RESTRICTEDWORLD TRADE
ORGANIZATIONG/VAL/M/32
31 January 2003
(03-0648)
Committee on Customs Valuation
MINUTES OF THE MEETING OF 4 – 5 NOVEMBER 2002
Chairman:  Mr. Raimundas Karoblis (Lithuania)
1. The Chairman informed Members that the proposed agenda was circulated in
WTO/AIR/1946.  It was adopted as follows:
Table of contents            Page
I. REPORT OF THE WORK OF THE WCO TECHNICAL COMMITTEE ON
CUSTOMS VAL UATION .......................................................................................................3
II. INFORMATION ON IMPLEMENTATION AND ADMINISTRATION OF
THE AGREEM ENT.................................................................................................................3
III. INFORMATION ON THE APPLICATION OF DECISIONS OF THE
COMMITTEE ON CUSTO MS VALUAT ION......................................................................3
IV. TECHNICAL ASSIST ANCE ..................................................................................................4
V. TRANSITIONAL REVIEW IN ACCORDANCE WITH PARAGRAPH 18 OF
THE PROTOCOL OF THE ACCESSION OF THE PEOPLE'S REPUBLIC OF
CHINA .......................................................................................................................... .............4
VI. REPORT OF THE COMMITTEE TO THE COUNCIL FOR TRADE IN
GOODS.......................................................................................................................... ..........11
VII. INDIA – INFORMATION ON CERTAIN ASPECTS OF THE EUROPEAN
COMMUNITIES VALUAT ION POLICY...........................................................................11
VIII. FOURTH, FIFTH, SIXTH AND SEVENTH ANNUAL REVIEWS OF THE
IMPLEMENTATION AND OPERATION OF THE CUSTOMS VALUATION
AGREEM ENT ...................................................................................................................... ..12
IX. PRESHIPMENT INSPECTION ...........................................................................................12
X. PARAGRAPH 12 OF THE DOHA MINISTERIAL DECLARATION
(WT/MIN(01)/DEC/1): IMPLEM ENTATION-RELATED  ISSUES.................................13
XI. OTHER BUSINESS.............................................................................................................. ..22
2. The representative of China stated that his delegation found the use of the term "Republic of
China" in WTO document G/VAL/N/1/TPKM/1 counter to the understanding in the statement of the
Chairman of the GATT Council in September 1992. This caused serious problems politically and in
the WTO's work.  Problems would arise if the Committee took up this legislation under the proposed
agenda item B.1.  Members were aware that a member called Republic of China did not exist;  the
misuse of this term here would confuse Members during discussions in the Committee and in
implementation of the Agreement.  His delegation strongly requested that a correction be made in linewith the formal designation of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
or Chinese Taipei, as indicated in the cover page of the document in order to facilitate the work in theG/VAL/M/32
Page 2
Committee.  His delegation understood that it might take time before the problem was resolved
horizontally.  Therefore, it proposed that the sub-item dealing with the Separate Customs Territory of
Taiwan, Penghu, Kinmen and Matsu in agenda item B.1 be dropped from the agenda of this meeting
so that the Committee could proceed with the other items on the agenda.  The repeated misuse of the
designation of a certain Member was negatively af fecting the functioning of this Committee and of
the multilateral trading system in general. Correct practice by all parties concerned would benefit the
present and future work of this organisation.
3. The representative of Chinese Taipei expressed his delegation's disappointment with China's
statement.  Its proposal to drop the sub-item pertaining to Chinese Taipei's legislation from the agenda
was unacceptable.  The issue, or rather non-issue, raised by the Chinese delegation obviously fell
outside the scope of the Committee's discussions and was entirely irrelevant to its subject-matter.When governments assembled in their capacity as Members of the multilateral trading system, they
should focus on trade-related issues only.  His delegation, a full Member of the WTO, played by the
rules and expected that every participant did the same in the non-discriminatory, level playing-field of
the WTO.  To block the proceeding of a meeting sole ly on an irrelevant issue was detrimental to the
proper functioning of this organisation.  His delegation regretted the inconvenience caused to theother Members.  From his understanding of the previous practices of this Committee, the Chairman
should act under his own discretion without unduly compromising the rights of any Member.  His
delegation would support any decision made in this regard.
4. The Chairman informed Members that in the past week he had had a number of consultations
with the interested parties to this matter.  It wa s clear that the matter could not be solved in the
framework of this Committee as it was a horizontal matter.  He considered that the only possible
solution in order to allow the meet ing to go forward would be to suspend consideration of the entire
agenda item B.1 pending resolution of the matter.  He asked if Members could agree on this proposal.
5. The representative of China did not object to the Chairman's proposal and would go along
with the consensus.  He added that it was not his delegation's intention to affect the normal practice of
this Committee nor to adversely affect the interest of all WTO Members.  Given that under item B.1,
other Members' notifications were to be discussed, his delegation had proposed to drop only
consideration of the sub-item on Chinese Taipei.  This was aimed at pre-empting the inappropriate
practice of a certain Member of the WTO to use terms that were inconsistent with the principle that
had been established under the 1992 statement of the General Council Chair.
6. The representative of Chinese Taipei regretted that this non-issue confused a particular
Member because he considered that, for many Members, the matter did not exist.  China's proposal to
single out a particular Member for discriminatory treatment was unacceptable.  His delegation
regretted that the matter, which was not caused by his delegation, would inconvenience some otherdelegations.  His delegation could agree with the Chairperson's proposal to suspend item B.1 pending
further resolution.
7. The representative of Guatemala raised a matter under other business concerning Mexico's
use of the provisions of the Agreement and its application of estimated prices for a number of
products .
8. The Chairman expressed regrets regarding the situation concerning agenda item B.1 and
apologies to Members which had presented notifications or which had an interest in them.  He added
that, under other business, he would take up two letters that he had received requesting information onthe Committee's work from the Chairs of the Working Group on Trade and Transfer of Technology
and the Special Session of the Committee on Trade and Development.G/VAL/M/32
Page 3
I. REPORT OF THE WORK OF THE WCO TECHNICAL COMMITTEE ON
CUSTOMS VALUATION
1.1 The observer of the World Customs Organization reported on the activities of the WCO
Technical Committee which is contained in Annex I to this report.
1.2 The Committee took note of the report.
II. INFORMATION ON IMPLEMENTATION AND ADMINISTRATION OF THE
AGREEMENT
2.1 The Chairman drew Members' attention to  document G/VAL/2/Rev .15 which contained the
updated lists of all Members who had invoked special and differential treatment provisions under the
Agreement.  In addition, he drew attention to document G/VAL/W/76 /Add.4 which contained an
updated inventory of notification requirements pursu ant to extension decisions and minimum value
reservations.
2.2 The representative of the United States stated  that her delegation took note of the documents
without prejudice to its interpretation of the refere nce made in the agenda item to "developing country".
2.3 The Committee took note of the stat ement and the information presented.
- Requests for extension of delay periods
2.4 The Chairman informed the Committee that, under this sub-heading, there were three pending
requests from Rwanda, Sri Lanka and the United Ar ab Emirates.  The request from Sri Lanka was
recently circulated in document G/VAL/W/105.  He had no developments to report on these requests.
2.5 The representative of Australia noted her delegation's support for the extension request by the
United Arab Emirates.  However, it noted that the request in G/VAL/W/83 did not specify the basis for
the request.  Therefore, her delegation asked the UAE to articulate more fully its reasons for the request.
2.6 The Committee took note of the statement and the information.
- Notifications made under Decisions concerning delay extensions and minimum value
reservations
2.7 The Chairman noted that under this sub-item, the Committee was to consider the notifications
made under the Decisions concerning delay extens ions and minimum value reservations.  One such
notification had been received from Colo mbia, circulated in  G/VAL/N/4/COL/3.
2.8 The Committee took note of the information.
III. INFORMATION ON THE APPLICATION OF DECISIONS OF THE COMMITTEE
ON CUSTOMS VALUATION
3.1 The Chairman informed the Committee that unde r this agenda item, the Committee noted any
new notifications of application of the Decisi ons of the Committee on Customs Valuation on the
"Treatment of Interest Charges in the Customs Valu e of Imported Goods and on the Valuation of Carrier
Media Bearing Software for Data Processing Equipment", both adopted by the Committee and
contained in document G/VAL/5.  Since the last  meeting, document G/VAL/W/5/Rev.12 had been
circulated which included the addition of notificati ons from Brazil, Cuba, and the Separate Customs
Territory of Taiwan, Penghu, Kinmen, and Matsu.G/VAL/M/32
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3.2 The Committee took note of the information.
IV. TECHNICAL ASSISTANCE
- Information on technical assistance
4.1. The Chairman drew Members' attention to document G/VAL/8/ Add.10 which contained
information on completed WCO technical assistance activities.  The information compiled was based on
the information provided to the 15th session of the Technical Comm ittee on Customs Valuation.  He
proposed that the Committee take note of th e information provided in the document.
