Customs valuation

Customs valuation is the process where

customs authorities assign a monetary
value to a good or service for the purposes
of import or export. Generally, authorities
engage in this process as a means of
protecting tariff concessions, collecting
revenue for the governing authority,
implementing trade policy, and protecting
public health and safety. Customs duties,
and the need for customs valuation, have
existed for thousands of years among
different cultures, with evidence of their
use in the Roman Empire, the Han Dynasty
and the Indian sub-continent. The first
recorded customs tariff was from 136 in
Palmyra, an oasis city in the Syrian
desert.[1] Beginning near the end of the
20th century, the procedures used
throughout most of the world for customs
valuation were codified in the Agreement
on Implementation of Article VII of the
General Agreement on Tariffs and Trade
(GATT) 1994.[2]

Agreement on
Implementation of Article VII
of GATT
Article VII of the GATT outlines the
requirements for Valuation for Customs
Purposes, and is applicable to all
members of the World Trade Organization.
The Agreement on Implementation of
Article VII (known as the WTO Agreement
on Customs Valuation or the “Valuation
Agreement”) ensures that determinations
of the customs value for the application of
duty rates to imported goods are
conducted in a neutral and uniform
manner, precluding the use of arbitrary or
fictitious customs values.[3]
The Agreement was negotiated during the
Tokyo Round, but at that time its
acceptance was voluntary. Adherence to
the Agreement became mandatory as part
of membership in the WTO subsequent to
the Uruguay Round. The Agreement is
administered by the WTO Committee on
Customs Valuation, which holds two
formal meetings a year. The Agreement
also established a Technical Committee
on Customs Valuation, which operates
under the auspices of the World Customs
Organization (WCO), with a view to
ensuring, at the technical level, uniformity
in interpretation and application of the
Agreement. The Technical Committee also
meets twice a year.

The Agreement has four major parts in

addition to a preamble and three annexes.
Part I sets out substantive rules of
customs valuation. Part II provides for the
international administration of the
Agreement and for dispute resolution. Part
III provides for special and differential
treatment for developing countries, and
Part IV contains the so-called final
provisions dealing with matters such as
acceptance and accession of the
Agreement, reservations, and servicing of
the Agreement.
The agreement gives customs
administrations the right to request further
information of importers where they have
reason to doubt the accuracy of the
declared value of imported goods. If the
administration maintains a reasonable
doubt, despite any additional information,
it may be deemed that the customs value
of the imported goods cannot be
determined on the basis of the declared
value, and customs would need to
establish the value taking into account the
provisions of the Agreement.[4]

Transaction value
The primary basis for customs valuation
under the Agreement is “transaction value”
as defined in Article 1. Article 1 defines
transaction value as “the price actually
paid or payable for the goods when sold
for export to the country of importation.”[5]
Article 1 must be read together with Article
8, which lets Customs authorities make
adjustments to the transaction value in
cases where certain specific parts of the
good - considered to be a part of the value
for customs purposes - are incurred by the
buyer but are not actually included in the
price paid or payable for the imported
goods. Article 8 also allows for the
inclusion in transaction value of
exchanges ("considerations") between the
buyer and seller in forms other than
money. Articles 2 through 7 provide
methods of determining the customs
value whenever it cannot be determined
under the provisions of Article 1.

The methods of customs valuation, in

descending order of precedence, are:

1. Transaction Value of Merchandise in

Question - price actually paid or
payable for the goods sold. (Art. 1)
2. Transaction Value of Identical
Merchandise (Art. 2)
 3. Transaction Value of Similar
Merchandise (Art. 3)
4. Deductive Value (Art. 5)
5. Computed Value (Art. 6)
6. Derivative Method (Art. 7)

This hierarchy is codified in domestic

legislation.[6]

See also
Customs Modernization Act
Uruguay Round Agreements
WTO Agreements
General Agreement on Tariffs and Trade
World Customs Organization
References
1. Hironori Asakura, World History of the
Customs and Tariffs, pg. 12,
https://books.google.com/books?
id=qlD0zOupzOUC
2. Uruguay Round Agreement,
Agreement on Implementation of
Article VII of GATT 1994,
http://www.wto.org/english/docs_e/l
egal_e/20-val_01_e.htm
3. United States Trade Representative -
Customs Valuation,
http://www.ustr.gov/trade-
agreements/wto-multilateral-
 affairs/wto-issues/customs-
issues/customs-valuation
4. http://www.wto.org/english/docs_e/l
egal_e/ursum_e.htm#gAgreement
5. WTO Agreement on Customs
Valuation, Article I
6. 19 U.S.C. 1401a

External links
WTO Customs Valuation Gateway,
http://www.wto.org/english/tratop_E/cu
sval_e/cusval_e.htm

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Last edited 2 years ago by Marcocapelle

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