RESTRICTEDWORLD TRADE
ORGANIZATIONG/VAL/M/17
14 February 2001
(01-0699)
Committee on Customs Valuation
MINUTES OF THE MEETING OF 7, 13, 24, AND 29 NOVEMBER 2000
Chairman: Mr. Remo Moretta (Australia)
The agenda proposed for the meeting, circulated in WTO/AIR/1427, was adopted as follows:
1. Report on the Work of the Technical Committee on Customs Valuation ................................1
2. Implementation issues referred to the Committee by the General Council contained in
paragraph 21(h) of the WTO document Job(99)/5868/Rev.1, 19 October 1999.......................2
3.  Information on Implementation and Administration of the Agreement ...............................18
4.  Information on the application of Decision of the Committee on Customs Valuation .........23
5.  Technical assistance ........................................................................................................ ............24
6.  India – Information on certain aspects of the European Communities valuation policy .....25
7. Sixth Annual Review of the Implementation and operation of the Customs Valuation
Agreement...................................................................................................................... ...............26
8. Report of the Committee to th e Council on Trade in Goods....................................................27
9. Preshipment Inspec tion ....................................................................................................... ........27
10. Other business .............................................................................................................. ................27
11. Resumption of meetin g on 13 November 2000 ..........................................................................28
12. Resumption of meetin g on 24 November 2000 ..........................................................................31
13. Resumption of the meet ing on 29 November 2000 ....................................................................32
ANNEX 1  REPORT TO THE COMMITTEE ON CUSTOMS VALUATION ON THE 11TH
SESSION OF THE TECHNICAL COMMITTEE ON CUSTOMS VALUATION.........33
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1. Report on the Work of the Technical Committee on Customs Valuation
1.1 The observer of the World Customs Organization presented the report of the Eleventh Session
of the WCO Technical Committee on Customs Valuation which was held from 30 October to 3
November 2000.  The report is reproduced in Annex I of this report.
1.2 The representative of India noted that the WCO was doing important work on the exchange of
information between exporting and importing countries which would have relevance for the
discussion on the next agenda item.  He informed the Committee that a case-study on goods which
had an accepted customs value that represented a price 40 per cent below the cost of production,
considered by the Technical Committee at its Eleventh Session, had raised some problems for his
delegation as well as for some other Members.  His delegation did not believe that this case-study,
contained in WCO document VT0126E1, was in line with the spirit of Article VII nor of the
Agreement and could be misused by unscrupulous traders.  He wished that the details of this case-G/VAL/M/17
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study and the fact that it was not unanimously accepted by all WCO Members be noted by the
Committee.
1.3 The representative of the United States raised a point of order as to the status of the previous
intervention.1.4 The Committee took note of the WCO report and the statement by the Indian delegation.
2. Implementation issues referred to the Committee by the General Council contained in
paragraph 21(h) of the WTO document Job(99)/5868/Rev.1, 19 October 1999.
2.1 The Chairman informed the Committee that the General Council, at its meeting of 18-19
October, had requested the Committee to consider three proposals related to implementation of the
Customs Valuation Agreement.  These three proposals were taken from paragraph 21(h) of WTO
document Job(99)/5868/Rev.1 of 19 October 1999.  In its request, the General Council asked that the
Chairman report on the outcome of the Committee's consideration of these items to the Council before
its Special Session on Implementation in December.  This implied that the Committee did not have agreat deal of time to consider these items.  Since the October meeting of the General Council, he had
consulted on these items among Members.  There were a number of questions and views which still
needed clarification and he opened the floor for discussion.
Tiret 1: A multilateral solution that enables customs administrations of importing countries to
seek and obtain information on export values in a time-bound manner, in doubtful
cases, shall be included in the Agreement.
2.2 The representative of India stated that all three proposals emanated from his delegation which
had explained them when they were introduced in the General Council.  Briefly, the first tiret was
proposed to facilitate implementation and rule out cases which did not represent the true transaction
value.  His delegation found that, after 12 years of experience applying the Agreement, such a
solution was necessary, and he was prepared to respond to Members' questions.
2.3 The representative of Senegal stated that developing countries had difficulties implementing
this Agreement and his delegation supported India, which had been implementing the Agreement for
12 years, and which found it necessary to make this proposal.  He added that many countries,
particularly developed countries, had not signed the Nairobi Convention.  Mutual administrativeassistance was necessary to be able to benefit from the cooperation of certain countries since his
country was basically an importing country.  Ofte n his Government heard from other Members that
regulations did not allow the sharing of information and data.  However, export declarations existed
and, when sometimes provided to his Government's customs administration, were useful.
2.4 The representative of Venezuela voiced support for the Indian proposal.
2.5 The representative of Pakistan also supported the Indian proposal which provided a solution
to a general problem faced by many developing countries.  A multilateral solution such as proposed,
would help all Members' customs administrations to resolve issues which pertained to basically
fraudulent transactions and documents.  The main point in the proposal related to provision of the
information in a "time bound manner".  His delegation's experience showed that requests forinformation were often shelved and no responses provided.  A prescribed time-frame would benefit all
Members.
2.6 The representative of Jamaica supported the Indian proposal and endorsed the comments
made by Senegal and Pakistan.G/VAL/M/17
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2.7 The representative of Thailand informed the Committee that his capital was still considering
the proposal, however, he presented preliminary observations.  All Members were concerned about
fraud which could distort trade and revenue collection.  But his delegation needed clarification on a
number of points.  First, what was meant by the term "to seek and obtain information" and how
customs authorities of importing countries go about seeking and obtaining the information.  Second, ifthe meaning of "seek and obtain information" was that the customs authority of the importing country
would contact the customs authority of exporting c ountries informally or formally, what would the
legal implications be if the latter could not provide the information with reason in a time bound
manner, bearing in mind that this proposal would be included in the Agreement.  Third, how would
the term "doubtful case" be defined and how could Members be assured that this would not be used as
a trade barrier?  Fourth, Thailand was subject to an Information Act which did not allow the
government agencies to provide this kind of information to others.  Finally, he understood thatprovisions in the Nairobi Convention allowed importing countries to seek and obtain such information
from other Members of the Convention.
2.8 The representative of Colombia also voiced preliminary views on the proposal.  In view of the
difficulties customs faced every day trying to obtain information which would allow them to disprove
fraudulent declared values by importers, it was important to have a multilateral commitment forcustoms administrations to exchange information on values.  This commitment should be accepted by
all Members and established to avoid becoming an obstacle to the free movement of goods and a
discretionary mechanism.  He added that some Members had stated that the information being sought
was confidential.  Article X of the Agreement allowed customs administrations to maintain
confidentiality unless an authorization was obtain ed by the exporting country.  The information
exchanged would be of an official nature to which other customs might have access according to the
mechanism set up.  There should be a commitment that this information would only be exchanged in
order to verify data and would not be used for othe r ends or for cases when the differences in prices
were relatively reduced.  Further, regulations would be necessary on the time limits and conditions for
the exchange for any dispute settlement procedures.  The guideline should always be reciprocity.
2.9 The representative of the Dominican Republic supported the Indian proposal as his delegation
believed that it would help countries such as his own in the implementation of Article VII of the
GATT.  In no case should transparency become an obstacle to trade.
2.10 The representative of India responded by presenting a case-study of imports of camera parts
from a non-WTO Member that showed the difficulties his customs administration was facing.  The
case looked unusual because the parts were sub-assemblies and normally cameras were imported
assembled.  Upon examination, the value declared was US$ 4800, the goods were coming from a thirdcountry (not the country of origin) which informed Indian custom that the export declaration in their
country was for US$ 37,000.  This was a case where the declared value was different and, in fact,
represented only 13 per cent of the actual value declared by the exporting country.  The Indian
customs found that there were eleven more such co nsignments with similar values.  The information
received from the exporter could not be used because the customs authorities of the third country saidthat the information was being provided in confid ence.  If there was a multilateral arrangement for
obtaining this information, perhaps it could have been used.
2.11 A second case dealt with imports of 108 consignments of footwear which were suspected of
being undervalued.  Upon examination, the Indian cu stoms found that the supplier in the exporting
country did not exist.  In these types of cases, assistance was needed from customs administrations.With respect to the concern that seeking informati on could be misused as a trade barrier, in both the
situations presented, clearance of the goods was allowed subject to the final determination of value.
The subsequent checks made revealed that the prices were much less than the declared values.  He
added that such cases were infrequent and that each country's customs administration had various
assessment and management methods to zero in on doubtful cases.
2.13 He confirmed that the Nairobi Convention was not signed by most delegations.  If it was
adhered to by most countries, the problems in implementing the Agreement would be much easier.G/VAL/M/17
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As far as the Information Act mentioned by Thailand was concerned, he stressed that the information
received from importers and exporters was protected from being divulged by Indian law.  Only when
a "doubtful case" was actually proven to be a case of fraud, and had to be tried in a judicial forum,
then the law would allow the information to be rev ealed.  This was also the spirit of the Agreement
which said that information collected for valuation purposes could not be divulged.
2.14 The representative of the United States reiterated Thailand's questions, underscoring several
which it considered unanswered.  For example,  what was meant by "time bound" and did this
envisage formal or informal procedures?  The proposal spoke in terms of "doubtful cases";  the
Nairobi Convention spoke in terms of "good reason to believe that a serious customs offence has been
committed".  Was the proposal being made attempting to equate these two terms, and what exactly
was meant by the term "doubtful"?  Was "doubtful" defined as a price looking as if it was too low or
too high or were there other criteria?  He also sought confirmation that developing countries wouldalso provide such information.  His delegation was also unclear as to whether, in the case of the
camera parts presented by India, a bilateral agreement existed between India and the other country,
and what was the reason given that this information could not be used.  Was the latter due to the laws
of the country which provided the information?  Finally, his delegation sought clarification as to why
a multilateral agreement would cure the problem when it seemed that the problem was the absence ofa bilateral agreement to address this situation.
2.15 The representative of New Zealand posed additional questions.  First, what objective criteria
existed for determining what was a "doubtful case";  how were the two case-studies cited by India
determined to merit investigation? Second, what would the legal implications be for a customs
administration that was not able to provide the information requested or not in a "time boundmanner".  She added that some of the information envisaged under the proposal was not actually kept
by her Government's customs administration.  It woul d be difficult, in some circumstances, for her
customs administration to provide the exact information on export values;  it would require a lot of
work and statistical changes to the domestic requirements for the maintenance of information.  This
question related to the question of confidentiality as well.  Third, how would the Indian proposal fitwith bilateral agreements, the Nairobi Convention a nd other existing international instruments in this
area?
2.16 The representative of Australia had questions similar to Thailand and other delegations.  His
delegation considered that WTO Members were responsible for ensuring that importers complied with
domestic laws on valuation.  When there were serious difficulties and all domestic procedures had
been exhausted, then cooperation could be sought with other customs administrations.  His delegation
was concerned that the proposal put forward by India might place undue burden on customsadministrations to provide information to importing countries.  This would be an inappropriate
diversion of resources from customs' prime responsibility.  He invited India to respond to these
concerns to clarify whether they were, in fact, justified.  Secondly, he noted that there were existing
instruments under which WTO importing countries could seek cooperation with other WTO Members
such as the Nairobi Convention, bilateral agreements, and the WTO Ministerial Decision on CasesWhere Customs Have Reason to Doubt the Truth or  Accuracy of the Declared Value (hereafter,
Ministerial Decision).  He asked how the proposal would fit in with these existing instruments and
why were not these instruments sufficient to deal with the problems described by India.
2.17 The representative of Canada said that his delegation had a question regarding the reasons for
this proposal in the first place - had other methods been tried, had they worked, if not, why?  On the
proposal itself, he asked if the information received from exporting countries was verified or audited?
How could it be ensured that the information was accurate given that export data was not always
reliable, and that it would be used for the application of the Customs Valuation Agreement?  His
delegation was also interested in knowing what peri od of time would be required.  Also, what was the
standard of proof of a doubtful case?  Under what criteria would the information have to be providedsince the proposal implied that the information would be gathered by a foreign country from the
exporting country which might also have its own confidentiality requirements.  This latter aspect was
critical.  His delegation was worried that this proposal would initiate shifting the burden ofG/VAL/M/17
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enforcement from the importing country to the exporting country.  The Agreement was based on the
fact that the enforcement should be by the former.  Finally, what would the proponents of this
proposal do with the price data requested and for what would it be used, particularly in light of tiret 3
and of the statement by the Dominican Republic which referred to Article 7?