4.2 The Secretariat reported that, under the WT O 2002 Technical Assistance Plan, 9 national
workshops of one week had been carried out mainly  in the regions of Africa, the Middle East and
Central and Eastern Europe.  In addition, one regional seminar was held in Jordan in which 14 countries
participated and another was to be held in South Af rican in the coming weeks.  A regional seminar for
French-speaking African countries would be held earl y next year.  Much efforts had been made in the
past weeks in putting together the 2003 Plan.  26 Members had requested assistance on customs
valuation as a priority issue.  In order to satisfy this demand, national requests were being grouped into 8sub-regional activities in which 4 to 5 countries would participate with 4 to 5 customs officers each.  In
addition 4 national workshops were being planned for 2003.
4.3 The Committee took note of the information.
- Article 20.3 Technical Assistance and Trade-Related Technical Assistance
4.4 The Chairman recalled that the Committee had adopted a Work Programme on Technical
Assistance for Capacity-Building as Regards the Implementation and Administration of the WTO
Agreement on Customs Valuation, contained in document G/VAL/W/82/Rev.1.  One of the main
elements in this Programme was the hosting of a seminar on technical assistance.  The programme
was circulated in G/VAL/47/Rev.2.  The seminar would be held on 6-7 November, immediately
following this meeting.  Over 60 delegations had registered and most of these Members and observers
would receive funding to bring capital-based experts to participate.  He believed that this seminar
would offer insight and information on the basis of which the Committee could discuss further its
contribution to the enhancement of technical assistance in this area.
4.5 The representative of Egypt proposed that in the future, when such meetings were held
back-to-back, funding be provided also for the days of the Committee meeting.  This was based on the
same idea used in the Committee on Trade and Environment which often met back-to-back with
meetings of the United Nations Environment Programme.
4.6 The Committee took note of the statement and the information.
V. TRANSITIONAL REVIEW IN ACCORDANCE WITH PARAGRAPH 18 OF THE
PROTOCOL OF THE ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA
5.1 The Chairman recalled that, as agreed at the July 2002 Committee meeting, China's
Transitional Review (hereafter, TRM) was to take place at this meeting.  In accordance with
paragraph 18 of the Protocol of the Accession of the People's Republic of China, the Committee was
to report to the Council for Trade in Goods on the outcome of the TRM, and the CTG would then
report to the General Council.  He drew Members' attention to two documents that had been submitted
for this review.  The first was from the European Communities in G/VAL/W/103 and the second wasfrom the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu in G/VAL/W/107.  Both
contained questions to China.  He also noted the notification of the national legislation of China inG/VAL/M/32
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G/VAL/N/1/CHN/1 and the responses to the Check list of Issues in G/VAL/N/2CHN/1, which were
usually documents for examination of national legislation, were relevant to this agenda item.  He
understood most of the questions mentioned above were presented on the basis of these documents.
Further, he drew attention to the submis sion from China contained in G/VAL/W/111.
5.2 The representative of China informed the Committee that, since accession, China had been
carrying out its commitments in a faithful manner through a wide range of steps including the
streamlining of the legislation and improvement of administrative measures.  These efforts had
effectively brought the principles and procedures of China's customs valuation system in line with
those in the Agreement.  His delegation had prov ided, in advance of this meeting, information
concerning the use of valuation methods in China, as required by Annex 1.A to China's Protocol of
Accession.  In order to fulfill the notification obligations under the Agreement, China also providedthe Committee with the regulations implementing the Agreement on 1 July 2002, pursuant to
Article 22 of the Agreement, and its responses to the Checklist of Issues.  This information should
have already enabled Members to have a clear idea of China's implementation.
5.3 In response to the requirement of the WTO that the legislation of Members should embody
the basic principles and contents of the Agreement, the General Administration of Customs of the
PRC (GACC) revised the Rules regarding Determination of Customs Value of Imported and Exported
Goods.  The revised Rules entered into force on 1 January 2002.  After revision, the provisions on
valuation methods and procedures were in full consistency with the Agreement.  In this regard, he
noted two points.  The first was that Article 1 through 8 of the Agreement stipulated that the customsvalue of imported goods shall be the transaction value.  When the declared value could not be
accepted as the transaction value in determining the customs value, customs shall apply the valuation
methods as listed in the Agreement in a sequential order. This requirement was fully reflected in
Articles 3 through 11 of the revised Rules.  Secondly, with a view to balancing the rights and
obligations between customs and importers in determining customs value, the revised Rules
specifically provided for the right of appeal on the importers' side, vis-à-vis  the right of verifying the
declared value as well as the obligation to keep the information confidential on the customs' side, as
required by Articles 10, 11, 13, 16 and 17 of the Agreement.
5.4 China as a developing country, was confronted with many constraints in implementation,
including insufficient capability to investigate and collect evidence, a lack of professionally trained
personnel, etc.  Due to these constraints, implementation of the Agreement exposed China to heavypressure for losses in customs revenue.  Despite that, China was implementing the Agreement in a
faithful and effective manner.  Statistics showed that from January to September this year the
application of transaction value accounted for 94.89% of the total dutiable imports declared.  In cases
where the declared value could not be accepted as the transaction value, customs officers reassessed
the customs value strictly in accordance with the Rules, which embodied the principle and procedureof the Agreement.  In this context, the Chinese government had also made great efforts in capacity
building.  A series of related documents including the Agreement itself and other important
publications by WTO and WCO had been translated and published in Chinese. Training courses
targeting officials from major local customs offices were organized by the General Administration of
Customs to further familiarize them with the Agreement and uniform implementation of domesticregulations. A publicity campaign and training for enterprises and customs declarers were
strengthened.  China also benefited from the technical assistance activities within the framework of
the WCO.  Regarding the Decision on Treatment of Interest Charges in the Customs Value of
Imported Goods and the Decision on Valuation of Carrier Media Bearing Software for Data
Processing Equipment, which China committed to accept no later than two years from the date ofaccession, preparations were being made to ensure their application by 11 December 2003.
5.5 The representative of the United States asked that China's statement be circulated.  He
indicated that his delegation wished to pose some questions related to the documents circulated underagenda item B.1.  His delegation had planned to raise these questions under that agenda item whichG/VAL/M/32
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was suspended.  Since they were also appropriate for the TRM, he proposed to raise them at the
appropriate time under this item.
5.6 The representative of China asked what would be the status of questions related to agenda
item B.1 that were raised under this agenda item?  According to his delegation's practice, it would not
provide written replies to questions raised under the TRM.  However, under the notification review in
item B.1, it would likely provide such responses in writing.
5.7 The Chairman considered that the questions related to the national legislation were relevant to
the TRM.  Therefore, it was appropriate to ask these questions under this agenda item.  When
item B.1 was taken up and China's legislation was examined, the Committee could refer to the
questions and answers raised under this agenda item.  Members could also raise additional questionsunder item B.1 when that item was taken up, if necessary.  In accordance with the normal practice
under the examination of legislation, Members could request that responses be circulated in writing.
5.8 The representative of the United States said that his delegation's intention was to raise the
questions under both items.  However, if the questions could have been covered under the notification
item, his delegation would not have had to raise them under this item and reference could have been
made to the previous discussion.  Since agenda item B.1 was suspended, he would raise the questions
under this agenda item.  When item B.1 was taken up, his delegation would make a statement
indicating that the questions raised under the TRM agenda item should be included in the discussion
without going through the questions again.
5.9 The representative of China, to show China's sincerity and commitment towards its WTO
obligations, responded to the questions it had received in writing prior to the meeting.  As notified to
the Committee, the provisions of Article 55 of the Customs Law, the relevant articles contained in the
Regulations on Import and Export Tariff, and the Rules of General Administration of Customs
Regarding Determination of Customs Value of Imported and Exported Goods were the main legalbases for customs valuation in China's domestic legislation.  These legal documents were authentic
only in the Chinese language.  Article 8.2.b of the Agreement required that each Member should
provide for the inclusion in or the exclusion from  the customs value of the loading, unloading and
handling charges associated with the transport of the imported goods to the port or place of
importation.  The question concerned the associated costs.  Article 3 of the Chinese Rules regarding
determination of customs value of imported/exported goods defined the customs value of imported
goods to be determined by the customs administratio n on the basis of the transaction value, inclusive
of the cost of transport, charges associated with transport of the goods, and the cost of insurance prior
to unloading the goods at the port within the customs territory of the People's Republic of China
(hereafter, PRC). This was strictly in accordance with Article 8.2.b of the Agreement.  On this basis, it
was clear that the associated costs only referred to the costs related to the transportation fees actually
incurred prior to unloading the goods being valued at  the port within the customs territory of the PRC,
including the cost of loading, unloading and the costs related to the disposal of the goods during the
transportation.
