./.RESTRICTEDWORLD TRADE
ORGANIZATIONG/PSI/WP/W/20
8 October 1998
(98-3881)
Working Party on Preshipment Inspection Original:  English
ISSUES RELATED TO THE DEVELOPMENT AND USE OF PRICE DATA BASES
Submission by the United States
1. The development and use of a price data base for conducting customs valuation of imported
goods is not contemplated by the WTO Ag reement on Customs Valuation (Agreement on
Implementation of Article VII of the General Agreement on Tariffs and Trade 1994).  Indeed, the useof a price data base for determining custom value goes counter to -- and can possibly undermine -- the
fundamental basis for conducting determinations in accordance with the Agreement, which is the
"transaction Value," or, as set forth in the Agreement , the price actually paid or payable when sold for
export to the country of importation  (with certain adjustments -- e.g., costs of packing incurred by
buyers, etc.).  Quite simply, a price from a data base is something quite apart from the  "price actually
paid or payable when sold for export,"  and is unlikely to comport with a price that was negotiated
between two parties for exportation to the country of importation.
2. The Agreement on Customs Valuation mandates that the valuation of goods for customs
purposes be conducted under a fair, neutral, and unif orm system that precludes the use of arbitrary or
fictitious customs values.  Whether utilised to establish a "minimum" price, or a "reference" price, in
the context of assessing a particular customs import transaction, a price data base represents an
imposition of arbitrariness and fictitiousness.  A price from a data base will show nothing more than
whether it is the same or deviates from the price of the import transaction at issue;  it will not establish
anything per se  about the import price under the elements for assessment set forth by Articles 1
through 7 of the Agreement.
3. Under Article 7 of the Agreement -- which is utilised when the valuation cannot be
determined under the terms of Articles 1 through 6 -- customs value is determined "on the basis of
data available in the country of importation."  However, Article 7 also forbids the customs value being
determined on the basis of "the selling price in the country of importation of goods produced in such
country," "the price of goods on the domestic market of the country of exportation," "minimum
customs value," or "arbitrary or fictitious values."
4. One effect of the use of a price data base is that it places an incorrect presumption of doubt onevery import transaction -- a presumption that creates an unwarranted burden on importers and
exporters.  In such a situation an arbitrary price is presumed to be "correct" while the importer's priceis presumed to be "incorrect."  Such a scenario is not contemplated under the Agreement on Customs
Valuation, and can result in unacceptable market access barriers.
5. With the development of a price data base there is an obvious incentive to utilise the
information, or "price," that is the easiest to obtain.  For example, the United States has been madeaware of price data bases being developed through the collection of prices from retail catalogues.  In
most cases, this will be the price in the commercial market of the country of importation -- something
that can be quite different form a price negotiated for a particular exportation to the country of
importation (i.e ., the price actually paid or payable when sold for export to the country of
importation ).  Price data bases have reportedly also included price of goods exported to countries
other than the country of importation, or even the price of goods in the country of exportation.  EvenG/PSI/WP/W/20
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setting aside the Article 7 prohibitions cited above, it is important to note that when compared to a
price form a data base, the price actually paid or payable  can often reflect significant differences due
to timing, modes of transport, and in particular the commercial level of transaction.
6. There is a particular concern if the development and maintenance of a price data base is the
product of an inordinate focus on commercial market level transactions and commercial market level
transactions and commercial policy concerns related to protection of a domestic industry.  The
Agreement on Customs Valuation is clear on such methodologies with its explicit recognition that
"valuation procedures should not be used to combat dumping".
7. Another issue surrounding the technical accuracy of a price data base arises because the
information in a price data base will likely not be contemporaneous with a sale for exportation to thecountry of importation.  In an era of globalized production and sourcing combined with just-in-time
manufacturing and distribution, prices can change daily -- and in some cases hourly.  Consequently,
there can be a virtually automatic presumption that prices in a data base are not relevant to the value
of merchandise sold for export "at or about the same time" as is contemplated under the Agreement.
8. Finally, there is a clear absence of fundamental transparency to the private sector if customs
valuation is conducted by simply rejecting an importer's transaction value and assigning a different
price, all based on a price data base.  Are price data bases publicly available to allow scrutiny for
accuracy?  If so, is business confidentiality respected?  Is there a system to appeal any information
contained in a price data base that may be incorrect, or may be prohibited by the Agreement onCustoms Valuation as a valid basis for determining Customs Valuation?  Finally, the use of a price
data base as a method for customs valuation also raised the question of how the appeal requirements
under Article 11 of the Agreement can be met in terms of providing written "reasons" for a particular
valuation decision.
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