Wto Agreement On Customs
Transportation and insurance costs. Under Article 8.2, countries must include in their legislation a provision that includes transport costs, insurance, etc., in or excludes customs value (CAF or FOB valuation base). The vast majority of countries evaluate products on the basis of CIF, with the notable exception of Australia, Canada and the United States. Like many important innovations, the WTO agreement on customs assessment is based on a very simple idea: that it is in the interests of both customs administrations and traders that trade in goods be taxed on the basis of the realities of trade policy transactions. This is the so-called “transaction value” method, which is the main method of customs assessment of the agreement. From the 1950s on, tariffs were assessed by many countries according to the Brussels value definition (BVD). Under this method, a normal market price was established for each product, defined as the price a commodity would obtain in an open market between buyer and seller, independently of each other, from which the duty was set. De facto deviations from this price were only fully taken into account if the reported value was greater than the reported value. Downward fluctuations were only taken into account by up to 10%. This method has led to widespread discontent among traders, as price changes and competitive advantages of companies have only been reflected when the fictitious price has been adjusted by the customs office after certain periods. Often, new and rare products were not included in the lists, making it difficult to determine the normal price. The United States has never been part of the BVD.
It was clear that there was a need for a more flexible and consistent evaluation method that would harmonize the systems of all countries. There are also three annexes to the agreement that deal with the specific role of the WTO Technical Assessment Committee and a number of special clauses for developing countries, which will be discussed in detail below. The key points of the agreement are contained in Articles 1, 7 and 8, as well as in the interpretive notes of these articles and in the general note. The WCO estimates that, based on the experience of the countries that implemented the agreement, these provisions provide the legal basis and the instruments for carrying out at least 90 per cent of valuation transactions on the basis of Method 1 (i.e. transaction value). This leaves about 10 percent of the trade that requires a more complex approach based on one of the other methods. The agreement aims to establish a fair, uniform and neutral system for the valuation of goods for customs purposes, which is consistent with commercial reality and prohibits the use of arbitrary or fictitious customs values.