5.10 The second question concerned the calculation of transport charges. The Note to Article 1 of
the Agreement said that the cost of transport after importation should not be included in the customsvalue. Accordingly, Article 5.b of the Rules stip ulated that, in determining the customs value of
imported goods, the cost of transport after importation should not be included provided that it was
distinguished from the price actually paid or payable.  Article 24 of the Chinese Rules dealt with
calculating the amount of cost of transport and insurance incurred prior to the port or place of
importation within customs territory of PRC. Generally, the first port or place or the port or place ofunloading within the customs territory of PRC was regarded as the port or place of importation. This
was provided for on the basis of the act of bringing any goods into a custom territory which was
defined as importation in a WCO document. The third sub-question concerned the fixed percentageG/VAL/M/32
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for insurance and freight.  Under a general provision set forth in Articles 25 and 26 of the Chinese
Rules, the freight or cost of insurance for land, air or ocean transportation should be determined in
accordance with the charges actually paid or payable.  Articles 26 or 28 also provided for the premise
of using the fixed percentage, namely in cases when the freight or cost of insurance could not be
determined or did not actually occur. In this context,  t was clear that if the actual cost of insurance or
freight could be determined, the fixed percentage would not be used to determine the customs value.
Besides this, the fixed percentage was subject to timely adjustment.
5.11 The second set of replies concerned related persons.  According to Article 1.2.b of the
Agreement, in a sale between related persons the transaction value should be accepted as the custom
value whenever the importer demonstrated that such  value closely approximated the transaction value
in sales to unrelated buyers of identical or similar goods or to the customs value of identical or similargoods as determined under the provisions of Articles 5 or 6 occurring at or about the same time.
Article 6 of the Chinese Rules fully reflected these provisions of the Agreement.  A third set of
questions related to valuation of particular cases.  Concerning goods sold from bounded areas or
warehouses, Article 13 of the Chinese Rules was applied to these types of goods, and Article 14
applied to goods exported for repair.  These two Articles had no relevance to each-other. Theprovisions of Article 14 did not necessarily apply to goods manufactured or processed domestically.
According to Article 45 of the Chinese Rules, for the customs value of passenger effects, personal and
postal articles, and other personal effects the dutiable value of imported goods or articles under
suspicion of smuggling should be determined under the regulations otherwise provided for by the
general administration of customs.  It was generally understood that passenger effects, personal andpostal articles and other personal effects were not subject to commercial importation and were not
directly covered by the Agreement.  Her delegation knew of many Members which applied simplified
procedures for determining the customs value of these types of goods.  Her Government's procedure
was of the same nature.  Article 15 of the Agreement stipulated that the customs value of imported
goods meant the value of goods for the purposes of levying ad valorem  customs duties on imported
goods.  In this context, the Agreement was not applicable to the determination of the dutiable value of
smuggled goods or articles.  According to the criminal law of PRC, the fine and punishment against
smuggling suspects were based on the amount of evasion of customs duty.  The dutiable values of
these goods or articles calculated by customs were used for the purpose of establishing the fine and
punishment.
5.12 The fourth question dealt with providing information.  A first sub-item concerned parties not
resident or established in  PRC.  According to Articles 31 and 32, parties obliged to provide
information included the consignee and the consignor of imported and exported goods.  Other
enterprises having monitoring or transaction relationships with the importer or exporter and the
relevant financial institutions were referred to as parties within the territory of PRC.  Parties residing
or established outside of the territory of PRC were not required to provide information in relation to atransaction.  She explained that the consignee and the consignor of imported and exported goods
referred to the consignee of the imported goods and the consignor of the exported goods, and that the
importer referred to the buyer of the imported goods and the exporter referred to the seller of the
exported goods.  All of these consignees and the consignors were resident or established within the
territory of PRC.  Concerning the time-limit for providing the information, Articles 33 and 34 of theChinese Rules stipulated that the importer shall provide the customs with further explanation and the
relevant information within 15 days from the date customs issued the written notice.  Her delegation
believed that 15 days was a reasonable time-limit for preparing explanations or information in usual
cases.  However, in practice, customs could accept a request for a delay by the importer if reasons
were given within the time-limit.  A fifth sub-item concerned price indicators.  Paragraph 140 of theReport of the Working Party on the Accession of China stated that China ceased to use and would not
reintroduce minimum or reference prices as a means to determine the customs value.  China was
keeping its word since becoming a WTO Member.  The price indicators contained in a national
valuation database were only to be used as parameters for risk analysis.  Regarding the minorG/VAL/M/32
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differences in terminology of Article 11 of the Chinese Rules, her delegation assured Members that
the provisions of Article 7 of the Agreement were completely reflected, without any amendment to
substance.  The seventh issue concerned application of the Committee's Decisions. According to its
commitment, China would apply the provisions of the Decision on the Treatment of Interest Charges
in the Customs Value of Imported Goods, and the Decision on Valuation of Carrier Media Bearing
Software of Data Processing Equipment no later than two years from accession to the WTO.  A
working group had been established to make an in-depth study of the implications and effects of
application and to draw up a programme for their implementation.  In conclusion, she reiterated that
since this was the first year of China's implementation of the Agreement, there was still room for
improvement in the process towards establishment of a sound and efficient system of customs
valuation.  Her delegation was eager to learn from other Members through their experience in
updating domestic legislation and in administrative aspects.
5.13 The representative of the United States asked why the Chinese Decree did not include
reference to the phrase "when sold for export to  the country of importation" in the definition of
transaction value?  In addition, the language in the Decree concerning the definition of price actually
paid or payable appeared to differ from the definition in the Agreement.  Her delegation considered itimportant to incorporate that definition into the Chinese laws.  She took note of the response on
related parties.  Her delegation considered that the Decree itself lacked the language of Article 1.2 of
the Agreement and the corresponding interpretative notes since there was no reference to the
circumstances of the test sale and how it was to be applied.  The Decree simply stated that where the
seller and the buyer were related within the meaning of Article 42, the transaction value shall beaccepted whenever the customs administration considered that the relationship did not influence the
price.  This was possibly an interpretative question but his delegation sought clarification from China.
Also, the Decree did not appear to fully implemen t Articles 2 and 3 of the Agreement.  Article 8 of
the Decree stated that in applying the transaction value method of identical or similar goods, customs
value shall be based on the transaction value of identical or similar goods imported at or about thesame time as the goods being valued. It did not contain the language concerning sold for export to the
same country of importation.  In addition, the scope of identical and similar goods covered in the
Decree appeared to differ from the Agreement.  Further, her delegation believed that the reference to
region should be deleted from the definition of identical or similar goods in Article 41 of the Decree.
5.14 Concerning the deductive value in Article 5 of the Agreement, her delegation considered that
the Decree should be revised or clarified consistent with Article 5.1(a)(1) of the Agreement and itsapplicable interpretative notes.  The Decree did not contain the provisions of the interpretative notes
to Article 5 of the Agreement.  She asked if they were reflected elsewhere in the laws?  Regarding the
computed value, there did not appear to be an indication that the amount for profit and general
expenses were to be taken as a whole and determined on the basis of information supplied by or on
behalf of the producer, unless the producer's figures were inconsistent with those usually reflected insales of goods of the same class or kind.  She also asked if China could clarify where reference to
currency conversion could be found in the laws.  While the responses to the Checklist of Issues
indicated that the PRC published the official rate of exchange, there was no indication whether the
currency conversion was the rate in effect at the time of exportation or importation as provided in
Article 9 of the Agreement.  She also sought clarification from China as to whether Articles 11 and 13concerning sufficient guarantee and Article 14 concerning interpretative notes were reflected in the
Regulations on Import and Export Tariffs of PRC or in the Customs Law of the PRC as it was
difficult to determine whether these provisions and the interpretative notes had been implemented.
She also asked whether the Decree covered Article 15 of the Agreement and was there an explanation
of the formula concerning Article 19 and to what it applied?  Finally, she asked China forconfirmation that it did not use minimum reference prices.  If there was a practice of using minimum
reference prices, she asked China to elaborate on that practice.  She added that her delegation would
submit these points in writing under the agenda item B.1.G/VAL/M/32
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5.15 The representative of China sought clarificati on as to whether the questions from the US were
to be asked under the notification agenda item or if they were only for the TRM.
5.16 The representative of the United States responded that her delegation wished to pose these
questions under the notification agenda item as well as under the TRM.  She asked them in detail
under the TRM agenda item because she was not able to raise them under the suspended notification
item.  If she could have raised them under the latter, she would have simply cross-referenced them
under the former.  She would not have added any questions and would have waited for China's
responses under the notification agenda item which would have been provided orally or in writing in
the meeting.  Her delegation would appreciate responses to the questions for the TRM agenda item,
and would refer to these responses under the notification agenda item.
5.17 The representative of China asked if his delegation could take note of the questions and
provide written responses when agenda item B.1 was taken up?  Or would the US delegation prefer
oral responses at this meeting, for reference under item B.1 when it was taken up, and that these
questions not be taken up again at that time.
5.18 The representative of the United States would prefer an oral response under the TRM agenda
item at this meeting.
5.19 The representative of the European Communities noted that his delegation was also interested
in the US questions and in receiving responses during this meeting.  He found the responses from
China largely complete and comprehensive.  He added, however, that the Agreement did not only
apply to commercial transactions.  With respect to the response on the question about information
from parties, he considered that the issue could be linked to the concept of what was a sale for export.
Therefore, his delegation would likely follow-up the response with a supplemental question on this
matter.
