to it waives the privilege by word or deed or voluntarily publicizes the substance of the legal communications beyond the circle of those who are authorized to make or to participate in the making of the decision.173

7.39.
The practice of investor-State dispute settlement tribunals is also a source of guidance on common elements regarding the scope of lawyer-client privilege, and the possibility of waiver through disclosure. The Tribunal in VG Gallo v Canada, citing to prior case law, confirmed that "domestic legal concepts of solicitor-client privilege are recognised and protected by international law".174 In several cases, investor-State tribunals have made rulings on whether a party's disclosure of legal communications to one or more third parties had the consequence of waiving lawyer-client privilege. For instance it has been established that in the government context, when the client is by nature a group, lawyer-client privilege "is not defeated by circulation beyond the attorney and the person within the group requesting or providing the information", such that privileged communications between different government departments remain privileged if "there is a 'substantial identity of legal interests' within the different [departments] in the particular subject matter of the communication".175
7.40.
In a series of cases, it has also been established that privilege is not automatically waived by inadvertent disclosure to the opposing party. In Glamis Gold v USA, the Tribunal found that there was no waiver when the respondent inadvertently disclosed several privileged documents to the opposing party; in reaching its decision, the Tribunal considered several different circumstances, including the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production, and any delay and measures taken to rectify the disclosure.176 In VG Gallo, the Tribunal stated that "according to … international law on the subject, where information covered by solicitor-client privilege is disclosed inadvertently, as a general rule there is no waiver of privilege".177 In that case, the Tribunal found that the respondent had "not implicitly waived its right to claim solicitor-client privilege with respect to the Draft and Final Cabinet Decisions, due to its inadvertent disclosure to the counterparty".178 In relation to another issue in the same proceeding, the Tribunal found that by specifically referring to and relying on the otherwise-privileged legal advice in its written submission to the Tribunal, there was an "implicit waiver of privilege" in respect of such legal advice.179 In Bilcon et al, the Tribunal, having considered several circumstances, found that the respondent had not waived privilege over 45 documents inadvertently disclosed to the opposing party.180
7.41.
In our view, several common principles emerge from the foregoing. First, lawyer-client privilege is recognised and has been protected in the context of international dispute settlement proceedings. Second, lawyer-client privilege over a communication may be waived if the party voluntarily discloses the document or the content thereof to a third party. Finally, the extent to which the disclosure to a third party waives privilege depends on the specific circumstances. For example, privilege is not automatically waived by inadvertent disclosure to the opposing party. We consider that these common principles are fully consonant with the general principles of due process and good faith applicable in the WTO dispute settlement context. We therefore consider that applying these principles is appropriate when dealing with issues of lawyer-client privilege arising in WTO dispute settlement.
7.42.
In light of the parties' arguments and the principles identified above, we consider that the main issue raised by Thailand's request is whether it would be a violation of due process for the Panel to rule on the WTO-consistency of the Charges. We consider that to address this issue, we must resolve whether Thailand waived lawyer-client privilege over the ACWL/Commerce Letters by disclosing them to PMTL in May 2016, and whether their submission by the Philippines precludes the Panel from making an objective assessment of the matter.

7.1.3.3.2 The circumstances surrounding the ACWL/Commerce letters

7.43.
We recall that it is not in dispute that, in May 2016, the Public Prosecutor, an agent of the Thai government, provided a copy of the ACWL/Commerce Letters to PMTL in the context of the ongoing criminal proceedings against PMTL that are the subject matter of this dispute. It is also not in dispute that the Public Prosecutor provided the ACWL/Commerce Letters to PMTL without invoking the Public Prosecutor's right to object under Section 231 of the Thai Criminal Procedure Code. This provision establishes a right to object to disclosure of requested documents on the grounds that they are, inter alia, "secret", "confidential", or "protected from publicity by law".181 At no time has Thailand asserted that the Public Prosecutor disclosed these materials to PMTL inadvertently. To the contrary, it is common ground that the Public Prosecutor knowingly and voluntarily disclosed the ACWL/Commerce Letters to PMTL. We consider that, absent a clear and compelling explanation by Thailand as to why the ACWL/Commerce Letters continue to be protected by lawyer-client privilege despite the Public Prosecutor knowingly and voluntarily disclosing them to PMTL, the foregoing would suffice to compel the conclusion that Thailand waived any lawyer-client privilege over the documents.
7.44.
In our view, Thailand has provided no such explanation. Regarding Thailand's argument that "it is clear that Thailand never consented, expressly or even impliedly, to the use of these documents by the Philippines in WTO proceedings", we accept that Thailand never specifically consented to the use of these documents by the Philippines in this proceeding.182 However, we are unable to agree with Thailand that such consent was required following the Public Prosecutor's decision to knowingly and voluntarily disclose the ACWL/Commerce Letters to PMTL. That action by the Public Prosecutor had the consequence of waiving any lawyer-client privilege that previously existed in relation to the ACWL/Commerce Letters. With this in mind, we are aware of no dispute in which a panel or the Appellate Body found that evidence in the possession of one party could not be submitted to the panel in the absence of express consent, by the opposing party, for the use of those documents in WTO proceedings.
7.45.
Regarding Thailand's assertion that under Thai law the right to documents exercised by PMTL "is normally understood to mean that the documents would not be shared publicly or used for another purpose, such as separate proceedings between different entities in an international forum", we agree with the Philippines that Thailand has failed to substantiate this assertion.183 Furthermore, in the course of the proceeding, Thailand's assertion has also been contradicted by the Thai Criminal Court itself. In its 14 July 2017 response to the Panel's questions relating to the ACWL/Commerce Letters, the Philippines drew the Panel's attention to an order of the Thai Criminal Court, dated 3 July 2017, issued in response to a petition by the Public Prosecutor for the Court to examine whether PMTL acted inconsistently with Thai law by sharing the ACWL/Commerce Letters with the Philippines.184 The order holds that PMTL enjoyed a right under Thai law to share the Commerce and ACWL Letters with the Philippines, and did not act in violation of the earlier court order prohibiting dissemination of information when it did so.185
7.46.
We now turn to Thailand's argument that the documents were clearly labelled "confidential" and included material that would normally be considered to be lawyer-client privileged. Thailand has not provided us with any domestic or international legal authority to support the premise that when a party voluntarily and knowingly discloses a communication to a third party, without imposing any restrictions on how that document may be used, lawyer-client privilege is not waived as long as that document is still marked "confidential".186 We agree with the Philippines that the consequences of disclosing the ACWL/Commerce Letters to third parties outside the lawyer-client relationship "are not cured by the fact that the Commerce Letter was stamped confidential".187 As the Philippines observes, it is often the case that, when a client discloses a privileged communication to a third party, and thereby waives privilege, the communication will have been marked or stamped "confidential" and/or "privileged" by the lawyer.188
7.47.
Furthermore, we need to take into account the consequences that would follow from accepting Thailand's argument. The Appellate Body has found that a party cannot refuse to provide information requested by a panel that is exclusively in the party's possession on the grounds that it is confidential, as that would enable the party to "thwart the panel's fact-finding powers and take control itself of the information-gathering process".189 Insofar as Thailand's argument suggests that a Member must consent to the use of any information contained in a document stamped "confidential", and which it chooses to designate as lawyer-client privileged notwithstanding its prior disclosure, this would have the same effect. Naturally, a Member that is defending a challenged measure in the context of a WTO dispute settlement proceeding would not have an incentive to consent to the use of information that a complainant seeks to rely on to establish the WTO-inconsistency of that measure.
7.48.
Thailand argues that the question of whether documents are obtained "legally" or "illegally" under domestic law does not resolve all of the relevant issues, as there "could be cases in which documents were obtained legally, in the very strict sense of the word, but the circumstances make clear that they were not intended for other use", and that in such circumstances, the question of whether the use of the documents was consistent with WTO due process rights and obligations "would not turn on the strict legality under domestic law".190 As an example, Thailand refers to a hypothetical in which "the Philippines or PM Thailand found the Commerce cover letter and the ACWL Letter lying on the street in Bangkok, having been dropped accidentally".191 Thailand submits that there would "presumably be nothing illegal in picking them up", but it could not be "assume[d] in the same manner that it would be appropriate to submit them to a panel without any further effort to see whether it was appropriate to do so".192 As noted above, following the meeting, Thailand requested that the Panel "explain clearly in its ruling whether it considers that the Philippines' good faith/due process obligations and the Panel's due process obligations extended merely to inquiring whether the Philippines acted legally", and "[i]f not, Thailand requests the Panel to explain clearly what additional steps were required of the Philippines and where it took those steps in this case".193
7.49.
It appears that Thailand's argument about PMTL and the Philippines acting "legally" is concerned with the situation in which a party obtains a communication that was inadvertently disclosed by the opposing party. As we have already found above, in such a situation, privilege is not automatically waived by the inadvertent disclosure to the opposing party. In such a situation, we agree with the premise that it may well be contrary to principles of good faith to then exploit the accidental disclosure by the other party. However, we do not consider it necessary to opine on what steps may be required of a party in such a case, because we agree with the Philippines' observation that "the relevant facts do not remotely resemble Thailand's hypothetical scenario".194 Specifically, in this case the facts are that "the Public Prosecutor elected to disclose the Letters to specific third parties, in a formal process, following a formal request naming one of the Letters; and, the Public Prosecutor agreed to disclosure without exercising its right to object to disclosure, and without imposing restrictions on the use of the Letters".195
7.50.
It seems to us that the basic thrust of Thailand's argument is that even though the Public Prosecutor knowingly and voluntarily provided the ACWL/Commerce Letters to PMTL for the purpose of enabling PMTL to defend itself against the Charges, and even though the Thai Court has confirmed that under Thai law PMTL was free to share these letters with the Philippines for the purpose of this proceeding (in which the Philippines challenges the WTO-consistency of the same Charges), the Panel should nonetheless decline to rule on the Philippines' claims on the grounds that the Philippines should have proceeded on the premise that widely recognized principles relating to the waiver of lawyer-client privilege do not apply in the context of WTO dispute settlement. In our view, to uphold Thailand's request in these circumstances would violate the due process rights of the Philippines. In this connection, we recall that, in the original proceeding, the Appellate Body explained that ensuring due process requires a balancing of the interests of both parties, and not merely the interests of the responding party. The Appellate Body explained that other interests may include "an aggrieved party's right to have recourse to an adjudicative process in which it can seek redress in a timely manner".196 In line with this understanding, the panel in EC – Seal Products highlighted that "the complainants' due process rights would not be affected by the removal of the two exhibits from the record in the present proceedings".197
7.51.
Thailand submits that the Philippines' actions "have compromised the Panel's ability to undertake an objective assessment of the matter as stipulated in Article 11 of the DSU and the Panel can no longer make an objective assessment".198 In this regard, Thailand emphasizes that "[e]ven with the best will in the world, however, it cannot be guaranteed that the Philippines' deliberate attempt to plant a seed of doubt as to Thailand's credibility will have no effect on how the Panel perceives and addresses the arguments of the parties for the remainder of these proceedings."199 Thailand explains that while a panel must be able to address a party's arguments and defences with a clear and open mind, that "cannot happen when the panel has before it not merely the arguments put forth by a party but also some of the legal advice received by the party in the process of preparing for the dispute"200, and that "the consequences of the Philippines' actions cannot be wiped out simply by the post hoc exclusion of the evidence".201 Thailand submits that "it is inevitable that any rulings by the Panel adverse to Thailand, especially with respect to the claims to which this material relates, will be perceived as having been tainted by the materials submitted by the Philippines".202
7.52.
We consider that it is perfectly normal for different individuals or agencies within a government, or advising a government, to hold different views on certain legal issues. In addition, we consider that it is to be expected that a Member's view on certain issues may change or evolve over time. Furthermore, a number of Thailand's arguments before the Panel regarding the non-applicability of the CVA to the Charges raise novel legal issues that are not touched upon at all in the ACWL/Commerce Letters. We note that the ACWL/Commerce Letters, which were apparently prepared years prior to the Charges being issued, do not establish any relevant fact relating to the Charges such that their existence or content would assist the Panel in making its objective assessment of the facts. More generally, if a complaining party considers that certain arguments or analysis contained in an agency's opinions are compelling, then it may present those arguments or analysis to the Panel – authorship by an organ or agency of the responding party does not itself contribute to the force of the arguments or analysis. In this regard, we agree with Thailand that "a party has a right to have its arguments before a panel judged only according to the standard in Article 3.2 of the DSU of whether they are based on a correct clarification of the provisions of the covered agreements in accordance with the customary rules of interpretation of public international law".203 We recall that, in our 10 May 2017 communication to the parties, we assured Thailand that "as a Party to the dispute [Thailand] is under no obligation to disclose, justify, or explain any confidential legal advice that it has received".204
7.53.
In the light of the foregoing, we consider that the ACWL/Commerce Letters are not relevant to our assessment of the matter before us, and we have given no weight to them in our analysis of the disputed issues in this proceeding. The ACWL/Commerce Letters have had no effect on how the Panel perceives and addresses the arguments advanced by the parties in relation to the applicability of the CVA to the Charges, and we consider that this is reflected in our extensive analysis of the issues raised in that regard.205
7.54.
We further note that in WTO dispute settlement proceedings it is not unusual for parties to develop arguments that attempt to rely on statements made by the opposing party outside the context of WTO dispute settlement proceedings, or in the context of prior or parallel WTO dispute settlement proceedings, or in its submissions in the same proceeding, and present these statements as being inconsistent with the arguments that the opposing party is advancing before the panel.206 This does not compromise a panel's ability to discharge its function of making an objective assessment of the matter. We further observe that there is no precedent for a GATT/WTO panel declining to rule on a claim on the basis that its ability to make an "objective assessment" of a matter has been compromised. In this regard, we find it relevant that the panel in EC – Seal Products evidently did not consider that the submission of an internal legal opinion in any way compromised its ability to make an objective assessment of the matter before it. We recall that in that case, unlike this case, it appears to have been common ground between the parties that the legal opinions at issue were classified documents under the applicable EU regulations, and the EU Council had not authorized their public disclosure.207Given that the submission of an internal legal opinion in those circumstances did not preclude the panel from making an objective assessment of the matter before it, Thailand's argument is to some extent contradicted by the only prior panel to find itself in an analogous situation.208
7.55.
In addition to requesting that the Panel decline to rule on the Charges, Thailand requested that the Panel order the Philippines to withdraw Exhibit PHL-150 from the record, as well as the related references in the Philippines' second written submission. In our view, if there is no basis to find that the ACWL/Commerce Letters are protected by lawyer-client privilege, or that their submission taints the Panel's objectivity, then it follows that we have no basis to order the Philippines to withdraw Exhibit PHL-150 from the record, or the related references in the Philippines' second written submission.

7.1.3.4 Conclusion

7.56.
For the foregoing reasons, the Panel concluded that Thailand had failed to demonstrate that its due process rights were violated, that the Philippines did not act in good faith, or that the Panel was prevented from making an objective assessment of the matter as a consequence of the Philippines submitting the ACWL/Commerce Letters to the Panel. The Panel therefore rejected Thailand's requests that the Panel decline to rule on the Philippines' claims relating to the Charges as a consequence of the Philippines submitting the ACWL/Commerce Letters to the Panel, and declined Thailand's request that the Panel exclude Exhibit PHL-150 from the record and strike the related references from the Philippines' second written submission. However, although the ACWL/Commerce Letters are admissible and are not protected by lawyer-client privilege, the Panel considers that they are not relevant to its assessment of the matter before it, and therefore gave no weight to them in its analysis of the issues in dispute in this proceeding.

7.1.4 The relevance of Thailand's developing country status

7.57.
Article 20.1 of the CVA provides that, upon notification, developing countries were entitled to delay the application of the CVA for a period "not exceeding five years". Thailand made a notification under this provision and implemented the CVA in 2000, following the expiry of the transition period allowed for under Article 20.1.209 Therefore, the special and differential treatment provisions of the CVA no longer apply to Thailand for the purposes of this dispute.210 The Panel notes that, in the course of these Panel proceedings, Thailand did not raise any specific provisions on differential and more-favourable treatment for developing country Members that require particular consideration.211
7.58.
Although the parties in this dispute generally agree that a "single legal standard applies to all WTO Members"212, Thailand nonetheless argues that its "developing country status may be relevant when the Panel attempts to determine compliance with that single legal standard".213 In this regard, Thailand states that its developing country status is a "relevant fact that the Panel may take into account in assessing the reasonableness of the actions of the Thai authorities at issue in this proceeding".214 Regarding the BoA Ruling, Thailand submits that "even if the BoA's decisions are not perfect, in the sense in which the Philippines' legal team, experts in the western legal tradition, wants, such perfection is not required".215 With respect to the criminal Charges, Thailand states that "developing countries such as Thailand face particular difficulties when dealing with customs fraud", and therefore "need to be able to adopt tough enforcement measures, such as criminal prosecution, in order to fight customs fraud efficiently".216
7.59.
We are aware that the diversity of existing national legal systems and traditions influences the way in which Members implement their WTO obligations. Regarding the BoA Ruling, which concerns issues of customs valuation and the CVA, we elaborate further below that, where the terms of the CVA are generally-worded and do not prescribe any particular means or methodology that must be followed in discharging a substantive and procedural obligation contained therein, the domestic customs authorities involved in customs valuation enjoy a margin of discretion regarding the means or methodology that they may follow, within the parameters laid down in the applicable treaty provisions, read in their context and in the light of the object and purpose of the CVA.217 It follows that, insofar as the terms of the CVA leave such a margin of discretion, "perfection is not the standard" that applies in WTO dispute settlement proceedings.218 In addition, in the context of our findings on the Charges we point out that it is common ground between the parties that there is nothing in the text of the CVA that prevents Members – developing or developed – from taking tough enforcement measures against customs fraud.219 Thus, we also agree with Thailand that developing country Members "need to be able to adopt tough enforcement measures, such as criminal prosecution, in order to fight customs fraud efficiently".220 However, the basis for our agreement is not that developing countries face special difficulties in this regard, but rather our interpretation of the rights and obligations under the CVA and the GATT 1994 that we develop in the context of our findings on the Charges.
7.60.
We note that Article 12.10 of the DSU provides that "[i]n examining a complaint against a developing country Member, the panel shall accord sufficient time for the developing country Member to prepare and present its argumentation". During this proceeding, the Panel took into account the respondent's status as a developing country Member when preparing and revising the timetable for the process. The Panel accommodated both Thailand's and the Philippines' requests for ample time to prepare the written submissions, and written question and answer procedure prior to the meeting; the extension of the initially agreed deadlines to submit responses to (and subsequent comments on) the questions posed by the Panel after the substantive meetings; as well as the timing of the issuance of the draft descriptive part of the Panel's report, and the issuance of the Panel's interim report to the parties.

