"World Trading System" - What is it all about?

Questions about Customs Duties and Customs Valuation

Topics:

	FOB or CIF Prices
	Harmonization of Duties
	Increasing of Customs values, Government Recourse to
	Lowering Duties below WTO Schedule
	National Customs Valuations
	Transaction Value of Dumped Imports

FOB of CIF Prices:

Does the WTO provide for customs assessment on the basis of FOB. or CIF prices? Members of the WTO are free to provide in their legislation whether to use f.o.b. or c.i.f. prices as a basis of their customs valuation system. Top of page

Harmonization of Duties:
Has the WTO harmonized the level of customs duties of all its members? It has never been the aim of the WTO (or the former GATT) to harmonize the tariffs or customs duties of all its members. In fact, by virtue of the principle of special and differential treatment in favor of developing countries, contained not only in Part IV of GATT but also in the ministerial declarations launching the multilateral trade negotiations (such as the Tokyo or the Uruguay Rounds), developing countries are not expected to make the same commitments and concessions in the area of tariff reductions as the developed countries. Top of page		While it is true that in the Uruguay Round, developing (and transition) countries have made significant contributions in this area, tariff averages continue to be quite high in a number of developing countries if compared to those in developed countries.

Increasing of Customs values, Government Recourse to:
What rights do I have under the WTO when the customs authorities arbitrarily increase the customs value of my imported goods? The basic principle of the WTO Agreement on Customs Valuation is that the customs authorities shall normally accept the transaction value of the goods being imported--the price paid or payable--or, in other words, the invoice price. Only in situations where the customs have reason to doubt the truth or accuracy of the contents of the customs declaration may they ask the importer to provide further explanation, including documents or other evidence that the invoice price is correct.     Top of page		If the doubts continue to exist because, for example, there are suspicions of under- or over-invoicing or customs fraud, the customs shall communicate to the importer, in writing if so requested, the grounds for refusing to accept the invoice price. The WTO further gives the importer the right of appeal, initially to a higher body or official within the customs administration, but eventually to a judicial authority (the national courts or tribunals which are in charge of these types of cases, such as tax courts and administrative tribunals). For a number of developing countries which made a reservation when acceding to the WTO, the Agreement on Customs Valuation comes into force on 1 January 2000.

Lowering Duties below WTO Schedule:
Does a government have the right to apply lower customs duties than those bound in the country's WTO schedule of concessions? Customs duties which are lower than the tariff rates bound in the WTO may be applied by governments at any time. In fact, many developing countries have what is called "ceiling bindings", which are bindings at rates that are higher than the actually applied rates (which may even be zero). Top of page		Within this ceiling, the countries in question are free to lower or increase the applied rates in light of general economic objectives (fighting inflation, for example) or the need to raise government revenues.

National Customs Valuations:
Is a national customs valuation system which operates on the basis of official or minimum prices set by the government in accordance with the WTO? The use of minimum customs values set by the government (also called official prices) is expressly prohibited by the WTO, as are arbitrary or fictitious values.   Top of page		At the same time, however, certain developing countries have under a special provision of the WTO retained officially established minimum values on a limited and transitional basis.

Transaction Value of Dumped Imports:
Do the customs authorities have to accept the transaction value of import shipments which are coming into the country at dumped prices? The invoice price of dumped import shipments would have to be accepted by the customs unless there are doubts as to the truth or accuracy of the import declaration. Top of page		However, the importing country could, at the same time, start an anti-dumping investigation if it considers that there is sufficient evidence of dumping and resulting injury.