5.20 The representative of Chinese Taipei appreciated the thorough and comprehensive responses
from China.  As an important trading partner, his delegation considered the smooth implementation of
the Agreement important.  His delegation had raised three sets of technical questions which
overlapped with questions from the US.  It was pleased with the responses provided.
5.21 The representative of China, in responding to the questions from the US, suggested leaving
the questions related to the Checklist of Issues to the notification agenda item B.1.  On the questions
specifically for the TRM, some were quite techni cal.  Her delegation would attempt to give full
responses but asked that any follow-up questions be directed to agenda item B.1.  Before answering
the first question, he made two points.  The first was that, in embodying the provisions of the
Agreement in its national legislation, China adopted the provisions and principles of the Agreement asthe general basis for its customs legislation and not on a sentence-by-sentence basis.  Secondly, he
recalled that the English version of China's legislation was for reference only.  The only authentic
version was in Chinese so there might be some misunderstandings in the English version.  The first
question concerned the definition of Article 1 of the Agreement and the Chinese Rules in Article 3.
Regarding the terms "sold for export to the countr y of importation", her delegation could not find any
specific definition in the Agreement for this concept.  It understood this to be left to national
legislation to give the concept meaning.  Her delegation understood this concept to mean that export
to the country of importation was based on the last sale which was the basis for defining the
transaction value of the imported goods which, in China's legislation, was the price actually paid or
payable for the goods by the buyer, adjusted in accordance with the provisions of Articles 4 and 5.This was provided that the conditions in Article 1(a)-(d) of the Agreement were satisfied.  Where the
buyer and the seller were related, the provisions of Article 6 shall apply.  Her delegation understood
this to be in conformity with the provisions of the Agreement.G/VAL/M/32
Page 10
5.22 The second question concerned the definition of price actually paid or payable.  The Chinese
Rules on determination of customs value of imported and exported goods accepted the definition
contained in Annex 3.  The price actually paid or payable included all payments actually made or to
be made as a condition of sale of the imported goods by the buyer to the seller or by the buyer to a
third party to satisfy an obligation of the seller.  This was the exact wording of Annex 3 as reflected inthe Chinese legislation.  The third question concerned the concept of region in Article 41 of the
Chinese Rules.  The definition of region meant the separate customs territory of PRC.  The next
question concerned currency conversion. According to Article 21 of the Chinese Regulations on
Import and Export Tariffs, the CIF price of imports, th e FOB price of exports,  the rental for imported
or exported goods, the charges of repairs or cost of materials and spare parts in foreign currency, shall
be converted into RMB at the middle price between the buying and the selling prices quoted by the
state administration of foreign exchange on the date of issuance of the duty memo. In case theexchange rate of any foreign currency was not available, customs may apply the exchange rate set by
the above administrative organ.  Thus, the date for using the currency was the time of importation.
This was in conformity with Article 9 of the Agreement.  The next question concerned the sufficient
guarantee.  Without reviewing the relevant regula tions, it was impossible to determine whether they
meet the requirements of Article 13 of the Agreement.  Thus, she replied that that the relevantregulation was contained in Chapter VI of the Chinese customs law.  This was the specific chapter
dealing with customs security. Articles 66 through 70 set forth the provisions concerning the
guarantee in customs affairs.
5.23 Her colleague added that the Chinese legislation adopted the spirit of the Agreement, if not
word by word.  The current law or Rules were agreed before China's accession.  Following the
practice of the laws or Rules after their coming into force, if China found that it might need
improvements, it would try to modify or amend the Rules or legislation of laws in the future.  Finally,
he added that the questions raised by Members could provide useful guidance in this regard.
5.24 The representative of the United States thanked China for the responses adding her hope that
some of her delegation's suggestions would be taken into account by China in making the laws
clearer.  She sought some further clarification.  She asked whether her delegation could expect
answers to the questions for which China had not b een able to provide answers under the notification
provision?  Her delegation would, in any case, submit all of these questions under the notification
agenda item and looked forward to China's responses in writing, consistent with the practice of this
Committee for notification process.  She also asked whether the Committee could have access to theCustoms Law or the Regulations on Import and Export Tariffs.  The Chinese representative had made
reference to this legislation and it was importa nt for comparing the Chinese system with the
Agreement.  She also asked if China intended to  implement all Decisions related to the Agreement?
5.25 The representative of China asked how to proceed with notifying texts of legislations in
which only a few Articles related to customs valuation. Was it necessary to notify the entire customs
text or only the relevant chapter or provision in the law and regulations that was relevant?  He added
that China was committed to implement the Decision on Interest Charges as well as on Carrier Media-
Bearing Software no later than two years after its accession.
5.26 The Secretariat responded that Members were required to notify the texts of the legislation
that put into effect the Agreement and those related to the Agreement.  While some Members did
notify entire texts of customs laws and regulations, it was preferable to notify only those sections of
the laws and regulations that were particularly relevant to customs valuation.
5.27 The representative of the United States stated that her delegation was only interested in those
aspects of the Chinese laws and regulations relevant to the implementation of the Agreement,
including any pieces of legislation that were cross-referenced in those laws and regulations.G/VAL/M/32
Page 11
5.28 The representative of China said that his delegation would try and provide this legislation as
soon as possible.
5.29 The representative of the European Communities was also seeking this additional
information.  He considered that it could be practically dealt with under the notification agenda item
when this would be addressed.
5.30 The Committee agreed that the Secretariat would prepare a report on the TRM that would be
factual in nature and refer to the minutes of this meeting.  This would be submitted to the General
Council on behalf of the Committee.
VI. REPORT OF THE COMMITTEE TO THE COUNCIL FOR TRADE IN GOODS
6.1 The Chairman drew Members' attention to the Committee's draft Report to the Council for
Trade in Goods in document G/VALW/106.
6.2 The Committee agreed that the Secretariat would update the Report, take into account
comments made, and submit the revised version to the Council for Trade in Goods.  The Report was
circulated as document G/L/509.
VII. INDIA – INFORMATION ON CERTAIN ASPECTS OF THE EUROPEAN
COMMUNITIES VALUATION POLICY
7.1 The Chairman informed the Committee that at its last meeting, it was agreed to revert to this
item following an exchange of views between India and the EC. He had urged both parties to use the
time between meetings to engage in bilateral di scussions with a view to reaching a resolution.
7.2 The representative of India stated that her delegation had received the answers to several
questions it had posed but was still waiting for res ponses to some supplementary questions from the EC.
Her delegation planned to discuss the matter bilaterally once the replies were received and then revert
to the Committee to report on the results of the discussions.
7.3 The representative of the European Communities stressed that his delegation had provided
complete and clear responses to all the questions posed and considered that there was no further need
to continue to discuss questions.  While India said at the last meeting that it had some residual
questions, they were rhetorical in nature, not new, and did not raise any new, substantial issues.While there had been considerable opportunity for contact between delegations, the fact that this
opportunity was not used could not justify continually using the Committee as a platform for endless
repetition and discussion of the matter.  While remaining open to provide information to India or any
delegation which asked, his delegation believed that the matter did not have to remain any longer on
the Committee's agenda.  The regulation at issue was not part of the normal valuation legislation andwas an instrument to implement certain agricultural tariff concessions arising from the Uruguay
Round of Trade Negotiations.  The Committee should conclude that a good dialogue took place, that
there did not seem to be any problem, and that both delegations remained open to listening to or
clarifying any new information that might arise.  If necessary, the Committee could come back to the
matter at a later time.  But maintaining this item on the agenda as a regular item did not reflect the realstatus of the dialogue that had taken place.
7.4 The representative of India noted that matter related to special provisions concerning
valuation of certain commodities in the EC legislation.  It was closely related to valuation issues and
her delegation could not understand why the EC had stated to the contrary.  Her delegation had raisedsome questions and clarifications and had received responses.  Her delegation was hoping to receive
responses to supplementary questions soon in order to continue the discussion and hopefully resolveG/VAL/M/32
Page 12
it.  Her delegation wished to maintain the item on the agenda so that it would not be forgotten.
However, it could be taken off as soon as the issues were resolved.
7.5 The representative of the European Communitie s agreed to revert to the issue at any time.
However, maintaining the item on the agenda for 2 to 3 years was not justified by the residual nature
of the outstanding issues.   These should be dealt with through consultations with India, after which
India could decide if it wanted to put the item back on the agenda.  This was a question of efficiency
and maintaining proper working procedures of the Committee.
7.6 The Committee took note of the statements made and agreed  to revert to this matter at its next
meeting.
VIII.  FOURTH, FIFTH, SIXTH AND SEVENTH ANNUAL REVIEWS OF THE
IMPLEMENTATION AND OPERATION OF THE CUSTOMS VALUATION
AGREEMENT
8.1 The Chairman reported that at the last meetin g, the Committee took note of the four documents
containing the Fourth, Fifth, Sixth, and Seventh Annual Reviews, namely documents G/VAL/W/29,
G/VAL/W/43, G/VAL/W/ 77, and G/VAL/W/89 respectively.  He drew Members' attention to the
Eighth Review circulated in doc ument G/VAL/W/109.  It was agreed to take up this matter at this
meeting.