7.2 The Board of Appeals Ruling

7.2.1 General

7.2.1.1 Factual background

7.61.
This section provides a general factual description of the BoA Ruling, including the events leading up to, and post-dating, the issuance of the BoA Ruling. The parties do not disagree on these facts. We note that the parties do disagree on several factual issues regarding the amount of provincial taxes actually paid by PMTL in the year 2002. We address these disputed factual issues in Section 7.2.6 below.
7.62.
Between January 2002 and January 2003, PMTL imported into Thailand 210 entries of Marlboro cigarettes from Indonesia.221 PMTL's transaction value for each of these entries was USD 8.50 per 1,000 sticks.222 The Thai Customs Department rejected the transaction values for the 210 entries of cigarettes imported by PMTL, and assigned a higher customs value.223 PMTL filed an appeal with the BoA, an authority within the Thai Customs Department that hears appeals from importers or exporters in relation to initial customs valuation decisions by the Customs Department.224 PMTL's appeal against the duty assessment for these 210 entries was part of a series of appeals made by PMTL, covering a total of 867 entries that took place between June 2000 and March 2003.225
7.63.
When the original panel issued its report in 2010, PMTL's appeals regarding the 210 entries were still outstanding before the BoA.226 Before the original panel, the Philippines claimed, inter alia, that Thailand acted inconsistently with Articles X:3(a) and (b) of the GATT 1994 as a consequence of the undue delay in the administrative review proceedings before the BoA in relation to the outstanding appeals for the 210 Marlboro entries. The original panel found that Thailand had acted inconsistently with both Articles X:3(a) and (b), and recommended that Thailand take action to address the delays.227
7.66.
By letter of 18 December 2012 to the Director General of the Customs Department, PMTL "request[ed] an explanation as to how the customs value was determined for the 210 entries at issue in the BoA Ruling".237 In particular, PMTL requested an explanation regarding questions that "are essential to the Company's understanding of how the BoA has determined the customs value for the Company's products set out in the BoA ruling".238 With respect to the industry group used in the comparison of P&GE rates, PMTL requested an explanation of the following: (i) the identity of the companies included in the "industry group of imported cigarette wholesalers in the year 2002" from which the benchmark P&GE rates were derived; (ii) how and why these companies were chosen, including the "selection criteria" for including or excluding a company from the industry group; and (iii) how the average P&GE rate for the industry group was calculated, including "the mean; the standard deviation; and the variances of the volumes / sales values for the members of the industry group".239 PMTL also requested an explanation regarding the deduction for provincial taxes.240
7.67.
On 16 June 2016 (i.e. three and a half years later), the Customs Department sent a letter to PMTL providing certain information in response to PMTL's request for an explanation dated 18 December 2012.241 The letter stated that information regarding P&GE rates was collected by assessing the 2002 P&GE rates for "wholesalers of imported cigarettes which are … in the same class or kind … in the level of brand [reputation] close to Marlboro cigarettes".242 The letter indicates that the average P&GE rate was determined with reference to "5 companies, with a 95% confidential [sic]interval at a range of 9.80 – 15.08 per cent with an average of 12.44 per cent".243 Additionally, the letter states that the deduction for provincial tax was determined by "applying the total amount of payment of provincial tax according to the receipts specifying that money is received from Philip Morris (Thailand) Limited and the name of retailers … and comparing in proportion to the cigarette sales amount in 2002".244
7.68.
Following the issuance of the BoA Ruling in November 2012, Thailand reassessed the customs duties and internal taxes due on the 210 entries.245 On the basis of the revised customs values, and taking into account currency fluctuations, refunds were due on some entries, and additional duties and taxes were due on others. With respect to 30 entries, Thailand has paid PMTL a refund; for 180 entries, additional sums were due.246 On 9 January 2013, PMTL received 180 Notices of Assessment in respect of these latter entries.247 The revised Notices of Assessment resulted in the payment by PMTL of an additional THB 152,581,835.35 (around USD 5.2 million) in duties and taxes.248
7.69.
On 18 January 2013, PMTL appealed the BoA Ruling to the Central Tax Court of Thailand. In a judgment of 29 October 2014, the Court upheld PMTL's appeal, on the grounds that the Customs Department had improperly used minimum values as the basis for the original valuation.249 On this basis, the Court ordered revocation of: the original 210 assessments; the BoA Ruling; and the 180 Notices of Assessment that resulted from the BoA Ruling.250
7.70.
On 28 January 2015, the Customs Department, together with the members of the BoA, appealed the Central Tax Court decision to the Thai Supreme Court, requesting the Supreme Court to reverse the decision of the Central Tax Court.251

7.2.1.2 Claims and order of analysis

7.71.
The parties' requests for findings in relation to the BoA Ruling are set out in greater detail in Section 3 of our Report. As reflected there, the Philippines' claims and Thailand's defences raise a number of issues in relation to the BoA Ruling.
7.72.
Article 1 of the CVA requires that, in situations where the importer is related to the seller, the transaction value must nonetheless be accepted, unless the customs authority demonstrates, after examining the circumstances of sale in accordance with the requirements of Article 1.2(a), that the price was influenced by the relationship between the buyer and seller. The Philippines claims that the BoA Ruling is inconsistent with Article 1 of the CVA because the BoA rejected the transaction value without properly examining the circumstances of sale, and because the BoA failed to communicate its grounds to PMTL for rejecting the transaction value, thereby also precluding PMTL from responding to those grounds. We note that the Philippines has made distinct claims in respect of: (i) the "substantive" obligation under Article 1.2(a), second sentence, that a customs authority must conduct an examination of the circumstances of sale in order to determine whether the relationship influenced the price; and (ii) the "procedural" obligation under Article 1.2(a), third sentence, that a customs authority must communicate to the importer its grounds for doubting the transaction value, and give the importer a reasonable opportunity to respond. The parties and third parties have indicated that these obligations are distinct, although they may be related.252 Notwithstanding that these provisions may be related, we agree with the parties and third parties that the obligations are distinct. We therefore proceed with our analysis by addressing the Philippines' distinct claims under these provisions separately, and in accordance with the structure of Article 1.2(a), by first addressing the Philippines' claim concerning the substantive obligation in the second sentence of Article 1.2(a), before addressing the Philippines' claim in respect of the procedural obligation in the third sentence.
7.73.
Article 5 of the CVA concerns the deductivemethod of customs valuation. Under Article 4, where a customs authority has rejected the transaction value under Article 1, and the customs value cannot be determined under the provisions of Articles 2 and 3, the customs value shall, in principle, be determined under Article 5. When using the deductive method under Article 5, a customs authority determines the customs value of the imported goods based on the unit price at which the imported goods or identical or similar imported goods are sold in the greatest aggregate quantity, at or about the time of the importation of the goods being valued, when they are sold in an unrelatedtransaction and deducts certain amounts from that figure to arrive at a revised customs value. Article 5 lists the specific types of deductions that must be made. After the BoA rejected the transaction value on the basis of the comparison of P&GE rates, the BoA proceeded to determine a revised customs value, by deducting various amounts from the value of the first sale to an unrelated purchaser (specifically, sales to retailers).
7.74.
The Philippines claims that, in determining the customs value to use in place of the transaction values, the BoA acted inconsistently with several aspects of Article 5 of the CVA.253 The Philippines contends that the BoA failed to deduct the correct amount of P&GE, inconsistently with Article 5.1(a)(i). The Philippines submits that the BoA acted inconsistently with Article 5.1(a)(ii) by failing to deduct any amount for transportation expenses. The Philippines also considers that the BoA failed to deduct the proper amount for provincial taxes payable by PMTL, and subjected PMTL to an excessively high burden of proof, inconsistently with Article 5.1(a)(iv).
7.76.
Where a customs authority improperly rejects the transaction value, inconsistently with the requirements of Article 1 of the CVA, it becomes a moot point whether the customs authority's determination of a revised customs value was conducted in accordance with the requirements of Articles 2 to 7. Thus, if we were to uphold the Philippines' claim that the BoA failed to satisfy the legal requirements of Article 1, it may be a moot point whether the BoA determined a revised customs value in accordance with the legal requirements of Article 5. In this respect, the Philippines acknowledges that "[i]f the Panel were to find that the BoA Ruling violates Articles 1.1 and 1.2(a), it would be within the Panel's discretion to exercise judicial economy with respect to the Philippines' claim under Article 5".255 Having said that, the Philippines "urges the Panel not to exercise judicial economy" in respect of the claims under Article 5, as it considers that "findings on a range of issues are an important means of contributing to the full and prompt resolution of the dispute."256 We note that the original panel, having found that the Thai customs authority acted inconsistently with Article 1 of the CVA, made additional findings in respect of Articles 5 and 7 of the CVA.257 We adopt the same approach in this proceeding, in the interest of assisting the parties in resolving their dispute.258 We will therefore proceed by addressing the Philippines' claims under Article 5 in the event that we uphold the Philippines' claims under Article 1. Since each of the Philippines' three claims under Article 5 pertains to a distinct provision of Article 5.1(a), we address each claim separately.
7.77.
We then turn to the Philippines' claim that the BoA acted inconsistently with Article 11.3 of the CVA by failing to provide sufficient reasons for its decision to PMTL, before finally addressing the Philippines' claim that the BoA acted inconsistently with Article 16 of the CVA by failing to provide an adequate explanation to PMTL upon request. Both of these claims involve an alleged failure by the BoA to provide reasons/an explanation to PMTL. However, since these claims are based on distinct provisions of the CVA, we address them separately.

7.2.1.3 Claims not pursued

7.78.
The Philippines' panel request contains a number of claims in relation to the BoA Ruling, almost all of which it has pursued in this proceeding. We note however that in addition to the measures specified in paragraph 2.7 above, the panel request also indicates that:

On 29 October 2014, the Thai Tax Court upheld an appeal by PM Thailand against the BoA Ruling. However, on 28 January 2015, Thai Customs appealed the Tax Court's decision to the Thai Supreme Court. The appeal is currently outstanding. On appeal, Thai Customs has argued that the DSB's recommendations and rulings under points (xii) and (xiii) above bind only the Philippines, and not Thailand. All actions by Thailand to uphold the BoA Ruling are measures taken to comply that are inconsistent with the provisions cited in paragraph 10.259

7.79.
The Philippines has referred to the appeal to the Thai Supreme Court in its submissions, and we have taken note of this factual circumstance in the context of setting forth the factual background and context to the measures at issue.260 However, the Philippines has not pursued any claims in respect of the "actions by Thailand to uphold the BoA Ruling" in the course of this proceeding. Accordingly, it is not necessary for us to make findings on what types of actions taken by a Member in the context of domestic appeal proceedings could constitute measures taken to comply.

7.2.1.4 Principles of interpretation applicable to the CVA

7.2.1.5 Standard of review

7.87.
In the course of this proceeding the parties have exchanged views on the standard of review in the context of the BoA Ruling.277 The parties agree, however, that the standard of review under Article 11 of the DSU also applies to the CVA.278 Furthermore, the parties agree that the Panel can neither defer to the findings of the customs authority, nor can it conduct a de novo review.279 We address below in the context of our substantive analysis additional issues concerning the standard of review as they arise.280

7.2.2 Claim under Articles 1.1 and 1.2(a), second sentence, of the CVA

7.2.2.1 Introduction

7.88.
Article 1 of the CVA requires that, in principle, the customs value of imported goods shall be the transaction value. In situations in which the buyer and seller are related, the transaction value must be accepted as the customs value so long as the transaction value is acceptable under the requirements of Article 1.2. In this respect, Article 1.2(a), second sentence, requires that, in a situation where the buyer and seller are related, if the customs authority has doubts as to whether the relationship influenced the price, it must examine "the circumstances surrounding the sale" and accept the transaction value, unless the customs authority demonstrates that the relationship did indeed affect the price.
7.89.
It is uncontested that the buyer (PMTL) and the seller (PM Indonesia) in the relevant transactions at issue here were indeed "related" within the meaning of the CVA.281 Since the buyer and seller were related, the BoA conducted an examination of "the circumstances of sale", specifically by comparing, on the one hand, two "profit and general expenses" (P&GE) rates attributed to PMTL and, on the other hand, a "benchmark range" constructed around an "industry average" P&GE rate that was calculated using the P&GE rates of five companies allegedly representative of the industry (these five companies comprised an alleged "industry group").282
7.90.
The Philippines asserts that the BoA's examination of "the circumstances of sale" was inconsistent with the substantive requirements contained in the second sentence of Article 1.2(a), and consequently the BoA's rejection of the transaction value was inconsistent with Article 1.1.283 The Philippines asserts that the BoA, in comparing PMTL's P&GE rates to a benchmark range of P&GE rates representative of the industry: (i) composed an improper industry benchmark group of companies; (ii) improperly determined the benchmark range of P&GE rates; and (iii) conducted an improper comparison between PMTL's P&GE rates and the benchmark range.
7.91.
In Thailand's view, the BoA reasonably determined that the relationship between PMTL and PM Indonesia affected the transaction value.284 Thailand considers that the BoA's choice of companies to include in the benchmark comparison group was reasonable; that the BoA acted reasonably in determining the benchmark range for the industry group; and that the comparison between PMTL's P&GE rates and the benchmark range was reasonable.
7.92.
The parties agree that an examination of the circumstances of sale between related parties under Article 1.2(a) may, in principle, be conducted by using a comparison aimed at determining whether the transaction value reflects normal commercial behaviour between unrelated parties.285 More specifically, the parties agree that comparing the P&GE rate that the importer obtained in sales of the imported goods with the P&GE rates obtained by other importers of similar or identical goods, could give an indication as to whether the relationship influenced the price.286 The Philippines argues that "the BoA's application of the method as part of its examination of the circumstances of sale was flawed in ways that render the examination inconsistent with Article 1.2(a) of the CVA."287 We proceed with our analysis on the understanding that a comparison of P&GE rates between PMTL and an industry benchmark is, in principle, a valid methodology for determining whether the relationship between PMTL and PM Indonesia influenced the price.

7.2.2.2 Main arguments of the parties

7.93.
The Philippines argues that an examination of the circumstances of sale, under Article 1.2(a), must consist of a rigorous and critical examination that observes due process, and covers "all relevant aspects of the transaction".288 According to the Philippines, the transaction value must be used unless the customs authority has grounds rooted in objective, positive evidence for regarding the transaction value as unacceptable.289
7.94.
Regarding the BoA's examination of the circumstances of sale, the Philippines first argues that the BoA constructed an improper industry group to compare against PMTL's P&GE rates. Specifically, the Philippines argues that the selection of the companies included in the industry group was inconsistent with the requirements of Article 1.2(a), second sentence, because the inclusion of PMTL itself sheds no light on whether PMTL's sale was consistent with the industry standard, and the P&GE rates of the other companies included in the industry group were not comparable to PMTL's P&GE rate since those companies did not make sales of imported cigarettes at the wholesale level.290 The Philippines also argues that, if the companies selected in the group were appropriate, then the BoA should have also included two other companies that it chose to exclude.291 Additionally, in the Philippines' view, regardless of whether the companies included in the group were appropriate, the BoA improperly excluded two companies that were appropriate comparators, and which therefore should have been included in the industry group.292
7.95.
Second, the Philippines argues that the way in which the BoA determined the benchmark range, on the basis of the industry group, was flawed. The Philippines considers that the BoA inappropriately determined the P&GE rates for the companies in the group, by using different definitions of "profit" in the numerator, compared to the denominator, when applying the calculation to determine P&GE.293 Additionally, the Philippines argues that the BoA used an inappropriate figure in respect of PMTL's P&GE rate when determining the benchmark range.294 Furthermore, the Philippines argues that the BoA inappropriately relied on a simple average instead of a weighted average when calculating an average P&GE rate for the industry group, thereby failing to take into account the differences in sales volumes of the companies in the industry group.295 The Philippines also submits that the BoA inappropriately determined the benchmark range using the statistical tool of "standard error".296
7.96.
Third, the Philippines argues that the BoA conducted an improper comparison between PMTL's P&GE rates and the benchmark range, because the BoA incorrectly relied on a strict quantitative test to assess whether the BoA's rates were consistent with the benchmark range, without taking into account qualitative factors that may have explained apparent discrepancies in the comparison of P&GE rates.297 Additionally, the Philippines notes that the BoA apparently used two rates for PMTL when comparing PMTL to the benchmark range, and that both of these rates were different to the P&GE rate used in respect of PMTL when calculating the industry average rate.298 The Philippines argues that the BoA should have been consistent, and used a single P&GE rate for PMTL both when determining the benchmark range, and when comparing PMTL to that range.
7.97.
In Thailand's view, the BoA reasonably determined that the relationship between PMTL and PM Indonesia affected the transaction value. Thailand considers that the BoA's choice of a benchmark comparison group was reasonable, because the BoA acted impartially and objectively by selecting the companies based on information received from the Thai Business Development Department, and which information was based on a Thai industrial classification identifying companies in the business of "wholesale of tobacco and tobacco products".299 Thailand considers that the inclusion of PMTL in the industry group was reasonable and appropriate.300 Thailand explains that the BoA excluded certain companies from the list on the basis of objectively justifiable reasons, including companies whose P&GE rates were disproportionately high, and companies for whom the BoA could not find relevant financial information.301 Thailand explains that the BoA excluded loss-making companies from the group, and that a company's loss-making status is a sufficient reason to exclude it from an industry group, on the basis that loss-making companies do not reflect P&GE in the ordinary course of trade.302 Thailand argues that the BoA's approach was reasonable in light of the difficulties of constructing a relevant group of comparator companies with which to compare PMTL's P&GE rates, and highlights that such realities, and the consequential necessity of relying on companies outside the cigarette sector, are acknowledged by a representative of PMTL itself.303
7.98.
Regarding the determination of the benchmark range, Thailand argues that the BoA's calculation of P&GE rates "was used consistently for all companies in the group" and that, even if the denominator had been based on total income, there "would have been no effect on the overall calculation."304 Regarding the determination of PMTL's P&GE rate, Thailand explains that the BoA used the rate of 9.22% in order to be consistent with how the rates were established for the other companies included in the benchmark group.305 Regarding the use of a simple average, instead of a weighted average, Thailand explains that, had the BoA weighted the calculation of the industry average, the volume of PMTL's sales would have "led to the BoA comparing PM Thailand with itself", meaning that PMTL "would not be subject to scrutiny simply because it was the largest importer."306 Thailand also argues that the BoA's reliance on "standard error" to establish a benchmark range of P&GE rates to compare against PMTL's P&GE rate was reasonable.307
7.99.
Regarding the comparison of PMTL to the benchmark range, Thailand considers that the BoA's determination of whether PMTL's rates were consistent with those of the industry group was objective and reasonable.308 Additionally, Thailand considers that the BoA did not act inconsistently with Article 1.2(a) by comparing two distinct rates for PMTL to the benchmark range.309

7.2.2.3 Analysis by the Panel

7.2.2.3.1 General considerations

7.100.
Article 1.1 (d) of the CVA states that:

The customs value of imported goods shall be the transaction value, that is the price actually paid or payable for the goods when sold for export to the country of importation adjusted in accordance with the provisions of Article 8, provided:

(d) that the buyer and seller are not related, or where the buyer and seller are related, that the transaction value is acceptable for customs purposes under the provisions of paragraph 2.