2.18 The representative of Singapore asked what type of fraud was causing India's problem?  The
examples provided did not clarify the question for her delegation which was convinced that fraud was
not a customs valuation issue.  On what facts did India suspect that there was fraudulent declaration of
the customs value declared by the importer;  what was the benchmark for suspicion of fraud?  Was it
based on the comparison of values declared by other importers such that this declaration stood out for
being much lower or higher than the others?  She asked for elaboration on how India would detect a
suspicious import.  With India being such a large market, there could not only be one importer for the
goods suspected of fraudulent declaration.  There would have to be other importers importing thesame good from different entry points into India.  Did India compare and collate such information
and, from this, determine if the value declared might be incorrect.  How did India currently verify the
accuracy of the declared value - what type of supporting documentation did India request from the
importer (examples cited were purchasing orders, bill of ladings, commercial invoices, etc.)?  She also
asked at what stage of the investigation would India require assistance from other customsadministrations?  She asked if India could further elaborate on the problems faced in specific cases.  If
India suspected such wide-spread collusion among traders, then could another customs administration
rely on the information submitted by an Indian exporter?  If this was to be a multilateral solution,
other customs administrations may need to obtain information from the Indian customs
administration.  Would this help other customs administrations if they could not verify that theinformation given to them by Indian authorities was accurate?  If, alternatively, there was not such
wide-spread collusion, should not India be able to use as a benchmark for accuracy the import values
declared by other importers in India and then ask the fraudulent importer to justify why its price was
so different?  Her delegation wondered why India could not deal with the fraud problem on the home
front like other customs authorities?  Her Government handled fraud at the importing end, by theimporting authority as they had better access to invoices and other supporting declarations.
2.19 She also asked what was the level of detail required on the export value.  For example, her
government collected export data for statistical purposes, not on a transaction-by-transaction basis.
Hence, this data would not contain the level of detail that would enable India to cross-match
information on the import declaration.  For the data to be useful to India, there would have to be
specific breakdowns of export prices for specific transactions.  This would require the exporting
authorities to look into the exporters' materials to  check for the data of the particular corresponding
shipment.  Even if the export value did not match the import declaration, it was not necessarily fraud.
If the collusion which India spoke about referred to collusion between the importer and the exporter,
receiving the export value from the exporting author ity or the exporter would not help to establish
whether there was fraud.  She asked also what was meant by "doubtful cases"?  In addition, India's
proposal would require exporting countries to divulge confidential information.  Several countriescould not divulge such information which was prot ected by secrecy laws.  India mentioned its own
legislation which protected information given by exporting authorities.  This was only the second
stage of information, however.  There were certain procedures in the domestic legislation that might
prevent even the provision of such confidential inform ation in the first place.  She also asked if India
and other developing countries which supported the proposal had the resources and would be in aposition to meet the additional demands that would be imposed by it and in a "time bound manner"?
Finally, she considered that this proposal undermined the basic premise of the Agreement by shifting
the burden of proof to the exporting authorities.  In order to assess the existence of fraud, the
information would have to be accurate.  If the proposal meant that exporting authorities would have to
verify the accuracy of the information submitted to them, this would amount to shifting theinvestigative burden to the exporting country's authorities.
2.20 The representative of the European Economic Communities stated that his delegation
associated itself with all of the questions raised which were appropriate given that the successfulG/VAL/M/17
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implementation of a multilateral Agreement was under consideration.  The work associated with this
Agreement belonged to the country of importation where there were at least five parties who knew the
reality of the transaction and on the basis of which the Agreement was constructed - the importer, the
customs administration, the tax administration, the financial authorities, external accountants, in
addition to the many parties who ought to know a nd would know the realities of the business affair.
All the powers of the Agreement were vested in the authorities of the importing country where all the
relevant information existed also, including the goods and evidence.  The exporting country was
simply the place where the export took place and there may be other intervening countries where the
trade would cross frontiers.  Under these circumstances, after twenty years of applying the
Agreement, it would not be a wise move to shift the burden, facility or competence of implementation
and administration of the Agreement.  His delegation was interested in hearing from India whether
they had a particular problem, of a particular nature, which may need to be discussed and for whichperhaps they, themselves, could only provide the solution if the cause was the availability of
information in the appropriate trading circuits.
2.21 He stressed that the broad principles must be upheld.  These included confidentiality, not
shifting the burden of commerce on the exporting customs administration, and the fact that the powers
to implement the Agreement were fully available in the importing country including access toinformation and those emanating from the work that has done on the Agreement since its inception,
i.e.  the Ministerial Decision.  The powers therein should be used to the fullest and, as such, they
provided the full armoury of tools that could be us ed to examine cases and try to find existing fraud.
For the most part, importers were willing to cooperate with importing authorities.  His delegation did
not consider that movement towards a radical solution was necessary when the ordinary goodmeasures, good practice and good administration of the Agreement should enable dealing with the
kinds of problems which arose on a daily basis for customs administrations.
2.22 The representative of Korea expressed appreciation to India for promoting the implementation
of the Agreement.  His delegation understood the difficulties faced by India in implementing.
However, it shared the views expressed by Thailand, the United States, New Zealand and Singapore.As a general comment, it seemed that the approach suggested by the proposal may be difficult to
apply to actual circumstances in which the transaction value is determined in accordance with various
elements.  Moreover, such approaches may obviate the demand for the Agreement.  He added that
export prices varied considerably depending on individual situations.  In would not be technically
easy to identify an appropriate export price to notify.  In addition, providing customs administrations
of importing countries with information on export variables was, in most cases, not allowed by
domestic law of the exporting country if the information was regarded as confidential.  He added thatthe purpose of declaring export values to customs in exporting countries was basically for statistical
purposes.  So, in many cases, the export variables could not be used as a reasonable basis to determine
the customs value of the imported goods.  Finally, according to India's proposal, in case the customs
administration of the importing country considered that there was fraud in the declared price, the
administration would request the exporting country to provide information on export values andwould use such information as the primary basis for the customs value.  This would undermine the
Agreement under which the customs administration should use the transaction value as the primary
basis for the customs value.
2.23 The representative of Brazil saw merit in the underlying objectives of the proposal which
were to combat fraud.  His delegation had no final position as the matter was still being examined in
his capital.  He singled out the important element of confidentiality and his authorities were
examining the legal implications of providing the information proposed.  He added that if it was
agreed that a multilateral solution to this matter was necessary, a great deal of work would be
necessary on the procedural side in order to ensure that it would be used in a fair manner.
2.24 The representative of Switzerland shared the view expressed by Singapore that the problem of
fraud was not a valuation problem.  Fraud should be dealt with at the national level of each country
and not within the scope of the Agreement and the WTO was not the appropriate place to discuss the
problem of fraud.  Her delegation acknowledged, however, that some countries were facing problemsG/VAL/M/17
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relating to fraud in the area of customs valuation.  But, like other delegations, her delegation believed
that any proposal suggested to resolve these problems should respect national legislations of Members
and take into account the constraints of such laws.  In order to help better understand the problems
being discussed, she asked if India could elaborate more on the concrete character of its difficulties
and on the way it had so far tried to solve them.  On this basis and referring to what Singapore hadsaid, she asked what India believed to be the origin or cause of the problems encountered.  In other
words, what drove traders to falsify the customs declarations?  She also asked India to give precise
information about the scope and economic impact of the problem it faced.  Furthermore, her
delegation was interested in knowing what measures India had taken so far to combat fraud and for
which reason these measures had not been efficient and why India was not using preshipment
inspection to combat fraud.  Finally, she asked why India was having difficulty in getting information
from its own importers as foreseen in paragraph 6, Annex III of the Agreement?
2.25 The representative of Hong Kong, China noted his delegation's support for the idea of
cooperation among customs administrations for the effective implementation of the Agreement.
Nevertheless, his delegation shared many of the questions raised initially by Thailand and elaborated
upon by other delegations.  Without going into details, he stated that he shared the US question as to
how an international agreement would help solve the sorts of problems identified through the example
of camera parts.  He did not see the connection, pa rticularly in view of the confidentiality issue.
2.26 The representative of Japan stated that most of his delegation's questions had already been
raised by previous speakers.  However, he asked what was the magnitude of the problem being faced
by India.  This had to be the starting-point for an y technical analysis.  He also wished to know what
kind of information the importing country could provide when assistance was sought, for example, thedate of the shipment, the export port, etc.  His delegation would need to know what kind of
information would be provided by the importing countries to assist the exporting countries in
providing the information.  Further, his delegati on would like to know the meaning of "time bound
manner" as well as the term "doubtful cases".  The resource implications of the proposal would have
to be analyzed and his Government might be obliged to modify its export clearance system toaccommodate this proposal.  His delegation asked if compensation was envisaged in the event that
business interests of the exporters would be affected or damaged by this proposal?  Finally, he asked
if while seeking assistance, would the importing country stop the import clearance system?
2.27 The representative of Chile confirmed that the problem of under-valuation was a problem for
many countries.  The problem and the proposal was being studied in his capital and he did not have a
precise position on the matter.  He considered that all the questions raised were valuable and were
similar to those of his own administration.  It might be useful to have a study done on what had beendone at the bilateral, plurilateral and multilateral levels in other fora to deal with the problems cited.
2.28 The representative of India attempted to answer the questions raised.  First, he explained that
the term "time bound" meant promptly and without inordinate delay when an export value was
requested.  His delegation had not specified a precise time-limit.  Second, his delegation was looking
for a formal solution.  While it had been mentioned that there some domestic laws which would notpermit the exchange of such information, his delegation believed that if there was a formal WTO
discipline, exporting countries could exchange the information asked for by importing countries.
Third, his delegation's proposal was confined to the meaning of "doubtful cases" found in the
Ministerial Decision.  There could be some difference between what was referred to under this
Decision and what was referred to under the Nairobi Convention.  Fourth, he confirmed that hisdelegation was proposing a multilateral solution that would require information from all countries,
whether developed or developing and his delegation was willing to share information when asked.
Fifth, in his delegation's experience, bilateral solutions did not work.  His delegation had a few such
agreements and found it very difficult to enter into such agreements with all its trading partners.  A
multilateral solution was preferable to a number of different bilateral solutions.
2.29 Sixth, regarding the questions on how Indian customs chose doubtful cases, he considered this
a secret of Indian customs.  All customs administrations had similar techniques to identify doubtfulG/VAL/M/17
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cases.  In the two examples given, he did not consid er that he had to justify how customs had selected
these cases.  It was proven in one case that the export value and the import value were significantly
different.  Whatever method Indian customs had us ed was valid as justified by the fact that the
declared value was fraudulent.  The methods applied were valid because they zeroed in on the right
cases.  Seventh, his delegation understood that most countries had export values, either exportdeclarations, export invoices, or through computer -databases.  There was a six-digit code for the HS
classification system, but many countries had more elaborate sub-divisions under the HS system and
they compiled trade statistics for each of the statistical sub-divisions and country-wise to determine
which country was exporting and importing.  This information was available in most countries and it
was not so difficult to provide such information.  He clarified that of, for example, one million
imports, information would not be sought on all of these, but only a few where customs had doubts.
In addition, customs clearance continued even where an investigation was on-going, as the Agreementobliged.
2.30 Regarding the point made by Australia that the proposal would create an undue burden on
customs administrations, his delegation did not believe so.  He added that, although India had no
bilateral agreement with Australia, their cooperation with Australia was very good and a large amount
of under-invoicing was detected through the assistance of Australian customs.  He provided a case ofapples imported from Australia at Australian$ 15.00 for a carton of 20 cases.  Indian customs had
posed as a buyer and had requested a sale from the supplier who admitted that the price was actually
Australian$ 28.00, but a relationship could be established whereby the difference between 28 and 15
Australian$ would be owed at a later date.
2.31 On Canada's point that the Indian proposal was not a solution, he added that the experience of
Indian customs was different than that of developed countries.  Countries with duty rates of 2 per cent
or below had a different type of problem in tackling customs fraud cases than countries like India,
which depended more on customs revenue.  Although India had tried to reduce duty rates
considerably in recent years, it still found that under-valuation persisted.  He requested developed
countries to look at the problems that India and many other developing countries faced such asmeeting the fiscal deficit without which further liberalization was not possible.  In addition, there was
a need to support honest trade and stop illegal activity.  He added that Canada's argument of shifting
the burden from the importing country administration to the exporting country administration was not
correct.  What was sought was one additional piece of information to help customs determine the
correct customs value.  His administration was fully competent and had a programme with Revenue
Canada for assistance.  Following their visits to Indian customs, Canadians had noted satisfaction with
India's work.  Therefore, it was not that India was not doing enough to reform its customs and it didconduct its own investigation, but Indian customs considered that this particular piece of information
was not available within the country and would be an important link in the process of establishing the
correct values under the Agreement.
2.32 Some of the questions from Singapore had been raised by others.  But he added that India had
a particular problem with third-country invoicing.  He cited a case of European-originating motorvehicle parts which went to a third country and which were invoiced in India far below the price in the
third country.  India went to the third-country supplier which confirmed selling at a much higher
price.  In cases involving third-country invoicing and where the goods did not undergo further
transformation, India had difficult problems.  For these types of cases bilateral solutions would not
help, but a multilateral solution was necessary because values from the country of origin werenecessary.  On the question of how wide-spread collusion was, he was grateful that it was a limited
problem.  However, given India's size and the amount of imports in the large market, it was
considerable and needed to be dealt with not only for revenue purposes but also for stopping trade
distortions caused by over- and under-invoicing.  With respect to the issue of data collection and
whether such data would be at the level necessary for the requirements of the proposal, he added that,under the proposal, his authorities would be satisfied with whatever statistical data was collected.