8.2 The representative of India stated that her delegation's concerns remained the same and she
continued to reserve her delegation's rights on this matter.8.3 The representative of Canada asked what possible steps could resolve this matter, including
Chairman's consultations or other means?
8.4 The Chairman stated that India's position rema ined unchanged over the long history of this
matter.  The Chairman had consulted several times among Members on this matter, including before this
meeting.  The results confirmed that there was no ag reement nor basis to have further consultations nor
to resolve the matter.  He urged Members to continue  to consult among themselves and indicated that he
was always available to assist on the matter.
8.5 The Committee took note of the draft reports  and of the statements made, and agreed  to revert to
this matter at the next meeting.
IX. PRESHIPMENT INSPECTION
9.1 The Chairman informed the Committee that, fo llowing adoption of the final Report of the
Working Party on Preshipment Inspection in document G/L/300, the General Council agreed that
future monitoring of the Agreement on Preshipment Inspection should be undertaken initially by the
Customs Valuation Committee, where PSI would be a standing agenda item.  Therefore, this subject
was included on the agenda as from this meeting.  He informed Members that the Secretariat had
recently issued a revision to the document listing countries using PSI in document
G/VAL/W/63/Rev.2.  At the last meeting, Members were reminded that, according to Article 6 of theAgreement on PSI, the Ministerial Conference was ob liged to review the provisions, implementation
and operation of the Agreement "at the end of the
 second year from the date of entry into force of the
WTO Agreement and every three years thereafter…"  The Chairman recalled that the first review was
carried out from 1996 through 1999, the year which in fact marked the three-year period for the
second review.  He asked the Committee to consider for discussion at this meeting two questions:whether it was desirable to carry out a second review of the Agreement, given the obligation under theG/VAL/M/32
Page 13
Agreement and the fact that a second review called for every three years thereafter was overdue;  and
secondly if a review was desirable, in which body of the WTO should this  review be conducted.
9.2 The Committee agreed to reflect further on the question of the review of the PSI Agreement
and to revert to this matter at the next meeting.
X. PARAGRAPH 12 OF THE DOHA MINISTERIAL DECLARATION
(WT/MIN(01)/DEC/1): IMPLEMENTATION-RELATED ISSUES
- Tirets from paragraph 7 of document Job(01/152/Rev.1)
10.1 The Chairman drew Members' attention to the draft report to the Trade Negotiating
Committee circulated in document G/VAL/W/109 for examination at this meeting.   Following
discussion of the report in an informal meeting, he proposed that the Committee adopt the report,
which was revised to take into account agreed comments and changes.
10.2 The Committee adopted the revised report and requested the Secretariat to circulate it to the
Trade Negotiating Committee on behalf of the Committee.  The report was circulated in document
G/VAL/49.
- Paragraph 8.3 of document WT/MIN/(01)17
10.3 The Committee agreed to reproduce the texts of statements made during an informal meeting
of the Committee in the report of this meeting.
10.4 The Chairman reported that since the last meeting in which the Committee had its first
discussion of this matter following submissi on on Indian proposal in G/VAL/W/102, two more
proposals had been received.  One from Canada ha d been circulated in G/VAL/W/110 and one from
the European Communities in G/VAL/W/112.  In addition, Mexico had circulated questions to India
on its proposal in G/VALW/104.  It was agreed at the last meeting to take up the matter of the report
to the General Council at the conclusion of this meeting.
10.5 The representative of India gave preliminary oral replies to Mexico's questions and would
follow with more detailed written replies.  With regard to the first question asking how the idea of the
exporting Member offering cooperation was compatible with a binding mechanism, he stated that the
proposal in G/VAL/W/102 emanated from the Doha Decision in paragraph 8.3.  This Decision,
binding on Members, stipulated that when an importing country sought assistance, the exportingcountry shall offer cooperation and assistance including furnishing information on export value.  The
Indian proposal was a practical mechanism to implement this Decision and was in line with the
directive of the Committee to identify and assess practical measures.
10.6 On the second question, how was it possible to have a binding mechanism, comprising the
elements specified by India in its paper, consistent with the domestic laws and procedures of all
Members, he noted again that the proposal was in pursuance of the Doha Decision.  The Committeehad adopted several similar decisions such as the decisions on the valuation of software and on
interest charges, as well as the decision regarding cases where customs has reasons to doubt the truth
or accuracy of the importer's declarations.  On the third question, did India expect Members to amend
their laws if they proved inconsistent with the mechanism, he emphasised that the main information
sought under this proposal was the information on export values declared by the exporter for thepurpose of comparing it with the import value declared. This was simple information which was not
usually sensitive and normally available in the documents submitted by the exporter.  His delegation
did not believe amending domestic laws to supply this information would be necessary.G/VAL/M/32
Page 14
10.7 On the fourth question, as paragraph 8.3 stated that assistance among customs administrations
was intended to corroborate the declared price, why did India seek other types of information
(quantities, origin) that were not related to price, he replied that the only other information requested
was the quantity. This was sometimes necessary to compute the value if there was a difference in
quantity reported by the importing country and by the exporting country.  The main informationsought was the export value information to compare the information declared at the country of import.
The country of origin was not essential but could be supplied by the importing country to enable the
exporting country to identify the consignment in question.
10.8 On the fifth question, what type of document did India envisage for verifying the authenticity
of a document and how should the customs authority of the exporting country proceed if the
document was not issued by the government, he replied that the Indian proposal did not ask forauthentication of any of the documents.  It was merely seeking the information on export value and
maybe some additional information.  Authentication or verification of authenticity of any document
was not a part of the Indian proposal.  On the sixth question, what would India consider to be a
reasonable time-limit for the exporting party to furnish the information, India considered the time-
limit of 30 days reasonable.  However, his delegation was flexible on this matter and open tosuggestions.
10.9 The seventh question asked what would be the consequences if the customs authorities of the
exporting party were unable (e.g. problems relating to domestic legislation, lack of time), to meet the
importing party's request within the agreed time-limit?  The Indian representative responded that aflexible approach would be needed within the time-limit established and that there should not be any
rigorous time-frame in which the exporting country would have to follow some special procedures.  If
there was a need for a longer time-frame, this could be mutually agreed on a case-by-case basis.
10.10 The representative of Mexico would send the preliminary replies to his capital and the final
ones when received.  He added that, regarding question 5, he clarified that his delegation would like
to know what type of document(s) India expected governments to provide in order to corroborate the
export value.
10.11 The representative of India reiterated that the Indian proposal did not envisage authentication
or verification of authenticity of any particular document.  He was not in a position to say more at this
stage because the proposal was aimed at the type of information to be provided by the exportingcountry through the elements of the format.  If authentication was needed, it would have to be
considered on a case-by-case basis. What was important was the information provided by the
exporting country which would be used as evidence in judicial proceedings.  If the judicial forum was
satisfied with that information then the matter would end there.
10.12 The representative of Canada, in presenting his delegation's proposal, explained that it
emanated from a desire to draft points he had indicated orally at the last meeting which constituted
other ways to identify and assess practical means to address concerns related to the truth and accuracy
of the declared value.  On the understanding that paragraph 8.3 specified that Members may seek
assistance and did not necessarily have to, the proposals was based on 3 parameters identified inparagraph 8.3.  Firstly, prior to seeking assistance, importing members should try to exhaust all the
possibilities available to them domestically before seeking assistance.  Secondly, due respect had to
be given to the confidentiality provisions recognised  explicitly in Article 10 of the Agreement as well
as in the legislation of respective countries.  Thirdly, such cooperation and assistance had to be
consistent with domestic laws and procedures.  In light of these parameters, his delegation drew up 5proposals to address, in a practical way, the concerns raised about the accuracy of the declared value.
He concluded with his delegation's view that further examination of the specific proposals in its
submission could be carried out by the Technical Committee on Customs Valuation (TCCV),
established pursuant to Article 22 of the Agreement.  The mandate of the TCCV in Annex II of theG/VAL/M/32
Page 15
Agreement provided for such examinations when th e Committee considered that it did not have the
necessary technical expertise.  Thus, the Committee could task the TCCV with the examination of the
practical means identified by this Committee, which would include the proposals by Canada, the EC
and India, and report back to this Committee at a subsequent date. This approach would allow the
Committee to fulfill its mandate under paragraph 8.3 and, beyond that, to arrive at recommendationsas to the means available to address them.
10.13 The representative of the European Communities stated that his delegation's proposal took, as
its starting-point, the mandate in paragraph 8.3 and the application of the Agreement on a day-to-day
basis by customs officers, and administrations.  It was at this level where the real customs work was
done and where practical means, and their assessment could be carried out.  While highlighting some
of the strong points in customs administrations, the proposal also brought out some areas wherecustoms administration could do more to help themselves while benefitting from technical assistance,
capacity-building, and cooperation.  His delegation's submission took the view that there was a
panoply of practical and technical tools available to customs services.  These needed to be properly
identified and assessed, and customs administrations needed to be pushed to optimize the use of the
best techniques to try to solve their problems.  There were many ways to do this and the Committeecould give some impetus to this task.  His delegation's proposal complemented the Canadian and
Indian proposals.  His delegation considered it important to note that other relevant bodies existed,
particularly the TCCV, which could do more in respect of this work.