7.101.
Article 1.2(a) of the CVA elaborates two distinct but related obligations, in its second and third sentences. It states that:

In determining whether the transaction value is acceptable for the purposes of paragraph 1, the fact that the buyer and the seller are related within the meaning of Article 15 shall not in itself be grounds for regarding the transaction value as unacceptable. In such case the circumstances surrounding the sale shall be examined and the transaction value shall be accepted provided that the relationship did not influence the price. If, in the light of information provided by the importer or otherwise, the customs administration has grounds for considering that the relationship influenced the price, it shall communicate its grounds to the importer and the importer shall be given a reasonable opportunity to respond. If the importer so requests, the communication of the grounds shall be in writing.310

7.102.
Thus, Article 1.1 provides that, in principle, a customs authority must use the transaction value of the imported goods as the customs value. Article 1.1(d) read in conjunction with Article 1.2(a) clarifies that this applies also in situations in which the buyer and the seller are related, unless it is established that the relationship influenced the price. If a customs authority has doubts as to whether the relationship between the buyer and seller affected the price, then under Article 1.2(a), second sentence, the customs authority must examine the circumstances surrounding the sale, and the customs authority may reject the transaction value if the customs authority establishes that the relationship influenced the price. Article 1.2(a), third sentence, also requires that if the customs administration has grounds for considering that the relationship influenced the price, it must communicate those grounds to the importer and the importer must be given a reasonable opportunity to respond, before the customs authority makes its final determination.
7.104.
The parties agree that Article 1.2(a) "does not prescribe a specific process for customs authorities to follow", and that the customs authority "has a degree of discretion in deciding how to conduct its examination".312 We agree. In this respect, we recall the original panel's findings that the term "examine" means to "inquire into, investigate or consider critically", similarly to the word "investigate", which means "[s]earch or inquire into; examine (a matter) systematically or in detail; make an (official) inquiry into".313 We note that the interpretative notes concerning Article 1.2(a), as well as Article 1.2(b), all indicate methods that may be used to determine whether the relationship between the buyer and seller influenced the price. We also note that the object and purpose of an examination of the circumstances of sale under Article 1.2(a) is to reveal whether the price was influenced by the relationship between the buyer and seller. Given the foregoing, we consider that, although Article 1.2(a) does not prescribe any particular means or methodology that must be followed by a customs authority in examining the circumstances of sale, the chosen means or methodology must be capable of, and suitable for, revealing whether the relationship between the buyer and seller influenced the price. We therefore agree with the Philippines that an examination of the circumstances of sale under Article 1.2(a) must be apt to reveal whether the relationship between the buyer and seller influenced the price.

7.2.2.3.2 The BoA's examination of the circumstances of sale

7.122.
It is uncontested by the parties, and borne out by the evidence, that the BoA conducted the following process for examining the circumstances of sale for the purpose of determining whether the relationship between PMTL and PM Indonesia influenced the transaction value:

a. The BoA constructed an "industry group" of five companies;

b. The BoA determined P&GE rates for each of the five companies in the industry group;

c. The BoA calculated an "industry average" P&GE rate of 12.44% for the five companies, using a simple average calculation;

d. From that industry average, the BoA constructed a "benchmark range" of P&GE rates falling between 9.8% and 15.08%, by adding and subtracting 2.64% from the industry average of 12.44%; and

e. The BoA compared two different P&GE rates for PMTL, namely 9.36% and 18.47%, against the benchmark range, and concluded that, because PMTL's rates fell outside the benchmark range, the transaction value was "influenced by the relationship between the purchaser and seller".349

7.123.
The Philippines has raised a number of different arguments concerning alleged flaws in the BoA's examination of the circumstances of sale, each of which, in the Philippines' view, individually "constitutes a sufficient basis for a finding of violation".350 However, the Philippines has also clarified that is making a single claim under Article 1.2(a), second sentence, and is only requesting a single finding of inconsistency.351 The Philippines has also indicated that in analysing the various grounds raised by the Philippines, "the Panel enjoys a degree of discretion in organizing its analysis … [and] could evaluate each ground separately or it could group inter-connected grounds together – for example, when dealing with the various arguments raised in respect of the comparator group constructed by the BoA as part of its circumstances of sale test."352 We note that two of the third parties also suggest that we should conduct a "holistic assessment", or assess the BoA's examination of the circumstances of sale "as a whole".353
7.124.
Panels have a degree of discretion as to how they structure their analysis, provided that they do not do so in such a way as to lead them to truncate their analysis prematurely, or foreclose consideration of crucial aspects of a party's arguments.354 We find it useful to address certain of the Philippines' arguments together, insofar as they correspond to three different aspects of the BoA's examination. We therefore proceed by addressing, in turn, the Philippines' arguments concerning: (i) the BoA's composition of the industry group; (ii) the BoA's determination of the benchmark range (including the way in which the BoA determined the P&GE rates for the companies in the industry group); and (iii) the BoA's comparison between PMTL and the benchmark range.
7.125.
While we group the issues raised into these three distinct aspects of the BoA Ruling, we stress at the outset that these issues involve interrelated aspects of the methodology and approach followed by the BoA. As integrally related aspects of a single methodology employed by the BoA, we do not consider that these aspects can be assessed in isolation from one another. In this regard, both parties share the understanding that the various aspects alleged by the Philippines are to be assessed by the Panel as constituting a single claim, rather than as a series of distinct claims.355 We will therefore conduct a holistic examination of the totality of the facts to arrive at an overall conclusion, taking into account our intermediate findings in respect of these various aspects.

7.2.2.3.2.1 The composition of the industry group

7.126.
As indicated above, to determine whether the price of the cigarettes was influenced by the relationship between PMTL and PM Indonesia, the BoA compared PMTL's P&GE rates with a range of P&GE rates. That range was based on an industry group that the BoA composed. The industry group consisted of five companies: PMTL itself, Lee Intertrade, Chemical Resins, Piriyapul International, and KHS.356 In the BoA Ruling, and other documents on the record, this industry group was described as consisting of "wholesalers" of "imported cigarettes", and comprising information for the "sale of … goods of the same class or kind" as PMTL.357
7.127.
The Philippines argues that the BoA's composition of the industry group was flawed, because: (i) the companies included in the industry group were not apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price; (ii) the BoA excluded two companies from the industry group that should have been included in the industry group; and (iii) the BoA arbitrarily excluded two other companies that were, for the purposes of the comparison, as similar to PMTL as those companies that were included in the industry group.
7.128.
We first set out the parties' arguments on these aspects of the BoA's approach, before proceeding with our analysis of the issues raised.
7.129.
First, regarding the companies that were included in the industry group, the Philippines asserts that, as a general matter, under Article 1.2(a), an examination of the circumstances of sale in the form of a comparison must satisfy two "principles of comparability", namely that the comparison (i) be made between comparable goods358; and (ii) takes full account of any differences that affect comparability.359 The Philippines further asserts that, in conducting its comparison of P&GE rates, the BoA acknowledged "that the sales of the companies chosen had to be comparable in terms of both the imported goods sold and the commercial level at which the sales were made."360 The Philippines argues, however, that of the five companies that the BoA included in the benchmark industry group, the only company that satisfied this standard was PMTL itself.361 The Philippines asserts that the other companies were invalid comparators, because three of the four remaining companies in the benchmark group (namely Chemical Resins, KHS and Lee Intertrade) did not sell imported cigarettes at a wholesale level362, and the remaining company (namely Piriyapul International) did not import or distribute cigarettes, and its cigarette retail sales comprised only a "tiny fraction" of its overall sales.363 As regards the inclusion of PMTL itself in the industry comparator group, the Philippines argues that "[i]f the examination includes a comparison of the importer with the importer itself in respect of transactions involving the same seller, that element of the examination cannot, by definition, shed light on whether the importer's pricing in those related party transactions is consistent with pricing in unrelated [party] transactions."364
7.130.
Second, the Philippines argues that the industry group was flawed because it excluded British American Tobacco (BAT) and Japan Tobacco International (JTI).365 The Philippines points out that in the course of bilateral communications between Thailand and the Philippines, Thailand indicated that BAT and JTI were excluded on the basis that they had been "loss-making" during the relevant period.366 In the Philippines' view, a "lack of profitability is not, in itself, a sufficient basis for excluding these companies".367 The Philippines concedes that "it may sometimes be appropriate to exclude unprofitable companies when drawing comparisons under the CVA", but maintains that the customs authority "must take account of commercial factors before doing so".368
7.131.
Third, the Philippines considers that Macrorich and Classic Cigars, two companies excluded from the benchmark group, were sufficiently similar to Lee Intertrade and KHS that their exclusion was not justifiable in terms of their business operations.369 The Philippines considers that a customs authority cannot exclude a company from a comparison group solely for the reason that its P&GE rate is "too low or too high", and rather it is the comparison itself that determines whether a P&GE rate is too low or too high.370 Additionally, the Philippines considers that the BoA had sufficient financial information for these companies to determine their P&GE rates.371 In the Philippines' view, the arbitrary exclusion of these companies was inconsistent with Article 1.2(a), second sentence.
7.132.
For its part, Thailand "generally agrees that an 'apples-to-apples' comparison should be used"372, but disagrees that Article 1.2(a) requires that comparisons must be conducted in accordance with the principles of comparability suggested by the Philippines.373 Thailand argues that the particular circumstances of the Thai cigarette market make it difficult to conduct an examination of the circumstances of sale to the level of perfection demanded by the Philippines.374 Thailand further explains that the BoA's approach was reasonable, because it sought to establish a list of "companies in the cigarette industry" by seeking information from the Ministry of Commerce and the Thai Customs Department regarding "companies that were in the business of import and/or wholesale of cigarettes and related products".375 Thailand also argues that the BoA's approach was in accordance with OECD guidelines.376
7.133.
Regarding the exclusion of BAT and JTI, Thailand argues that the BoA excluded all loss-making companies from the benchmark comparison, and that the exclusion of these loss-making companies was reasonable, on several grounds.377 Thailand argues that: loss-making sales are not in the ordinary course of trade378; loss-making firms "could not be reasonably used to determine whether PM Thailand's P&GE [rate] was within the range that might be expected based on transactions between unaffiliated parties"379; it would be excessively burdensome to require the BoA to examine whether commercial factors could explain why such firms are loss-making380; the Philippines did not explain what commercial reasons could account for BAT and JTI's lack of profitability, or what valid commercial reasons would be sufficient to include loss-making companies in a benchmark group381; and given that BAT and JTI import cigarettes from related exporters, their lack of profitability confirms that their transaction values "may have been influenced by the relationship".382
7.134.
Finally, regarding the exclusion of Macrorich and Classic Cigars, Thailand explains that Macrorich was "excluded because its P&GE rate of 54% was disproportionately high and did not appear to be, in effect, 'within the ordinary course of trade'".383 Thailand argues that "in arriving at a reasonable and objective benchmark, it is perfectly reasonable to exclude a data point that appears aberrational."384 With respect to Classic Cigars, Thailand argues that Classic Cigars was excluded from the group of 29 companies because "no financial information about its operations and P&GE ratios for 2002 was available."385
7.135.
We recall that authorities enjoy a margin of discretion regarding the means or methodology that they choose to follow when engaging in comparisons. However, in the context of conducting an examination of the circumstances of sale, they enjoy that discretion within the parameters laid down under Article 1.2(a), read in its context and in light of the object and purpose of the CVA. We agree with Thailand that the text of Article 1.2(a) does not prescribe specific requirements regarding comparisons made in the context of examining the circumstances of sale.386 However, we consider that certain principles of comparability are inherent in the essential legal standard to be applied under that provision, or arise by necessary implication from the context and purpose of Article 1.2(a).
7.136.
As a starting point, we consider it axiomatic that, for a comparison to be apt to reveal whether the relationship between the buyer and seller influenced the price, that comparison must be between comparable things. Not only is this inherent to the legal standard under Article 1.2(a), but it is reflected in a general principle of comparability that appears both within the CVA itself, as well as throughout the covered agreements.387 We also consider that both the CVA and other covered agreements indicate that, where there are relevant differences between things being compared, those differences must be accounted for in some way.388 Thus, in our view, for a comparison between two things to reveal whether the relationship between a buyer and seller influenced the price, such a comparison should be between comparable things, and any relevant and identifiable differences that would affect the comparison must be taken into account.
7.137.
Furthermore, we consider that, where a comparison is between the importer and a groupof companies intended to represent the industry, a company that would otherwise satisfy the requirement of comparability described above may only be excluded from that industry group on the basis of an objectively justifiable reason.389 In the absence of an objectively justifiable reason to exclude an otherwise appropriate comparator company, the industry group is arbitrary and does not accurately represent the industry. A comparison using such an arbitrary industry group would not be apt to reveal anything about the business operations of the importer relative to the industry.
7.138.
Applying these basic principles to the BoA's examination of the circumstances of sale, we consider first the companies that the BoA included in the industry comparator group (PMTL itself, and four other companies). We then consider the companies excluded from the industry comparator group. We note that the parties' arguments regarding the composition of the industry comparator group raise a number of issues that are interrelated, and it is for that reason that we address them together.
7.139.
It is axiomatic that the inclusion of PMTL within the industry group is not apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL. Specifically, we agree with the Philippines that, if an examination of the circumstances of sale "includes a comparison of the importer with the importer itself in respect of transactions involving the same seller, that element of the examination cannot, by definition, shed light on whether the importer's pricing in those related party transactions is consistent with pricing in unrelated transactions."390 We further note that the BoA did not include PMTL in the industry group as a consequence of being unable to disaggregate data relating to the importer from data relating to the industry group. To the contrary, the BoA sought actively to include data for the importer. Insofar as the other four companies included in the industry comparator group engaged in business activities that were sufficiently comparable to those of PMTL, and insofar as the BoA used the appropriate P&GE rate for PMTL on both sides of the comparison, then the inclusion of PMTL itself in the industry comparator group would not necessarily render the entire industry group inapt to reveal whether the relationship influenced the price, or give rise, by itself, to a violation of Article 1.2(a) of the CVA. We do, however, consider that the BoA's decision to undertake a comparison of PMTL to itself raises questions about the BoA's composition of the industry group.391
7.140.
Turning to the other four companies included in the group, it is uncontested that they differ from PMTL in significant ways and that, despite the representation made in the BoA Ruling itself, none of them were "imported cigarette wholesalers in the year 2002". We emphasize in this regard that it is uncontested by Thailand that:

a. Chemical Resins is a manufacturer of cigarette filters and does not sell cigarettes;

b. KHS is a wholesaler of cut tobacco that does not import cigarettes for resale;

c. Lee Intertrade is a wholesaler of cigars, tobacco, rolling paper, and cigarette holders, but not imported cigarettes; and

d. Piriyapul sells cigarettes at the retail level (instead of the wholesale level), and cigarettes comprise only a small fraction of Piriyapul's overall sales.392

