FAQs: Customs Valuation Part 2
Summary
TLDRThe script discusses global customs valuation rules, emphasizing that WTO member countries must adhere to WTO agreements, including Article 7 of GATT and the Agreement on Implementation. It outlines the five-year grace period for new WTO members to implement customs valuation agreements. It contrasts the Brussels Definition of Value with the WTO's transaction value-based system and details six valuation methods, including transaction value and fallback methods. The script also notes the possibility for importers to request a reversal in the application order of certain valuation methods.
Takeaways
- 🌍 Customs valuation of imported goods must comply with national laws, but WTO member countries must base their laws on specific WTO instruments.
- 📜 The relevant WTO instruments include Article 7 of the General Agreement on Tariffs and Trade, the Agreement on Implementation of Article 7, and the Uruguay Round Ministerial Decision.
- ⏳ A WTO member country is generally required to implement the Agreement on Customs Valuation as soon as it becomes a member but can delay for up to five years.
- 📏 Some countries still use the Brussels Definition of Value from the 1953 Convention, which differs from the WTO's valuation system.
- ⚖️ The Brussels Definition of Value is based on an estimated or normal market value, whereas the WTO's system relies on the actual price paid or payable for the goods.
- 📐 The WTO's customs valuation principles, under Article 7 of the 1994 GATT, emphasize that customs values should not be arbitrary or fictitious and must reflect the actual value of goods or comparable goods.
- 🔍 If the actual value of goods is not ascertainable, the customs value should be based on the closest ascertainable equivalent.
- 🔢 The Agreement on Customs Valuation outlines six valuation methods: transaction value, comparative value (identical goods), comparative value (similar goods), deductive value, computed value, and fallback method.
- 🔄 Article 4 of the Agreement allows for altering the sequence of applying deductive and computed value methods upon the importer's request, with developing countries needing customs approval for such changes.
- 📊 The Agreement on Customs Valuation aims to provide a fair, uniform, and neutral system for determining customs value, reflecting the actual transaction value of goods to the greatest extent possible.
Q & A
What is the basis for customs valuation in WTO member countries?
-In WTO member countries, customs valuation must be based on the instruments under the WTO, including Article 7 of the General Agreement on Tariffs and Trade (GATT), the Agreement on Implementation of Article 7, and decisions of the WTO Committee on Customs Valuation.
How soon must a WTO member country implement the Agreement on Customs Valuation?
-WTO member countries are required to implement the Agreement on Customs Valuation as soon as they become members, but they may delay its application for up to five years from the date of accession.
What are the key principles of customs valuation under GATT Article 7?
-The key principles are that the customs value should not be arbitrary or fictitious, should not be based on indigenous goods' value, and must reflect the actual value of goods imported or similar goods under competitive business conditions.
What are the main differences between the Brussels Definition of Value and the WTO Agreement on Customs Valuation?
-The Brussels Definition of Value is based on a national concept of what a good would fetch in the open market, whereas the WTO Agreement is based on the actual price paid or payable for the goods, making it more positive and transaction-focused.
How is the 'actual value' of goods determined when it cannot be ascertained?
-When the actual value cannot be determined, customs valuation should be based on the nearest ascertainable equivalent value derived from similar transactions under comparable conditions.
What are the six methods of customs valuation provided under the Agreement on Customs Valuation?
-The six methods are: 1) Transaction Value Method, 2) Comparative Value Method (identical goods), 3) Comparative Value Method (similar goods), 4) Deductive Value Method, 5) Computed Value Method, and 6) Fallback Method.
Can an importer request a change in the order of customs valuation methods?
-Yes, under Article 4 of the Agreement on Customs Valuation, importers can request the reversal of the order between the Deductive Value Method and the Computed Value Method, but developing countries may require customs authority approval for this.
What is the role of the transaction value method in customs valuation?
-The transaction value method is considered the primary basis for customs valuation, as it focuses on the actual price paid or payable for the goods being imported.
What flexibility does the fallback method of customs valuation offer?
-The fallback method allows greater flexibility by using previous valuation methods but adapting them where necessary to determine the customs value when other methods cannot be applied.
Which countries still follow the Brussels Definition of Value for customs purposes?
-Some countries still adhere to the Brussels Definition of Value, which is based on the 1953 Convention on the Valuation of Goods for Customs Purposes.
Outlines
🌍 Global Rules for Customs Valuation
Customs valuation rules are determined by national laws, but WTO member countries must base their customs valuation on specific WTO instruments. These include Article 7 of the General Agreement on Tariffs and Trade (GATT), the Agreement on Implementation of Article 7, and the Uruguay Round Ministerial Decision. This framework ensures uniformity in assessing the value of imported goods across countries.
⏳ Implementation of the Customs Valuation Agreement for WTO Members
When a country joins the WTO, it is required to implement the Customs Valuation Agreement. However, newly joined member countries may delay applying this agreement for up to five years. This grace period provides flexibility for countries to adapt their national customs laws to WTO standards.
⚖️ Alternative Customs Valuation Systems
Some countries still follow the Brussels Definition of Value, established under the 1953 Convention on Valuation of Goods for Customs Purposes. This system contrasts with the WTO valuation system as it focuses on an estimated 'normal value' a good might fetch in the open market, rather than the actual price paid for the goods.
🔍 Differences Between Brussels Definition of Value and WTO Agreement on Customs Valuation
The main difference between the Brussels system and the WTO’s customs valuation system lies in their approach. The Brussels system uses a national concept of an ideal value, while the WTO’s agreement relies on the actual price paid or payable for the imported goods, making it more objective and transparent.