10.14 The representative of Chinese Taipei saw merit in the proposals but emphasised that his
delegation saw value in setting up information exch ange mechanisms that were voluntary in nature
and which did not require any amendment to Members' domestic laws.  As indicated by Canada, other
practical means might be available and this Committee might want you encourage cooperation
through non-legally binding Memoranda of Understandings as the first step in carrying out the
mandate in paragraph 8.3.  Such MOU arrangements were used by other international organisationssuch as the International Organisation of Secu rity Commissioners where non-binding MOUs were
welcomed by its members and, as a result, many had been signed.  These could assist customs
administrations in a positive way to better determine declared values.
10.15 The representative of Thailand asked for assurance that any mechanism would not be used to
shift the burden from importing to exporting countr ies.  Secondly, any mechanism should not be used
on a routine basis.  The Indian proposal did not contain any safeguard against this.  While Indiasuggested that the monitoring mechanism would provide such a safeguard, his delegation did not
consider this adequate because the abuse would ha ve already occurred.  Additional safeguards would
be needed.  He also asked what type of information importing countries would present to exporting
countries to show their grounds for doubting the de clared value.  A letter requesting information
would not be sufficient.
10.16 The representative of China stated that, as a Member newly applying the Agreement, it was
confronted with challenges including fraud, and considered the exchange of  information as one of the
effective ways for valuation control and fraud prevention.  It appreciated all efforts towards
establishing effective frameworks for such exchange.  Concerns on all sides had to be taken intoaccount.  This included, on one hand, the demand to obtain information from exporting countries by
importing countries, and on the other hand, limited resources including human resources, the
confidentiality requirements of domestic laws, concerns about the accuracy of the information
received from exporting countries and provided to other members.  Her delegation considered the
Indian proposal constructive and valuable in seeking a proper and practical solution to address theconcerns.  The establishment of a communication channel or contact point in customs administrations
would also be useful.  Her delegation would need more time to study the proposal before providing
more substantial comments.G/VAL/M/32
Page 16
10.17 The representative of the United States voiced her delegation's support for the EC and
Canadian submissions which reflected discussion and oral proposals made at the last meeting.  She
also reiterated her delegation's interest in some ideas in the Indian submission, namely the contact
point in paragraph 5 and some ideas in paragraph 6 of the submission.  The Canadian paper pulled
together the ideas in the mandate.  She considered that the Committee had identified means andinvolving the TCCV in this work would serve as one such practical mean.  The Committee had a
mandate to charge the TCCV with technical questions.  She agreed with China that there were
complexities involved in effectuating this type of information exchange and a practical way to address
these issues would be to have an examination by the TCCV.  The Canadian paper outlined elements
for such an examination.  Therefore, she suggested  that the Committee's report to the General Council
indicate that the Committee identified means and that a practical way to address these means would
be through a referral to the TCCV.  She also considered that another practical mean was the bilateralprocess.  However, she recognized that India had concerns about this.
10.18 The representative of Switzerland stated that her delegation could support most of the ideas
contained in the EC and Canadian papers as well as the practical means identified therein.
10.19 The representative of Hong Kong, China note d his earlier comments on the Indian paper and
would focus present comments on the Canadian and EC  submissions.  His delegation considered that
the Canadian submission rightly pointed out that paragraph 8.3 did not endorse information exchange
as a standard recourse but only as a possible approach.  This was why the mandate only requested
Members to identify and assess practical measures to address concerns on the accuracy of the declaredvalue.  He suggested that the proper discharge of the mandate would be to evaluate the different kinds
of possible cooperation and assistance, and to consider how best each or a combination of them could
solve the problem. The Canadian paper listed a number of possible means comprising both measures
available or being developed and long-term arrangements.  His delegation was prepared to consider
the Canadian proposal seriously because it believed that long-term and comprehensive actions wouldbe more effective in providing solutions to the problem.  His delegation shared the EC's view that the
most effective way to deal with the problem was to tackle it at the source.  Information exchange
provided importing authorities with only a reacti ve and indirect means to combat the problem.
Paragraph 8.3 also made clear that access to this information exchange should be consistent with
domestic laws and procedures of the exporting authorities and that any information obtained should
be treated in confidence in accordance with Artic le 10 of the Agreement.  While not ruling out the
usefulness of information exchange, his delegation considered that it played only a supplementaryrole in tackling specific cases.  It would, therefore,  be more meaningful to identify and consider other
proactive and preventive alternatives to deal with the source of the problem.  His delegation supported
exchanging information through non-binding cooperative arrangements between customs
administrations concerned about fighting customs offences including valuation fraud.  Assistance
rendered should be on a case-by-case basis and subject to the laws of the exporting country.  The useof information as evidence in legal proceeding should be sought under the avenue of mutual legal
assistance in criminal matters.
10.20 The representative of Australia said that her delegation supported both the Canadian and EC
submissions as constructive contributions.  It agreed that assistance was not to be the norm but should
only be called on in specific cases after the importing country had demonstrated that it had exhausted
all domestic avenues.  Furthermore, any decision on paragraph 8.3 should not impose a requirement
for countries to amend their legislation or procedures to ensure compliance;  any cooperation and
assistance offered should be consistent with domestic laws and procedures.  She agreed that the
WCO's checklist for valuation and verification would be useful and noted that the content of thischecklist was discussed at the TCCV meeting held in Brussels.  Numerous changes still needed to be
made to the checklist document and the TCCV Secretariat would be revising it for further
consideration at the next meeting of the TCCV.  In addition to the checklist, the importing country
should be required to send a copy of the completed checklist and supporting information to theG/VAL/M/32
Page 17
exporting country as evidence of completion of the correct verification procedures. No single
measure, but possibly a combination of measures, would address the concerns in paragraph 8.3.
10.21 The representative of Singapore shared the concerns expressed by Thailand and Hong Kong,
China concerning shifting the burden from the importing to the exporting country.  Further it
supported the view that information exchange was a supplementary mean to deal with a problem
which should be tackled at the source.  The 3 parameters set out by Canada put the problem in the
necessary context.  She stressed that any cooperative arrangements, whether bilateral or as an MOU,
should be done on a case-by-case basis and subject to domestic laws.  His delegation supported
examination of means by the TCCV.
10.22 The representative of Japan summarized that the Committee had before it 3 submissions and
some oral suggestions, namely the Brazilian suggestion on the use of the internet for establishing a
focal point, and the suggestion from Chinese Taipei for the use of MOUs.  His delegation did not
consider the WTO suitable for exploring these proposals.  It agreed, for three reasons, that the
appropriate context would be the WCO where technical questions could be examined.  Firstly, the
nature of the concerns raised by paragraph 8.3 was not only related to the Agreement, but also to theoverall conduct of customs administrations, including enforcement practices.  Secondly, the proposals
were technical in nature and the Agreement provided  the Committee with a structure to deal with such
technical questions.  Thirdly, Members should avoid duplication of work among international
organisations.  On the specific proposals, the EC hi ghlighted that the concerns were not isolated but
were inter-related and generally enhancing customs administrations, and enforcing power was alonger term solution.  His delegation considered the Indian proposal useful and was looking towards
finding practical means to address these concerns.  However, it should not alter what was agreed in
paragraph 8.3.  His delegation fully supported the Canadian proposal and considered that the 5
proposals could be further explored in the TCCV.  He added that the statement from the WCO in the
formal meeting showed that the TCCV was looking for guidance from this Committee in the conduct
of their technical work.  It was necessary to clarify the connections between the independent work
being carried out by the two organizations.
10.23 The representative of India noted that he had already commented on many of the ideas in the
EC and Canadian proposals at previous meetings.  His delegation, in principle, had no objection to the
measures suggested in these proposals which he considered were capacity building and technical
assistance measures.  These were on-going activities since implementation.  While useful, they did notdirectly deal with the concerns in paragraph 8.3.  India's proposal addressed the specific mandate
given to the Committee.  He added that the Canadian analysis of the mandate left out an important
element.  When an importing country made a request for assistance, according to paragraph 8.3, the
exporting country shall offer cooperation and assistance, including information on export values.  He
added that the WCO self assessment guide, of which reference was made by the Canadianadministration, said that the importing country should demonstrate that it had exhausted all avenues
internally before seeking information.  While his delegation had no problem, in principle, with this
concept, it had a problem with the word "demons trate".  The problem related to how a customs
administration could satisfy another administration's need for demonstrated  completion of all the
measures listed in the guide.  His delegation had suggested to replace "demonstrate" with "ensure" inthe WCO to add an element of trust between countrie s.  If the importing country certified that it had
completed all the measures listed, other countries should believe it.  Otherwise, this could be a source
of dispute between countries.