2.33 On the matter of confidentiality, he drew the attention of the Committee to Article 10 of the
Agreement which said that information obtained would be kept confidential except to the extent that itG/VAL/M/17
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would be required to be disclosed in judicial pr oceedings.  So, when information was obtained under
the proposal, and it was found that it matched the declared value, it would be kept confidential as
there would be no reason to disclose it.  Only if there was a wide variation in prices and there was
cause for some action to be taken in a judicial proceeding, it would be disclosed.  This was foreseen
under Article 10 of the Agreement anyway.  He added that Indian customs was also bound by nationallaw not to disclose this information as well as by the specific wording of Article 10.  He asked why
exporting countries would be interested in protecti ng information in the case of fraud?  Would they
support fraudulent transactions?  Article 10 did not support the protection of fraudulent cases by
stating that information could be disclosed in the context of judicial proc eedings which would only be
undertaken in the case of a fraudulent transaction.  He mentioned that when some exporters from a
country indulged in fraudulent transactions, it harm ed the interests of the other exporters in the
country of origin of the product who were paying the correct amount of duty on the declared value.Therefore, it was as much in the interest of the exporting countries to cooperate with the importing
country administrations to root out the fraudulent cases.
2.34 On the question of whether developing countries themselves would be able to undertake the
obligations of the proposal, he said that his country was fully committed to helping other countries
through the exchange of information among customs in a prompt manner.  He noted that hisdelegation was prepared to provide the specific details of all the consignments - the bill of lading
number, the invoice number, the container details, and the vessel on which the goods came, etc.  In
some cases, under-valuation was tied to money launde ring and drug-related offences.  He agreed with
the EC comment that all the powers under the Agreement were with the importing country, but
unfortunately, the importing country did not have all the information it needed.  It was operating inthe environment of the importing country and some information had to come from the exporting side.
He noted that the OECD countries were now look ing towards full cooperation among countries in
administering domestic taxes.  Here was a situation where goods went from one country to another,
either directly or through several countries.  There was a greater need for mutual cooperation and
exchange of information.  Two basic reasons for which the WCO was established were to harmonizecustoms procedures and to bring about an exchange of information and mutual cooperation among
customs administrations.  Although the importing country had all the authority, without the
information requested, the Indian experience indicated that the task was difficult.
2.35 He fully recognized Korea's point that exporting prices varied considerably.  His delegation
was only asking for the price declared at the exporting end.  By this, customs would not be looking at
another consignment which might have been different.  The proposal was not designed to upset this
fact, but merely to check the price at the other end.  He acknowledged that a situation where theexporter and importer were colluding would not be addressed by the proposal and his delegation was
aware of this.  His delegation considered that if such a multilateral solution were in place, customs
would have less need to actually ask for values once the exporters and importers knew the existence
of the arrangement.  With respect to Switzerland's point that the WTO was not the appropriate forum
to discuss fraud, his delegation considered that it was since this was a WTO Agreement and theseissues arose out of the implementation of this Agreement.  From the experience of his country, these
issues needed to addressed.  He noted that although the Agreement was 21 years old, many countries
were not able to implement it fully and this said a lot by itself and highlighted that there were issues
that needed to be addressed.  Although the ideal situation would be to get rid of customs duties, until
such time, the problems would exist and a solution was needed to tackle them.  Regarding Japan's
question on the magnitude of the problem, he noted that it depended on the good.  The problem did
not exist for all goods but for some, in particular, second-hand goods which developing countries
imported, metal scraps, and third-country invoicing.  When goods were procured directly from the
manufacturers as opposed to traders, the problem was much less.  He was puzzled by the matter raised
by Japan concerning damage to exporters.  He reiterated that if the information proved that thetransaction was genuine, there would be no question of divulging the information and would result in
more rapid conclusion of the investigation.  If there was a case of fraud and, as a result, the
information was used, he did not see why damages woul d have to be paid to the exporters.  The matter
would have to be dealt with under the relevant law which he did not think provided for any damages.G/VAL/M/17
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He considered the final question by Japan on delaying the import clearance procedure a separate
issue.  The idea of requesting information was to cross-check and in cases where there was no
problem with the declared value, it would actually expedite the clearance.  In any case, it would take
time for the requested information to come, and Indian customs released the goods in accordance with
the Agreement.
2.36 The representative of the United States noted that the US customs administration recently
expressed satisfaction when it was presented with a new draft by India of a potential mutual
cooperation customs agreement which it was presently reviewing.  In seeking further specificity, he
asked if "doubt" was equated with "fraud" or with the definition under the Nairobi Convention which
had a specific standard, because he knew of some administrations where doubt was cast in virtually
every transaction.   With regard to the case of Indian imports of Australian apples, he asked if India
acted upon the information that it had obtained and, if so, how would the proposal have changed theprocedures in this example.  His delegation saw no link between the proposal and this case.  A third
question related to resources and whether India had examined how many requests it would envision
making in one year, either in terms of number or percentage of imports.  He noted that the US was
importing about US$ 1 trillion a year.  In translating India's experience to the US, he would be
grateful for an estimate as to how many requests were envisioned as a percentage of its own  imports.Fourthly, he asked what was meant by the word "information".  He remained unclear as to what
information was being sought - was it the declared value?  Many countries did not include certain
elements in their declared value that were in the Agreement.  How would the proposal envision
dealing with aggregate values which many countries compiled on the export side.  Did the proposal
envision countries changing their methods for calculati ng declared value?  If not, what would be the
utility of examining a value that had not been constructed consistent with the hierarchy of the
Agreement?  Finally, he asked what specific information India would be willing to share under this
proposal as an exporter and what elements were in its declared value?  Would there be other types of
valuation-related information that India would be willing to share under this proposal?  Would there
be an expectation that customs administrations of exporting countries visit offices of exportingcompanies and would India would be willing to check its own importers and exporters for such
information?
2.37 The representative of Canada sought further clarification on the type of information desired
by India.  Since it was not known when information might be requested, it would have to be collected
for all imports which implied a significant resource problem.  Laws might have to be changed in order
to collect the correct information as requested.  This related to the question of whether India verified
the data it received;  did it send auditors to make sure that the data being reported by its exporters wasaccurate?  Most export data was provided for statistical purposes at various levels of aggregation and
notification for enforcement purposes, therefore, verification was not conducted on its accuracy.
Although requests might only come one or two times a year, the data would have to be collected every
day.  Furthermore, he asked what India wanted to do with the price data it would receive?  His
delegation was interested in knowing why they needed  this information, particularly in light of the
Dominican Republic's statement regarding Article 7, and because of the proposal in tiret 3 which also
dealt with Article 7.  With regard to what was meant by "doubtful", he agreed that, with respect to the
Ministerial Decision, India was correct in stating it was up to customs to determine because here the
only investigation would be on an Indian importer.  However, if another country were to provide
confidential business information to another country's customs service, more specificity than"doubtful" was needed.  He also sought more detail on India's comment that it requested a multilateral
solution to see the values in the country of origin.  This complicated matters because it implied tracing
transactions and the value at the point of production because the final value of sale of the good could
be very different.
2.38 Finally, he confirmed that Indian customs was moving down the right road in terms of
implementing the Agreement and this was why his delegation was puzzled as to why it was making
this proposal.  India had admitted that this proposal would not address the situation of collusion
between importers and exporters.  In addition, under-valuation usually implied that the adjustmentsG/VAL/M/17
Page 11
under Article 8 were not added in and the exporting country would not have any information on these
elements.  Therefore, this proposal would only cover fraud which was being carried out by the
importer.  If this was so, the best source of info rmation would be in the importing country.  The WCO
suggested possible ways of dealing with fraud, such as record-keeping, research and analysis, risk
assessment, high-risk and low-risk enforcement areas, etc.  His delegation was still not clear whyfraud by the importer could not be dealt with through normal fraud investigations.  His delegation was
worried that this proposal was a substitute for using proper fraud methodologies and modern customs
techniques which he considered important for implementing the Agreement.
2.39 The representative of Australia reiterated its support for full cooperation in this area.
However, the case of the Australian apples showed that cooperation already existed and that India was
able to obtain the information that it was seeking.  This appeared to contradict India's earlier statement
that there was currently no way of obtaining the sort of information sought under this proposal.  Inlight of this, his delegation still did not understand why a formal, or mandatory, multilateral solution
was required.
2.41 The representative of Singapore acknowledged that all delegations were concerned with
genuine fraud and that each country combated such cases.  She sought clear, specific answers as to
what was meant by "doubtful cases".  In practical terms, it seemed to mean that each time Indiancustoms had doubts or simply questions about a declared value, exporting countries' customs
administrations would be required to investigate its e xporters in order to obtain the export data and the
values needed to support India's investigation.  This was not even at the point of legal proceedings,
but only in the case of doubt.  This would imply several practical as well as legal difficulties.
Singapore exporters provided export and business  information to Singapore customs administrations
under confidence, the latter not being at liberty to divulge this information.  If there was a legal
investigation under judicial proceedings, this would imply a different situation.  However, her
delegation could not accept that it would have to go after its own exporters when they were not the
subject of any fraud investigation.  Therefore, the solution would first have to start at the importing
country where investigation of importers would have to be exhausted, including use of the computedvalue.  When all such efforts had been exhausted, then cooperation should be explored.  This led to
the question of what level of information would be needed.  She was puzzled by the statement by
India that they would be satisfied by whatever statis tics were available.  Her delegation did not see the
utility in using broad data.  Even if this information was available and could be provided, it would not
be of utility to the Indian customs in solving fraud.  Finally, she emphasized that money laundering
and drugs had nothing to do with the Agreement.
2.42 The representative of the European Communities, on the question of "doubt", noted that there
were two different concepts in the Ministerial Decision and in the Nairobi Convention.  Neither of
these concepts could provide the basis for a multilateral agreement because customs administrations
doubted all the time and would be requesting information from around the world continuously.  This
was the reality from his experience.  Simple doubt was not sufficient to create such an instrument that
was under discussion.  The concept in the Nairobi Convention did not warrant further informationbecause a strong case already existed, and the provisions of the Ministerial Decision would have
already been used.  In addition, he questioned whether such a proposal could be made operational
because of the amount of resources and the questions of confidentiality.  Cooperation mechanisms
existed under the WCO and the types of products men tioned by India could be dealt with by Indian
customs.
2.43 The representative of the Dominican Republic clarified that when he was speaking of Article
7 in this context, he meant the Agreement on Implementation of Article VII of the GATT 1994.  He
stressed that one of the obstacles for developing countries in the implementation of this Agreement
was that it was impossible to demonstrate the origin al transaction.  Developing countries could have
more faith in the invoice presented by the importer if they had more information.  In his delegation'ssupport for the Indian proposal, it agreed with the main thrust of the proposal which would strengthen
the efforts of countries such as his own, which were trying to implement the Agreement.  He noted
that many of the questions raised were reasonable and should be taken into consideration.  However,G/VAL/M/17
Page 12
he considered that international trade transactions needed to be more transparent and this was what the
WTO was working towards.  But, this came into co nflict with the question of confidentiality.  He
added that Article 6.2 of the Agreement stated that appeal could be made to the authorities of other
countries in order to obtain information for the computed value.  This was similar to what the Indian
proposal was trying to accomplish and showed a pre cedent for third countries assisting in verifying
the customs value.  Of course, the proposal would imply modification of the Agreement which had
consequences.  Although further study was necessary, his delegation did not believe that the proposal
should be rejected.
2.44 The representative of India thanked the US delegation for mentioning the draft bilateral
agreement which was under discussion and looked forward to resolving matters through this
agreement.  He noted that a study recently completed showed that there were few cases, if any, of
under-invoicing coming from the US.  However, there were cases of over-invoicing of goods going tothe US from India.  If this was true, Indian customs may not ask for any information from the US
under the proposal.  He added that the Nairobi Convention did deal with cases of fraud, in particular,
cases where there were reasonable grounds for suspecting fraud.  But, as noted earlier, this
Convention was not accepted by most countries, including most developed countries, and this was
where the problem lay.  Out of the few countries which had accepted the Convention, there were few,only 23, which had acceded to Annex II of the Agreement which dealt with valuation and assessment
of cases.  The Ministerial Decision spoke of "doubtf ul cases" and he considered that when there was
doubt, there was a reasonable ground for assuming fraud and then proof was needed.  In cases where
Indian customs could establish that fraud existed in "doubtful cases", it would not ask exporting
countries for information, unless documentation was needed.  With respect to the concern that itwould be Indian customs deciding on the "doubtful  cases", he saw no other option and assured the
Committee that Indian customs did a good job of se lecting such cases.  Information would only be
requested when absolutely necessary and would be examined at the highest level, by the Director-
General of the Center for Revenue Intelligence.  Therefore, he did not consider that this would cast an
undue burden on other countries.
