RESTRICTEDWORLD TRADE
ORGANIZATIONWT/GC/49
24 September 2001
(01-4524)
General Council Original:  English
REPORT OF THE CHAIRMAN OF THE COMMITTEE ON CUSTOMS VAULATION
TO THE CHAIRMAN OF THE GENERAL COUNCIL
The following communication, dated 14 September 2001, has been received by the Chairman
of the General Council from the Chairman of the Committee on Customs Valuation.
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With reference to your letter of 2 August 2001, in which you refer the implementation matter
contained in tiret 56 of document JOB(01)/112 to me for consultations and suggestions of an
appropriate course of action, I attach the report of these consultations.
Given the lack of consensus, I am only able to provide a factual summary of my
consultations.  Nevertheless, I believe it presents an accurate picture of the present situation with
respect to tiret 56 and I hope that it will assist you in your further work on implementation issues.
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Report of the Chairman of the Committee on Customs Valuation
1. Following the Special Session of the General Council on 15 December 2000, to which the
Chairman of the Committee on Customs Valuation reported the outcome of the Committee'sconsideration of the first three Indian proposals (G/VAL/36), the Chairman of the General Council
held an informal consultation on 10 April 2001 in which the initial three proposals plus three
additional proposals were discussed.  Further clarification was provided by the Indian representative
on the proposals, and additional questions were asked.  Nevertheless, the consultations proved
inconclusive and further consideration of the matters was necessary.
2. Following their subsequent consultations,  the Chairman of the General Council and Director-
General circulated on 13 July 2001, on their own responsibility, a paper identifying elements on
which they saw the possibility of early agreement and proposing that certain issues be referred to
subsidiary bodies for consideration (JOB(01)/112).  Following the numbering of tirets used in a paper
presented by Uruguay, Argentina, Morocco, New Zealand, Norway, Switzerland, and Thailand, tiret56 (dealing with former tiret 1 of G/VAL/ 36), dealing with customs valuation, read:
'"The General Council should direct the Committee on Customs Valuation to continue its
work on addressing the issues and needs specifically identified by Members relating to
ensuring proper implementation of the Agreement and, in particular, those concerns related to
fraud.   In this regard, the General Council directs the Committee  to undertake a study, andWT/GC/49
Page 2
provide a report, which shall include the identification of practical methods available, and
appropriate technical assistance required, to address such concerns.  The study should, inter
alia, evaluate the possible use in addressing fraud of mechanisms such as multilateral or
bilateral cooperation arrangements , the Marrakesh Decision on the issue, and the application
of relevant WCO or other international instruments."
Enhanced technical assistance:  text in front of Valuation Committee should be rapidly agreed
and referred to in a package of early implementation decisions of the General Council.'
3. At an informal meeting of the General Council on 30-31 July 2001, Members agreed that
certain outstanding implementation-related issues, as contained in JOB(01)/112, should be referred to
the relevant WTO bodies or to their Chairpersons for consideration and reporting back.  With respect
to customs valuation, Members agreed to the following terms of referral:
"That the Chairman of the General Council request the Chair of the Committee on Customs
Valuation to hold consultations on the basis of the report contained in document G/VAL/36
with the aim of suggesting to the Chairman of  the General Council an appropriate course of
action by 15 September."
4. On 6 August 2001, I circulated a fax summarizing the previous discussion in the Committee
on the proposal (tiret 1 of G/VAL/36), and asking for comments and suggestions on appropriate
solutions in order to assist in preparing my repor t.  Five responses were received from Colombia,
Hong Kong, China, Japan, Thailand and Singapore which were circulated to all Members.
5. Subsequently, I convened an informal meeting of the Committee on 10 September 2001 at
which I presented four possible solutions that had been made at different points in time with respect to
this implementation issue.  These possible solutions are as follows:
- India's proposal (tiret 1 of G/VAL/36)
"A multilateral solution that enables customs administrations of importing countries to seek
and obtain information on export values in a time-bound manner, in doubtful cases, shall be
included in the Agreement."
- Chair/DG Text (tiret 56 of JOB(01)/112)
"The General Council should direct the Committee on Customs Valuation to continue its
work on addressing the issues and needs specifically identified by Members relating toensuring proper implementation of the Agreement and, in particular, those concerns related to
fraud.   In this regard, the General Council directs the Committee  to undertake a study, and
provide a report, which shall include the identification of practical methods available, and
appropriate technical assistance required, to address such concerns.  The study should, inter
alia, evaluate the possible use in addressing fraud of mechanisms such as multilateral or
bilateral cooperation arrangements , the Marrakesh Decision on the issue, and the application
of relevant WCO or other international instruments."