7.141.
We note that several CVA provisions contemplate a comparison of P&GE rates in connection with "imported goods of the same class or kind", including in the specific context of examining the circumstances of sale under Article 1.2(a).393 We further note that Article 15.3 defines "goods of the same class or kind" as goods which fall "within a group or range of goods produced by a particular industry or industry sector, and [which] includes identical or similar goods." Furthermore, both paragraph 9 of the Interpretative Note to Article 5 and paragraph 8 of the Interpretative Note to Article 6 refer explicitly to the question of "whether certain goods are 'of the same class or kind' as other goods". Both interpretative notes indicate that such a determination must be on a case-by-case basis, and that "the narrowest group or range of … goods … for which the necessary information can be provided, should be examined." In short, while an authority is not confined to comparing identical or similar products for the purpose of conducting a comparison of P&GE rates, a customs authority also does not have licence to pick any products that are related in some way to the product being valued, without regard to whether those comparator products have sufficiently common characteristics for such a comparison to be apt to reveal whether the price of imported goods was influenced by the relationship between the buyer and seller.
7.142.
We recall that the BoA Ruling concluded that two separate P&GE rates ascribed to PMTL were "not consistent with those of the industry group of imported cigarette wholesalers, which is the information for the sale of the goods of the same class or kind in the Kingdom [of Thailand]".394 Recalling the definition in Article 15.3 of the CVA, Thailand submits, only in the context of providing its comments on the Philippines' responses to the Panel's second set of questions, that this definition "is much broader, of course, than the definition of 'identical' and 'similar' goods contained in Articles 15.2(a) and (b) of the CVA".395 However, while Thailand disagrees with the Philippines' interpretation of these terms, Thailand has not advanced any arguments to demonstrate that the four companies in the comparator group actually produced products "of the same class or kind", except for its reliance on the TSIC classification.396 We address this further below.
7.143.
We recall that the legal standard under Article 1.2(a) requires that, at a minimum, the examination of the circumstances of sale should be apt to reveal whether the relationship influenced the price. In our view, given the significant differences in business operations between Chemical Resins, KHS, Lee Intertrade and Piriyapul, it is not clear how the P&GE rates of these companies can, in principle, reveal anything about the P&GE rate of PMTL, a company that exclusively sells cigarettes at the wholesale level. Having said that, we do not consider that the inclusion of these four companies in the industry comparator group, by itself, necessarily renders the entire industry group inapt to reveal whether the relationship influenced the price, or gives rise, by itself, to a violation of Article 1.2(a) of the CVA. In this regard, we consider it necessary to further consider whether the inclusion of these four companies in the industry comparator group was defensible on one or more grounds raised by the respondent.
7.144.
We will therefore proceed to consider the principal reasons identified by Thailand, which are that these companies were identified as being part of the "wholesale of tobacco and tobacco products" industry, that the BoA referred to the OECD guidelines, and that the BoA encountered difficulties identifying comparable companies because, inter alia, the companies that were more comparable to PMTL were loss-making during the relevant period.
7.145.
In its second written submission, Thailand stated that it is "incorrect" to argue that the BoA "went beyond the industry in selecting the comparison group", but did not elaborate further.397 In response to a question from the Panel, however, Thailand elaborated that the BoA relied on information provided by the Business Development Department of the Thai Ministry of Commerce.398 According to Thailand, the Business Development Department relied on Thailand's Standard Industrial Classification (TSIC), heading 51,233 of which referred to "wholesale of tobacco and tobacco products", to provide the BoA with a list of possible comparator companies within that sector.399
7.146.
We consider that such references may constitute an ex post rationalization of the BoA's conduct. As the Philippines points out, "Thailand did not provide this justification for its industry group in the BoA Ruling, its first written submission, or its second written submission. This explanation was, instead, offered for the first time in Thailand's responses of July 2017 to the Panel's first set of questions."400 Furthermore, in reviewing all of the evidence presented by the parties, we cannot see any evidence on the record of the BoA's determination indicating that the BoA relied on the TSIC to determine whether certain companies were comparable to PMTL. Insofar as this is an ex post rationalization, we do not consider that Thailand can defend the BoA's actions on this basis.
7.147.
Having said that, we acknowledge that in the context of customs valuation determinations, where there may be no official "record" of a customs authority's determination in contrast to the record that exists in the context of an anti-dumping, countervailing duty, or safeguards investigation, there may be circumstances in which it is difficult to sharply distinguish between an ex post rationalization and permissible reliance on documentary evidence showing how the authorities actually conducted their examination. We also note that the Appellate Body has explained that a panel is not precluded from making alternative findings on ex post rationales made by the respondent.401 We are mindful that the original panel followed the same approach, in order to help "resolve the parties' dispute".402 Although the absence of any evidence in support of Thailand's assertion suggests that, in this particular instance, the BoA's reliance on the TSIC may constitute an ex post rationalization, we nevertheless consider it appropriate to follow the same approach as the original panel. We therefore proceed to address this explanation by Thailand on an arguendo basis.
7.148.
We concluded above that the fundamental business operations of Chemical Resins, KHS, Lee Intertrade and Piriyapul were so different from those of PMTL that a comparison of their P&GE rates was not, in principle, apt to reveal anything about the price paid by PMTL to PM Indonesia for cigarettes. In our view, this is not called into question by the alleged fact that the BoA relied on a domestic industry classification, pursuant to which the relevant companies all appeared under the heading of "wholesale of tobacco and tobacco products". In our view, although a domestic industry classification may be a useful starting point for a customs authority to seek comparable companies, the customs authority remains under a fundamental obligation to ensure that the comparator companies are, in actual fact, comparable to the importer.
7.149.
Our reasoning in this regard is only reinforced by the fact that Thailand has not contested that, under the TSIC, "companies self-register under a particular code", "companies are not obliged to account for all their activities", "they are free to register under three separate codes at any one time", and "there is … little to no verification of whether companies correctly identify their business activities".403 Additionally, the Ministry of Commerce apparently re-categorized the TSIC codes in 2009, and although none of the companies has significantly changed its business activities, under the new classification none of the four companies appears under "wholesale of tobacco products" (new TSIC code 46323). Rather, Chemical Resins appears under "manufacture and distribution of cigarette filter[s]" (new TSIC code 12002), KHS and Lee Intertrade appear under "wholesale of non-finished tobacco products" (new TSIC code 46203), and Piriyapul appears under "retail of other goods in general stores" (new TSIC code 47190).404 We therefore agree with the Philippines that "the SIC code under which a particular company is registered is not a reliable indicator of the business activities undertaken by that company."405
7.150.
As a general matter, regarding Thailand's emphasis that the BoA acted "impartially" and "objectively" in how it composed the industry group, we do not question that this was the case. Furthermore, we agree with Thailand insofar as it argues that the selection of companies whose business operations were significantly different from those of PMTL was not inherently biased against PMTL.406 However, we consider that the absence of bias or partiality is not directly relevant to assessing whether a particular examination of the circumstances of sale was apt to reveal whether the relationship between the buyer and the seller influenced the price.407 Thus, the BoA's decision to compose an industry group on the basis of the TSIC codes is not problematic by virtue of any partiality or bias on the part of the BoA in using the TSIC codes. Rather, an apples-to-oranges comparison is problematic regardless of whether or not, in a particular case, it yields an outcome that is favourable to the importer.
7.151.
Thailand also argues that the BoA's approach followed OECD guidelines.408 We understand Thailand to refer to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.409 We note that the Minutes of the BoA Meeting of 26 September 2012 indicate that the BoA did indeed purport to follow an approach that "is pursuant to the OECD rules".410
7.152.
We note that Thailand has not sought to demonstrate the relevance of the OECD Transfer Pricing Guidelines to the assessment of whether the BoA's examination of the circumstances of sale was consistent with Article 1.2(a) of the CVA. Thailand has not emphasized this aspect of its argumentation, and, in our view, has not elaborated on how the OECD guidelines indicate whether the BoA acted consistently with Article 1.2(a), second sentence. In the absence of such elaboration, we are wary of undertaking our own assessment of whether the BoA followedthe OECD guidelines411, and, in any event, we do not consider it necessary to do so. In accordance with the reasoning set forth above regarding the BoA's reliance on the TSIC, we consider that regardless of the source from which a customs authority derives its approach to examining the circumstances of sale, the actual examination must, fundamentally, be apt to reveal whether the relationship influenced the price. Thailand has not demonstrated how the references in the BoA Minutes to OECD "rules" or "guidelines" demonstrate that the companies selected were apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL.
7.157.
Thailand points to what it terms an "expert witness statement" made on behalf of PMTL, and submitted as evidence in this proceeding by the Philippines, that indicates that "[i]n order to determine whether the Gross Margin [(GM)] was in line with industry standards, PM Thailand then compared this GM to that of other comparable operators that transact with unrelated parties, including distributors in the tobacco industry, but, since there are so few of the latter, also others in other sectors of industry for better comparability purposes."416 Thailand considers that "[i]f it would be appropriate to consider companies from other sectors, it cannot be a priori unreasonable to consider companies within the tobacco sector that are not as identical to PM Thailand as the Philippines might like".417 Thailand also points out that the expert witness "referred to 'fast-moving consumer goods companies'", which, in Thailand's view, "undermines" the Philippines' objections to relying on other companies "within the group of 'tobacco products'", and in particular the reliance on Piriyapul which also sells products that "all appear to be, like cigarettes, 'fast moving consumer products'".418
7.158.
We are wary of according undue reliance to this expert witness statement, given that it was not made on behalf of the Philippines in the context of this proceeding, but rather was submitted by PMTL in the context of a domestic criminal proceeding that addressed a different customs valuation determination to that at issue in the BoA Ruling.419 In any event, and in accordance with the legal standard under Article 1.2(a), second sentence, the essential question is whether Piriyapul is an appropriate comparator company. Indeed, in this respect the expert witness statement explicitly indicates that, in comparing PMTL's gross margin with the industry standard, PMTL compared its gross margin to "that of other comparable operators", both within and outside the tobacco industry.420 In our view, Thailand has failed to demonstrate, through either the expert witness statement, or through any other arguments or evidence, that a comparison of PMTL to Piriyapul was apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL. We do note, however, that the expert witness statement is indeed indicative of the fact that there were difficulties in establishing a comparison group in the Thai cigarette market. In this respect, as discussed above, although the particular circumstances of the market situation may be a relevant consideration in the BoA's determination of a particular method to use, it does not change the fact that the ultimate methodology chosen by the BoA to examine the circumstances of sale must have been apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price.
7.159.
In connection with its arguments concerning the difficulties of establishing the industry group, Thailand asserts that when "faced with a choice between a comparison with companies selling the same product and companies of the same size, it is objectively justifiable to proceed with the former".421 We observe that, with the exception of Piriyapul, the other companies included in the industry comparator group were not "selling the same product". In addition, Piriyapul is a "grocery store retailer" that sold several thousand other products, such that it cannot be said that its P&GE rate was derived from "selling the same product".422 Furthermore, we consider that Thailand's argument concerning a choice between companies selling the same product versus companies of the same size represents a false dichotomy. As indicated above, we consider that there were other possible methodologies that the BoA could have employed, and Thailand has not demonstrated that the BoA was forced to choose "between a comparison with companies selling the same product and [a comparison with] companies of the same size".423
7.160.
In its argumentation regarding the companies included in the industry comparator group and the difficulties that the BoA faced in finding comparable companies, Thailand has highlighted the difficulties that the BoA encountered in constructing an industry group given that a number of the other companies initially considered (e.g. other cigarette importers) were excluded from the final industry group, for various reasons.424 For its part, the Philippines claims that the BoA, in fact, acted inconsistently with Article 1.2(a) through its exclusion of certain companies. Specifically, the Philippines argues that the exclusion of BAT, JTI, Macrorich and Classic Cigars from the industry group was not justified. We now address whether the exclusion of these companies was indeed justified.
7.161.
Turning first to the exclusion of BAT and JTI from the industry group, Thailand argues that these companies were excluded because they were loss-making and had no profits during the relevant period.425 The Philippines argues that a "lack of profitability is not, in itself, a sufficient basis for excluding these companies".426
7.162.
It is uncontested that BAT and JTI's business operations in Thailand are comparable to PMTL, and, in particular, that the goods they sell are sufficiently similar to the goods at issue (namely Marlboro cigarettes) such that a comparison of P&GE rates could, in principle, shed light on whether the price paid by PMTL was influenced by its relationship with PM Indonesia. We recall that certain companies that are potentially relevant comparators may nonetheless be excluded from an industry comparator group on the basis of objectively justifiable reasons.427 The parties disagree as to whether the BoA should have excluded these companies exclusively on the basis that they were "loss-making", or whether the BoA should have taken into account valid commercial reasons for their loss-making status before excluding them.
7.163.
We note that the explanation that these companies were excluded on the basis of their loss-making status was first presented not by the BoA, but by Thailand, in the course of bilateral consultations between the Philippines and Thailand.428 In our review of the evidence on the record of the BoA determination, we can see noindication that the BoA opted to exclude BAT and JTI on the basis that they were loss-making.429 We therefore consider that Thailand's explanation that the BoA excluded BAT and JTI on the basis of their loss-making status may constitute an ex post rationalization, in which case the exclusion of these companies could not be justified on that basis. Nevertheless, in accordance with our approach above, we consider it appropriate to proceed on an arguendo basis and address the parties' arguments in relation to the exclusion of JTI and BAT.430
7.164.
We consider that paragraph 5 of the Interpretative Note to Article 6 of the CVA is instructive.431 Paragraph 5 explains that:

It should be noted in this context that the "amount for profit and general expenses" has to be taken as a whole. It follows that if, in any particular case, the producer's profit figure is low and the producer's general expenses are high, the producer's profit and general expenses taken together may nevertheless be consistent with that usually reflected in sales of goods of the same class or kind. Such a situation might occur, for example, if a product were being launched in the country of importation and the producer accepted a nil or low profit to offset high general expenses associated with the launch. Where the producer can demonstrate a low profit on sales of the imported goods because of particular commercial circumstances, the producer's actual profit figures should be taken into account provided that the producer has valid commercial reasons to justify them and the producer's pricing policy reflects usual pricing policies in the branch of industry concerned. Such a situation might occur, for example, where producers have been forced to lower prices temporarily because of an unforeseeable drop in demand, or where they sell goods to complement a range of goods being produced in the country of importation and accept a low profit to maintain competitivity.