2.45 In the three cases he referred to, although fraud was established, the problem was not solved
because information such as from another country, was needed.  In the case of the Australian apples,
the information from the supplier was found via the internet because Indian customs did not have an
agreement with Australian customs.   Although it pointed to a clear case of under-valuation, it could
not be used.  This as why there was not a contradiction in what India was proposing because if a
multilateral solution existed, the information could have been easily obtained from Australian
authorities.  These were the kinds of cases where Indian customs would like to have more informationfrom other administrations and where a formal and mandatory solution was necessary.  Similarly in
the case of camera parts, the information was retrieved from the third country and could not be used
because it was supplied in confidence.  If the pr oposed multilateral solution existed, the information
could be requested and used.  In the third case, the verification of the supplier was done by Indian
customs and again in such a manner that the information could not be used in a judicial procedure.However, if the information was had through the other country's administration, it could have been a
valid piece of evidence.
2.46 With respect to the question of exactly what type of information was sought, he clarified that
it was simply the declared value at the export side.  India would be willing to share the same type of
information to other countries.  While this information would not be the only piece of informationwhich would solve our problems, it would go a long way in helping Indian customs to value the goods
and tackle the fraud problem.  On Canada's question of whether India verified data, he explained that
some verification was done, but not as elaboratel y as for imports, which he thought was the same
situation in most countries.  He assumed that the data provided in the exporting country, where the
exporter was not subject to any duty or control, would be accurate and some problems could be solvedsimply by looking at this data.  The countries where this proposal would be most useful would be
countries with which India did not have bilateral agreements and from which it found difficult to
obtain information.  Information would not be sought to a great extent from Canada.  He added thatG/VAL/M/17
Page 13
his delegation was aware that to arrive at the transaction value, adjustments under Article 8 had to be
made, but this was a different matter, and Indian customs could take care of situations where such
adjustments were not provided or not added.  The problem existed where the declared value, in the
first instance, was fraudulent.  The proposal was not a substitute for dealing with fraud or for
establishing a fraud investigation mechanism.
2.47 He added that the information that the exporter gave to the exporting country's customs
administration was no doubt confidential.  If it was given to Indian customs in the few cases it would
be requested, Indian customs would treat the information in the same fashion under India's domestic
law.  Under the proposal, there was no request for exporting customs administrations to investigate
companies.  Under the Nairobi Convention, where there was reasonable fraud established, such
investigation could be requested, but this was not part of this proposal.  Finally, he did not consider
that the EC, being such a rich group of countries, would be concerned with any resource problemassociated with this proposal.  It was European goods which were coming through third countries
which were posing problems and this was undercutting EC supplies.  So, the EC should be more
interested in providing values to India because products coming directly from the EC were not under-
valued and the correct amount of duty was being paid.  The solution would also assist the EC
suppliers to correct this problem.  India was doing whatever it could to investigate and combat fraud,but this was an additional piece of information which would assist it in its work.
Tiret 2: The addition of cost of services such as engineering, development, and design work,
which are supplied directly or indirectly by the buyer free of charge or at reduced
cost for the production of goods under import, shall be included in Article 8:1(b)(iv).
2.48 The representative of India informed Members that this proposal dealt with Article 8:1(b)(iv)
of the Agreement.  Article 8 of the Agreement c ontained adjustments to be made to determine the
transaction value;  sub-paragraph (b) listed the goods and services supplied by the buyer free of
charge or at a reduced cost for use in connecti on with the production and sale for export of the
imported goods, which must be included in the transaction on value to the extent that such value had
not been included in the price actually paid or payable.  The logic was that these goods and servicesformed part of the value of the imported goods, even though they had been supplied by the buyer.
The goods listed under items i-iii would be included in the customs value if they were supplied by the
buyer even though they may be supplied from the importing country.  However, in the case of item iv,
a distinction was made and the value included only if the service came from outside the importing
country.  Thus, there was a difference between the goods listed in items i-iii and the services listed in
item iv which he considered was giving rise to artificial bifurcation of values.  Many times, part of the
value of the services listed in item  iv was listed as coming from inside the importing country where it
would not be included in the customs value when actually it may have been done elsewhere and
should be included in the value.  This gave an open invitation to unscrupulous importers to split the
value.  Therefore, his delegation proposed that the services, even if coming from the importing
country, should be a part of the value, and all the items under Article 8.1(b) should be included in the
value.
2.49 The representative of the European Communities considered that the proposal was asking that
something that had been part of the Agreement since its inception be changed.  Such a change would
have a hard, economic effect because commerce and industry had assumed specific rights and had
built their businesses around the valuation treatment presently in the Agreement.  In considering how
to deal with the problem India had mentioned of spli tting values into cost elements attributed to the
imported goods, and those which were internally sourced, existing and new tools which identified the
actual services involved and their costs should be considered.  It would be premature to claim that
there was a problem in this regard that begged changing the rules as a solution.  If the problem existed
and it was related to how importers structured costs and presented them to customs, it could be a
communication or information-gathering problem and a technical analysis would be required ratherthan a change in the legal basis of the Agreement.G/VAL/M/17
Page 14
2.50 The representative of Canada supported the statement by the European Communities.  His
customs administration had similar questions regarding the real aspects of the problem, how it
manifested itself and why it could not be addressed through other customs techniques, particularly
since the buyer was supplying the services mentioned in item 8.1(b)(iv).  The buyer could always be
approached and audited if there were problems.  He asked also whether adding the costs in wouldsolve the problem, or would it just add another problem of determining whether the correct amount
was added in.  He also considered that there were other techniques to address this matter and this
proposal was not a solution to fraud.
2.51 The representative of the United States also asked what the problem was that needed to be
addressed.  Fraud and bifurcation of the value also happened in other ways so the problem would still
exist.  His delegation also wondered what the economic rationale would be for including the cost of
services performed in the country of importation.  There was an incentive built into the Agreementand he wondered what the rationale was for affecting the performance of such services in the country
of importation.  Further, he wondered why this proposal was made, particularly when the information
needed to verify the operation of this provision was available in the importing country.
2.52 The representative of Japan shared the questions and concerns expressed by other Members.
His delegation also wondered what the real problem was and the economic rationale for the proposal.
Businesses were operating under the provisions of the Agreement for a long time and an unnecessary
change in the Agreement would cause undue burden.
2.53 The representative of India, in responding to the questions on the economic rationale for the
proposal, explained that under Article 8.1(b), the first three items could be supplied either by the
exporting, importing or a third country.  No distinction had been made and the costs of these goodswould be included in the customs value.  His delegation's proposal concerned the last item under
Article 8.1(b) which dealt with services that also c ould come from either the exporting, importing or a
third country, but would only be included in the value when coming from a country other than the
importing country.  His delegation considered that all four items should be treated in the same way in
assessing the customs value.  There was an innate contradiction in these provisions and there was aneconomic justification in treating them all the same way.  If the services came from a third country,
the importer would sometimes have to pay for them.  Lately, his delegation noticed that for some
importations, the basic design came from another country but reengineering would be done in the
country of importation.  Although little would be done, the cost would be extensively manipulated to
show a large amount of engineering from the importing country.  He provided an example of a
product which was valued at a thousand million currency units, and the bifurcated value was
presented as 700 million units for the value and 300 million units for the engineering done in India.Upon examination, it was found that this was not the case.  Other cases were more difficult to prove,
since money transfers were difficult to trace.  His delegation, therefore, thought that the Agreement
could eliminate this distinction.  Regarding the comment about the long-standing practice, he
understood that countries where much of these services were being provided wanted to continue to
exclude these costs.  He, therefore, proposed that those countries could continue the treatment underthe Agreement by way of an exemption.
2.54 The representative of Singapore considered that there was an underlying rationale to the
different treatment of these provisions.  She believed that the Agreement was designed to encourage
or facilitate development of the services under item iv in the importing countries by not including
these costs in the importer's price.  It was designed to help countries develop their own serviceindustries.  If these were to be included in the cu stoms value, would it not be a means of inflating the
import price which would in the end be paid by the domestic consumers.
2.55 The representative of Thailand, while acknowledging that this proposal would be beneficial to
the revenue collection of the importing country, noted that it could create a problem of double
taxation for importers.  In addition, the consumer of the importing country would have to bear theburden of the additional costs.  The cost of a service provided by the buyer may have been subject toG/VAL/M/17
Page 15
domestic taxation and would then be taxed again in the form of an import duty.  Therefore, the
importer could be paying tax on this service twice.
2.56 The representative of India did not consider that the objective of the Agreement was to
encourage importing countries to develop service industries.  The main purpose of the Agreement was
to arrive at the customs value of the imported goods.  Other elements under this Article had to beadded to the value, so why not the services mentioned in item iv  If any country wanted to exempt
charges on these services, they could always design fiscal policy to do so or exempt them from
customs duty.  His delegation considered that these were legitimate costs which formed the value of
the imported good.
2.57 The representative of the United States recalled that the reason for the exemption under
Article 8.1(b)(iv) was because it pertained to services carried out in the importing country.  In the
United States as well as in other countries, there were exemptions for tariffs pertaining to goods thathad been sent abroad and returned.  Items i-iii contained exemptions as described by tariff laws of
Members and these pertained to goods.  However, with regard to item iv which pertained to services,
it was more problematic to create such an exemption.   This was the rationale for this exemption.  In
addition, there was the secondary matter of double taxation.  He also asked why it was more difficult
to prove fraud in this situation as opposed to any other type of activity in the importing country?  Herequested another explanation from India as to what the real problem was that gave rise to the
proposal.
2.58 The representative of Canada still did not understand why this proposal would solve the
problem identified by India because importers would still have to be audited to determine whether the
amount was correct.  At the time of the negotiation of the Agreement, it was agreed that the presentprovisions were desirable.  The proposed change could have disruptive effects on business
arrangements and raise the value for duty purposes.
2.59 The representative of India noted that it was not always possible to bring out the details of
fraudulent transactions through internal audits because financial transactions were so intricate and
payment for the services would go back to the actual  supplier.  With regard to the US comment that it
was difficult to provide an exemption for these services, he disagreed stating that the service
represented part of the imported good which could always be exempted either partially or fully to
reflect these services.  Those countries that wanted to exempt these services from the transaction
value could have the option, but his delegation wanted to give the same treatment to items i-iv of
Article 8.1(b).  The problem mentioned by Thailand of double taxation existed also for the goods in
items i-iii.
2.60 The representative of Canada agreed that the problem mentioned by India was fraud.
However, even if the amount had to be added into the value, the fraudulent importer could still not do
so and ignore the requirement.  If Indian customs could not find the financial transaction in the first
instance, why would they be able to find it if the proposal was adopted.  His delegation did not see
how this particular proposal would solve fraud.  This was inconsistent with free trade.  He concluded
that there were other fraud/enforcement techniques to deal with the problem noted.
2.61 The representative of New Zealand considered that the proposal would be contradictory to the
economic rationale of the provision which was to encourage development of such service industries in
the importing country.  This would be against the interest of developing countries and she was
confused as to why India would propose this.  In addition, what was meant by the term "the buyer" in
this proposal?  Was the buyer just the one person who purchased the imported goods or was it meantto cover services provided by companies other than  the buyer of the goods?  This would not fit with
the language of the Agreement which spoke of the services "undertaken elsewhere than in the country
of importation…".  Finally, she asked how this w ould work in practice when such services would
continue on an on-going basis after the good had actually entered the importing country, including
value-added, etc..  How long would the work done by the buyer continue to be valued for customspurposes?G/VAL/M/17
Page 16
2.62 The representative of India clarified that the phrase used in the proposal corresponded to the
situation where these charges were excluded from the customs value.  In Article 8.1(b), the opening
statement spoke of "the value of the following goods and services that were supplied directly or
indirectly by the buyer free of charge or at reduced cost…". Under item iv of this Article, the services
mentioned were exempted if they were undertaken in the country of importation.  However, the mainclause was that the goods and services had to be supplied free or at reduced cost by the buyer.
Therefore, it was the buyer that had to provide the goods and services.  Regarding the point by
Canada that if the phrase "undertaken elsewhere than in the country of importation" was not there,
what difference would it make, he considered th at it would make a huge difference.  Importers,
particularly fraudulent ones, could not take advantage of the provision.  Because the term was there, it
encouraged bifurcation of the values.  He reiterat ed that the Agreement was not meant to encourage
industries of particular sectors, but to determine customs value of imported goods.  His proposal wasthat all elements that make up this value should be included.
Tiret 3: The residual method of determining customs value under Article 7 shall be inclusive
of all residual eventualities, thus allowing valuation based on domestic market price
or export price in a third country with appropriate adjustments.
2.63 The representative of India clarified that the proposal meant domestic market price in the
exporting country;  the intention was not to include the selling price in the country of importation.
The two methods proposed were presently items (c) and (e) of the list of  prohibited methods under
Article 7 of the Agreement.  These prices were presently used in other Agreements such as the Anti-
Dumping Agreement. He clarified that Article 7 and these two additional proposed methods would
only be used as a last resort when the other methods could not be used.  By denying the use of thesetwo prices, which were the nearest equivalent to the actual value, the concept of Article VII of the
GATT 1994, his customs administration considered that it was not able to arrive at the proper value
for customs purposes.
2.64 The representative of Canada considered that there must have been good reasons why these
two methods were prohibited under the Agreement when it was negotiated.  He asked what was meant
by "all residual eventualities"?  He also asked where would customs administrations retrieve the
information necessary for the two proposed methods and for the appropriate adjustments which would
have to be made to these prices?
