Customs Valuation
Summary of Customs Valuation
The process whereby customs authorities assign a value for duty purposes to imported merchandise. Normally, the purchase price of the goods, as evidenced by the supplier’s invoice, is adequate for the determination of value. In those cases where the invoice is not available or is believed to be fraudulent or otherwise unsuitable, the customs authorities may employ other methods of determining value, including appraisement, construction of value by assigning a value to each of the components and production processes, or comparison with like merchandise from the same country of origin. Effective with the implementation of the Trade Agreements Act of 1979, the United States employs the transaction value method to value imports. Prior to this act, several alternative valuation schemes were applied, including export value, U.S. value, constructed value, and American selling price. These alternative valuation methods, authorized in Section 402 and 402(a) of the Tariff Act of 1930 have been effectively supplanted by the transaction value method, except in a limited number of cases when the transaction value cannot be determined or is inapplicable for whatever reason.
See Customs Valuation Code.
(Main Author: William J. Miller)
Customs Valuation and the GATT Policy Negotiations
In relation to the GATT Policy Negotiations, Christopher Mark (1993) provided the following explanation and/or definition of Customs Valuation: The process of appraising the value of imported goods on which duties are to be assessed, according to the tariff schedule of the importing country.
Customs Valuation in International Trade
Meaning of Customs Valuation, according to the Dictionary of International Trade (Global Negotiator): The amount of money required to be shown on the customs entry according to the importing country’s regulations. Since many products are assessed duty on ad valorem basis, the correct customs value is necessary to determine the correct duty obligation. Countries have different methods to determined customs valuation; for instance, some countries do not include the cost of transportation from the exporting country, while others (the majority) do. Some countries increased the value by the cost of so-called assists rendered by the importer to the foreign producer. Many countries have comparative formulas for testing customs values, such as the value of similar goods and/or estimates of the production costs, transportation costs and manufacturer/exporter profit. Accurate customs valuation is also important to determine whether the pricing of imported goods violates the importing country’s anti-dumping regulations.
The International Law of Customs: Customs Valuation
This section provides an overview of the international law of customs: customs valuation within the legal context of Market Access (Customs Regulation) in international economic law (Main Regulatory Areas).
Customs Valuation
The Agreement on the Implementation of GATT Article VII (known as the WTO Agreement on Customs Valuation or the “Valuation Agreement”) was negotiated in the Tokyo Round to ensure 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. In the WTO Agreement on Customs Valuation, the primary basis for customs value is “transaction value” as defined in Article 1 of the WTO Agreement on Customs Valuation, which should be read
together with Article 8 which provides, inter alia, for adjustments to the price actually paid or payable in cases where certain specific elements which are considered to form a 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 imported goods. Article 8 also provides for the inclusion in the transaction value of certain considerations which may pass from the buyer to the seller in the form of specified goods or services rather than in the form
of money. Articles 2 through 7 provide methods of determining the customs value whenever it cannot be determined under the provisions of Article 1 of the WTO Agreement on Customs Valuation.
Adherence to the Valuation Agreement is important for U.S. exporters, particularly to ensure that market access opportunities achieved through tariff reductions are not undermined or negated by unwarranted and unreasonable “uplifts” in the customs value of goods to which tariffs are applied. The use of arbitrary and inappropriate “uplifts” in the valuation of goods by importing countries when applying tariffs can result in an unwarranted doubling or tripling of duties.
The Valuation Agreement is administered by the WTO Committee on Customs Valuation, which holds two formal meetings a year. The Valuation 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 WTO Valuation Agreement. The Technical Committee also meets twice a year.
As noted, the Valuation Agreement was initially negotiated in the Tokyo Round, but at that time its acceptance was voluntary. The achievement of universal adherence to the Valuation Agreement as part of membership in the WTO, which occurred in the Uruguay Round) was an important objective of the United States.
Ensuring that Customs Officials use a proper valuation methodology, i.e., one provided for under the Agreement, and avoiding arbitrary determinations or officially-established minimum import prices is essential to maintain the integrity of negotiated market access commitments based on the value of the imported good. Just as important, the implementation of the Agreement often represents the first concrete and meaningful steps taken by some WTO Member governments toward reforming their customs administrations, diminishing corruption, and ultimately moving to a rules-based trade facilitation environment.
An important part of the Customs Valuation Committee’s work in support of the Agreement’s provisions is the examination of Members’ implementing legislation. As of October 2008, 80 Members had notified their national legislation on customs valuation (this figure does not include the 27 individual EU Members); 46 Members, mostly least developed countries (LDCs) or recently acceded countries, have not yet notified their national legislation on customs valuation.
Resources
Further Reading
- Davide Rovetta and Laura Carola Beretta, “The International Law of Customs: Customs Valuation,” Elgar Encyclopedia of International Economic Law, Cheltenham Glos (United Kingdom), Northampton, MA (United States)
Hierarchical Display of Customs valuation
Trade > Tariff policy > Customs regulations
Trade > Trade > Trading operation > Import
Customs valuation
Concept of Customs valuation
See the dictionary definition of Customs valuation.
Characteristics of Customs valuation
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Resources
Translation of Customs valuation
- Spanish: Valor en aduana
- French: Valeur en douane
- German: Zollwert
- Italian: Valore in dogana
- Portuguese: Valor aduaneiro
- Polish: Wartość celna
Thesaurus of Customs valuation
Trade > Tariff policy > Customs regulations > Customs valuation
Trade > Trade > Trading operation > Import > Customs valuation
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