7.166.
We note that Thailand argues that Article 2.2.1 of the Anti-Dumping Agreement indicates that sales below the cost of production may be treated as not being in the "ordinary course of trade".432 As a general matter, we note that the subject matter of Article 2.2.1 of the Anti-Dumping Agreement (rules governing the determination of normal value for purposes of determining the existence of dumping) is different from the subject matter of Articles 1 through 7 of the CVA (rules governing the determination of the value of goods for the purpose of levying ad valorem duties). Therefore, we are wary of according undue weight to these provisions of the Anti-Dumping Agreement in interpreting the CVA. However, even if we were to rely on Article 2.2.1 of the Anti-Dumping Agreement as relevant context for the question of assessing whether customs authorities may exclude loss-making companies from an industry comparator group used for customs valuation purposes, we note that Article 2.2.1 does not support Thailand's argument. Rather, Article 2.2.1 states explicitly that sales below the cost of production may be treated as not being in the ordinary course of trade "only if the authorities determine that such sales are made within an extended period of time in substantial quantities and are at prices which do not provide for the recovery of all costs within a reasonable period of time." Thus, Article 2.2.1 provides strict conditions that must be satisfied in order for sales below cost to be treated as not being made in the ordinary course of trade.
7.167.
We are also unconvinced by Thailand's suggestion that the reference in Article 5 of the CVA to "additions usually made for profit and general expenses" implies that there are "usually" profits in an importing country, and that when "determining whether those profits are within the 'usual' range … it is reasonable to exclude companies that sell at a loss".433 We consider that the expression "profit and general expenses" is an accounting term of art, and the adverb "usually" merely implies the "typical" P&GE. Furthermore, the interpretative note to Article 6 clearly indicates that the usual, or typical, P&GE can include "nil" profits.
7.168.
We further disagree with Thailand's argument that, "presumably, companies in the same industry are affected by the same commercial factors", and consequently, "there is no basis to distinguish between companies in a particular sector on the basis of the commercial factors affecting them".434 We consider that firstly, this is a presumption that may not be true in every case, and secondly, there may indeed be commercial factors affecting all (or many) companies in a particular industry, with the result that all (or many) companies are operating at a loss. Far from suggesting that these companies should not be taken into account, we consider that in such a situation where the entire (or almost the entire) industry is loss-making, the importer must be compared with the entire industry, including those companies that are loss-making, in order for the comparison to meaningfully reveal how the importer's situation compares to that of the relevant industry, in the particular circumstances of that market.
7.169.
Additionally, we disagree with Thailand that a requirement to investigate valid commercial reasons for a company's lack of profitability would "increase, rather than decrease, the level of subjectivity in a tribunal's decision", and that "it is more objective and reasonable to exclude loss-making companies" per se.435 The CVA clearly requires that when conducting a computed-value calculation under Article 6, a customs authority is obliged to examine valid commercial reasons for a "low" or "nil" profit, regardless of the subjectivity of such an examination. Furthermore, where valid commercial reasons436 couldexplain a particular company's "low" or "nil" profits, and a customs authority failed to take those considerations into account, that would be a less objective analysis of the circumstances of sale than if it did take those considerations into account.
7.170.
With respect to Thailand's argument that "it would be excessively burdensome and indeed impossible for a tribunal such as the BoA to investigate why a company such as BAT might have made a loss in a given period"437, we first note that when conducting a computed value calculation under Article 6 of the CVA a customs authority is obliged to examine valid commercial reasons despite the burden such an examination imposes. However, we also recall in this connection that, under Article 1.2(a), the process of examining the circumstances of sale is one that is supposed to involve consultation between the customs authority and the importer. In this respect, the Philippines itself indicates that "if PM Thailand had been given the opportunity to address whether loss-making (or other) companies should have been included in an industry group, it should have provided any relevant information."438 Taking account of the balance under the CVA between the respective rights and responsibilities of the importer and the customs authority, we agree with the Philippines that the burden of indicating "valid commercial reasons" for a company being loss-making should be placed on the importer.439
7.172.
Applying this legal standard, we note the Philippines' explanation that PMTL was not informed of the BoA's selection of the industry group, and therefore was not given the opportunity to provide any information regarding valid commercial reasons to justify the inclusion of BAT or JTI in the group.442 On the basis of the evidence before us, we agree with the Philippines that the BoA did not indicate to PMTL that BAT and JTI were excluded from the group, nor did the BoA indicate its reasons for excluding those companies from the group.443 Consequently, PMTL was precluded from being able to provide potentially valid commercial reasons that could explain BAT and JTI's loss-making status.
7.173.
For these reasons, we are not persuaded that JTI and BAT, two companies that were comparable to PMTL, were excluded from the industry group on the basis of objectively justifiable reasons. Consequently, we consider that the decision to compare PMTL with an industry group that did not actually comprise "imported cigarette wholesalers in the year 2002", other than PMTL itself, cannot be defended on the grounds that JTI and BAT were loss-making. We do not consider it necessary to address whether the exclusion of JTI and BAT from the industry group, by itself, necessarily renders the entire industry group inapt to reveal whether the relationship influenced the price, or gives rise, by itself, to a violation of Article 1.2(a) of the CVA.
7.174.
Regarding the exclusion of Macrorich and Classic Cigars, we note that the Philippines' arguments in this respect are based on the fact that "like Lee Intertrade and KHS, which were included in the final group, Macrorich and Classic Cigars import and distribute tobacco and cigars (but not cigarettes)."444 As a factual matter the similarities between the operations of these companies are uncontested. We have already concluded that, given the significant differences between PMTL's business operations and those of KHS and Lee Intertrade (as well as Chemical Resins and Piriyapul), we do not see how the P&GE rates of these companies can, in principle, reveal anything about the P&GE rate of PMTL. Recalling our conclusion above that Lee Intertrade and KHS were themselves not apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price, we consider that, for the same reason, Classic Cigars and Macrorich also should not have been included in the industry group.
7.175.
Having said that, we do not consider that Thailand has demonstrated that there was any objectively justifiable reason for excluding Macrorich and Classic Cigars from the group, given the BoA's decision to include Lee Intertrade and KHS in the industry comparator group. First, we can find no indication in the record of the determination as to why the BoA excluded Macrorich and Classic Cigars from the industry group.445 Therefore, as with Thailand's references to the TSIC, and the exclusion of JTI and BAT, we consider that Thailand's explanation for the exclusion of these companies may constitute an ex post rationalization.446 Nevertheless, in accordance with our approach above, we consider it appropriate to proceed on an arguendo basis and address the parties' arguments in relation to the exclusion of Macrorich and Classic Cigars.447
7.176.
Regarding Thailand's explanation that the BoA excluded Macrorich because its P&GE rate was disproportionately high, we do not consider that an examination of the circumstances of sale would be apt to reveal whether the relationship influenced the price if a company were excluded from a comparator group solely on the basis that its inclusion would affect the comparison. In our view, the mere characterization of a company's P&GE rate as "too high" or "too low", absent any further explanation, is not an objectively justifiable reason for excluding that company from a comparator group. Indeed, absent some other kind of explanation, there is no basis for regarding a company with a high P&GE rate as anything other than representative of the industry.448
7.177.
As for Thailand's explanation that Classic Cigars was excluded because the BoA did not have access to relevant financial information, we note that the record of the BoA's determination demonstrates that the BoA did, in fact, have financial data for Classic Cigars in 2010, sufficient to calculate a P&GE rate for Classic Cigars for 2002.449 Furthermore, we note that in the course of this proceeding, the Philippines has submitted Classic Cigars' Audited Financial Statement for 2002 with the date of receipt by the Thai Commercial Registration Department of 28 March 2003.450 Had the BoA indicated in the course of the required consultations451 with PMTL that it was conducting an examination of the circumstances of sale based on a comparison of P&GE rates, and that it excluded Classic Cigars from the industry group on the basis that no financial information was available, there appears to be no reason that PMTL could not have provided that same audited financial statement to the BoA, much as the Philippines has provided it to us. Regarding Thailand's argument that "the newly-composed BoA in 2011-2012 conducted its own analysis using different sources of information (TSIC data, Revenue Department data, and Customs data) than the 2010 BoA"452, we do not consider that Thailand has adequately explained how either the BoA's reliance over time on different sources of information, or changes in the composition of the BoA itself, has a bearing on the question of whether the BoA had access to relevant financial information. In short, we do not consider that Thailand has adequately explained the exclusion of Classic Cigars from the group.
7.178.
Given the BoA's decision to include Lee Intertrade and KHS in the industry comparator group, we consider that there was a degree of arbitrariness in the BoA's decision to exclude Macrorich and Classic Cigars from the group. As our earlier findings regarding the inclusion of Lee Intertrade and KHS make clear, we consider that the BoA's inclusion of these companies in the industry group was problematic. The reason is that from the significant differences in business operations between Lee Intertrade and KHS (and Chemical Resins and Piriyapul) and PMTL, it is not clear how the P&GE rates of these companies can, in principle, reveal anything about the P&GE rate of PMTL, a company that exclusively sells cigarettes at the wholesale level. For the same reason, we consider that it would have been problematic for the BoA to include Macrorich and Classic Cigars in the industry comparator group. However, given the BoA's decision to include Lee Intertrade and KHS in the industry comparator group, there was a degree of arbitrariness in the BoA's decision to exclude Macrorich and Classic Cigars from the industry comparator group. We do not consider it necessary to address whether the exclusion of Macrorich and Classic Cigars from the industry group renders the entire industry group inapt to reveal whether the relationship influenced the price or gives rise to a violation of Article 1.2(a) of the CVA.
7.179.
At this point, we consider it useful to recapitulate the intermediate conclusions that we have reached above with regard to the composition of the industry group. As elaborated above, we consider that the authorities enjoy a margin of discretion regarding the means or methodology that they choose to follow when engaging in comparisons, but that certain principles of comparability are inherent in the essential legal standard to be applied under that provision, as read in its context and in light of its object and purpose. We consider that it is axiomatic that the inclusion of PMTL within the industry group is not apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL. We note that, despite the representation made in the BoA Ruling that PMTL's P&GE rates were compared to a benchmark range derived from the P&GE rates of "imported cigarette wholesalers in the year 2002", Thailand does not contest that none of the other companies included in the group were actually "imported cigarette wholesalers in the year 2002".453 We further consider that, given the significant differences in business operations between PMTL and Chemical Resins, KHS, Lee Intertrade and Piriyapul, it is not clear how the P&GE rates of these companies can, in principle, reveal anything about the P&GE rate of PMTL, a company that exclusively sells cigarettes at the wholesale level. We are not persuaded that the BoA's composition of the industry group can be defended on the grounds that these companies were included in the TSIC, or by the BoA's reference to the OECD guidelines, or because the BoA encountered difficulties identifying comparable companies as a consequence of its decision to engage in a comparison of PMTL's P&GE rates with those of an industry comparator group for the purpose of examining the circumstances of sale. Furthermore, we are not persuaded that JTI and BAT, two companies that were comparable to PMTL, were excluded from the industry group on the basis of objectively justifiable reasons. Finally, we consider that there was a degree of arbitrariness in excluding Macrorich and Classic Cigars from the group, given the BoA's decision to include Lee Intertrade and KHS in the industry comparator group.
7.180.
Based on all of the foregoing, we consider that the Philippines has established that the BoA constructed an industry comparator group composed of companies that were not comparable to PMTL, and consequently were not, in principle, apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL. However, we consider that it may be premature to arrive at a conclusion as to whether this intermediate finding gives rise, by itself, to a violation of Article 1.2(a) of the CVA. As we have already indicated, a customs authority is not precludedfrom conducting an examination of the circumstances of sale on the basis of a comparison of P&GE rates in situations where the market circumstances do not allow for a perfect apples-to-apples comparison. We agree with Thailand that a particular market situation could be such that anyexamination of the circumstances of sale will suffer from certain limitations. Such shortcomings in the comparison may not give rise to any inconsistency with Article 1.2(a) insofar as relevant and identifiable differences that would affect the comparison are taken into account. We therefore proceed to examine the remaining aspects of the BoA's comparison, addressing, in turn, the BoA's determination of the industry benchmark P&GE range, and the manner in which the BoA compared PMTL's P&GE rates with that industry benchmark P&GE range. Finally, we will conduct an overall assessment of the BoA's examination of the circumstances of sale.

7.2.2.3.2.2 The determination of the benchmark range

7.181.
Having constructed an industry group, the BoA proceeded to determine a P&GE rate for each of the five companies in the industry group and calculated an "industry average" P&GE rate of 12.44% for the five companies, using a simple average calculation.454 From that industry average, the BoA created a "benchmark range" of P&GE rates, by adding and subtracting 2.64% from the industry average – the resulting benchmark range fell between 9.8% and 15.08%.455 It is uncontested that the BoA used the statistical measurement of "standard error" to determine the benchmark range, by adding and subtracting two "standard errors" from the industry average.456
7.182.
As elaborated below, the Philippines argues that the BoA's determination of the benchmark range was flawed because: (i) the BoA used different definitions of corporate income in determining the numerator and denominator for its calculation of P≥ (ii) the BoA used an incorrect P&GE rate for PMTL when determining the industry average; (iii) the BoA calculated the industry average on the basis of a simple average, instead of a weighted average, thereby failing to account for differences in sales volumes between PMTL and the other companies457; and (iv) the BoA used an inappropriate statistical measurement of "standard error" to calculate the benchmark range.
7.183.
We first set out the parties' arguments on these issues in greater detail, before providing our analysis of the BoA's determination of the industry P&GE range in the light of the issues raised.
7.184.
Regarding the BoA's determination of a P&GE rate for each of the companies in the industry group, the Philippines explained that the BoA's calculation was based on a formula, by which the P&GE rate was calculated by dividing the sum of "net profit", "selling and administrative expenses", and "corporate income tax" (if any), by a denominator comprising simply the income of the company.458 The Philippines notes that, in determining the net profit for the purpose of giving a value to the numerator in the P&GE calculation, the BoA deducted operating expenses from "total income"(which includes ordinary operating income as well as extraordinary income).459 However, when determining the denominator for the P&GE calculation, the BoA used "main income" (which excludes extraordinary income).460 The Philippines notes that although one of the five companies did not have any extraordinary income, the other four companies did, resulting in different income figures being used in the numerator and denominator for those four companies.461 In the Philippines' view, the "use of inconsistent income figures for four companies in the industry group had an impact on the calculation of: the P&GE rates for the four companies concerned; the average P&GE rate for the industry group; the standard deviation used to calculate the standard error of the mean; and, hence, the normal range for the industry group."462
7.185.
Regarding the BoA's determination of a P&GE rate for PMTL as part of the industry comparator group, the Philippines argues that the BoA incorrectly used a rate of 9.22%.463 The Philippines explains that the 9.22% rate was calculated from data in PMTL's financial statements, which reflect the customs duties and taxes paid by PMTL on the revised customs value determined by the Customs Department, and not the actual transaction value.464 The Philippines argues that the BoA should have therefore used a P&GE rate of 18.47% rate, adjusted to reflect the customs duties and taxes that would have been paid on the transaction value.465 The Philippines argues that, "[a]s a result, the benchmark P&GE rates used in the comparison were necessarily lower, through the inclusion of an unadjusted PM Thailand rate of 9.22 percent, than they would have been had the BoA used an adjusted PM Thailand rate of 18.47 percent on both sides of the comparison. This lack of even-handedness … inevitably skewed the comparison".466 In the Philippines' view, a comparison based on the rate of 9.22% could reveal "only whether the Customs Department's assessment of higher customs values led to P&GE rates that were consistent with those of the industry group."467 The Philippines also points out that if the BoA had used the adjusted rate of 18.47% for both inclusion in the benchmark group as well as the comparison with PMTL itself, that rate "would have fallen very close to the upper limit of the range" established by the BoA.468
7.186.
The Philippines argues that, once the BoA had determined P&GE rates for each company, the BoA failed to account for significant differences in the sales volumes of the companies in the benchmark group when determining the industry average, by using a simple average calculation instead of a weighted average calculation.469 The Philippines considers that the purpose of a comparison of P&GE rates is to shed light on the circumstances of sale, and if one of the companies included in the benchmark group is substantially larger than the others, this should be accounted for, or else "the benchmark will not be apt to represent normal commercial behavior in the industry; rather, the range will be skewed by the disproportionate sizes of the companies included."470 The Philippines highlights that, in 2002, PMTL had sales amounting to THB 8.5 billion, whereas by comparison, Piriyapul, the largest of the other four companies in the benchmark group, had net sales of THB 200 million (or 2.4% of PMTL's net sales), while the three other benchmark companies had combined net sales of less than THB 110 million (just over 1% of PMTL's net sales).471 The Philippines notes that if the BoA had weighted the calculation to account for different sales volumes, PMTL's figures would have dominated the calculation, such that the BoA's "basis for rejecting PM Thailand's transaction values would have disappeared."472 Thus, in the Philippines' view, "any insight regarding the effect of the relationship between buyer and seller on the transaction values was masked by differences that flowed purely from the different sales volumes of companies included in the comparator group".473 The Philippines also states that the differences in size between PM Thailand and the companies included in the comparator group are also relevant "in assessing whether PM Thailand's P&GE rate was 'inconsistent' with those of the industry group in the sense of Paragraph 6 of the Interpretative Note to Article 5 of the CVA".474
7.187.
Regarding the BoA's determination of the benchmark range from 9.8% to 15.08%, the Philippines argues that the BoA inappropriately applied the statistical measurement of "standard error of the mean" to construct this range. The Philippines argues, first, that statistical methods in general were inappropriate, because the industry group of only five P&GE rates "was far too small to yield any statistically valid result" and was a "deficient population due to the small number of companies used".475 In any event, the Philippines explains that the BoA's reliance on standard error was particularly inappropriate, since standard error effectively measures the precision of a sample mean, and does not "identify whether a particular value in a distribution is abnormally high or low relative to the sample mean".476 The Philippines elaborates that, because the standard error is calculated by dividing standard deviation by the square root of the number of observations, mathematically speaking the standard error necessarily becomes smaller as the number of observations becomes larger, with the consequence that, with a sufficient number of observations, the standard error would be close to zero, resulting in a "range" based on standard error that would exclude all (or almost all) observations.477 The Philippines further asserts that the correct statistical method for determining whether PMTL's rates fell within the normal range of industry rates was to establish a range of values based on standard deviation.478
7.188.
Thailand explains, regarding the allegedly inconsistent definition of income in determining the numerator and denominator of its calculation of P&GE rates for the companies in the industry comparator group, that the calculation of profit was based on total income (including extraordinary income) because "the total expenses used in the calculation of the numerator for each of the five companies was reported on a corporate-wide or total basis", and that "it was necessary to use total income and total expenses, because that was the basis on which the expenses were reported or available".479 According to Thailand, the "resulting figure was then divided by the operating or main income in order to allocate the total profit over operating income only, to reflect as accurately as possible the P&GE ratios that would be achieved on operations."480 Thailand also notes that this calculation "was used consistently for all companies in the group" and that even if the denominator had been based on total income, there "would have been no effect on the overall calculation."481
7.189.
With respect to the BoA's choice of a P&GE rate of 9.22% for PMTL when treating it as part of the industry benchmark group, Thailand notes that the BoA used the rate of 9.22% in order to be consistent with how the rates were established for the other companies included in the benchmark group.482 Thailand considers that the BoA could not have gone "behind" the financial statements of other companies to see whether their P&GE rates could have been higher or lower than expected, and therefore "the only reasonable approach was for the Board of Appeals to rely on the available audited information."483 As to the Philippines' argument that this rate was incorrect because it would have been lower if Thai Customs had accepted the transaction values, Thailand notes that for purposes of the comparison, "it was appropriate" for the BoA to use figures for PMTL and the other companies based on the "financial results" in the audited financial statements because it was "the only basis on which to make a fair apples to apples comparison".484
7.190.
Regarding the differences in sales volumes between PMTL and the other companies included in the industry group, Thailand defends the BoA's reliance on a simple average instead of a weighted average, in determining the average P&GE rate for the industry comparator group. Thailand asserts that the fact of PMTL having significantly larger sales volumes than the other companies "does not mean that … the BoA cannot compare PM Thailand to other companies", which would put PMTL "beyond review by Thai customs law, simply because it is the largest importer".485 Thailand further notes that expert evidence provided by the Philippines itself in this dispute indicates that there is a problem with making comparisons with PMTL in Thailand, since there are so few "comparable operators that transact with unrelated parties".486 Thailand considers that it is "objectively justifiable" for the BoA to conduct a comparison with "companies selling the same product" rather than "companies of the same size".487 In Thailand's view, the BoA's approach "in the absence of perfect solutions or mandated approaches in the CVA" was not inherently unreasonable, and was objective and unbiased.488 Thailand also argues that "a comparison with companies of the same size as PMTL would have required the BoA to look at companies in entirely different sectors".489 Thailand further asserts that "the Philippines itself acknowledges that the asymmetry in the relative sizes of sales was a matter considered by the BoA", however the BoA did not ascribe as much "weight and significance" to this consideration "as the Philippines would have liked".490 Furthermore, Thailand recalls that the Philippines itself explains that if the BoA had weighted the calculation to account for differences in sales volumes, PMTL's figures would have "dominated any weighting of the figures".491 Thailand considers that this would have "led to the BoA comparing PM Thailand with itself … [which would] have prejudged the outcome" of the comparison.492 Thus, according to Thailand, it was reasonable for the BoA to rely on a simple average P&GE rate, instead of a weighted average.493 Thailand also considers that, even if PMTL had been excluded from the benchmark group, its P&GE rates would still have been outside the benchmark range.494
7.191.
Turning to the BoA's determination of the benchmark range around the industry average, Thailand argues that the Philippines does not indicate what sample size would be sufficient for "the use of the sample and statistical tools", and that under the Philippines' suggested approach of simply comparing PMTL's P&GE rates with the range of P&GE rates in the benchmark group, from lowest to highest, PMTL's rates still fall outside that range when excluding PMTL's own rates from the benchmark range.495 As for the BoA's reliance on "standard error" to create the benchmark range, Thailand argues that Article 1.2(a) does not prescribe a statistical tool for determining ranges for comparison.496 In Thailand's view, the BoA's reliance on the mean "makes sense as, in statistics, the 'mean' is the expected value of a given variable, and … is the measure of 'central tendency' of the values in the distribution".497 Thailand explains that the standard error of the mean "'measures how precisely the population mean is estimated by the sample mean' … [and thus] predicts the range around the sample mean within which the actual mean of the entire population would be expected to fall".498 Thailand considers that the BoA's approach is supported by the WCO Commentary on the application of the deductive value method499, that other possible approaches to the comparison of P&GE rates demonstrate the reasonableness of the BoA's approach500, and that the Philippines' reliance on standard deviation is misplaced.501
7.192.
We first address the Philippines' argument that the BoA's use of different definitions of corporate income in determining the numerator and denominator for the calculation of P&GE was inconsistent with Article 1.2(a). Before turning to the parties' specific arguments, we note at the outset that the CVA does not impose any specific obligations on customs authorities with respect to how corporate income is treated in the context of calculating a company's P&GE rate. This means that customs authorities have a degree of discretion in how they treat corporate income in the context of calculating a company's P&GE rate. However, a customs authority does not have licence to define corporate income in any manner that it wishes. In light of the legal standard that we have articulated above, we consider that the relevant question is whether the BoA's calculation of the P&GE rates of the companies in the industry comparator group using different figures for corporate income in the numerator and the denominator was apt for the purpose of determining whether PMTL's P&GE rate was consistent with the industry, in order to assess whether the relationship between the buyer and seller influenced the price.
7.193.
The parties' arguments in this proceeding reveal that there was a lack of clarity surrounding the manner in which the BoA actually conducted its calculation, which has only been clarified in the course of this proceeding. We consider it useful to recount how the parties' understanding of the BoA's calculation of P&GE rates has evolved through the course of this proceeding.
7.194.
In its first written submission, the Philippines claimed that the BoA Ruling is inconsistent with Article 1.2(a) of the CVA because the BoA used different approaches to calculating the P&GE rates for the five benchmark companies.502 Specifically, the Philippines understood that, in determining the profit for two of the five companies in the benchmark group (namely KHS and Lee Intertrade), the BoA used a "profit before income tax" method, but for the other three companies (namely PMTL, Chemical Resins and Piriyapul), the BoA used a "profit after income tax" method.503
7.195.
In its first written submission, Thailand responded that the Philippines' arguments concerning the figures for the benchmark companies were factually incorrect, and that for all comparator companies, the BoA used profits before tax plus general expenses.504 Thailand noted that certain companies did not pay taxes, meaning that profit before tax and profit after tax were the same figure.505
7.196.
In its second written submission, the Philippines stated that it accepted Thailand's clarification of the facts, but maintained that, in the light of Thailand's explanations regarding corporate income tax, the Philippines had been able to identify the "real source of the anomalies".506 The Philippines explained that the anomalies that it identified arose from the fact that the BoA's calculation for the rate of P&GE was determined by dividing the sum of net profit, selling and administrative expenses, and corporate income tax (if any), by a denominator consisting of the income of the company.507 The Philippines explained that, in determining the net profit for the purpose of determining the numerator in the P&GE calculation, it appeared that the BoA had deducted operating expenses from total income (which includes ordinary operating income as well as extraordinary income)508; however, when determining the denominator for the P&GE calculation, the BoA had used "main income" consisting of ordinary operating income only, and excluding extraordinary income.509 Proceeding on that understanding, the Philippines noted that although one of the five companies did not have any extraordinary income, the other four companies did, resulting in different income figures being used in the numerator and denominator for those four companies.510 In the Philippines' view, the "use of inconsistent income figures for four companies in the industry group had an impact on the calculation of: the P&GE rates for the four companies concerned; the average P&GE rate for the industry group; the standard deviation used to calculate the standard error of the mean; and, hence, the normal range for the industry group."511
7.197.
In its second written submission, Thailand did not specifically respond to this point, or explain whether the Philippines' understanding was correct, and if so why the BoA's approach was reasonable. Rather, Thailand simply asserted thatthe Philippines "is incorrect" in arguing that the BoA calculated the P&GE ratios for the relevant companies inconsistently, and noted that there was nothing inconsistent or unreasonable about the BoA's approach.512 However, Thailand acknowledged that "the Philippines also suggest[ed] that there is a minor computational error in some of the calculations underlying the above table", and that as of that time, "Thailand is still reviewing this issue and will provide any necessar[y] clarification as appropriate".513
7.198.
In response to a question from the Panel asking Thailand to clarify, Thailand then explained that "there does not appear to be any computational error as such".514 Thailand then explained what the BoA had done, and why:

The total income was used in the calculation of profit because the total expenses used in the calculation of the numerator for each of the five companies was reported on a corporate-wide or total basis also. In other words, to arrive at a profit figure, it was necessary to use total income and total expenses, because that was the basis on which the expenses were reported or available. Thus, the calculation of profit was done on an "apples minus apples" basis.

The resulting figure was then divided by the operating or main income in order to allocate the total profit over operating income only, to reflect as accurately as possible the P&GE ratios that would be achieved on operations. This is, in effect, the final calculation used by the BoA.515

7.199.
In the light of the foregoing, we are able to draw two sets of conclusions regarding the alleged inconsistencies in the BoA's P&GE calculations, and in particular its treatment of corporate income. First, we are now able to arrive at a factual conclusion as to what the BoA actually did. We understand that the BoA's determination of P&GE rates for the companies in the benchmark group consisted of a calculation as follows:

[SEE IMAGE IN SOURCE DOCUMENT]

7.200.
We further understand that it is uncontested that, in determining the numerator ("net profit"), the BoA relied on a figure representing ordinary operating income (earned in sales of goods) as well as extraordinary income (not earned through sales of goods). It is also undisputed that, when determining the denominator (i.e. "total income") for the P&GE calculation, the BoA used a figure consisting of ordinary operating income only and excluding extraordinary income.516 Thus, the BoA used different definitions of income in determining the numerator and denominator for its calculation of P&GE. We understand that it is also undisputed that the BoA followed the same approach in determining the numerator and the denominator for all companies in the industry comparator group. It is uncontested that, of the five companies for which the BoA calculated a P&GE rate, one of the companies did not have any "extraordinary income", meaning that, for this one company, their profit figures used to derive the numerator and denominator were in fact identical, whereas for the other companies, the profit figures used to derive the numerator and the denominator were different.
7.201.
Second, we consider that the manner in which the above explanation has unfolded demonstrates shortcomings in the BoA's approach to examining the circumstances of sale under Article 1.2(a), second sentence. We recall that the process of examining the circumstances of sale is one of consultation between the customs authority and the importer. As explained above, the manner in which the BoA addressed corporate income had still not been clarified as of the time of the Philippines' first written submission, and it was only in the light of Thailand's first written submission that the Philippines was able to discern how the BoA had actually conducted its calculation. Furthermore, it was only in response to a question from the Panel that Thailand elaborated on why the BoA had apparently conducted its calculation in this manner. None of this was discussed by the BoA and PMTL in the context of the customs valuation determination itself, nor in any subsequent explanations provided to PMTL or the Philippines by the BoA (or any other Thai entity). We further note that the Philippines' argument is based on its understanding of the calculation conducted by the BoA, as explained in two documents that, in our view, are not on the record of the BoA's determination.517
7.202.
To the extent that we were to address the parties' arguments, we consider that certain questions may remain despite Thailand's explanation for why the BoA calculated the P&GE rates in this way. Having said that, we also note that the Philippines has not specifically responded to the explanation and justification that Thailand provided in response to a question from the Panel. In any event, we do not consider it necessary to resolve that issue, given the BoA's failure to communicate this aspect of its methodology to PMTL. In particular, we consider that PMTL was precluded from ever raising its concerns regarding this aspect of the methodology to the BoA at the time of the customs valuation determination.
7.203.
Turning to the second flaw alleged by the Philippines, which concerns the manner in which the BoA calculated the P&GE rate for PMTL when treating it as part of the industry comparator group, we note that this argument relates to the inclusion of PMTL itself in the industry group. We have already found above that the BoA's inclusion of PMTL itself within the group was not apt to reveal whether the relationship influenced the price. However, we do not consider that this necessarily renders the Philippines' argument moot. Rather, we consider that it relates more generally to a methodological issue of how the BoA should have determined the P&GE rate of the companies included in the industry group, taking into account that the group included PMTL itself. In light of the legal standard that we have articulated above, we consider that the relevant question is whether the BoA's determination of the P&GE rates of the companies in the industry comparator group, derived from their financial statements and in the case of PMTL, reflecting the P&GE rates derived from the customs values as determined by Thai Customs as opposed to a P&GE rate derived from the declared transaction values, was apt for the purpose of determining whether PMTL's P&GE was consistent with the industry, in order to assess whether the relationship between the buyer and seller influenced the price.
7.204.
Regarding the P&GE rate that the BoA used for PMTL, we recall that, according to the Philippines, the BoA incorrectly ascribed a P&GE rate of 9.22% to PMTL, when it should have used a rate of 18.47%.518 We agree with the Philippines that, for the purpose of determining PMTL's P&GE rate, the BoA should not have used the rate of 9.22% derived from PMTL's financial statements. As the Philippines explains, and Thailand does not dispute, the 9.22% rate used by Thailand was based on PMTL's financial statement, prepared on the basis of the revised customs values as determined by the Thai Customs Department.519 Thus, these figures do not correspond to PMTL's transaction values. We agree with the Philippines that the 9.22% figure is only useful for assessing whether the revised customs value assessed by the Thai Customs Department is consistent with that of an industry benchmark group. In our view, that reveals nothing about whether the P&GE rates calculated on the basis of PMTL's transaction values were consistent with the P&GE rates of the industry group, and therefore whether those transaction values were influenced by the relationship between the buyer and seller.520
7.205.
We are not convinced by Thailand's argument that, because the P&GE rates of the other companies were determined based on the financial statements, the BoA was forced to also use PMTL's financial statements to determine its P&GE rate. We recall that the BoA's comparison of P&GE rates was in the context of an examination of the circumstances of sale, conducted in order to determine whether PMTL's transaction values should have been accepted by the Customs Department. We further recall that, under the CVA, any revised customs value determined pursuant to Articles 2 through 7 can only be assessed after the transaction value has been validly rejected.521 It is a fact that, in the context of an appeal of an initial customs valuation determination, an importer may challenge not only the initial rejection of the transaction value, but also the manner in which the revised customs duties were calculated by the Customs Department. An importer may also refrain from challenging the determination of revised customs value, notwithstanding any concerns it may have regarding that determination, if the importer is confident that the transaction values should have been accepted. It is therefore inappropriate, in our view, for an appellate tribunal such as the BoA to conduct its examination of the circumstances of sale in assessing whether the transaction value should have been rejected, by accepting at face value that the revised customs duties calculated by the Customs Department accurately reflect the value of the importer's goods.
7.206.
Having found that 9.22% was not an appropriate rate to use in respect of PMTL, we further note that, in total, the BoA ascribed three different rates to PMTL in the process of conducting its comparison: 9.22% when including PMTL within the industry group, and two different rates of 9.36% and 18.47% when comparing PMTL to the benchmark range.522 We note that the rates of 9.22% (not taking into account interest) and 9.36% (taking into account interest) were both based on PMTL's financial statements for 2002, which were themselves based on the taxes and duties paid on the revised customs values as determined by the Customs Department.523 By contrast, the 18.47% rate was a rate calculated by PMTL as to what its P&GE rate would have been had the transaction value, as declared by PMTL, been accepted by the Customs Department.524 As explained above, we consider that the BoA should have based its determination on the transaction value, and therefore the BoA should have used a rate that appropriately reflected this. We understand that the 18.47% rate is indeed a rate that the BoA could have used as it does not suffer from the same shortcomings as the 9.22% and 9.36% rates.525
7.207.
Turning to the third flaw alleged by the Philippines, namely the BoA's use of a simple average instead of a weighted average to calculate the industry average P&GE rate, we recall the Philippines' contention that the BoA failed to account for significant differences in the sales volumes of the companies in the benchmark group when determining the industry average, by using a simple average calculation instead of a weighted average calculation.526 We recall that, in response to a Panel question, the Philippines states that the differences in size between PMTL and the companies included in the comparator group are also relevant "in assessing whether PM Thailand's P&GE rate was 'inconsistent' with those of the industry group in the sense of Paragraph 6 of the Interpretative Note to Article 5 of the CVA".527
7.208.
We recall that the purpose of constructing a benchmark group was to ascertain a benchmark figure for P&GE rates, to determine whether PMTL's rate was consistent with that benchmark group. We consider that differences in sales volumes can have a direct impact on different companies' P&GE rates, and therefore, in principle, a comparison of P&GE rates should account for meaningful differences in sales volumes. We note that the principle of economies of scale implies that companies with significantly different sales volumes may have different levels of profits and general expenses. Consistent with this understanding, Article 1.2(b) of the CVA, which prescribes a number of methods by which an importer can demonstrate that the transaction value was not influenced by a relationship with the seller, explicitly indicates that "due account shall be taken of demonstrated differences in … quantity levels". Furthermore, Articles 2 and 3 of the CVA indicate that, in determining the customs value for a particular good, the transaction value of an "identical" or "similar" good can be used if the transaction value was for a sale "at the same commercial level and in substantially the same quantity as the goods being valued". Both Articles 2 and 3 indicate that the transaction value of goods sold "in different quantities" may be used if "adjusted to take account of differences attributable to … quantity … provided that such adjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment". These provisions confirm that differences in sales volumes, generally, are a relevant consideration that should be taken into account when making comparisons. Furthermore, where an industry group comprises only four other companies, large differences in sales volumes could have particularly significant implications for the determination of what is "usual" for the industry. Since any comparison must be apt to shed light on whether the relationship between the buyer and seller influenced the price, we do not consider that a customs authority can simply disregard significant differences in sales volumes.
7.209.
Having said this, we disagree with the Philippines that the BoA was necessarily required to take into account the differences in sales volumes between PMTL and the other companies in the context of determining an industry P&GE average, whether in the form of using a weighted average or otherwise. It is uncontested that the combined sales volumes of the four other companies included in the industry comparator group represent a tiny fraction of PMTL's sales, and that the next-largest of the other four companies included in the industry group, Piriyapul, had net sales amounting to just 2.4% of PMTL's net sales, of which only a fraction is attributable to imported cigarettes.528 It is further uncontested that if the BoA had weighted the calculation to account for differences in sales volumes, while including PMTL itself in the industry comparator group, then PMTL's figures would have "dominated any weighting of the figures"529 in a way that would have "led to the BoA comparing PM Thailand with itself".530 In this respect, the Philippines accepts that there would have been no need to use a weighted average if PMTL itself had not been included in the comparator group, as the other four companies were of comparable size to one another.531 We do not consider that, having decided to include PMTL in the industry comparator group, the BoA was then required to perfect the inaptness of the industry comparator group, and its comparison of PMTL with that group, by using a weighted average that would have led to a comparison of PMTL with itself. We also note that the Philippines itself has indicated that the difference in sales volumes is something that the BoA could have taken into account when comparing PMTL to the benchmark range.532 Based on our review of the CVA533, and in accordance with our findings above concerning the BoA's composition of the industry group, we consider that relevant differences can be taken into account in different ways. Therefore, not only do we consider that it would have been inappropriate for the BoA to use a weighted average when determining the industry P&GE average, given that this would have fundamentally distorted the outcome of the comparison for the reasons explained above, but we also consider that it would be inappropriate for us to assess this aspect of the BoA's examination in isolation from how the BoA conducted its overall comparison. For these reasons, we do not consider that the BoA's failure to account for differences in sales volumes when calculating the industry P&GE average was flawed or inappropriate in the circumstances of this case. We do, however, return to this issue in the context of assessing the BoA's comparison of PMTL to the benchmark range.534
7.210.
Turning to the Philippines' fourth set of arguments, concerning the BoA's determination of the benchmark range based on the standard error of the mean, we note that the Philippines has made two distinct arguments. The Philippines argues that: (i) the size of industry group was too small to apply statistical methods to determine a benchmark range; and (ii) in any event, the BoA's reliance on "standard error" was misplaced.
7.211.
Before turning to these specific arguments, we note at the outset that the CVA does not impose any specific obligations on customs authorities with respect to the use of samples or statistical tools.535 This means that a customs authority's degree of discretion in deciding how to conduct the examination extends to the use of statistical tools in determining an industry benchmark P&GE range.536 However, a customs authority does not have licence to use statistical tools in any manner it wishes. In light of the legal standard that we have articulated above, we consider that the relevant question is whether the BoA's determination of an industry benchmark P&GE range by adding and subtracting two "standard errors" from the mean was apt for the purpose of determining whether PMTL's P&GE rate was consistent with the industry, in order to assess whether the relationship between the buyer and seller influenced the price.537
7.212.
On the basis of our review of the evidence that it has provided538, we agree with the Philippines that sample size is an important and relevant consideration in assessing whether an examination of the circumstances of sale, where it relies on statistical methodologies, is apt to reveal whether the relationship influenced the price. We further consider that the evidence provided by the Philippines raises doubts about whether the size of the industry group was sufficiently large to justify the BoA's resort to any statistical methods for the purpose of determining a P&GE benchmark range. We agree with the Philippines that "[i]t is axiomatic in statistical analysis that the statistical validity of the results depends upon the number of observations"539 and that "a customs administration should only have recourse to statistical tools … when the number of observations … is sufficiently large for statistical analysis to yield meaningful results".540 Recalling the relevant legal standard, we are convinced that a statistical analysis that is not capable of yielding "meaningful results" would not be apt to reveal whether the relationship between a buyer and seller influenced a transaction value. We further note that the Technical Committee on Customs Valuation's Commentary 15.1, regarding the "Application of Deductive Value Method", states that:

The usual amount for commission or profit and general expenses could constitute a range of amounts which probably would vary according to the class or kind of the goods being valued. In order for a range to be acceptable it should be neither too wide nor too deficient in population. The range should be obvious and easily discernible in order for it to be the 'usual' amount. Other approaches might also be possible, e.g. the use of a preponderant amount (where such an amount exists) or an amount derived by simple – or weighted averaging.541

Having noted that sample size is an important consideration, we proceed to assess the BoA's use of "standard error" to define the benchmark range.

