Customs Valuation and the World Trade Organization

Transcription

1 2 nd WCO GLOBAL AEO CONFERENCE Madrid, Spain, April 2014 Customs Valuation and the World Trade Organization Roy Santana Market Access Division World Trade Organization 1 World World Trade Trade Organization / Market / Market Access Division / / 154 Rue de Lausanne, 1211 Geneva 21, 21, Switzerland / [email protected] /

2 Structure of this presentation: A. Why Customs Valuation at the WTO? B. Main principles of the Agreement on Customs Valuation C. The Committee on Customs Valuation and the Technical Committee D. (2013) Agreement on Trade Facilitation 2

3 A. Why Customs Valuation at the WTO? 3

4 Can WTO Members protect their industries? Yes. But only through import duties (tariffs), which are the backbone of the system. Most other measures, also known as non-tariff measures (NTMs), are either: Generally prohibited (for example quantitative restrictions), or Regulated to ensure that they are not arbitrarily used to discriminate or as a disguised form of protectionism (for example, SPS and TBT measures; trade remedies). 4

5 Most WTO Agreements seek to regulate NTMs GATT 1994 Understandings Marrakesh Protocol Multilateral Agreements on: Annex 1A Multilat. Trade Agrs. on Goods Agriculture Sanitary and Phytosanitary measures Safeguards Technical Barriers to Trade Trade-related investment measures Antidumping Customs Valuation Preshipment inspection Rules of origin Import Licensing Procedures Subsidies and countervailing measures 5

6 How much should I pay? It is normally necessary to know at least 3 things: 6

7 Is the value 2. of Types the of duties goods A. needed? Why rules? Type of duty Example Ad valorem Specific Compound Mixed Technical 5% $5 per kg 10% + $2 per kg 10% or $2 per kg, whichever is higher EA MAX AD S/Z 7

8 Example A. Why rules? Rate of duty specified x Value of imported goods = Customs duty Example: 15% x $2.000 $1.000 = $150 $300 Rules are needed to preserve the value of tariff concessions! 8

9 B. History of the rules Uruguay Round (1994) 1. Agreement on the Implementation of Article VII of the GATT 1994, a.k.a. the Customs Valuation Agreement 2. Decision Regarding Cases Where Customs Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value 3. Decision on Texts Relating to Minimum Values and Imports by Sole Agents, Sole Distributors and Sole Concessionaires CCV added (1995) 4. Decision Concerning the Interpretation (x5) and the Administration (x4) of the Agreement (G/VAL/5) 9

10 B. The Committee on Customs Valuation and the Technical Committee 10

11 General Principles (1) Recognizing the need for a - Fair, - Uniform and - Neutral system For the valuation of goods for customs purposes that precludes the use of arbitrary or fictitious customs values Preamble 11

12 General Principles (2) 1. Primacy of transaction value 2. Uniformity in valuation 3. Fairness and neutrality Preamble 4. Simple and equitable criteria 5. Consistency with commercial practice 12

13 Content of the Agreement Valuation Methods (Art. 1-8) Currency conversion (Art. 9) Confidentiality (Art. 10) Right of Appeal (Art. 11) Publication (Art. 12) Release of goods (Art. 13) Definitions (Art. 15) Written explanation (Art. 16) The annexes are really important! 13

14 Reasonable doubts about the truth of the importer s declaration Customs may ask importer for additional information/documentation Customs must inform importer of its reasons for doubting Customs must give importer reasonable opportunity to respond Art WTO Decision Customs must inform importer in writing of final decision Transaction value can be rejected 14

15 Thailand Cigarettes (Philippines) (DS371) Panel Findings: Procedural steps to determine Transaction Value 1.Importer declares a transaction value 2.Customs examines the circumstances of the sale (only if it has doubts about the validity) 3.Customs examines information provided by importer; obligation to communicate grounds for doubts 4.Customs gives reasonable opportunity to respond; importer submits further information 5.Customs makes a final decision on the value; provides written explanation if importer requires (it is not only a formal, but also a substantive obligation) 15

16 Sequence MUST be followed Authorized Valuation Methods Transaction value TV of identical goods TV of similar goods Deductive value Computed value Fall-back Normally importer s option 16