10.24 He noted that the Canadian submission was advocating exchange of information through
bilateral arrangements and that it was necessary to distinguish cases of fraud from those where under-
valuation was not deliberate.  Bilateral arrangements were continuing and were useful in some
circumstances, but not in all.  A multilateral arrangement would be preferable, particularly in cases
where more than two countries were involved.  His delegation had difficulty obtaining information inG/VAL/M/32
Page 18
these latter situations even with bilateral arrangements in place. On distinguishing different types of
fraud, unless information on export values was obtained, it would not be possible to segregate cases
where the under-valuation was deliberate or not.  Claims of fraud must be based on real evidence.
Therefore, his delegation was focusing only on cases of deliberate under-valuation. Dealing with
fraud was an on-going effort towards enhancing the effectiveness of administrations.
10.25 On the EC proposal, he appreciated the analysis of fraud and the examples given.  In India, in
the absence of evidence, the court was likely to decide in favour of the importer in case of fraud or
even in cases where there was a lack of evidence appropriate to determine the customs value and the
customs administration wished to reject the transact ion value.  Thus, there was a need for evidence.
His delegation had explained that it needed export value information primarily for comparison
purposes with the declared price.  Variations in price would signal a basis for rejecting the declaredprices and using subsequent methods.  It would not be used as a substitute value but would be useful
in judicial proceedings to establish fraud.  Export values would be more or less the same as the
transaction value because it was the price paid by the importer to the exporter for the goods in
question, subject to certain adjustments in some cases .  However, in the majority of cases, they would
be exactly the same.  The EC continued to emphasize cooperation between administrations within anappropriate legal framework such as agreements between countries.  While the bilateral approach
could continue, a multilateral approach was needed  for problematic cases to obtain information that
could be used as evidence in judicial proceedings.
10.26 On the question of entrusting further work to the TCCV, his delegation did not consider that
the final solution laid with the TCCV.  While the te chnical format could be referred to the TCCV for
advice, this Committee had a specific mandate on the exchange of information on export values.  His
delegation considered that its proposal was on the exchange of information on export values.  It
needed to be further considered and a decision need ed to be taken by this Committee.  Regarding the
concerns on creating a binding mechanism, he again referred to other binding Committee decisions.His delegation was looking for a similar such decision which would create an understanding and a
moral responsibility on Members to exchange inform ation for difficult and selective cases.  His
delegation did not intend to create a routine mechanism as some delegations feared nor to shift the
burden to exporting countries.  The mechanism was only to combat fraud which required hard
evidence in judicial forums.
10.27 The representative of Malaysia noted that previous speakers had raised some legitimate
concerns such as shifting of burdens, consistency with domestic laws and regulations, and a need to
have safeguards to prevent misuse.  On the format, which her delegation viewed as a tool to facilitate
the exchange of information in the event that an e xporting country was able to furnish the information
as requested, the purpose of the information requested and the information provided should pertain to
the specific import.  Hence the request for information in part B on export price and currency and interms of the invoice would be pertinent.  The quantity exported and other information would be
considered additional information which could be provided if deemed necessary to assist the
importing country to determine the unit price.  In part A of the format, it would be useful to furnish
information on the efforts made to exhaust domestic avenues before seeking external assistance.  She
also sought greater clarity as to who would be providing the information under the phrase "purpose
for which information is required" in point 5 of Part B.
10.28 She considered that the format, as proposed by India and subject to some modifications, could
be forwarded to the TCCV for its technical evaluation.  Views could be presented before the next
meeting of this Committee which could provide a useful basis to further discussions.  The TCCVshould also update this Committee on its progress on the checklist and guidelines so that Members
could decide if this could be further developed to fulfil the mandate of paragraph 8.3.  The proposal
for MOU's by Chinese Taipei was similar to the EC proposal and could be a useful addition to the
practical means identified.  Her delegation would welcome clarification from the EC as to howG/VAL/M/32
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sourcing of information could be obtained and how its proposal for a system to improve capacity
could be translated into concrete technical cooperation programs.  Presumably, this would be in
conjunction with the WTO technical cooperation plans.  She suggested that the report to the General
Council note that the proposals could be further studied in the Committee to be followed by a later
report with possible recommendations to the Ge neral Council at a date to be determined.
10.29 The representative of the United States noted that the Indian proposal was not the only
proposal responding to the mandate in paragraph 8.3.  She reiterated that the Committee's mandate
was not to take a decision but to identify and assess practical means.  Her delegation was not prepared
to go beyond that mandate.  The discussions thus far had captured in large part the mandate to identify
and assess practical means.  She added that the TCCV should examine the various elements presented
in the submissions and orally before this Co mmittee progressed any further.  This would not
relinquish the Committee's mandate in any way and was within its mandate.  The Committee could
then further discuss the input received.
10.30 The representative of the Philippines noted that her customs administrations faced similar
concerns as India.  While in the early stages of implementation, it attached  importance to identifying
and assessing practical means to address these particular concerns.  Her delegation was prepared to
look at the Indian proposal if there would be concensus as it considered that it included elements
which could alleviate the problem. She added that the parameters identified in the Canadian
submission gave comfort to her delegation.  However, she asked how an importing Member could
prove that it had exhausted all avenues domestically.  She also added that the confidentiality provisionof Article 10 would be necessary.  She cautioned against shifting the Committee's mandate to the
TCCV.   While the WCO gave useful advice to customs administrations, the Ministerial mandate to
identify and assess practical means to address concerns, including the exchange of information on
export values, was to this Committee.  The format proposed by India was an attempt to satisfy this
mandate.  The elements mentioned in paragraph (c),  page 3 of the EU submission were useful but
could not address the concerns immediately.
10.31 The representative of Canada, on the process and the mandate, thought that Members may
have a different evaluation of paragraph 8.3. The phrase "consistent with its domestic laws and
procedures" in paragraph 8.3 was an important element.  Under the mandate, the Committee was
directed to identify and assess practical means to address concerns, including the exchange of
information on export values, and to report to the General Council.  The numerous elements on thetable were evidence that the Committee had met its mandate.  The question was what to do with the
information to move things forward.  Since, the Agreement provided for the TCCV to address such
questions in order to assist this Committee in its work, he saw no inconsistency with the mandate for
this Committee to seek technical expertise and advice from the TCCV which would report back.   The
TCCV could examine the various elements in the Indian and Canadian proposals, and the conceptsraised by other delegations.  The report to the General Council could speak about the practical means
that had been identified and assessed to date, as well as about tasking the TCCV to further examine
elements within a timeframe to be defined.
10.32 He added that the word "demonstrate" in his delegation's proposal should be understood in a
flexible manner.  It was not important to have legal proof that a country had extinguished all possible
means, but to allow customs administrations to ensure (building on the term used by India) that all the
reasonable means were used.  It could be useful, for example, to see the type of information that had
been gathered before requesting the information.  Further, both sides had to be comfortable that there
was no abuse or routine procedure, and that the procedure was for exceptional circumstances.
10.33 The representative of Brazil did not entirely agree on the binding nature of paragraph 8.3.
However, what was important was that the decision authorised Members to seek information on
export values or other assistance, and mandated the requested member to offer cooperation andG/VAL/M/32
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assistance within the bounds of its domestic legislation.  This decision was not for renegotiation.
Respect for domestic legislation and for confidentiality was built into the Decision.  Also included
therein was the mandate for the Committee to identify and assess practical means to address concerns
on the accuracy of the declared value, including the exchange of information on export values.  The
Canadian and EC proposals sought to address the br oader issue of the accuracy of the declared value.
This was welcome.  The Indian submission, on the other hand, seemed to address specifically the
clause relating to exchange of information on export values by providing a format for facilitating this
exchange..  It added nothing nor deleted anything from paragraph 8.3. The proposals were
complementary and the Committee could move forward on all of them in fulfilling its mandate.  His
delegation had no difficulty with requesting technical input from the TCCV.  However, any request
would have to establish a firm deadline for reporting back to the Committee which would have to, in
its initial report, request the General Council to extend the mandate in paragraph 8.3.
10.34 The representative of the European Communities stressed that the Committee had limited
time to report to the General Council.  Proposals, both written and oral, had been made and could be
incorporated therein.  It would not be an efficient use of the Committee to engage in technical
discussions which were the competence of the TCCV.  Requesting input from the TCCV would notamount to handing over the Committee's responsibility as the TCCV was a body created under the
Agreement.  He agreed on establishing a firm deadline for the TCCV to complete its work.  This
Committee would also have to maintain the deadline in the mandate to report to the General Council.
Such a report should note that work had been tasked to the TCCV as well as note the proposals made.
10.35 On the question from Malaysia regarding what format cooperation and assistance to
administrations could take and how it could be transl ated into concrete programmes, he stated that his
delegation was working on this.  The EC had developed customs cooperation agreements, customs
cooperation programmes and specific bilateral agreements as well.  While on-going, it was important
that customs administrations know about these types of tools which could serve to exchangeinformation among customs administrations.
10.36 The representative of the United States did not consider an extension of the mandate by the
General Council necessary because the mandate required a report to the General Council on the
Committee's discussions in the framework of identifying and accessing the practical means.  The
report to the General Council could indicate that ce rtain elements had been identified with respect to
practical means and these had been sent to the TCCV for technical input.  The first part of theDecision was established and she was not sure what purpose would be served by requesting a renewal
of the mandate to report back to the General Council.
