. /.WORLD TRADE
ORGANIZATIONG/VAL/W/103
30 September 2002
(02-5203)
Committee on Customs Valuation Original:  English
CHINA'S TRANSITIONAL REVIEW MECHANISM
The following communication, dated 25 September 2002, has been received from the
Permanent Delegation of the European Commission.
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Please find enclosed the European Community's TRM contribution on Customs Valuation for
distribution to Members.
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The EC welcomes China's effort to implement its commitments under its Protocol of
Accession to the WTO, more specifically on the issue of customs valuation and preshipment
inspection.  The EC is very pleased that China st ated that it would fully apply without delay the
provisions of the WTO Agreements on Customs Valuation and Preshipment Inspection.
Transparency
As for customs valuation, the EC took note of th e recent circulation of China's notification of
legislation and responses to the Checklist of  Issues in documents G/VAL/N/1/CHN/1 and
G/VAL/N/2/CHN/1 (5 July 2002).  The EC assumes that these provisions have been published and
made generally available, in accordance with the principle of transparency and the requirements of
Article 12 of the Customs Valuation Agreement.
Transposition
We appreciate China's prompt translation of the texts transposing the commitments entered
into, and as regards the customs valuation legislation notified by China (documentG/VAL/N/1/CHN/1) we would have the following questions:
1. Article 3 of the Chinese legislation refers to the costs of insurance and "associated costs
incurred prior to unloading of the goods at the port within the customs territory of the People's
Republic of China".  What is envisaged by "associated costs" in this context?
2. Article 6 refers to acceptance of transaction value "whenever…. the importer demonstrates
that such value closely approximates to the one of the following" (specified).  Can it be confirmed that
the above provision reflects Article (1)(2)(b) of the Customs Valuation Agreement, and it applies not
as an obligation but as a choice with the importer can exercise?
3. Article 11 closely reflects the provisions of  Article 7 of the Customs Valuation Agreement,
but some apparently minor differences in terminology arise.  Can it be confirmed that Article 11 of
the Chinese legislation reflects Article 7 of the Customs Valuation Agreement without differences of
substances?G/VAL/W/103
Page 2
4. Article 13 indicates that for processed goods sold from a bonded area or warehouse, the
determination of the customs value is on the basis of the selling price (with exemptions for the value
of materials and parts added).  Can it be confirmed that Article 14 applies only to goods which have
been processed in the People's Republic of China?
5. Article 24 deals with calculation of transport charges.  The provisions of Article 24 seem to
indicate that the taking into account of the costs of transport beyond the port or place of importation
(Article 7 of the Customs Valuation Agreement).  Is this actually the case?
6. Articles 26 and 28 prescribe fixed percentages for insurance and freight.  The Customs
Valuation Agreement does not provide a basis for su ch a practice, as it is the actual costs which
should be taken into account.  What happens if the fixed percentage is higher than the actual cost forinsurance and freight?
7. Articles 31 and 32 refer to obligations for various parties to provide information on request.
Can it be confirmed that, with respect to implementation of the Customs Valuation Agreement,
Chinese legislation will not require parties not resident or established in the People's Republic ofChina to provide information in relation to transactions?
8. Articles 33 and 34 gives 15 days for importers to provide certain information.  It is however
the case that the preparation and delivery of certain data and information may require sufficient (i.e.,
longer) time.  Can it be confirmed that sufficient time is allowed to importers to answer requests fromthe customs administration for information?
9. Article 45 refers to particular cases where these rules may not apply.  Can it be confirmed that
any additional rules covering the special situations  mentioned will follow on the lines of the Customs
Valuation Agreement?
Horizontal questions
Finally, on a more general level, can China confirm that, in accordance with the principles
and provisions of the Customs Valuation Agreement, no rules, regulations or administrative practices
will allow the use of price indicators to substitute  for the methods of valuation provided for in the
Customs Valuation Agreement?.
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