7.213.
Turning to the Philippines' arguments concerning the BoA's use of "standard error of the mean" in particular, we understand from the parties' arguments that standard error is calculated by dividing the standard deviation of the sample by the square root of the number of observations in the sample.542 The Philippines has demonstrated that the necessary and inevitable consequence of dividing the standard deviation by the square root of the number of observations in the sample is that the size of the standard error necessarily and inevitably decreases in size as the number of observations increases.543 This means that the larger the industry group, the more companies would fall outside a P&GE "range" that was calculated using the standard error.544 If there were a sufficient number of companies in the group, every single company would fall outside a range established on the basis of standard error.
7.214.
Recalling the legal standard under Article 1.2(a), second sentence, we consider that a P&GE industry range that necessarily shrinks as the number of observations increases is simply not adequately representative of the industry. Notwithstanding any other concerns related to the use of standard error to establish the range545, the fact that a benchmark range based on standard error narrows the range in a way that necessarily excludes P&GE rates that properly reflect the industry demonstrates that a comparison between an importer's P&GE rate and such a benchmark range is not apt to reveal whether an importer's relationship influenced the price.
7.215.
We note that there is little explanation in any of the evidence on the record of the BoA's determination as to why the BoA constructed a range from 9.8% to 15.08%. In fact, it appears that the only explanation for this approach is provided in the Minutes of the BoA Meeting of 26 September 2012, which state that the range was determined on the basis of a "Confidential Interval at 95%". The relevance of this reference to a "confidential interval of 95%" is not clarified. However, we understand that in the field of statistics, a 95% confidence interval in a normal distribution "is an approximation of the proportion of observations that falls outside a range based on plus and minus two standard deviations from the average."546 It therefore appears to us, on the basis of the BoA Minutes, that the BoA may have intended to calculate a range based on standard deviation. Mathematically speaking, a range based on two standard deviations would not have stretched from 9.8% to 15.08%, but rather from 6.51% to 18.37%.547 Thus, the explanation on the record of the BoA's determination for why the BoA constructed its range may contradict the range it actually established.
7.216.
We are unconvinced by Thailand's argument that standard error is appropriate since standard error measures the precision within which a population mean is estimated by a sample mean, and therefore predicts that range within which the actual mean would be expected to fall.548 We agree with this characterization of standard error, but fail to see how that demonstrates the validity of using such a range – which necessarily gets smaller as the size of the sample increases – for assessing whether a particular observation is representative of the whole.
7.217.
We find similarly unconvincing Thailand's argument that the BoA's approach is supported by the WCO Commentary on the application of the deductive value method, which states that for purposes of comparison with an importer's own P&GE figures, a "usual" amount of P&GE "could constitute a range of amounts … [that] should be neither too wide nor too deficient in population", and "[o]ther approaches might also be possible, e.g. the use of a preponderant amount … or an amount derived by simple - or weighted averaging."549 Again, we fail to see how this reference to a preponderant amount is any way related to a determination of a range which decreases as the size of the companies in the group increases.
7.218.
We note that Thailand argues that various other possible approaches to the comparison of P&GE rates would have led to the same result, i.e. that PMTL's P&GE rates were outside the benchmark range, and that this demonstrates the reasonableness of the BoA's approach. According to Thailand, these other possible approaches include using the full range of the sample group P&GE rates from highest to lowest, or relying on the interquartile range of the average-industry P&GE ratio, or relying on one standard deviation.550 In our view, the fact that a different approach may have resulted in the same outcome does not obviate any flaws in the approach actually used. If a customs authority were to arbitrarily reject a transaction value on the basis of a coin-toss, but subsequently it was demonstrated that there is an alternative WTO-consistent approach to conducting the examination of the circumstances of sale that, if applied, would also result in the transaction value being rejected, the fact of the latter could not be used to justify the former.
7.219.
In sum, we find that the BoA's determination of the benchmark range was problematic in several respects. First, we consider that there was a lack of clarity in the BoA's use of different definitions of profit in determining the numerator and denominator for its calculation of P&GE. Second, we consider that, having included PMTL in the industry group, the BoA then used an inappropriate P&GE rate for PMTL in the context of determining the industry average, because it used a P&GE rate that reflected the Thai Customs Department's revised customs values for PMTL, rather than the price actually paid. Third, we consider that the determination of the benchmark range using statistical tools, in particular the standard error of the mean, was also flawed.
7.220.
We consider that it may be premature to arrive at a conclusion as to whether these intermediate findings give rise to a violation of Article 1.2(a) of the CVA. Rather, we consider that we must continue with our analysis to address the manner in which the BoA compared PMTL's P&GE rates with that industry benchmark P&GE range. Thus, we now turn to review the basis upon which the BoA established that PMTL's P&GE rate was "inconsistent" with the industry benchmark range.

7.2.2.3.2.3 The comparison between PMTL and the benchmark range

7.221.
Once the BoA had constructed its benchmark range (including by relying on a P&GE rate for PMTL of 9.22%), it proceeded to compare two different P&GE rates for PMTL, specifically 9.36% (based on PMTL's financial statements) and 18.47% (the rate requested by PMTL), with the benchmark range of 9.8% to 15.08%.551 Having determined that both of PMTL's rates fell outside the benchmark range, the BoA concluded that the relationship between PMTL and PM Indonesia affected the price paid by PMTL, and on that basis rejected PMTL's transaction value.552
7.222.
The Philippines argues that the BoA's comparison of PMTL to the industry group was flawed in multiple respects, including its reliance on a mechanical, bright-line test. We first set out the parties' arguments on these aspects of the BoA's approach, before proceeding with our analysis of the issues raised.
7.223.
The Philippines argues that the legal standard under Article 1.2(a) "accommodates differences between the things being compared, particularly when these differences are explained by commercial considerations or are not commercially significant."553 The Philippines indicates that, under Articles 5 and 6 of the CVA, when determining whether an importer's P&GE rates are "inconsistent with" those of an industry group, a customs authority must take into account the degree to which the P&GE amounts are different, and "differences between an importer's figures and those of a comparator group do not suggest that the relationship influenced the price, provided the differences do not render the two amounts incompatible or incongruous."554 In the Philippines' view, "[i]n assessing whether the importer's P&GE amounts are inconsistent with those of an appropriate industry group, an authority must consider explanations for any quantitative differences between them."555 The Philippines asserts that even if the BoA's selection of the benchmark group was sufficient, the imperfections present in the choice of benchmark group mean that, although a comparison of P&GE rates could suggest the influence of a relationship on the transaction values, qualitative factors should also be taken into account.556 The Philippines argues more specifically that the BoA should have taken into account the differences in sales volumes between the companies that were included in the benchmark group and PMTL when conducting the comparison.557 Additionally, the Philippines argues that even where a quantitative assessment is not flawed, a customs authority "cannot … draw rigid bright lines on the basis of that quantitative assessment alone … [T]he administration must accompany the quantitative assessment with a qualitative assessment of relevant factors."558 The Philippines suggests that such a qualitative assessment "could, for example, reveal that any differences between the P&GE rates are explained by commercial considerations, or are not commercially significant."559
7.224.
The Philippines argues that the BoA acted inconsistently with Article 1.2(a), second sentence, by failing to use the same P&GE rates for PMTL when including PMTL in the industry group when determining the benchmark range and when comparing PMTL's P&GE rates to the benchmark range.560 The Philippines argues that the only rate the BoA should have used for PMTL was 18.47%, given that the P&GE rates of 9.22% and 9.36% were not based on the transaction value, but rather the revised customs value as determined by the Thai Customs Department.561 The Philippines also clarifies that, regardless of which rate the BoA used, it should have used the same rate when including PMTL in the industry group and when comparing PMTL to that group.562 Additionally, the Philippines argues that the differences in size between PM Thailand and the companies included in the comparator group are also relevant "in assessing whether PM Thailand's P&GE rate was 'inconsistent' with those of the industry group in the sense of Paragraph 6 of the Interpretative Note to Article 5 of the CVA".563
7.225.
Regarding the legal standard under Article 1.2(a), Thailand explains that the BoA's standard for assessing the extent to which the relatedness of the buyer and seller influenced the price was whether PMTL's P&GE rates were "'consistent' with those of the industry group".564 Thailand considers that this approach is supported by the expert witness testimony submitted by the Philippines as evidence in this dispute.565 Thailand further argues that "paragraph 6 of the Interpretive Note to Article 5 and paragraph 5 of the Interpretive Note to Article 6 do not define the term 'inconsistent' or 'inconsistency' as the Philippines suggests", and consequently it is up to WTO Members to define what they consider to be "inconsistent".566 In Thailand's view, the BoA conducted its comparison by establishing "reasonable parameters within which, with an almost absolute level of confidence, the representative P&GE ratio of the industry would be expected to be found".567 Thailand considers that "this kind of objective approach achieves reasonable, reasoned and adequate outcomes".568 Thailand notes that it was on this basis that the BoA considered that there were reasonable grounds to conclude that PMTL's transaction value was inconsistent with the industry benchmark.569 Thailand emphasizes that "the BoA's approach need not be the only reasonable approach" and, in Thailand's view, the Panel "cannot set aside the BoA's approach simply because there may be other reasonable approaches".570 Thailand also considers that the Philippines "appears to consider that the BoA was obliged to engage in an endless search for a subjective ('qualitative') method, based on a potentially endless consideration of unknown or unspecified facts that might somehow be relevant, and ending only when there was an outcome favourable to the importer."571
7.226.
Thailand explains that the P&GE rate in PMTL's audited financial statement for 2002 was 9.36%, which was modified to 9.22% to account for interest income and expenses.572 Thailand notes that on 15 September 2004, PMTL requested that a rate of 15.05% be used, and, on 15 December 2005, PMTL requested that a rate of 18.47% (calculated based on the transaction values as initially declared by PMTL) be used.573 The BoA subsequently "considered both the 9.22/9.36% figure and the 18.47% figure and found that both were outside the benchmark range".574 Furthermore, Thailand contends that, because PMTL had argued that a rate of 18.47% should be used, the BoA "without prejudice to whether this rate was correct, also compared this rate with the benchmark range" to ensure "completeness in the analysis".575 Thus, in Thailand's view, the BoA did not act inconsistently by using both of these figures to compare against the benchmark range.576 Thailand does not specifically address the Philippines' argument that the differences in size between PMTL and the companies included in the comparator group were relevant to the assessment of whether PMTL's P&GE rate was inconsistent with the industry P&GE range that the BoA determined.577
7.227.
We recall that the BoA constructed an industry benchmark P&GE range of 9.8% to 15.08%. The final step in the BoA's methodology for determining whether the relationship influenced the price was to determine whether PMTL's P&GE rates were inconsistent with the P&GE rates calculated for the industry group. The BoA concluded that PMTL's transaction values were influenced by the relationship between the buyer and seller solely on the basis that PMTL's rates of 9.36% and 18.47% fell outside of that industry benchmark P&GE range. The BoA conducted no further analysis, of either quantitative or qualitative factors, as part of its examination of the circumstances of sale.
7.228.
Leaving aside the parties' disagreement over the precise meaning of the terms "inconsistent with" in the context of certain CVA provisions578, we consider that the BoA's decision to adopt a mechanical, bright-line test to compare PMTL's P&GE rate with the industry benchmark range was inappropriate, taking into account the totality of the circumstances before it. First, the quantitative differences between the P&GE rates attributed to PMTL and the industry benchmark range are small. PMTL's P&GE rates of 9.36% and 18.47% fell outside the benchmark range of 9.80% to 15.08%, by margins of only 0.44% and 3.39% respectively. These differences are also relatively small as compared with the P&GE ratios for many of the other 15 companies under the TSIC heading 51,233 (wholesale of "tobacco and tobacco products") for which the BoA calculated P&GE ratios for 2002.579
7.229.
Second, most of the other companies in the "tobacco and tobacco products" industry fell outside of the benchmark range of 9.80% to 15.08% which the BoA constructed. This included one of the four companies (other than PMTL) included in the industry comparator group, Chemical Resins, which had a P&GE rate of 17.75%.580
7.230.
Third, the BoA applied a bright-line test in circumstances where it was confronted with different methods of calculating P&GE rates for the same companies, which yielded different P&GE rates for PMTL. We have already addressed above the Philippines' concerns regarding the P&GE rate used by the BoA in respect of PMTL when including PMTL within the industry group, and found that the BoA's reliance on a P&GE rate of 9.22% for PMTL was flawed, since it was calculated based on the revised customs values determined by the Customs Department.581 We further found above that a relevant P&GE rate that could have been used for PMTL when calculating the benchmark range was the rate of 18.47%, calculated based on PMTL's declared transaction values.582 For the same reasons set forth above in respect of the benchmark group, we consider that the BoA could have used this rate of 18.47% for PMTL when comparing PMTL to the benchmark range.583 Furthermore, and of relevance to the manner in which the BoA conducted its comparison, we agree with the Philippines that, regardless of the actual rates used, by assigning different P&GE rates to PMTL when constructing the benchmark group versus when comparing PMTL against that benchmark group, the BoA's comparison was flawed.584 We note that, in effect, the BoA compared three different things: a benchmark range, calculated using a figure based on revised customs values determined by the Customs Department to be the appropriate customs values for PMTL's purchases of the cigarettes, taking into account interest (i.e. 9.22%); an individual rate determined based on the revised customs value determined by the Customs Department, not taking into account interest (i.e. 9.36%); and an individual rate determined based on the declared transaction value actually paid by PMTL to PM Indonesia (i.e. 18.47%).585 We do not see how a comparison based on such different things can reveal anything about any one of those three things.
7.231.
Fourth, the BoA's comparison of PMTL's P&GE rate with the industry benchmark range did not take into account the vast differences in sales volumes between PMTL and the companies in the comparator group. We have already found above that significant differences in sales volumes must be taken into account when conducting a comparison of P&GE rates for the purpose of assessing the circumstances of sale.586 The BoA did not take into account such differences when comparing PMTL's P&GE rate to the benchmark range.
7.232.
Fifth, the BoA's reliance on a bright-line test for conducting its comparison is particularly problematic given the shortcomings in its composition of the industry comparator group, and its determination of the benchmark range. Specifically, we have found that the BoA compared PMTL's P&GE rates to a benchmark range of P&GE rates using an industry comparator group that was not apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL. We have further found that the BoA's determination of that benchmark range was flawed in several respects. Taken together, we agree with the Philippines that "the serial flaws in the BoA's comparison mean that there was no basis for the BoA to apply rigid quantitative bright lines, without consideration of qualitative factors, in assessing [whether] PM Thailand's P&GE rates that fell slightly outside the calculated range".587
7.233.
In other words, even assuming that the BoA was entitled to compare PMTL's P&GE rate with P&GE rates derived from a handful of companies selling different products at different commercial levels when defining a range for the industry comparator group, such differences would still be relevant for assessing whether PM Thailand's rate is "inconsistent" with the P&GE rates for this industry. Taking into account the apparent difficulties that the BoA faced, we agree with the Philippines' argument that the fact that such companies are a far less-than-perfect proxy for the industry itself needs to be taken into account when drawing conclusions from the comparison of P&GE rates.588 In addition to the problems with the comparator group, we recall that the BoA calculated the P&GE rate for PMTL based on the customs values as determined by Thai Customs as opposed to PMTL's declared transaction values, and that the benchmark range of 9.80% to 15.08% was derived by adding/subtracting two "standard errors" from the mean P&GE rate of only five companies (as indicated above, the BoA's statistical analysis resulted in two of those same five companies falling outside of the industry benchmark P&GE range).589 Furthermore, the application of a bright-line test was inappropriate given the vast differences in sales volumes between PMTL and the companies in the comparator group.
7.235.
We note, however, that in the particular circumstances of this dispute, the Philippines has argued that the BoA failed to communicate to PMTL its grounds for considering that the relationship influenced the price, and therefore PMTL was precluded from being able to respond, inconsistently with Article 1.2(a), third sentence.594 Without prejudice to the Philippines' claim under Article 1.2(a), third sentence, we consider that in reviewing the evidence before us, there is no indication that, prior to its final determination, the BoA indicated to PMTL that it considered that PMTL's P&GE rate was inconsistent with a benchmark range established around an industry average, or indeed any other information that would have put PMTL in a position to provide relevant qualitative information to the BoA. Consequently, the BoA deprived PMTL of an opportunity to provide relevant qualitative information that could have been taken into account. We therefore consider that, by precluding PMTL of an opportunity to provide potentially relevant information, the BoA's examination of the circumstances of sale was not apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL.
7.236.
In sum, we consider that the BoA's decision to adopt a mechanical, bright-line test to compare PMTL's P&GE rate with the industry benchmark range was inappropriate, taking into account the totality of the circumstances before it. These circumstances included the small quantitative differences between the P&GE rates attributed to PMTL and the industry benchmark range; the number of other companies in the "tobacco and tobacco products" industry that fell outside of the range constructed; the vast differences in sales volumes between PMTL and the industry group; the different methods of calculating P&GE rates for the same companies resulting in different sets of figures; the shortcomings in the composition of the industry group; the additional shortcomings in the determination of the benchmark range; and PMTL having had no opportunity to provide the BoA with potentially relevant qualitative information for purposes of the comparison.
7.237.
Based on the foregoing, we conclude that the manner of the comparison undertaken by the BoA, i.e. its application of a simple bright-line test in these circumstances, did not establish that PMTL's P&GE rate was "inconsistent" with the industry benchmark range that it had constructed.

7.2.2.3.2.4 Overall assessment

7.238.
We have concluded that the BoA compared PMTL's P&GE rates to a benchmark range of P&GE rates using an industry comparator group that was not apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL. We have considered the composition of the industry group in conjunction with the manner in which the BoA determined the industry benchmark P&GE range, and also in conjunction with the manner in which the BoA compared PMTL's P&GE rates with that industry benchmark P&GE range. In this regard, we have concluded that the manner of the comparison undertaken by the BoA did not establish that PMTL's P&GE rate was "inconsistent" with the industry benchmark range, taking into account the flaws in how that benchmark range was determined, as well as the flaws in the composition of the industry group itself.
7.239.
In light of these findings in respect of these different aspects of the BoA's examination of the circumstances of sale, we consider that the BoA's examination, taken as a whole, was not apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL for the relevant cigarettes. The BoA's examination was therefore inconsistent with Article 1.2(a), second sentence, of the CVA. Consequently, the BoA lacked a proper basis for rejecting the transaction value under Article 1.1 of the CVA.