📜 Key Principles of WTO Customs Valuation
Article 7 of the GATT (1994) outlines the principles of customs valuation, emphasizing that customs values must not be arbitrary, fictitious, or based on domestic goods' values. Instead, values should reflect the actual price of imported or similar goods in a competitive market. The WTO agreement provides guidelines to ensure these principles are upheld.
🔢 Methods of Customs Valuation under the WTO Agreement
The WTO Agreement on Customs Valuation provides six methods to determine customs value, starting with the 'transaction value' method, followed by comparative methods for identical or similar goods, deductive value (based on the local resale price), computed value (based on production costs), and a fallback method, which allows more flexibility.
🔄 Flexibility in Customs Valuation Methods
Article 4 of the WTO agreement allows importers to request the reversal of the deductive and computed value methods. However, in developing countries, customs authorities must approve this reversal. This flexibility provides importers with the option to choose the method that best suits their circumstances while maintaining transparency.
Mindmap
Keywords
💡Customs Valuation
💡WTO Agreement on Customs Valuation
💡Transaction Value
💡Brussels Definition of Value
💡General Agreement on Tariffs and Trade (GATT)
💡Uruguay Round
💡Article 7 of the GATT
💡WTO Committee on Customs Valuation
💡Deductive Value Method
💡Computed Value Method
Highlights
Customs value of imported goods must be determined according to national laws, except for WTO member countries, where national laws must align with WTO customs valuation rules.
The WTO instruments that guide customs valuation include Article 7 of the General Agreement on Tariffs and Trade (GATT) and the Agreement on Implementation of Article 7 of the GATT.
WTO member countries must implement the Agreement on Customs Valuation as soon as they become members, but they are allowed up to five years to delay its application.
Some countries still follow the Brussels Definition of Value (BDV), based on the 1953 Convention, which differs from the WTO system.
The BDV is based on a national concept of an 'ideal' or 'normal' value that a good would fetch in the open market, whereas the WTO valuation system is based on the actual price paid or payable.
The GATT principles of customs valuation emphasize that customs value should not be arbitrary or fictitious and should be based on the actual value of imported goods or like goods.
The customs value must be derived from a sale or offer of sale under fully competitive conditions in the ordinary course of business.
If the actual value is not ascertainable, the customs value should be based on the nearest equivalent that can be ascertained.
The Agreement on Customs Valuation outlines six methods of valuation to be applied in a specific order, starting with the transaction value method.
The six methods are: transaction value method, comparative value method based on identical goods, comparative value method based on similar goods, deductive value method, computed value method, and fallback method.
The transaction value method is the preferred basis for customs valuation wherever possible.
An importer can request to reverse the order between the deductive value method and the computed value method, as per Article 4 of the Agreement on Customs Valuation.
Developing countries are allowed to make a reservation, subject to customs authorities' approval, for reversing the order of valuation methods.
The Agreement on Customs Valuation ensures that customs value should be based on real, tangible value rather than on theoretical or hypothetical numbers.
The fallback method provides greater flexibility by allowing the use of previous valuation methods in case none of the earlier ones apply.
Transcripts
are there any rules
for customs valuation that are accepted
worldwide customs value
of imported goods has to be determined
in accordance with the national laws of
a country
however in the case of a wto member
country
its national laws on customs valuation
have to be based on the following wto
instruments
article 7 of the general agreement on
tariffs and trade
the agreement on implementation of
article 7 of the gut
the uruguay round ministerial decision
regarding cases
where customs administrations have
reasons to doubt
the truth or accuracy of the declared
value
which has been subsequently adopted as a
decision
of the wto committee on customs
valuation
how soon is a wto member country
required to implement the agreement on
customs validation
normally as soon as a country becomes a
member
they are allowed to delay the
application of the agreement on customs
valuation
for up to five years from the date on
which they joined
the wto are there any
other systems of customs valuation
[Applause]
yes the national laws for customs
valuation in some countries
still follow the brussels definition of
value
based on the 1953 convention on the
valuation of goods for customs purposes
what is the essential difference between
the brussels definition of value
and the valuation system under the
agreement on customs valuation
the former is based on the national
concept
of an idea or normal value that
a good would fetch in the open market
whereas the latter is based on a
positive concept
relying more on the actual price paid or
payable
for the good being valued
what are the gut principles of customs
valuation
article 7 of the gut of 1994
lays down the main principles of customs
valuation
customs value should not be arbitrary
fictitious
or based on value of indigenous goods
it should be real and based on the
actual value of goods under
import or of like goods it should also
be derived
from a sale or offer of sale in the
ordinary course of business
under fully competitive conditions
if the actual value is not ascertainable
the customs value should be based on the
nearest
ascertainable equivalent of such value
the agreement on customs valuation
contains provisions
to implement these principles
what are the different methods of
customs valuation
allowed under the agreement on customs
valuation
the preamble to the agreement on customs
valvation
recognizes that to the greatest extent
possible
the basis of customs value should be the
transaction value
however in all it provides for
six methods of validation to be applied
in the following order one
the transaction value method two
comparative value method based on
transaction value of identical goods
3. comparative value method based on
transaction value of similar goods
4. deductive value method based on
subsequent sale price in the importing
country
5 computed value method based on cost of
materials
fabrication and profit in the country of
production
and 6. fallback method based on previous
methods with greater flexibility
can the sequence be altered
article 4 of the agreement on customs
valuation
allows an importer to request reversal
of the order of application
between the deductive value method and
the computed value method
however the developing countries are
allowed to make
a reservation to the effect that such
reversal
will be subject to approval by customs
authorities
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