10.37 She asked if the Indian proposal was meant to be a binding mechanism and what was the
intention of the annex in the format?  There was considerable complementarity and similarity betweenthe format and work being developed already in the TCCV and she questioned the rationale for a strict
deadline for the TCCV to report back to the Committee.  A response would be necessary at some
point, but her delegation did not agree with reviewing the mandate of an existing decision.  The fact
that the TCCV would be examining issues for this Committee was sufficient proof that the Committee
was still engaged in the work.
10.38 The representative of Brazil referred to the work in the Committee on Trade and
Development which had a mandate to report by July 2002.  The deadline passed and the CTD
requested an extension of its mandate.  The issue was not whether the Committee could take up the
matter when it chose to do so.  The issue was a broader one in that the mandate in paragraph 8.3 waspart of  the work programme adopted by Ministers in Doha.  As evidence, he quoted the cover letter
by which the Director General and the Chairman of the General Council forwarded the draft Decision
on Implementation Related Issues and Concerns to the Ministerial Conference.  It read, "the draft
Decision proposes immediate action on a number of implementation issues and provides thatG/VAL/M/32
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remaining issues which include those referred to other WTO bodies as well as those listed in
compilation will be addressed in the course of the future work programme in accordance with
paragraph 12 of the draft Ministerial Declaration".  Requesting renewal of the mandate was simply to
maintain the status of the mandate as an integral part of the work programme adopted in Doha..
10.39 The representative of the United States did not see any connection between a failed deadline
in the Committee on Trade and Development and this Committee's work.  The deadline was met in
the former but some of the elements in the report  were not completely examined.  Members had been
initially warned that that deadline was ambitious which proved correct.  This Committee had been
tasked to identify and assess, which it had done, and to report back on that aspect, not on any
decisions taken.  Part of the assessment would include tasking the TCCV with examination of
technical issues.  This would be on-going and the TCCV would report back to this Committee.  Thisdid not require any decision by this Committee.  She wondered what the expectation was of the
Committee's follow-up of the input provided by the TCCV?  Would the Committee continue to assess
or discuss practical means or was it supposed to take a decision?  Was it the intention of some
Members to renegotiate paragraph 8.3 and thereby seek a decision on elements that could not have
been agreed before because some Members had serious domestic legal problems with the exchange ofexport values?  Her delegation would not agree to any language in the report to the General Council
that indicated that the Committee had not completed its mandate and, therefore, needed an extension.
10.40 The representative of Brazil had mentioned the work of the CTD because of the similar
situation of work not concluded by the prescribed timeline. It was not necessary to enter into
discussion of why the deadline was missed.  The fact was that the work was not concluded within the
prescribed time and the Committee requested an extension.  Thus, it was not out of order for this
Committee to do the same.  He reiterated his delegation's non-intention to reopen the Ministerial
Decision in paragraph 8.3.  The Committee was mandated to identify and assess, and requesting
technical input from the TCCV meant that the Committee had not concluded its identification andassessment.  If the US had a problem with the repor t saying that the mandate had not been concluded,
his delegation would have a problem with the report saying that the mandate had been concluded.
10.41 The representative of Canada stressed that the Committee's work was aimed at trying to
resolve and address concerns raised in paragraph 8.3.  Brazil seemed to distinguish between the
proposal by India, on one hand, and the proposal made  by others including Canada, on the other.  All
proposals should be addressed in the same way because they were all addressing concerns relative tothe truth and accuracy of the declared value. This  went beyond only  an exchange of information.  He
supported the US view that the Committee had practically completed its mandate.  The deadline for a
report to the General Council should not be missed.  However, his delegation was willing not to close
discussion of the matter pending input from the TCCV which should be time-bound.  Continuing
discussion in the Committee would remain general and would not allow for progress on the substanceof the issues.  Once technical input was received, the Committee could revisit the issues again.
10.42 The representative of the United States said that, while the mandate was part of the
implementation work programme, it was necessary not to compare requirements in different bodies.
She took note of Brazil's statement regarding the language for the General Council report.
10.43 The representative of India asked whether the proposals in their entirety or certain extracted
elements from the proposals would be referred to the TCCV for technical advice?  On having a
general discussion of the matter after input would be received from the TCCV, he reiterated that this
Committee had a specific mandate with no authorisation to delegate it to another Committee.  TheTCCV had a mandate to look into technical questions, but not to take over the work of this
Committee. Was the TCCV subordinate to this Committee which would need to be the case for this
Committee to delegate work to it?  Otherwise, the General Council would have to do so.  His
delegation could agree with the TCCV assessing certain specific issues and reporting back to thisG/VAL/M/32
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Committee within an established time-frame.  This would require identification of the elements to be
considered by the TCCV.  For example, in his delegation's proposal, there was a suggestion that the
format and procedure may benefit from advice of the TCCV.  Once input was received, the
Committee would need to consider the matter further.
10.44 The representative of Brazil agreed to disagree with the US on how to more forward.  On
Canada's intervention, he had not intended to separate the proposals from each other.  He only noted
that the Indian proposal focused more directly on the part of the mandate which referred to the
exchange of information, whereas the Canadian and EC proposals were broader in nature and
addressed the wider context of identification and assessment of means to address the concerns on the
accuracy of the declared value.
10.45 The representative of the European Communities considered that the Committee could
complete its mandate in time.  Receiving input fro m the TCCV was not essential to completing the
mandate but made sense as the TCCV was also doing similar work.  This Committee could adapts its
on-going work to take into account input from the TCCV when it was received.
10.46 The Committee took note of all the statements made.  It agreed  that the Chairman would hold
informal consultations on terms of reference for work to be submitted to the TCCV as well as on the
report to the General Council.
XI. OTHER BUSINESS
11.1 The Chairman informed Members that he had r eceived two letters in his capacity as Chairman
of the Customs Valuation Committee from the Chairman of the Working Group on Trade and
Transfer of Technology and from the Chairman of the Special Session of the Committee on Trade and
Development.  The former requested him to inform of any discussion, submission and/or other
developments relating to trade and technology transfer that had taken place in the Committee.  Inresponse, he suggested informing the Chair of th at body that the Committee did not have any such
discussions on the issue as well as about the Decision on Carrier-Media Bearing Software.  On the
latter, the Chair was requesting information on discussions or other developments relating to special
and differential treatment that had taken place in the Committee.  In response, he suggested informing
the Special Session that the Committee did not have any discussions on special and differential
treatment provisions as well as providing information on Members' status regarding the use of special
and differential treatment provisions, on the work under Article 20.3 technical assistance and onimplementation-related discussions.  He would send these replies on his own responsibility.
11.2 The Committee so agreed.
11.3 The representative of Guatemala stated its concerns regarding the application by Mexico of
estimated prices with regard to some products from Guatemala.  Guatemala noted that, pursuant to
Article 144, indent 13 of the customs legislation of  Mexico, it was the role of the Secretariat of
Finance and Public Credit to establish estimated prices for different imported goods pursuant to
Article 36.1 of this law.  This was guaranteed by a monetary deposit.  Guatemala posed the following
questions to the Mexican Government.  Had Mexico constituted a reservation in order to useminimum values pursuant to paragraph 2 of Annex III of the Agreement?  Had Mexico notified to the
WTO that the Secretary of Finance and Public Credit could establish estimated prices for merchandise
imported into Mexico?  If so, could Mexico indicate the date and the number of this notification
document?   What were the criteria used by Mexico to calculate the estimated prices for the imported
goods and how did they calculate the current value established by the Secretary of Finance and PublicCredit in Mexico?  Why did Mexico not use the transaction value for imported goods which were
subject to estimated prices when, pursuant to Article 1 of the Agreement, they were under an
obligation to use the transaction value as the primary method for defining the customs value ofG/VAL/M/32
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imported goods?  In so far as Mexico had decided not to use the transaction value to determine the
customs value of imported goods, on what basis was the mechanism of estimated prices converted
into minimum values officially established on the basis of resolutions issued by the Secretary of
Finance and Public Credit of Mexico.  What were the criteria that differentiated minimum values and
the estimated prices as applied by Mexico.  He requested responses in writing to these questions, andreserved the right of his delegation to raise this matter again at a time which it deemed appropriate.
11.4 The representative of Mexico took note of Guatemala's concerns but requested the questions
in writing.  His delegation would respond to them in a timely fashion.
11.5 The representative of Brazil recalled that earlier in the year his delegation had raised a
concern similar to that expressed by Guatemala. His delegation had had a useful bilateral consultation
with Mexico on the matter but was still waiting for the written responses to its questions.
11.6 The representative of Honduras also voiced its concern on this matter.  It asked that, in the
interest of transparency, questions raised by Guatemala and the responses forthcoming from Mexico
be circulated to all Members.
11.7 The representative of El Salvador supported the request by Honduras for circulation of all
written questions and responses.11.8 The representative of Brazil reserved his delegation's rights on the report to the Trade
Negotiating Committee adopted by the Committee.11.9 The next meeting of the Committee would be held on 29 November 2002.  The meeting was
adjourned.
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