2.65  The representative of New Zealand also asked what was meant by "all residual
eventualities"?  She also asked if the concept of domestic market price in the exporting country was
the same as the concept in the Anti-Dumping Agreement?
2.66 The representative of India clarified that the proposal referred to the prices in Article 7(c) and
(e) and not other "eventualities".  This was what was meant by the term "residual eventualities".
Further, his delegation examined the Anti-Dumping Agreement and found that these types of priceswere allowed to be used in that context to compare values.  Why not in the context of the Customs
Valuation Agreement?  He confirmed that his delegation was committed to the first method under the
Agreement (the transaction value) and if that failed, the following methods in the Agreement.  If all of
them failed and the customs administration arrived at Article 7, it wished to be able to use the two
prices proposed which were presently prohibited.  He did not have any examples of using thesemethods because they were presently not allowed.
2.67 The representative of Singapore stressed that the prices in the Anti-Dumping Agreement and
in the Customs Valuation Agreement represented two different concepts.  In the former, the objective
was to show price discrimination so a comparison of the domestic price in the exporting country andthe export price to the importing country or to a third country was necessary.  But in the context of the
Customs Valuation Agreement the objective was to determine the value of the transacted goods.  This
should be based on the actual transaction price agreed between the exporter and the importer.  This
was why in the Customs Valuation Agreement, it was clearly stated that the two proposed prices wereG/VAL/M/17
Page 17
not to be used.  She also asked how the information for the proposed prices would be obtained.  They
would not be reflective of the actual transaction value.  In the domestic market of the exporting
country, the price could be very high because of overhead costs, advertisements, and other costs that
were incurred on the domestic market.  Allowing the use of the domestic market price in the exporting
country could result in high, fictitious export values.  Regarding the export value to a third country,she asked which third country would be chosen - woul d it be the highest priced country or the lowest?
Would customs administrations shop for the best price among third countries and how would they
determine which best reflected the transaction value?
2.68 The representative of India reminded Member s that the Customs Valuation Agreement did
not only contain the transaction value method.  To the greatest extent possible, this method should be
used and if it could be, the proposed prices would not be needed nor would be relevant.  If all themethods failed, then Article 7 would be relevant.  His proposal only requested that two methods that
were presently excluded under Article 7 be allowed to be used when everything else failed.  In
addition, these two methods were allowed under another WTO Agreement, so why not under this
Agreement?  It was already explained in these other Agreements how to find the values so he did not
see the difficulty in obtaining them for use in this context.
2.69 The representative the United States remained puzzled over the rationale for this proposal.
He asked what was meant by the term "with appropriate adjustments"?  Would this include
adjustments up or down?  He also asked which ma rket prices would be used and how would they be
determined?  Would a wholesale catalogue price or a shopping center price be used?  How could it beensured that the prices would not be determined in an arbitrary manner?  Finally, he asked why the
Anti-Dumping Agreement was being discussed in this context and wondered why it was relevant
given the considerably and explicitly different functions of the determinations made under it and the
Valuation Agreement?
2.70 The representative of India clarified that under the proposal, the prices could not be used
directly but adjustments to the prices would have to be made.  One example was with respect to FOB
or CIF basis.  If the exporting country had a different valuation basis, the price would have to be
adjusted to take into account these additional char ges.  Further, under the similar and identical
methods, adjustments had to be made for quantity.  The proposal was not bringing concepts of other
Agreements into the Valuation Agreement.  These two prices were being used in the Anti-Dumping
Agreement and should be allowed in extreme circumstances under the Valuation Agreement.
2.71 The representative of Canada considered that it was necessary to ascertain why these two
price methods were excluded in the first place.  He did not believe that using these two methods
would facilitate implementation of the Agreement because if, as India stated, the information would
be obtained in the same way as it was under the Anti-Dumping Agreement,  this would imply a verycomplicated process.  Therefore, he was not sure why this proposal was being made.  He was still
unclear as to how the information on the prices, the adjustments and their values would be obtained.
2.72 The representative of the European Communities suggested that these two methods were
excluded because it was considered that there was no point in referring to sources which would be
difficult to obtain and make relevant to the transaction value.  In addition, he did not consider it
prudent to stray into other Agreements which had completely different concepts and contexts.  He
reminded delegations of the importance of the Interpretative Notes to Article 7 which stressed the
importance of previously determined values and that, under Article 7, the previous methods should be
used with reasonable flexibility in their application.  The Agreement itself clarified that suchflexibility could be possible within the provisions of Article 7 and it was unnecessary to look further.
2.73 The representative of Thailand considered that this proposal, as it dealt with the residual
method, could provide more flexibility to the Agreement, particularly in the case where new,
innovative products were involved.  Previous records of prices of such products did not exist in theG/VAL/M/17
Page 18
importing country.  Therefore, he considered that this proposal would facilitate the task of customs
administrations.
2.74 The representative of Japan also wondered how customs administrations would obtain the
information necessary to determine the domestic market price in the exporting country and the price
in a third country, as well as that necessary to determine the adjustments.  If a proper adjustment was
sought, it might be necessary to examine the exporters' financial books.  If there were significant
promotion or advertising costs such as television commercials, it would be necessary to quantify these
costs to make an appropriate adjustment.  This could create problems.  Further, the Agreement was
written in such a manner as to ensure a certain le vel of predictability for importers.  However, the
importer would not know the domestic market price in the country of importation nor the export price
in a third country.  The importer would only know th e transaction value.  Therefore, if the proposal
was accepted, the element of predictability for importers would be damaged.
2.75 The representative of India stated that the proposal would not effect the predictability inherent
in the Agreement because the transaction value would remain the primary method of valuation.  If the
transaction value could be applied, there would be no need to use any other method.  However, asThailand pointed out, one example when it could be necessary to use other methods was with respect
to new, innovative goods for which the transaction method could not be used and there were no other
means of determining the price.  Article 7 would then be used and the two proposed prices would
augment the choices of methods based on information that would not be available in the country of
importation.
2.76 The representative of Canada reiterated his que stions as to why this proposal was necessary
and how the information would be collected.  He added that if the sources mentioned by the United
States were going to be used to determine the prices, these would only be starting points and certainly
not end points to determining the prices. He asked how it would make application of Article 7 easiersince it was unclear how the information would be procured.  He also considered Japan's comments
relevant.
2.77 The Chairman took note of the statements ma de.  He noted that a number of Members were
still considering the proposals.  He also noted that a number of technical questions had been raised
during this discussion and that he would prepare a report of this discussion and his consultations for
the General Council on his own responsibility.  He would circulate it for technical clarification and
this would be the extent of input from Members at that point in time.
3. Information on Implementation and Administration of the Agreement
a) Notification of national legislation
3.1 The Chairman recalled that Article 22 of the Agreement required each Member to inform the
Committee of any changes in its laws and regulations relevant to the Agreement and any changes in
the administration of such laws and regulations.  In addition, the Decision on Notification and
Circulation of National Legislation, adopted by the Tokyo Round Committee, required each Member
to notify its legislation to the Committee.
i) Brazil
3.2 The Chairman drew Members' attention to document G/VAL/N/1/BRA/2 and 3 which
contained the Brazilian notification of regulations regarding customs valuation.  This item had been
on the agenda since April 1999 and, following questi ons from the EC and the US at the last meeting,
it  was agreed to revert to this item at this meeting.G/VAL/M/17
Page 19
3.3 The representative of Brazil explained that these notifications had been made in a timely
manner and that, in particular, G/VAL/N/1/BRA/3 dealt with instruments of a specific and limited
nature.  The core of the system was contained in G/VAL/N/1/BRA/2 and was fully compatible with
WTO obligations.  This legislation had been the subject of consultations with other Members who had
posed questions which were duly answered in detail and provided to the Committee.  In addition, thereport of the Brazilian Trade Policy Review contained responses from Brazil to questions posed by
these Members.  Since considerable time had elapsed since these notifications were made and there
was nothing new to report to the Committee, his dele gation requested that the matter be removed from
the agenda of the next meeting.
3.4 The representative of the United States noted that this Committee had one of the better
reputations in the WTO for solving problems in a practical manner.  Notifications of legislation and
their examination was an important element in this regard.  Brazil had complied with its obligations,
however, numerous Members had not.  His delegation hoped that this would not become an issue in
the future which the Committee would have to address.  He stated that his delegation had participated
in some of the consultations with Brazil in which it had exchanged questions and responses.
Unfortunately, only recently his delegation had obtained translations of lengthy responses.  Therefore,his delegation continued to request that this matter be kept on the agenda for the Committee's next
meeting as a matter of problem-solving and nothing more.
3.5 The representative of Brazil noted that this raised a systemic issue which his delegation had
raised on previous occasions.  The procedures of  the Dispute Settlement Understanding, which his
delegation was under, was a parallel track to the work of the Committee and there were some
important issues related to mixing the two tracks.  Although his authorities requested the removal of
this item from the agenda, he recognized the position of the United States and wished to record his
delegation's disagreement with keeping this item pending on the agenda of the Committee.
3.6 The Committee agreed to revert to this item at its next meeting.
ii) Costa Rica
3.7 The Chairman drew Members' attention to document G/VAL/N/1/CRI/1 which contained
Costa Rica's Law No. 8013, published in Special Section No. 57-A of the Official Journal "La
Gaceta" of 5 September 2000.
3.8 The representative of Mexico asked if Costa Rica had already invoked the reservation which
corresponded to Article 259 of the Costa Rican legislation related to delayed application of the
computed value?
3.9 The Chairman confirmed that Costa Rica had notified the reservation referred to by the
Mexican delegation and the Committee agreed to conclude the examination of the Bulgarian
legislation.iii) Estonia
3.10 The Chairman drew Members' attention to document G/VAL/N/1/EST/ 1 which contained the
Customs Valuation Act of 8 February 1995 and the Procedure for Declaration, Determination and
Adjustment of Customs Value, Regulation of the Minister of Finance of 15 March 2000, No. 29.
Document G/VAL/N/2/EST/1 contained Estonia's responses to the Checklist of Issues.
3.11 The Committee agreed to conclude the examination of the Estonian legislation.
iv) JapanG/VAL/M/17
Page 20
3.12 The Chairman drew Members' attention to document G/VAL/N/2/JPN/1 which contained
Japan's responses to the Checklist of Issues.
3.13 The Committee agreed to conclude examination of this item of the agenda.
v) Jordan
3.14 The Chairman noted that document G/VAL/N/ 1/JOR/1 contained the notification of Jordan's
Customs Law No. 20 of 1998.  In addition, document  G/VAL/N/2/JOR/1 contained the responses to
the Checklist of Issues.
3.15 The representative of the European Communities noted that, when Members transcribed the
provisions of Article 1 of the Agreement into national legislation, the wording of Article 1.2(b) tended
to vary.  Sometimes this was not problematic, but sometimes it opened the possibility to different
interpretations.  Since this was a signficant prov ision, his delegation would prefer the wording of the
original Article in the Agreement.  At this meetin g, this comment concerned this legislation and that
of Zambia.  He sought clarification that what was meant was actually the meaning as contained in the
Agreement.
3.16 The representative of Jordan confirmed that this Article of its legislation would be applied in
the spirit of the Agreement.3.17 The Committee agreed to conclude examination of Jordan's legislation.
(vi) Kyrgyz Republic3.18 The Chairman drew Members' attention to document G/VAL/N/1/KGZ/1 which contained the
notification of the relevant sections of the Customs Code and Regulations of the Kyrgyz Republic.
He noted that this notification was circulated only recently.
3.19 The representative of the Kyrgyz Republic excused the late circulation of the notification and
was prepared to take questions for which he would seek to respond by the Committee's next meeting.3.20 The representative of the European Communities requested more time to consider the
legislation.3.21 The Committee agreed to revert to this item at its next meeting.
(vii) Malta
3.22 The Chairman drew Members attention to document G/VAL/N/1/ML T/1 which contained
Malta's notification of its Act No. XIX of 1999 entitled An Act to Amend the Import Duties Act .
3.23 The Committee agreed to conclude the examination of Malta's legislation.
(viii) Poland3.24 The Chairman noted that document G/VAL/ N/1/POL/2 contained the Regulation of the
Minister of Finance of 29 February 2000 amending  the Polish Regulation concerning the manner of
use of foreign exchange rates announced by the National Bank of Poland in order to determine thecustoms value.
3.25 The Committee agreed to conclude the examination of Poland's legislation.G/VAL/M/17
Page 21
(ix) Romania
3.26 The Chairman noted that document G/VAL/ N/1/ROM/2 contained Romania's notification of
its national legislation.  At the last meeting, it was agreed to revert to this item at this meeting,
following questions by the United States.
3.27 The representative of the United States stated that his delegation had engaged in constructive
consultations which appeared to be heading towards a solution.  However, since these consultations
concerned this legislation and the practices therein, his delegation was not yet in a position to agree to
remove this item from the agenda and asked that it remain on the Committee's agenda.
