WTOCustoms Valuation

Agreement

Why an Agreement on customs valuation?

customs valuation and ad valorem customs duties

Article VII of GATT 1947 The Tokyo Round Code The WTO Agreement on Implementation of

Article VII of GATT 1994 (Customs Valuation Agreement)

What does the Agreement do?

Provides uniformity and certainty Transparency and consistency Neutral system for valuation of goods Basis should be the transaction value

Customs valuation methods Primary basis for customs value is “transaction

value” of the goods sold If customs value cannot be determined on the basis of

transaction value of the goods, alternative methods are provided:

--transaction value of identical goods

--transaction value of similar goods

--deductive value

--computed value

--”fall-back” method

Transaction value

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 of the Agreement

Transaction value--details Price actually paid or payable = total payment made or to

be made by the buyer to or for the benefit of the seller for the imported goods. Includes all payments made as a condition of sale of the imported goods by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller

Adjustments to the price actually paid or payable (in cases where specific elements considered to form part of the value for customs purposes are incurred by the buyer but are not included in the price actually paid or payable for the goods)

Inclusion of certain considerations passing from buyer to seller in the form of goods or services rather than money

Transaction value--conditions

1 - no restriction on the disposition or use of the goods by the buyer, other than

--imposed or required by law or public authorities in the country of importation

--limiting the geographical area in which the goods may be resold do not substantially affect the value of the goods

2 - no part of the proceeds will accrue to the seller, unless adjustment is made

Transaction value--conditions (2)

3 - sale or price not subject to some condition or consideration for which a value cannot be determined for the goods being valued

4 - buyer and seller not related or if related, transaction value acceptable for customs

--if relationship did not affect the price, or

--when importer demonstrates that the value closely approximates a “test value”

Transaction value of identical or similar goods

If transaction value of goods sold cannot be used for valuation,

1. Transaction value of identical goods

2. Transaction value of similar goods

Conditions for use: --the goods must be sold to the same country of

importation as the goods being valued

--the goods must be exported at or about the same times as the goods being valued

Deductive and computed value

If transaction value for the goods, or for identical or similar goods cannot be used,

- Deductive value

- Computed value

the importer has the right to choose the order of application of the two methods

“Fall-back” method If none of the previous methods can be used, value can

be determined using reasonable means consistent with the principles and general provisions of the Agreement and of Article VII of GATT 1994

In this method, value must not be based on: -selling price of goods in country of importation

-higher of two alternative values

-price of goods on domestic market of exporting country

-cost of production other than computed values for identical or similar goods

-price of goods for export to a third country

-minimum customs value

-arbitrary or fictitious values

Special and Differential Treatment

Transition periods for developing countries:

Five year delayed implementation for developing countries not parties to the Tokyo Round Code

Three years for the application of the computed value method

Special and Differential Treatment (2)

Other provisions for developing countries:

-Possibility of a reservation to retain minimum

values on a limited and transitional basis

-Possibility of a reservation regarding the right of the importer to choose between deducted and computed value

-Reservation with respect to certain aspects of using the deductive valuation method

The Agreement Today

Committee on Customs Valuation– Overview of the agreement– Review notifications– Review implementation– Oversee the provision of technical assistance– Oversee requests for delayed implementation

Implementation Situation56 Developing Countries originally requested the 5-year

delay period (Art. 20.1) 23 are still under the delay period, have been granted an

extension, or are in the process of requesting an extension

8 have implemented 25 have not notified nor asked for an extension, thus the

situation is unclear

An additional 24 have not notified the delay, nor legislation.

Implementation SituationCentral and Eastern Europe

Of the 16 countries that are WTO Members, 12 have implemented the agreement

The situation with respect to the other 4 is not clear, as there are very recent acceding countries (Albania, Croatia, Georgia, and Lithuania)

Other Delays or ReservationsWith respect to Computed values 47 Members have made such a notification

With respect to Minimum values 18 Members have made such a notification

With respect to the right of the importer to choose between deducted and computed value

53 Members have made such a notification

With respect to certain aspects of using the deductive valuation method

51 Members have made such a notification

Other Delays or ReservationsCentral and Eastern Europe

Of the 16 WTO Members of the region, only Turkey has made a reservation with respect to the right of the importer to choose between deducted and computed value, and with respect to certain aspects of using the deductive valuation method

Customs Valuation and E-commerce

Potential Considerations– on-going work in the CTG and Work

Programme

Decision on Carrier Media Bearing Software

Decision on the Valuation of Carrier Media

1. It is reaffirmed that transaction value is the primary basis of valuation under the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (the Agreement) and that its application with regard to data or instructions (software) recorded on carrier media for data processing equipment is fully consistent with the Agreement.

2. Given the unique situation with regard to data or instructions (software) recorded on carrier media for data processing equipment, and that some Parties have sought a different approach, it would also be consistent with the Agreement for those Parties which wish to do so to adopt the following practice:

In determining the customs value of imported carrier media bearing data or instructions, only the cost or value of the carrier medium itself shall be taken into account. The customs value shall not, therefore, include the cost or value of the data or instructions, provided that this is distinguished from the cost or the value of the carrier medium.

For the purpose of this Decision, the expression "carrier medium" shall not be taken to include integrated circuits, semiconductors and similar devices or articles incorporating such circuits or devices; the expression "data or instructions" shall not be taken to include sound, cinematic or video recordings.

3. Those Parties adopting the practice referred to in paragraph 2 of this Decision shall notify the Committee of the date of its application.

4. Those Parties adopting the practice in paragraph 2 of this Decision will do so on a most-favoured-nation (m.f.n.) basis, without prejudice to the continued use by any Party of the transaction value practice.

Application of the Decision

30 WTO Members have made a notification concerning their practice of applying the Decision

21 WTO Members apply paragraph 2 of the Decision

9 WTO Members apply other practices

Application of the DecisionCentral and Eastern Europe

All those who have notified, apply paragraph 2 of the Decision

They are: Bulgaria, Cyprus, Czech Rep., Estonia, Hungary, Latvia, Poland, Romania, Slovak Rep., and Slovenia

The End

Questions or Comments