. /.WORLD TRADE
ORGANIZATIONG/VAL/W/121
10 June 2003
(03-2991)
Committee on Customs Valuation Original:  Spanish
REPLY TO THE QUESTIONS SUBMITTED BY SEVERAL COUNTRIES IN THE
COMMITTEE ON CUSTOMS VALUATION WITH REGARD TO THE
MECHANISM OF ESTIMATED PRICES APPLIED BY MEXICO
The following communication, dated 4 June 2003, has been received from the Permanent
Mission of Mexico.
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Like many other countries, Mexico has encountered major problems arising from the
undervaluation of goods so as to avoid the payments of various duties, which has a serious effect on
public revenue.  Consequently, it was thought advisable to introduce mechanisms to guarantee the
payment of foreign trade duties prior to the release of the goods, as well as procedures for the prompt
cancellation of such guarantees in a form consistent with the international treaties to which it is theparty.
Mexico's Customs Law establishes in Article 64 the use of the transaction value as the
principal method for determining the tax base for the payment of foreign trade duties in accordance
with the Agreement on Implementation of Article  VII of the General Agreement on Tariffs and
Trade 1994 (Agreement on Customs Valuation).  That law also incorporates the use of the subsequent
methods of valuation, as set out in the above-mentioned Agreement.
The Agreement on Customs Valuation also contains provisions applicable to cases where the
customs authority suspects that goods have been undervalued.  These provisions allow the customs
authority to initiate an investigation of the accuracy of the value declared by the importer, provided
that such an investigation allows the goods in question to be released.  In accordance with theAgreement, such release may, if required, be subject to the presentation of a guarantee by the
importer.  These provisions have also been incorporated into Mexico's Customs Law and through the
estimated price mechanism.
On this basis, Mexico has established the estimated price mechanism in accordance with the
right granted to it as a Member of the WTO by the Agreement on Customs Valuation, in particular in
Article 13 which states:
"If, in the course of determining the custom s value of imported goods, it becomes necessary
to delay the final determination of such customs value, the importer of the goods shallnevertheless be able to withdraw them from  customs if, when so required, the importer
provides sufficient guarantee in the form of a surety, a deposit or some other appropriate
instrument, covering the ultimate payment of customs duties for which the goods may be
liable.  The legislation of each Member shall make provisions for such circumstances."
Estimated prices are of a general, non-discriminatory nature and only provide a point of
reference for the initiation of an investigation by the tax authority with regard to valuation, on accountG/VAL/W/121
Page 2
of the presumed undervaluation of the goods, as well as a reference of the amount of the duties to
which the goods might finally be subject; such goods, in conformity with Article 13 of the
Agreement, may be subject to a guarantee so as to  enable the importer to withdraw the goods pending
the conclusion of the investigation by the customs authority.  Under no circumstances may the
estimated prices be used as the tax base for the payment of duties;  instead the authority must use thevaluation methods contained in the Agreement on Customs Valuation.
In order to determine whether goods will be subject to this mechanism and, if so, the price
applicable, the Ministry of Finance and Public Credit analyses the actual imports of the goods in
question and reviews the behaviour of prices over a period of time (three years on a monthly basis).
Statistical adjustments are made to the inform ation in the database so as to exclude such
factors as seasonal variations.  The average weighted import price is obtained on the basis of
information relating to the value and volume of the actual imports by country of origin and by
company.
In addition, the international price of the goods is obtained on the basis of data drawn from
specialized publications, from international market reports (in the case of commodities) and from lists
of prices quoted by various suppliers in the countries having the greatest weight in terms of volume of
imports.
Once the average weighted import price and the international price of the goods in question
have been determined, the margin of undervaluation is calculated in relative terms.
When a decision has been made to apply an estimated price for a specific product, it is
published in the Official Journal of the Federation.  Furthermore, the obligations arising from trade
treaties or agreements in this field are carried out by the Ministry of the Economy.
The use of estimated prices does not imply that Mexico rejects transaction value for the
purposes of the payment of duties, and thus their use does not turn them into the officially established
minimum values referred to in paragraph 2 of Annex III of the Agreement on Customs Valuation.  On
the contrary, the value declared by the importer is not rejected, but he is allowed to withdraw his
goods from the customs upon presentation of a guarantee which may take the form of a deposit, credit
line, collateral, pledge, securities or a letter of credit - in accordance with the legislation on thismatter - which is sufficient to cover the payment of the duties to which such goods may finally be
subject.
Accordingly, since the estimated prices are not officially established minimum values in the
terms of paragraph 2 of Annex III of the Agreement on Customs Valuation there is no obligation toenter a reservation.
Article 12 of the Agreement establishes an obligation to publish the laws, regulations, judicial
decisions and administrative rulings of general application giving effect to the Agreement, in
conformity with Article X of the GATT 1994.  In addition, the Agreement stipulates that anyestablishment of a guarantee under the terms of Article 13 of the Agreement shall be provided for in
the legislation of each Member.  Such obligations were fulfilled through the publication of the
Resolution establishing the mechanism to guarantee the payment of duties on goods subject to
estimated prices by the Ministry of Finance and Public Credit  in the Official Journal of the Federation
of 28 February 1994.  Furthermore, each modification of that Resolution has been duly published
through the same channels prior to its entry into force.
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