3.28 The Committee agreed to revert to this item at its next meeting.
(x) Slovenia3.29 The Chairman drew Members' attention to document G/VAL/N/1/SVN/2 which contained
relevant changes to the national legislation regardin g customs valuation.  Specifically, this notification
contained Articles 15 to 27 of the Customs Act, and Chapter 4 of the Decree on the Implementation of
the Customs Act, both of which maintained and deta iled the legislation previously in force, already
notified in document G/VAL/N/1SVN/1.
3.30 The Committee agreed to conclude examination of Slovenia's legislation.
(xi) Turkey3.31 The Chairman drew Members' attention to document G/VAL/N/1/TUR/2 which contained the
new Turkish Customs Law No. 4458 which entered into force as of 5 February 2000 and was
published in the Turkish Official Gazette No. 23866 dated 4 November 1999.
3.32 The Committee agreed to conclude examination of Turkey's legislation.
(xii) Zambia3.33 The Chairman drew Members' attention to document G/VAL/N/1/ZMB/1 which contained
Zambia's notification of its Customs and Excise Act and Customs and Excise Regulations, 1999.3.34 The Committee agreed to conclude examination of Zambia's legislation.
3.35 The Chairman urged all Members, particularly those Members who had recently begun to
implement the Agreement, to notify their legislation under Article 22 of the Agreement.  Furthermore,
all Members applying the Agreement should notify their responses to the Checklist of Issues which
was found in document G/VAL/5.  Both notificati ons were obligations under the Agreement and
should be respected as soon as possible.
b) Notification that national legislation under the Tokyo Round Customs Valuation Agreement
remained valid under the WTO Customs Valuation Agreement
3.36 The Chairman recalled that at the last meeting it had been agreed to suspend consideration of
this sub-item unless there was something to repo rt.  He had not received any new information
concerning the outstanding notifications under this sub-item, so he proposed that the Committee againsuspend its consideration.
3.37 The Committee agreed.G/VAL/M/17
Page 22
c) Notifications made by developing country Members
3.38 The Chairman drew Members' attention to document G/VAL/2/Rev.11 which contained the
updated list of all Members which had invoked special and differential treatment provisions under the
Agreement.  It was a revision of the previous version of the document to show those Members not
applying the Agreement, whether through invocati on of Article 20.1 or paragr aph 1 of Annex III.  In
addition, for those applying the Agreement, the document showed the reservations in effect for each
Member under Article 20.2, and under paragraphs 2, 3 and 4 of the Agreement.  The document also
maintained the list of those developing country Members which may still retain some of the special
and differential treatment provisions according to the Decision on "Continued Application under the
WTO Customs Valuation Agreement on Invocations of Provisions for Developing Countries for
Delayed Application and Reservations under th e Customs Valuation Agreement 1979" (WT/L/38).
He also drew Members' attention to document G/VAL/W/76 which followed the Committee's request
that the Secretariat prepare a reference note listing the various notification and reporting requirements
of Members with respect to their Decisions granting extensions and minimum value reservations.  He
proposed that the Committee take note of the information contained in these documents.
3.39 The Committee took note of the information.
3.40 The Chairman noted that, also under this sub-item, there were 7 outstanding requests for
extensions under consideration.  He understood that a draft decision for the Maldives had been
recently circulated in document G/VAL/W/69/Add.1.  The document reflected the Maldives'
agreement with the draft decision that had been faxed to the Maldives customs earlier.  He proposedthat the Committee agree to adopt this draft decision.
3.41 The Committee adopted the Decision contained in G/VAL/W/69/Add.1.
3.42 The Chairman noted his understanding that consultations were still on-going on six other
outstanding requests and that there was no action to be taken presently by the Committee.  He
proposed that the Members which had made these requests keep the Secretariat up-dated on the
progress of their requests and when and if a draft decision had been formulated which they would like
to put before the Committee.  He would attempt to call a meeting of the Committee as soon as
possible thereafter to consider the drafts.  This would not prejudice any new requests which might be
added to this group.
3.43 The representative of the European Communities stated that his delegation wished to
conclude two long-standing requests from Bahrain and Senegal.  These countries should be
forthcoming with the necessary information to conclude their requests.
3.44 The representative of Senegal stated that his delegation took note of the EC statement and
wished to assure the Committee that it hoped to be able to finalize consultations concerning its request
very soon.  His delegation had worked towards a decision and, in spite of intense consultations, had
come up against problems, particularly concerning minimum values.   In the next few weeks, he
hoped to achieve an agreement.
3.45 The Committee agreed to proceed in the manner proposed by the Chairman.
3.46 The Chairman stated that finally, under this sub-item, the Committee was to consider the
notifications made under the Decisions concerning delay extensions and minimum value reservations.
He drew Members' attention to a recent notification received by Tunisia contained in documentG/VAL/N/4/TUN/1 which was not on the airgram but should also be taken up at this meeting.  He
asked for comments on any of the notifications.G/VAL/M/17
Page 23
3.47 The representative of Jamaica stated that, in accordance with paragraph 2 of the Decision
concerning Jamaica's request for an extension of the transition period in document G/VAL/24, her
delegation would provide an oral report to the Committee on the progress of fulfilling its work
programme in Annex I of that Decision and the status of implementation of the Agreement.  This
would be followed by a written report for circulat ion.  Concerning legislation, the draft bill was
considered by the Cabinet, approved by the Legislative Committee and was before the Cabinet for
approval for tabling in the Parliament.  It was anticipated that the legislation would be ready for
implementation in January 2001.  Concerning admini strative procedures, their preparation was in
progress and should be completed by the end of November.  This activity had been influenced by the
contents of a handbook generously made available by the United Kingdom Customs & Excise
Department who had continued to act as a source of guidance in Jamaica's preparation for
implementation.  In addition, use had been made of the recently released customs valuation controlhandbook as well as the guidelines on drafting national valuation legislation for implementation of the
Agreement, both prepared by the WCO.  Concerning training, the time foreseen in the work
programme had been effected by schedule changes by trainers from overseas.  One trainer from the
WCO was originally scheduled to come in September 2000, but this was rescheduled to mid-January
2001.  Jamaica also made a request to the Cari bbean Customs Law Enforcement Council (CCLEC) to
provide training assistance as the one-week training by the WCO would be inadequate.  The CCLEC
would provide training from Canada.  This had been scheduled to begin in October but had been
delayed due to personnel problems until 13 No vember 2000 when a fact-f inding mission would be
held.  The actual dates for training and the contents of the course would be determined at that time.  A
local official, instrumental in the transition process, had benefitted from a one-month training coursesponsored by the Commonwealth Secretariat and the Government of India.  There were on-going
efforts to put in place the necessary staffing complement, the preparation of the high-risk list, and
updating the list of related persons.  However, the provision of relevant infrastructure and the
computerization exercise had been effected by budgetary constraints.  A guide for the use of the
public was now being printed and would be available by early December 2000 and the first scheduledtalk to interested parties was to be given at a seminar hosted by the Institute of Chartered
Accountants, members of the legal and accounting prof ession, and customs brokers.  Notwithstanding
these constraints, it was anticipated that Jamaica would be ready for implementation by March 2001.
3.48 The representative of Colombia stated that her delegation had reported, as required by the
Decision granting Colombia the right to use minimum values, on the criteria, methodology and the
sources and procedures being used to calculate minimum values to the Committee which wascirculated in document G/VAL/N/4/COL/1, of 3 July  2000.  Since the circulation of this report and
this meeting, there had not been any changes in the legislation, no new minimum prices had been
introduced, and in a Resolution of 3 July, the prices of a component of shoes were taken off the list of
products subject to minimum prices because this had not been authorized by the Committee.
3.49 The representative of Canada thanked delegations for providing the reports as foreseen under
the Decisions and his Government found them usef ul in providing information on minimum values
for transparency, and on the status of progress made under the various work programmes.
3.50 The Committee took note of the statements made and the information contained in the
notifications.
4. Information on the application of Decision of the Committee on Customs Valuation
4.1 The Chairman stated that under this agenda item, the Committee took note of any new
notifications of application of the Decisi on of the Committee on Customs Valuation on the
"Treatment of Interest Charges in the Custom s Value 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.8 had beenG/VAL/M/17
Page 24
circulated which contained the references of the recent notifications by Estonia and Jordan.  In
addition, document G/VAL/W/5/Rev.8/Add.1 contained the reference for Poland's notification of
application of these Decisions.
4.2 The Committee took note of the information.
5. Technical assistance
(a) Information on technical assistance
5.1 The Chairman stated that under this first sub-item, the Secretariat had recently circulated, for
information, a document G/VAL/8/Add.7 which co ntained information on technical assistance
activities carried out by the WCO.
5.2 The Committee took note of the information.
(b) Article 20.3 technical assistance activities
5.3 The Chairman stated that this item had been on the agenda following agreement by the
Committee at the October 1996 and April 1997 meetings.  During the course of discussions under this
item, the Secretariat had prepared the documents listed in the airgram to assist the Committee's
consideration.  The Chairman suggested that in futu re meetings, this sub-item could be combined with
sub-item D under which the Committee discussed the proposal from the European Communities on
technical assistance.
5.4 The representative of Australia informed the Committee that his delegation had submitted to
the Secretariat a report on customs-related technical assistance provided to developing countries by
Australia since 1996.  This would be circulated for information.
5.5 The Committee took note of the statement made.
(c) Report from the Secretariat on its activities
5.6 The Secretariat informed Members that since the last meeting of the Committee, seven
missions had been carried out, of which four we re follow-up missions.  One of the missions was
carried out in cooperation with the WCO and consultants were engaged for the others.  This brought
to 43 the number of Members covered by the Programme, out of the 56 Members which had
requested the five-year delay period.  The Secretariat had recently established the Working Group on
Least Developed Countries which would be responsible for technical assistance for those Members.The Market Access Programme would now be working in cooperation with the new unit established
to administer this Working Group, as well as with the Technical Cooperation Division.
5.7 The Committee took note of the report.
(d) Trade-related technical assistance
5.8 The Chairman noted that, under this sub-item, the Committee had been considering the
proposal by the European Communities on a technical assistance project on customs valuation which
had been contained in the minutes of the June/July 2000 meeting, namely G/VAL/M/15.  ThisG/VAL/M/17
Page 25
proposal was followed by further clarification in document G/VAL/W/71.  At the meeting of 21 July,
the Chairman had given a thematic report on his consultations on the proposal up to that date.  This
report was contained in G/VAL/M/16.  Since that time, and given the summer break and other
pressing matters on the agenda, the Chairman had undertaken consultations whenever possible. He
had hoped that his consultations would have taken him to a position to be able to make a formalstatement at this meeting.  However, this could not be agreed by some Members.  He asked Members
whether the matter should be taken up at the next formal meeting of the Committee or whether the
Committee should suspend this meeting to take up the matter at the appropriate time.
5.9 The representative of Peru stated that her Government had evaluated the EC proposal and,
considering technical cooperation valuable in this area, congratulated the EC on this proposal.
Technical assistance was necessary for developing c ountries to strengthen their capacity to implement
the WTO Agreements which would contribute to a better participation of developing economies in the
multilateral trade system.  Technical assistance should include the different sectors involved, both
public and private, such as infrastructure, human resources, administrative organization, etc.  For the
adequate implementation of the Agreement on Customs Valuation, sufficient human resources were
needed with practical knowledge of the Agreement.  Therefore, theoretical as well as practical courseswere necessary to be able to solve cases that may arise.  Regarding infrastructure, teams with access
to advanced technology to simplify customs proc edures in conformity with the Agreement were
necessary.  Regarding administrative organization, experts in customs were necessary to understand
how the Agreement functioned in other countries, and to be able to adapt the national customs
structure.  Peru required assistance in formulatin g import declarations, preparing computer modules as
well as other electronic infrastructure in the customs offices.  Finally, it was necessary to have
specialized preparation in accountancy with risk indicators.  Peru had recently adopted a system and
needed technical assistance to develop it and enhance its practical application.
5.10 The representative of the European Communities was convinced that significant progress had
been made on this matter since the last meeting and his delegation believed that it was on the
threshold of a common understanding which would guide the Committee in reinvigorating its work on
technical assistance.  His delegation wanted to find an agreement as soon as possible.
5.11 The representative of Chile voiced his concern over leaving this matter until the next formal
meeting of the Committee which would be next year.  He noted that a seminar had been held on the
matter the previous day, indicating the importance of technical assistance in this area.  Several pointsemerged from the discussions in this seminar including coordination among donors, individual
requests of Members, possible multilateral monitoring of technical assistance, etc.  The Committee
should take up these matters as well as the role of the private sector.
5.12 The representatives of India and Canada
 voiced support for suspending the meeting.
5.13 The Committee agreed that, under the agenda item Other Business, it would agree to suspend
this meeting.
6. India – Information on certain aspects of the European Communities valuation policy
6.1 The Chairman stated that this matter was fi rst raised by India at the Committee meeting in
November 1998.  Questions were put to the EC delegation by India and responses were received from
the EC.  At the April/May 2000 meeting of the Committee, India asked further questions of the EC,
and agreed to provide these new questions to the EC in writing.  He understood that no such questionswere received.  At the 21 July 2000 meeting of the Committee, India again raised the matter under
Other Business and requested responses to the questions it had put to the EC.  The EC responded that
it had replied to the questions provided in this Co mmittee as well as in the Trade Policy Review Body.