17 Prohibited Valuation Methods (Article 7) 1. Selling price of goods domestically produced 2. Higher of two alternative values 3. Price of goods in the domestic market of the country of exportation 4. Cost of production other than computed values 5. The price of goods for export to a country other than the country of importation 6. Minimum customs values 7. Arbitrary and fictitious values 17

18 Transaction Value (Article 1) CV of imported goods shall be the transaction value 1. Price actually paid or payable (PAPP) 2. For the goods 3. When sold for export 4. Adjusted (Art. 8) 18

19 In practice: = PAPP (generally, but not always, the price in the invoice) Allowed deductions (if not already included) Additions of Article 8 (if not already included) Customs value Total payment, whether direct or indirect, made or to be made, for the imported goods by the buyer to, or for the benefit of, the seller. 19

20 Related parties : Why does it matter? The concept of transaction value relies on competing businesses to freely negotiate the fair market value of imported merchandise. This system works well in a free market where businesses maximize their profit. When companies are related, however, this may, or may not, be the case. Article

21 C. The Committee on Customs Valuation and the Technical Committee 21

22 The CVA established two Committees: Committee on Customs Valuation (CCV) Technical Committee on Customs Valuation (TCCV) 22

23 WCO - Technical Committee CVA, Article 18.2 and Annex II Task: To ensure the uniform application of the agreement at the technical level Instrument Description No.* Advisory opinion Answers a question on a specific set of facts (actual or theoretical) Commentary A series of comments on part of the text of the agreement; supplement with additional guidance, including examples. Applies to a number of situations. Explanatory note Case study Study Answers a question of a general nature arising from one or more provisions in the Agreement; may also examine trade practices. Exposition of complex set of facts based on an actual commercial transaction; used to demonstrate practical application Result of an examination in some depth of any question relating to the Agreement

24 WTO - Committee CVA, Article 18.2 and Annex II Tasks: 1. Afford Members the opportunity to consult on matters relating to the administration of the customs valuation system by any Member (CVA, Art. 18.1) 2. Oversee the operation of the Agreement 3. Review of notifications, e.g. national legislation All information (including most legislations) is publicly available: (Document symbol: G/VAL/ ) 24

25 D. Agreement on Trade Facilitation 25

26 Trade Facilitation 9 billion documents each year to process movement of goods! Companies sometimes spend more money complying with customs regulations than the revenue earned by customs administration 26

27 Time is money! East Asia & Pacific Documents required to import goods (average No.) Time to comply with all procedures to export and import goods (days) CEECAC MENA OECD Source: World Bank, Doing Business

28 Article 3 - Advance Rulings What? Written decision provided by a Member to an applicant prior to the importation of a good. It sets forth the good s tariff classification, and origin (Art.3.9). Members are encouraged to provide, inter alia, the method or criteria used for customs value (see Art. 3.9(b)) Time Delivered in a reasonable, time bound manner Other Binding on that Member in respect of the applicant that sought it. 28

29 Article 4: Appeal or Review Procedures On what? Administrative decision issued to any person on customs issues Who? Administrate authority higher than or independent of the official that issued the decision, and judicial appeal or review. How? Non-discriminatory manner Within set period in the law, or without undue delay 29

30 Article 5.1: Preshipment Inspection Members shall not require the use of preshipment inspections in relation to tariff classification and customs valuation.

31 Article 7: Release & clearance of goods (1) 1. Pre-arrival processing 2. Electronic payment 3. Separation of release from final determination 4. Risk Management 31

32 Article 7: Release & clearance of goods (2) 5. Postclearence audit 6. Average release time 7. Trade Facilitation Measures for Authorized Operators 8. Expedited Shipments 9. Perishable Goods 32

33 Article 10.4: Single Window OGAs OGAs CUSTOMS CARRIER CUSTOMS CARRIER WHARFINGER CUSTOMS BROKER HAULIER PORT AUTHORITY WHARFINGER CUSTOMS BROKER Single Window HAULIER PORT AUTHORITY LINE AGENT CONSIGNOR CONSIGNE E LINE AGENT CONSIGNOR CONSIGNEE FROM TO

34 Thank you! Roy Santana Market Access Division World Trade Organization 34