- Alternative text by LMG
"Further to paragraph 2 of the 1994 Decision Regarding Cases Where Customs
Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value,
Members agree that when the customs administration of an importing country had reasonable
doubts about the truth or accuracy of the declared value the customs administration of the
exporting country shall, if requested, promptly provide information on the export value
declared by the exporter."WT/GC/49
Page 3
- Pettigrew text
"Ministers agree that, when the customs administration of an importing Member has
reasonable grounds to doubt the accuracy of the value declared, it may seek assistance from
the customs administration of an exporting Member as to the value of the good imported.  In
that case, the exporting Member shall, in accordance with its domestic laws and regulations,offer cooperation and assistance in the investigation of any fraud."
6. At this meeting, India clarified that its position incorporated both its proposal as well as the
paragraph labelled "Alternative text by LMG". Two Members had sympathy for the Indian position.
All Members acknowledged that the problem of fr aud was a real one.  However, the majority of
Members which spoke and provided written comments considered that a practical solution to the
problem was needed.  They supported the Chair/DG text above because it would allow for furtherstudy of the problem with the aim of finding such a practical solution.  Some of these Members added
that they would wish to see some additional clar ifications with respect to the work the Committee
would carry out, the time-frame, and the deliverables. but could accept the Chair/DG text as a
practical solution.  One Member said that the Chai r/DG text did not contain all the necessary elements
as contained in the LMG text.  It was agreed that I would carry out further consultations on the matterto develop an alternative text.
7. Following this meeting, two Members, India and Norway, each made a proposal designed to
bridge the gap and find a consensus on the matter.  Circulated to all Members in a fax dated 13
September, they were discussed at an informal meeting on 14 September and are reproduced below:
Indian Proposal
"Further to the 1994 Decision Regarding Cases Where Customs Administrations
Have Reasons to Doubt the Truth of Accuracy of the Declared Value,  Members agreed that,
if, after receiving further information, or in the absence of a response, from the
importer provided for in paragraph 1, the customs administration of an importing country still
has reasonable doubts about the truth or accuracy of the declared value, the customs
administration of the importing country may also request the customs administration of the
exporting country to provide information on the export value declared by the exporter.  The
customs administration of the exporting country shall promptly provide this information, ifavailable.
The customs authorities of the exporting country are not required to verify the
accuracy of the export value declared by the expo rter for this purpose.  This information shall
also be treated as strictly confidential by the authorities concerned in accordance with the
requirements of Article 10 of the Agreement on Implementation of Article VII of the GATT
1994.  This information shall be used by the authorities concerned solely for verifying the
truth or accuracy of the value declared by the importer. "
Norwegian Proposal
"Recognizing the legitimate concerns expressed by the customs administrations of
several/certain importing Members on the accuracy of the value declared, the Committee onCustoms Valuation should be directed to identify practical means available to address such
concerns.  This should i.a. include identification of means by which assistance could be
sought from exporting Members, appropriate technical assistance required, as well as an
evaluation of mechanisms such as multilateral or bilateral cooperation arrangements, the
Marrakesh Decisions on the issue and the application of relevant WCO or other internationalinstruments.  A report, including recommendations, should be submitted to the General
Council by the end of 2002 at the latest."WT/GC/49
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8. Several Members appreciated the Indian proposal because it went beyond the LMG text to
address concerns previously mentioned by these Members.  They therefore supported this proposal.
A few Members noted that more time was needed to study the proposals and their implications.
However, many other Members reiterated concerns previously stated and did not consider that the
Indian proposal resolved these technical issues and questions. Such issues included verification of theexport values, confidentiality of information subjec t to legal procedures, changes to the burden of
proof as presently provided for in the Agreement, and the fact that many Members' national
legislations would not permit divulging such information.  They re-emphasized that what was needed
was a practical solution.  Those who supported the Indian proposal noted their belief that the second
paragraph of the Indian proposal satisfactorily addressed these concerns.  It would provide an
immediate solution to the pressing problem of fraud which did not require further analysis in the
Committee.  Two Members noted that the very fact that the discussions kept returning to technicalaspects indicated that further technical examination of the matter was necessary.
9. The many Members who spoke in support of the Chair/DG text also stated that they were
prepared to accept the Norwegian proposal as an appropriate course of action to be suggested by the
Chairman of the Committee to the General Council Chair.  This proposal recognised the legitimacy ofthe proponents' concerns, would allow for identification of practical solutions and for
recommendations, and provided a time-frame for the submission of the report.  However, the
supporters of the Indian proposal noted that the Indian proposal had positive elements to address
concerns, including the issue of confidentiality and verification of data.  They considered that what
was now needed was the political will to accept a Decision on the matter.
10. All acknowledged the genuine difficulties in addressing fraud.  Therefore, there is a
recognition of the problem.  Nevertheless, significant differences remain on the appropriate solution
between the supporters of the 13 September Indian proposal and the many other Members which
support the Chair/DG text or the variation of it provided in the Norwegian proposal. Therefore, I amnot in a position to report that my consultations have led to a consensus or to suggest a course of
appropriate action on the matter referred to me by the Chairman of the General Council.
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