At the conclusion of that meeting, he had urged bot h parties to make all efforts towards resolving theG/VAL/M/17
Page 26
matter and that bilateral efforts continue with a view to resolving any discrepancies on this matter.  It
was on the agenda of this meeting following agreement at the April/May 2000 meeting.
6.2 The representative of India noted that the matter had been on the agenda for a while and her
delegation would also appreciate an early, mutually satisfactory resolution.  However, she recalled
that India had requested the EC to provide the Regulations 2913/92, 2454/93, and 3223/94 to which it
had referred in their replies to her delegation's first set of questions.  The EC had also referred to two
Council Regulations in addition to certain separate legal instruments.  She noted that her delegation
had additionally posed oral questions to the EC which were reflected in the minutes of that meeting in
G/VAL/M/14.  She asked the EC to send to her delegation the relevant Regulations and Council
instruments so that it could fully examine the EC's replies.
6.3 The representative of the European Communities considered that bilateral discussion of the
matter would be more productive to resolving this matter.  He agreed that there were questions posed
to which his delegation had replied.  There were additional questions which his delegation had waited
to receive formally in writing.  His delegation believed that India had the Regulations in question,
particularly the basic Customs Code which had been circulated in the Committee.  Nevertheless, hisdelegation had no problem in providing these docume nts to India, however, he did not know exactly
to which Council Regulations the Indian delegation wa s referring.  He suggested that India and the EC
clarify jointly what information was still needed.  If there were additional questions, his delegation
would wait to receive them.  His delegation considered the replies given up to now as complete and
covered all substantial matters.  They indicated that the Agreement was being fully respected.  If,however, any Member had any problem with the EC 's valuation policies, his delegation was open to
discuss them.
6.4 The Chairman proposed that the item be taken off the agenda while bilateral consultations
continue.  This would be without prejudice to the positions or the ability for either party to raise the
matter again at the next formal meeting if necessary.
6.5 The representative of India noted that her delegation had requested the three Council
Regulations that the EC had referred to separately.  Her delegation preferred that the item remain on
the agenda for the next formal meeting and would engage in bilateral consultations with the EC.
Should the consultations resolve the matter, she would inform the Committee.
6.6 The Committee took note of the statements made and agreed  to revert to this item at the next
meeting.  He urged both parties to engage in fruitful bilateral discussions with a view to reaching a
resolution to the matter.
7. Sixth Annual Review of the Implementation and operation of the Customs Valuation 
Agreement
7.1 The Chairman drew Members' attention to document G/VAL/W/77 which contained the draft
of the Sixth Annual Review of the Implementation and Operation of the Customs Valuation
Agreement.  He proposed that the Committee examine the document section-by-section.
7.2 The representative of India noted that Members of the Committee were aware that, as far as
her delegation was concerned, the Committee had not formally adopted the Fourth (1998) and Fifth
(1999) Annual Reviews of the Agreement.  That wa s because there were certain issues contained
therein, common to these documents as well as to the Sixth Annual Review, that her delegationconsidered were not reflected in a factual manner.  The resolution of these issues would require the
Chairman to continue consultations on the Fourt h, Fifth and now Sixth Annual Reviews.  Therefore,
she proposed that the Committee take up the Sixth Annual Review after such consultations are
completed.G/VAL/M/17
Page 27
7.3 The Committee took note of the comment made and the document G/VAL/W/77.
7.4 The representative of India asked for clarification as to what was meant by "noting" document
G/VAL/W/77.  She stated that her delegation's position was that this document be a part of the
Chairman's consultations.  Since there were no comments to the contrary, she considered that the
document containing the Sixth Annual Review continue to be suspended as an agenda item as were
the Fourth and Fifth Annual Reviews.
7.5 The Chairman clarified that the Indian delegation's comments had been noted and that the
Sixth Annual Review would form part of the info rmal consultations on the Fourth, Fifth and Sixth
Annual Reviews.
8. Report of the Committee to the Council on Trade in Goods
8.1 The Chairman stated that the Committee was required to submit its report to the Council on
Trade in Goods by its meeting of 15 November 2000.  A draft of the report was contained in
document G/VAL/W/78 and he asked for comments on it.
8.3 The Committee adopted the report and agreed  that the Secretariat update it to reflect the
proceedings of this meeting and submit it to the Council on Trade in Goods.
9. Preshipment Inspection
9.1 The Chairman stated that this item was a standing item on the agenda following agreement by
the Working Party on Preshipment Inspection.
9.2 There were no comments on this agenda item.
10. Other business
(a) Guatemala's communication (G/VAL/W/75)
10.1 The Chairman drew Members' attention to a communication by Guatemala in document
G/VAL/W/75 containing a request to issue a corrigendum to its Decision (G/VAL/33) granting an
extension of the delay period in implementing the Agreement.  He proposed that the Secretariat issue
the corrigendum reflecting Guatemala's request.
10.2 The representative of Mexico sought clarification that this was a corrigendum, not an
extension request.10.3 The Committee agreed that the Secretariat issue a corrigendum to G/VAL/W/75.
(b) Date of the next meeting
10.4 The Chairman stated that, given the Committee's deliberations on certain items on the agenda,
including the EC proposal under item 5(d),  he proposed to suspend the meeting until 13 November
2000.G/VAL/M/17
Page 28
10.5 The Committee agreed.
11. Resumption of meeting on 13 November 2000
The meeting was resumed to take up item 5( d) of the agenda contained in WTO/AIR/1427.
1.1 The Chairman stated that he had conducted informal consultations on this item over some
time which had led him to make a statement at the 21 July 2000 meeting.  This statement summarized
a number of re-emerging themes which the Committee would need to address, and he stated that he
would use that as the basis for further informal consultations on appropriate next steps.  After carrying
out these consultations, he considered that he was in a position to make another statement
summarizing the situation.  He would invite comments afterwards.
1.2 Following his informal consultations on the EC's proposal to reinvigorate the Committee's
work on technical assistance, he noted agreement in the Committee:
- that there was a general interest in reinvigorating the Committee's work on technical
assistance.  As document G/VAL/W/70 showed, there was a history in the Committee of work ontechnical assistance, which all agreed could be strengthened and provided a solid basis upon which
further work could be built;
- that there was still a need to further improve technical assistance in order to enhance
developing countries' capacity to implement and administer the Agreement and that to this end a
better coordination between assistance providers and donors and beneficiary countries was essential;- that therefore the Committee agreed to develop with the support of the Secretariat a work
programme to reinvigorate and improve the provision of technical assistance by developed countries
to developing countries in accordance with Article 20.3 of the Agreement on Customs Valuation with
a view to facilitating the effective implementation and administration of the Agreement on the
understanding that developing countries may autonomously participate in such technical assistance toother requesting developing countries.  The work programme was to be based on best international
practice principles as also stated in the integrated framework for least developing countries, document
WT/LDC/HL/1/Rev.1, in order to ensure a demand driv en approach to technical assistance, recipient
countries' ownership of assistance activities, enhan ced information sharing, and coordination between
donors, providers and beneficiary countries.  The work programme was to encompass the following
elements, taking into account resource constraints in developing countries:  stocktaking of existing
technical assistance activities, review of priority activities for implementation and administration ofthe Agreement, survey of developing countries' needs in such priority areas, assessment of needs
(within clear timeframes) in light of the agreed  priorities, and establishment of follow-up and
monitoring mechanisms;
- that the Committee continue to request all the providers and donors of technical assistance to
better coordinate their actions on the basis of the priority areas discussed by the Committee and of theassessment of needs undertaken under the work programme.  All international organizations active in
this area should be invited to participate in the implementation of the work programme;
- that the work of this Committee on technical assistance was without prejudice to work of
other WTO bodies, as well as technical assistance delivered under Article 20.3 of the Customs
Valuation Agreement.  However, the Committee ag reed to communicate his statement and the work
programme to the Council for Trade in Goods and to the Committee on Trade and Development
which may wish to consider their implications for technical assistance programmes related to the
implementation of other WTO agreements.  The Committee also agreed to regularly make available to
the Council for Trade in Goods and the Committee on Trade and Development information on the
progress achieved under the work programme;- that the establishment and implementation of this programme did not affect in any way the
commitments undertaken by countries that had been granted an extension in the transition period for
the implementation of the Agreement or the review of other implementation issues in the context of
the implementation review mechanism.G/VAL/M/17
Page 29
1.3 The representative of the European Communitie s thanked the Chairman for the work he had
put into his delegation's proposal and other Members for their constructive approaches.  He added that
the efforts of the EC were to start a process and the Chairman's statement did not reflect the
conclusion, but only the beginning.  If the Committee agreed, his delegation hoped to get on to thereal work in the next months to make operational the Chairman's statement.  This would require
further reflection which he hoped Members would comment upon.
1.4 The representative of Mexico asked for distribution of the Chairman's statement. His
delegation underlined that work on technical assi stance had been underway for some time in the
Committee, and he did not understand how the new wo rk programme of the EC proposal would fit in.
He was not against the proposal, but asked how it would coordinate with what was on-going in theSecretariat, including the cooperation with the Technical Cooperation Division.  The work in other
Committees would also have to be taken into account.  He further asked if the new proposal would
deal specifically with valuation or with larger customs issues, which was not necessarily the purview
of this Committee.  In addition, he noted that Article 20.3 specified that developed countries should
provide technical assistance to developing country Members in accordance with their capacities.
1.5 The Chairman clarified that his statement did not imply a "reinvention of the wheel" and
recognized that there was a history of work in this area, including that of the Secretariat.  He meant
that the Committee should seek to develop, with the support of the Secretariat, a work programme
which reinvigorated the on-going work.  It was true that the Committee should focus on matterswithin its purview.  Therefore, his statement stressed addressing the matter in a coordinated matter
with the other Committees in the WTO.
1.6 The representative of the Philippines agreed with the statement by the Chairman but did not
consider that it contained anything new compared to the Committee's on-going work on technical
assistance.  Technical assistance was guided, in reality, by the level of financial support for the
project, and she was looking forward to see how the proposal would be operationalized.  She added
that her delegation wanted to believe that when all the extension requests were negotiated and
granted, that those countries which were directly involved in the negotiations were fully aware of the
needs of these Members and could help provide for them.
1.7 The representative of India said that her delegation understood that the Committee and
developed country Members had already been engaged in providing technical assistance to
developing country Members which had requested it.  However, this had proved to be insufficient to
address all concerns.  The new proposal was intended to address those lacunae in the efforts
underway.  Her delegation hoped that this proposal would strengthen the work currently being done
and not seek to replace or nullify it.  Her delegation attached importance to the Chairman's statementthat the work programme would be developed in accordance with Article 20.3 of the Agreement,
which required developed countries to provide developing countries with technical assistance upon
mutually agreed terms.  She noted, however, that India and some other developing countries had been
providing technical assistance as well.  In addition, her delegation attached importance to the fact that
the work programme would address only customs valuation issues, since it had to be developedstrictly in accordance with Article 20.3, and would not intrude into other areas.  Further, the actual
elements of the work programme were intended to be developed within clear time frames and the
elements should not become so burdensome that developing countries were effectively denied
technical assistance and were hesitant to come fo rth with requests of what they believed would help
them to implement the Agreement.  Her delegation also stressed that there should be no linkage
between this work programme and the work being done in other Committees or Councils, which were
to decide their own technical assistance activities in accordance with their mandates.  If the
Committee on Customs Valuation were to show that it developed something workable, effective, and
efficient, then those other bodies would take notice.  Finally, her delegation attached importance to
the fact that this work programme was not intended to imply that technical assistance was the soleG/VAL/M/17
Page 30
manner for helping developing countries implement or administer the Agreement.  Indeed, the
Implementation Mechanism of the General Council was already addressing issues that developing
countries had raised.
1.8 The representative of the United States considered the notion of "reinvigoration" of the
Committee's work an important underlying theme.  He noted that the delegation of Mexico had
usefully pointed out the work over the past three years and he could understand confusion as to how
the new work programme might fit in.  Indeed, the Committee had engaged in surveys, needs
assessments, efforts to identify priority activities, etc. so the question of where the Committee would
go from here was relevant.  He believed that some delegations were dissatisfied with the results of the
work over the past few years which had been ad hoc.  Perhaps the Chairman's statement reflected the
start of a more systematic approach, whereby a detailed work programme would be developed withprecision and which would allow us to learn from the experience over the last few years.  Therefore,
his delegation supported the present initiative.  Finally on the point by the Philippines regarding
Members' extension requests, he noted that Members which had worked with these Members had tried
to address these needs.  However, he considered that it would be unfortunate if needs assessments
were carried out only in the context of extension requests.  The present proposal was a moresystematic approach to countries coming forward and identifying their needs outside the context of an
extension request.
1.9 The representative of Norway considered the points made useful and added that his delegation
attached importance to the need for effective co mmunication of all agents involved in technical
assistance in this matter.  It was also important to see the present proposal in a broader context of
overall work. The aim of the Committee's work s hould be that technical assistance was readily
available so that Members would not have to ask for extensions.