7.2.2.4 Conclusion

7.240.
In the original proceeding, the panel found that Thailand had acted inconsistently with Articles X:3(a) and (b) of the GATT 1994 by virtue of delays in the administrative review proceedings before the BoA.595 For the reasons set forth above, the Panel concludes that, in implementing the DSB's recommendations and rulings in the original proceeding, the BoA acted inconsistently with Articles 1.1 and 1.2(a) of the CVA by rejecting PMTL's transaction values without a valid basis, and in particular that the BoA acted inconsistently with Article 1.2(a), second sentence, by failing to properly examine the circumstances surrounding the sale of the cigarettes to PMTL because its examination of the circumstances of sale was not apt to reveal whether the relationship between PMTL and PM Indonesia influenced the price paid by PMTL for the relevant cigarettes.

7.2.3 Claim under Articles 1.1 and 1.2(a), third sentence, of the CVA

7.2.3.1 Introduction

7.241.
As stated above, Article 1.1(d) of the CVA requires that the customs value of imported goods shall be the transaction value, including in situations where the buyer and seller are related if the transaction value is acceptable under Article 1.2. As discussed in detail above, Article 1.2(a), second sentence, requires that, in a situation where the buyer and seller are related, the customs authority must examine the circumstances surrounding the sale and accept the transaction value, unless the customs authority demonstrates that the relationship did indeed affect the price. Article 1.2(a), third sentence, further requires that when a customs authority has grounds for considering that the relationship influenced the price, it must communicate those grounds to the importer and give the importer a reasonable opportunity to respond.
7.242.
The Philippines claims that the BoA acted inconsistently with Article 1.2(a), third sentence, because it failed to communicate its grounds for considering that the relationship influenced the price, and failed to allow a reasonable opportunity for the importer to respond.596 The Philippines also asserts that, as a consequence, the BoA's rejection of the transaction value was inconsistent with Article 1.1.597
7.243.
Thailand submits that the procedural requirements of Article 1.2(a), third sentence, are not applicable to decisions of appellate tribunals covered by Article 11 of the CVA, and that even if such requirements were applicable such requirements were satisfied since PMTL was aware that the BoA was conducting a comparison of P&GE rates, and had the opportunity to present its case to the BoA.598

7.2.3.2 Main arguments of the parties

7.244.
The Philippines contends that the procedural requirements of Article 1.2(a) do apply to decisions of appellate tribunals, since such obligations apply to the "customs administration", and, as Thailand itself states, the BoA is an authority within the customs administration that is not independent of the customs administration.599 The Philippines notes that in this case the BoA undertook a de novo assessment of PMTL's customs values, and developed "an entirely new ground for considering that the transaction value was not acceptable".600 The Philippines highlights that "[w]here there are new grounds, the BoA's duty to communicate them … is especially important, because the importer has never before had a chance to address the particular grounds."601
7.245.
The Philippines argues that Article 1.2(a) requires a customs authority to provide an importer with a "meaningful opportunity" to understand the basis for the authority's doubts and the nature of the information that would be required to dispel those doubts.602 The Philippines asserts that the BoA failed to satisfy this requirement, because it did not inform PMTL that it was examining the circumstances of sale, nor did it inform PMTL of: how it had selected the benchmark companies; which benchmark companies it had selected; its methodology for calculating the P&GE rates for each company; or why it considered PMTL's P&GE rates to be inconsistent with the benchmark group.603 The Philippines explains that PMTL was not made aware of the BoA's intention to use the comparison of P&GE rates for considering the acceptability of the transaction value.604 Additionally, the Philippines notes that, even if PMTL was made aware of the general nature of the testing that the BoA intended to use, this would not satisfy the requirements under Article 1.2(a), since PMTL would still not have known the BoA's grounds for doubting the transaction value.605 Thus, in the Philippines' view, the BoA "failed to communicate its grounds for rejecting the transaction values and, as a necessary and inevitable consequence, it failed to provide a reasonable opportunity for [PMTL] to respond."606
7.246.
Thailand submits that the procedural requirements of Article 1.2(a) are not applicable, "mutatis mutandis"607, to decisions of appellate tribunals under Article 11 of the CVA.608 Thailand agrees with the Philippines that the BoA is part of the customs administration, but disagrees that the procedural provisions of Article 1.2(a) consequently apply to the BoA.609 According to Thailand, "there is nothing in either Article 1.2(a) or Article 11 to suggest that the appellate tribunal must follow exactly the same procedures as must be used to reach the initial valuation decision".610 In Thailand's view, the "logic and purpose" of an appeal imply that different procedures could apply, given that "the issues and evidence would normally be different at an appellate stage".611 Thailand states that the procedures of Article 1.2(a) "might not be adaptable or appropriate" to all possible approaches taken by an appellate tribunal.612 Additionally, Thailand submits that the requirement in Article 1.2(a) to provide the importer with notice of the grounds may be redundant in an appellate proceeding, since by virtue of the appeal the customs administration would have necessarily determined that the relationship affected the price.613 In Thailand's view, "[i]f the appellate tribunal is not replicating the method of the original determination … there is no reason why the appellate tribunal should be compelled to follow the procedures of the original determination."614 Additionally, Thailand points out that the right of appeal under Article 11 may be to an authority within the customs administration or to a judicial authority.615 Thailand argues that, under the Philippines' logic, the procedures of Article 1.2(a) would apply to appellate authorities in the customs administration but not to judicial authorities, even though they perform the same function under Article 11.616 Thailand also disagrees with the Philippines that the BoA conducted a de novo determination of the customs valuation.617 Thailand notes that, in this dispute, the BoA did not conduct the "same enquiry as a customs officer would have done when goods were first imported".618
7.247.
Thailand also argues that, even if the requirements of Article 1.2(a), third sentence, were applicable to the BoA, such requirements were satisfied since PMTL was made aware that the BoA was conducting a comparison of P&GE rates, and PMTL had ample opportunity to present its case to the BoA.619 Thailand asserts "that there was an extensive process of oral and written interaction between PMTL and the BoA and that this process satisfied the due process requirements of Article 1.2(a)".620 Thailand points to a number of letters sent between the BoA and PMTL concerning the P&GE rate to be used and the timing of a meeting to discuss the matter.621 Thailand considers that PMTL "had, in effect, an open-ended opportunity to interact with the Board of Appeals, in both writing and in person".622 Thailand notes that Article 11 does not prescribe specific procedures for instances of appeals, and if the drafters had intended specific procedures to apply, they "could and would have done so".623 Thailand considers that the Philippines is effectively complaining that PMTL was "not given an advance opportunity to comment on the Board of Appeals' final decision", which is a requirement similar to that under Article 6.9 of the Anti-Dumping Agreement, but which does not exist in the CVA.624 Thailand notes that Section I of the Trade Facilitation Agreement (TFA) addresses the procedures for appeals of customs decisions, but does not impose the kind of detailed procedural requirements which the Philippines reads into Article 11.3 of the CVA.625

7.2.3.3 Analysis by the Panel

7.2.3.3.1 General considerations

7.248.
As explained above, Article 1.1 of the CVA provides that, in principle, a customs authority must use the transaction value of the imported goods as the customs value. Article 1.1(d) read in conjunction with Article 1.2(a) clarifies that this applies also in situations in which the buyer and the seller are related, unless it is established that the relationship influenced the price.626 The third and fourth sentences of Article 1.2(a) of the CVA state that:

If, in the light of information provided by the importer or otherwise, the customs administration has grounds for considering that the relationship influenced the price, it shall communicate its grounds to the importer and the importer shall be given a reasonable opportunity to respond. If the importer so requests, the communication of the grounds shall be in writing.

7.249.
As indicated above in the context of Article 1.2(a), second sentence, the original panel explained that customs authorities and importers have respective responsibilities under Article 1.2(a):

The customs authorities must ensure that importers be given a reasonable opportunity to provide information that would indicate that the relationship did not influence the price. Importers are responsible for providing information that would enable the customs authority to examine and assess the circumstances of sale so as to determine the acceptability of the transaction value. Provided with such information, the customs authorities must conduct an "examination" of the circumstance of sale, which would require an active, critical review and consideration of the information before them.627

7.251.
Regarding the requirement to communicate "grounds" to the importer, the original panel considered that the term "grounds" means the "reasons for considering".629 The original panel also noted that, where an importer has provided information and evidence to the customs authority, "the grounds for [the customs authority's] consideration that the relationship between the buyer and the seller influenced the price must be linked to that concerned evidence so as to assist the importer in understanding the authority's consideration".630 Additionally, the original panel stated that it was neither "necessary [n]or useful … to define the exact extent and scope of 'grounds' to be provided under Article 1.2(a) as they may vary depending on the factual circumstances presented in each case."631
7.252.
However, the original panel explained that:

[I]n order for the importer to have a reasonable opportunity to respond to the customs authorities' consideration … the importer must not be left to guess the reasons for the customs authorities' consideration. The right of the importer to have "a reasonable opportunity to respond" under Article 1.2(a) would lose its meaning unless the importer is informed of at least the reason(s) why the customs authority continues to question the acceptability of the transaction value despite the evidence and information presented or otherwise in the possession of the customs authority until that point.632

7.253.
The original panel highlighted the importance of giving the importer the opportunity to respond, because "while customs authorities are responsible for providing a 'reasonable opportunity' to the importer to provide information, once given this opportunity, importers are in principle liable for supplying the customs authorities with information that would indicate that the relationship did not influence the price."633 In this respect, the original panel emphasized that, "[t]o the extent that Thai Customs was presented with certain evidence, the grounds for its consideration that the relationship between the buyer and the seller influenced the price must be linked to that concerned evidence so as to assist the importer in understanding the authority's consideration."634
7.255.
The parties do not contest the legal standard described above. The parties disagree on two main issues. First, whether the obligations contained in Article 1.2(a), third sentence, apply to an appellate tribunal such as the BoA. Second, in the event such obligations do apply to the BoA, whether the BoA satisfied those obligations.

7.2.3.3.2 The applicability of Article 1.2(a), third sentence, to the BoA

7.256.
In the original proceeding, Thailand explained that the BoA is an authority within the Thai Customs Department that hears appeals from importers or exporters in relation to initial valuation decisions by the Customs Department. Thailand elaborated that:

The Board of Appeals is headed by the Director-General of Customs (who serves as Chairman). 'A civil servant attached to the Customs Department' serves as secretary to the Board. The Director-General and the Secretary both may vote on appeals. The Director-General exercises the deciding vote in the event of a tie. In addition, the Board of Appeals is supported by a 'team of officers of the Customs Standards Procedure and Valuation Bureau [of the Customs Department] that acts as secretariat of the Board of Appeal.' This secretariat presents an initial report to the Sub-Committee for Customs Valuation of the Board of Appeal. This Sub-Committee is charged with the 'power and responsibility to... consider the appeal' and to reach initial conclusions for the purposes of presenting a 'Report of the Conclusion of the Appeal Sub-Committee' to the Board of Appeals. It is composed entirely of Customs Department officials.635

7.257.
In response to a question from the Panel, Thailand confirms that, at the time of the BoA Ruling at issue, the structure and composition of the BoA had not changed since the original proceeding.636
7.262.
We note, however, that Thailand raises a number of arguments that, in its view, demonstrate why it "would not make sense" for the exact same procedural obligations of Article 1.2(a) to apply to an appellate tribunal such as the BoA.644 In this regard, we understand Thailand's argument to be that if Article 1.2(a), third sentence, were to apply to appeals tribunals such as the BoA this would mean that the exact same procedural obligations would apply, and that, because it would not make sense for the exact same procedures to apply, it follows that the procedural obligations in Article 1.2(a), third sentence, are not legally applicable to the BoA.
7.263.
First, Thailand argues that, "[d]epending on the nature or scope of the appeal, the requirement to provide grounds under Article 1.2(a) third sentence may be more or less redundant."645 Thailand argues that the procedures at the appellate level can be different because "the issues and evidence would normally be different at an appellate stage"646 and that "[i]f the appellate tribunal is not replicating the method of the original determination … there is no reason why the appellate tribunal should be compelled to follow the procedures of the original determination."647
7.266.
Second, Thailand argues that "Article 1.2(a) by its express terms, applies to a determination of customs value", whereas by contrast, the "task" of the BoA is "to resolve an appeal of a determination of customs value", and because these "are not the same thing" there is "no reason to assume that the same procedures necessarily apply mutatis mutandis to both".650
7.267.
In our view, Thailand's argument rests on a tenuous distinction between an initial "determination of customs value" and an "appeal of a determination of customs value". We consider that to the extent that an appellate tribunal such as the BoA is "resolving an appeal of a determination of customs value", to use Thailand's terminology, it may also be making a customs value determination. Indeed, in the appeal in question the BoA developed its P&GE comparison methodology during the appeal as an entirely new ground for considering that the transaction value was not acceptable, and on that basis the BoA proceeded to revisethe customs values that were initially determined by the Customs Department. In such circumstances, we do not see how a decision by an appellate tribunal as to the correct customs value is not a customs value determination within the meaning of Article 1.2(a), and the CVA more generally.651
7.268.
We agree with Thailand that there is "no reason to assume"652 that the exact same procedures necessarily apply to any tribunal, regardless of relevant institutional differences. As a general matter, we agree with Thailand that it would be inappropriate for any panel to make assumptions about the obligations in the covered agreements. Rather, any conclusion as to the applicability of any substantive or procedural obligations, including those in the CVA, must be anchored in the text of the relevant provision, read in the light of their context, and the object and purpose of the relevant agreement. We therefore do not assume that the procedural obligations in Article 1.2(a), third sentence apply to the BoA, but rather proceed by conducting a proper textual analysis of the relevant provision.
7.269.
Third, Thailand argues that it would lead to absurd consequences if the procedures of Article 1.2(a) would apply to appellate authorities within the customs administration, but not to other judicial authorities outside of the customs administration, even though both types of entities perform the very same function under Article 11 of the CVA.653
7.270.
Assuming for the sake of argument that appeals tribunals outside of the "customs administration" are not subject to the specific obligations in Article 1.2(a), third sentence, there are several plausible explanations as to why that may be. For example, there may have been an assumption, by the drafters of the CVA, that such tribunals would not be expected to go as far as appeals tribunals within the "customs administration" in terms of developing and applying their own customs valuation methodology (as the BoA did in this case). Insofar as appeals tribunals outside of the customs authority are typically confined to reviewing the correctness of the initial customs valuation determination, without embarking on a customs valuation determination afresh, then it may well be that the procedural obligations in Article 1.2(a), third sentence, would have less scope for application. Regardless, given that the entity at issue here is an appeals tribunal within the customs administration, and taking into account not only that it conducted its own customs valuation determination but that no practical difficulties have been shown to arise as a consequence of subjecting it to the obligations in the third sentence of Article 1.2(a), we do not consider it necessary to address the extent to which these obligations may apply to other appeals tribunals.
7.271.
In conclusion, we consider that if the customs administration – whether in the form of an appellate tribunal within the customs administration, or the customs officer(s) conducting the initial valuation – considers that the relationship between the importer and exporter influenced the price, then Article 1.2(a), third sentence, requires that the importer be informed of the grounds for that consideration, and be given a reasonable opportunity to respond, before the customs authority makes its final determination.

7.2.3.3.3 The communications between the BoA and PMTL

7.272.
Recalling the legal standard above, to satisfy Article 1.2(a), third sentence, the BoA was required to provide to PMTL sufficient information regarding its grounds for considering rejection of the transaction values, to enable PMTL to understand the BoA's reasons and meaningfully respond to those reasons.
7.273.
The Philippines asserts that the BoA did not inform PMTL that it was examining the circumstances of sale, and "failed to communicate its grounds for rejecting the transaction values and, as a necessary and inevitable consequence, it failed to provide a reasonable opportunity for [PMTL] to respond."654
7.274.
Thailand does not directly assert that the BoA ever "communicate[d] its grounds" for doubting the transaction values to PMTL prior to the BoA Ruling. However, Thailand argues that this obligation was satisfied since PMTL was aware that the BoA was conducting a comparison of P&GE rates, and because PMTL had an "open-ended opportunity" to communicate with the BoA.655 Thailand points to letters sent from PMTL to the BoA that refer to P&GE rates, which in Thailand's view, constitute evidence that PMTL "was clearly aware" that the BoA was conducting a comparison of P&GE rates.656 Thailand elaborates that it:

[C]onsiders that there was an extensive process of oral and written interaction between PMTL and the BoA and that this process satisfied the due process requirements of Article 1.2(a) of the CVA to the extent that they might apply mutatis mutandis to proceedings of a review tribunal such as the BoA.657

7.277.
Having reviewed these letters661, we consider that PMTL's references to P&GE rates were indeed in relation to the application of the deductive method (whether in the context of using the deductive method to test the transaction values, or in the context of applying the deductive method to determine a revised customs value). Specifically, a letter from PMTL to the Director-General of the Thai Customs Department states that "[a]s discussed during our meeting, we are concerned that the Board of Appeal (BOA) plans to rule on 210 appeals relating to Marlboro cigarette imports in 2002 using a deductive value calculation with a profit and general expense (gross margin) of 9.36%".662 Moreover, Thailand's own summary of the letters from PMTL indicates that PMTL "maintain[ed] that the transaction value should be used but also address[ed] how the BoA should apply the deductive method if it chose to take that approach".663 For these reasons, we consider that PMTL's references to P&GE rates in its communications with the BoA were not in the context of a comparison of P&GE rates. Furthermore, we note that as late as 12 October 2012 (approximately one month prior to the issuance of the BoA Ruling on 16 November 2012), PMTL was still indicating to the BoA that it was "unaware of any evidence that provides grounds for doubting the transaction values, much less evidence that would warrant the rejection of the transaction values", and requested that "if … any grounds exist for doubting the transaction values, the BOA … communicate such grounds to the importer in writing."664

7.2.3.4 Conclusion

7.279.
For the reasons set forth above, the Panel concludes that, in implementing the DSB's recommendations and rulings in the original proceeding, the BoA acted inconsistently with Articles 1.1 and