1.10 The representative of Switzerland considered that the elements of the work programme would
be useful because they would give insight into th e technical assistance provided so far.  The most
important element would be to establish follow-up and this should be an important aim of the work.
Implementation of assistance needed by developing countries should be carried out as quickly as
possible.  Her delegation considered that a well-functioning system of customs valuation was
beneficial for all Members.  Therefore, all Member s should strive towards its achievement, developed
countries in financial and substantial support and developing countries in analysing their needs and in
requesting assistance.
1.11 The representative of Jamaica emphasized the importance of demand-driven technical
assistance, with practical applications of the Agreement, and of capacity-building.  Her delegation did
not envisage that a reinvigoration of the Committee's work would result in a reduction of current total
levels of assistance, whether bilateral or multilateral, to recipient countries, nor would take away fromaspects of the Committee's present work which had met with success.
1.12 The representative of Mauritania stated that many developing countries had undertaken wide-
ranging reforms to increase their capacities.  It was an on-going learning process, both for the
beneficiaries as well as for the donors.  His delegation was in favor of demand-driven technicalassistance, provided in an integrated way and focu sed on a long-term plan.  Technical assistance had
for some years been on an ad hoc basis and, often, there were gaps left by consultants and experts
from organizations and development partners.  Trainers needed to be trained so that the beneficiaries
of technical assistance could become the true owners of such assistance.
1.13 The representative of the Philippines noted that inadequacies of the Secretariat's work in
meeting the needs identified by developing countries was because there were no funds for carrying
out this work.  In the Budget Committee there was a proposal for a fund of US$ 10 million for
technical assistance, and her delegation was pleased that many developed country Members were
disappointed that these funds could not be put into the 2001 budget, while there were other developedG/VAL/M/17
Page 31
country Members which were still questioning the role of technical assistance in the WTO.  Her
delegation considered that if "reinvigoration" was desired, Members would have to give what was
needed.
1.14 The representative of Australia supported the Chairman's statement and was ready to work
with other Members to operationalize the "reinvigoration" of the Committee's work and to discuss
tasks that the Committee should focus upon in its continuing work in this area.
1.15 The representative of the European Communities was pleased that work could now proceed.
He noted two themes to the discussion.  The first related to the question of what was new to the
proposal, as much had been done in the Committee.  He responded that his delegation's proposal did
not seek to revolutionise the work of the Committee,  but to renew its efforts.  With respect to the
funding question, he considered that, with a valid work programme, it would easier to garner funds, as
opposed to requesting in a vacuum.  He added that the word "administration" in his delegation's
proposal was new and implied an evaluation of th e present work with a monitoring and follow-up
role.  This would make the technical assistance efforts more effective and would help to move away
from an ad hoc approach.  The second theme related to how this proposal related to the on-goingwork.  He saw his delegation's proposal as building on to this work and not replacing it.  He again
noted that this was the starting-point and not the conclusion, so Members would be free to discuss the
matter and its development in the future.
1.16 The Committee agreed to proceed with the work on technical assistance on the basis of the
Chairman's statement.  It was further agreed to suspend the meeting to take up item 3(c) of the
existing agenda in WTO/AIR/1427 at the resumption.
12. Resumption of meeting on 24 November 2000
The meeting was resumed to take up item 3( c) of the agenda contained in WTO/AIR/1427.
1.1 The Chairman recalled that the purpose of this meeting was to address extension requests for
which draft decisions were pending.  He drew Me mbers' attention to document G/VAL/W/73/Add.1
which contained the draft decision regarding Bolivia's request for an extension under paragraph 1,
Annex III of the Agreement.
1.2 The Committee adopted the Decision contained in G/VAL/W/73/Add.1.
1.3 The representative of Bolivia thanked Members for adopting the Decision.  She informed the
Committee that the customs reform process in Bolivia, with the approval of the General Customs Law
on 20 July 1999, was an historic event in Bolivia's customs administration.  Bolivia's customs was notmodernizing;  the reform process implied the creation of a new institution eliminating the main
problems that Bolivian customs had been facing for more than 50 years.  This political decision taken
by her Government was intended to comply with one of the commitments assumed in the Uruguay
Round.  Implementation of the Agreement implied enormous efforts with extreme social cost.  This
was why her delegation requested a two year extension.  For example, the challenges faced wasexemplified by the cost of the reform process, estimated at about US$ 35 million, for a small economy
with a GDP per capita was US$ 2000.  Despite th e costs, being aware of the WTO commitments,
Bolivia would use the time granted by the Committee to fully apply the Agreement.  However, if
necessary, her Government would revert to the Committee to raise specific implementation
difficulties it might encounter.
1.4 The Committee agreed to suspend the meeting to continue discussion of this agenda item,
pending translation of additional draft decisions.G/VAL/M/17
Page 32
13. Resumption of the meeting on 29 November 2000
The meeting was resumed to take up item 3(c) of the agenda contained in WTOAIR/1427.
1.1 The Chairman recalled that the purpose of this meeting was to address extension requests for
which draft decisions were pending.  He drew Me mbers' attention to document G/VAL/W/72/Add.1
which contained the draft decision regarding Burundi's request for an extension under paragraph 1,
Annex III of the Agreement.
1.2 The Committee adopted the Decision contained in G/VAL/W/72/Add.1
1.3 The representative of Burundi thanked the Committee for its sympathetic consideration of the
request.  As all were likely aware, his country was experiencing political difficulties.  In spite of its
goodwill, it had not been possible to implement the Agreement on time.  Recently there had been a
political agreement and it was hoped that peace would come soon.  His Government planned, that by
August 2002, it would be in a position to apply the Agreement.
1.4 The Chairman drew Members' attention to document G/VAL/W/41/Add.3 and Corr.1 which
contained the draft decision regarding Sri Lanka's request for an additional extension under paragraph
1, Annex III of the Agreement.
1.5 The Committee adopted the Decision cont ained in G/VAL/W/41/Add.3 and Corr.1
1.6 The representative of Sri Lanka expressed his Government's appreciation to the Committee
for approving its request for an extension.  This request emanated from exceptional circumstances in
his country due to unforeseen delays in the adoption of the domestic legislation necessary to
implement the Agreement.  He added that the progress report submitted by Sri Lanka of 15 August2000 showed that Sri Lanka had taken a number of measures in the areas of administrative reforms
and human resource development to implement the Agreement.  In this regard, his delegation
expressed appreciation for the technical assistance provided by both developed and developing
country trading partners.  He added that Sri Lanka presently limited use of minimum values for
customs purposes to only used motor vehicles classified under HS 87.01, 87.02, 87.03 and 87.04.
This application of minimum values was not for protectionist purposes but to prevent under-invoicing
and to regularize imports of used motor vehicles.  Therefore, his delegation wished to state for claritythat, pursuant to paragraph 2 of Annex III of the Agreement, it intended to request a derogation before
the expiry of the extension, for these minimum values.  He emphasized Sri Lanka's commitment to the
multilateral trading system and to implement and apply the provisions of this Agreement.
1.7 The meeting was adjourned.G/VAL/M/17
Page 33
ANNEX 1  REPORT TO THE COMMITTEE ON CUSTOMS VALUATION ON THE 11TH
SESSION OF THE TECHNICAL COMMITTEE ON CUSTOMS VALUATION
Ms. Virginia Brown, the Chair of the Technical Committee on Customs Valuation is unable
to attend this Session of the Committee and has asked me, Lee Deegan, to present the report of the11
th Session of the Technical Committee on her behalf.
The formal report of the Technical Committee is published as WCO document VT0164E2.
The 11th Session ended last Friday, November 3.  The 11th Session was very well attended with
delegates and observers from 760 countries and 2 international organisations.
In opening the 11th Session, the Director of the Tariff a nd Trade Affairs directorate, Mr. Holm
Kappler, reported to the Technical Committee on intersessional developments.  This report included
references to the July 2000 WCO Policy Commission and Council Sessions;  technical assistance;  the
WCO informal economic survey;  relationships with international organisations;  the WCO Fellows
programme; and, the previous week's Senior Managers Valuation Seminar.
In regard to the economic survey, the Technical Committee took note of the outcome of the
informal study conducted by the WCO with LDC a nd DC Members regarding the application of the
WTO Valuation Agreement as it related to revenue yield.  The survey, in the form of a short
questionnaire, was directed to those administrations  newly applying or preparing to implement the
Valuation Agreement.  The questionnaire sought basic but direct responses and, as such, Customsadministrations were not asked to quantify their opinions or to substantiate their data-collection
mechanisms.  Thirty five (35) Customs administrations responded fully or in part to the questionnaire.
The Technical Committee noted that of the 35 respondents, 27 stated they had not or did not expect a
reduction in revenue yield as a direct result of implementing the WTO Valuation Agreement.  Eight(8) indicated they had or expected a short-term drop in revenue yield.  In the majority of cases, it was
acknowledged that successful implementation of the Agreement required a change in the way
Customs conducts its business including the need to develop a risk management philosophy and
closer working r3elations with trade.  The Technical Committee took note of the overall outcome of
the survey.
In terms of technical assistance, the Technical Committee took note of the seminars, training
courses and expert missions that had been carried out by the WCO Secretariat during the intersession.
Morocco, Canada, the U:S., South Africa and Japan also provided details of technical assistance
activities undertaken by them since May 2000.  The Technical Committee also took note of the offers
of technical assistance support the WCO had received from other donor organisations during the
intersession.
The Technical Committee was advised of the Senior Managers Valuation Seminar which had
been conducted by the WCO Secretariat over the previous week.  The technical Committee was
reminded that the Senior Managers Seminar was one module of the new valuation training package
which is currently being developed and that this seminar was the pilot for that particular module.  TheTechnical Committee noted that the evaluation of and feedback on the seminar were extremely
positive and that benefits gained had been acknowledged by the participants.  The seminar was aimed
at valuation policy developers and managers of national valuation programmes.  Tit was noted that
many of the participating delegations had requested that the seminar be conducted regularly.  The
Technical Committee further noted that development of the total package was progressing well andthat design partnerships were being forged with France and Sweden on the Basic and Distance
Learning Modules, respectively.G/VAL/M/17
Page 34
It was noted that the issue of exchange of information between the importing country
Customs administration needing pricing/tansaction in formation and the Customs administration in the
exporting country, was being addressed by a working group which included Valuation Sub-
.Directorate staff, under the auspices of the WCO Enforcement Sub-Directorate.  the working group
has carried out work covering the Nairobi Conv ention, the Customs Enforcement Network (CEN) and
bi-lateral alternatives mutual administrative assistance.  The final recommendations of the working
group will be reported to the WCO Enforcement Committee at its meeting in February 2001.
The Technical Committee was also advised that the 43rd Session of the Policy Commission
was held from 3-5 July 2000 and was followed by the 95th and 96th Council Sessions.  The Policy
Commission and Council discussed a range of issues including the WCO 2000-2003 strategic plan;  astrategy for implementing the WTO Valuati on Agreement and Pre-Shipment Inspection.
A number of Specific Technical Questions were examined by the Technical Committee at its
11
th Session.  These included;
a) Meaning of the expression "related to the goods being valued";
b) Practical Case Study:  "Application of Article 1 of the Valuation Agreement to goods
Imported below the cost of production";
c) Meaning of the expression "sufficient guarantee" under Article 13 of the WTO
Valuation Agreement;
d) Treatment under the WTO Valuation Agreement of accrued credits.
All of the technical items were concluded by the Technical Committee at its meeting last
week with the practical case-study  "Application of Article 1 of the Valuation Agreement for goods
sold for export at prices below their cost of production" being adopted by the Technical Committee.
The issues reviewed by the Technical Committee under "questions raised during the
intersession" were:
(a) Practical application of the WTO Valuation Agreement with respect to Decision 6.1
submitted by Brazil;
(b) The Valuation treatment of price-influenced importations from related parties
submitted by Colombia;
(c) Meaning of the expression "as a condition of sale of the goods being valued"
submitted by Bulgaria.
The first two items received a preliminary examination by the Technical Committee and as a
result, the Secretariat will undertake further work during the intersession.  The Technical Committee
decided not to proceed with the third item given that the matter had effectively been dealt with at the
10th Session in May 2001.  It was ultimately agreed that a series of presentations focussing on post
import audit and its associated techniques as they related to Customs valuation would be the next
theme.
Finally, the question of the relationship and/or linkage with Article VII of the General
Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Implementation of Article VII
of the GATT 1994 was raised by some delegates.  Here there appeared to be some confusion as to
which of the two provisions took precedence.  For example, the terms "actual value" and "fully
competitive conditions", which appear in Article VII of the GATT 1994, are not referred to in theG/VAL/M/17
Page 35
Agreement on Implementation of Article VII of the GATT (known as the WTO Valuation
Agreement).  Notwithstanding this, some members are still apparently using the tests of "actual value"
and "competitive conditions" when applying the WTO Valuation Agreement.  It is possible that this
matter may require clarification for Members, in which case it will be referred to your Committee for
examination and discussion.
__________