WORLD TRADE
ORGANIZATIONG/VAL/N/2/CHN/1
5 July 2002
(02-3755)
Committee on Customs Valuation Original:  English
INFORMATION ON IMPLEMENTATION AND ADMINISTRATION
OF THE AGREEMENT ON CUSTOMS VALUATION
Checklist of issues
PEOPLE'S REPUBLIC OF CHINA
The following communication, dated 1 July 2002, has been received from the Permanent
Mission of the People's Republic of China.
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With reference to the Decision on the Checklist of Issues (taken by the WTO Committee on
12 May 1995 and 25 April 1996), I have the honour to provide  the Committee on Customs Valuation
with China's responses to the Checklist of Issues.
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1. Questions concerning Article 1:
(a) Sales between related person:
(i) Are sales between related persons subject to special provisions?
Yes, sales between related persons are subject to the provisions of Article 6, Article 34 of the
Rules of General Administration of Customs of the People’s Republic of China Regarding
Determination on Customs Value of Imported and Exported Goods.
According to Article 6, where the seller and the buyer are related within the meaning of
Article 42, the transaction value shall be accepted whenever the customs administration
considers that the relationship did not influence the price or the importer demonstrates that
such value closely approximates to the one of the following occurring at or about the same
time:
(a) the transaction value in sales to unrelated buyers of identical or similar goods for
export to the People’s Republic of  China;
(b) the customs value of identical or similar goods as determined under Article 9;
(c) the customs value of identical or similar goods as determined under Article 10.
In applying the foregoing tests, due account shall be taken of demonstrated differences in
commercial levels, quantity levels, the elements enumerated in Article 4 and Article 5 and
costs incurred by the seller in sales in which the seller and buyer are not related and that are
not incurred by the seller in sales in which the seller and the buyer are related.
According to Article 34, when believing with grounds that the relationship between the buyer
and seller influenced the transaction value, customs administration shall issue a written noticeG/VAL/N/2/CHN/1
Page 2
to the importer with the grounds for belief and ask for further explanation in written form,
including documents or other evidence, that could demonstrate the declared value is not
influenced by the relationship between the buyer and seller. If, within 15 days from the date
of issuance of the notice, the importer fails to provide further information or the customs
administration still, after examining the document or evidence provided, has reasonabledoubts that, the relationship between the buyer and seller did influence the transaction value,
customs administration may refuse to accept the declared value and determine the customs
value in accordance with the provisions in Article 7 to Article 11.
(ii) Is the fact of intercompany prices prima facie considered as grounds for regarding the
respective prices as being influenced?
Not automatically, the presumptions set forth in Article 42 shall be grounds for deeming the
parties to be related, namely,
(a) they are the members of the same family;
(b) they are officers or directors of one another’s businesses;
(c) one party directly or indirectly controls the other party;(d) both of them are directly or indirectly controlled by a third party;
(e) together they directly or indirectly control a third party;
(f) one party directly or indirectly owns, controls or holds  5 percent or more of the
outstanding voting stock or shares of the other party;
(g) one party is an employee, officer or director of the other party; or(h) the buyer and seller are legally recognized partners in business.    
If the buyer and seller are associated in business with each other in that one is the sole agent,
sole distributor or sole concessionaire of the other, they, if fall within the criteria of the
foregoing paragraphs, shall be deemed to be related.
(iii) What is the provision for giving the communicati on of the afore-mentioned grounds in writing
if the importer so requests? (Article 1.2(a))
According to Article 34, when believing with grounds that the relationship between the buyer
and seller influenced the transaction value, customs administration shall issue a written notice
to the importer with the grounds for belief and ask for further explanation in written form,
including documents or other evidence, that could demonstrate the declared value is notinfluenced by the relationship between the buyer and seller. If, within 15 days from the date
of issuance of the notice, the importer fails to provide further information or the customs
administration still, after examining the document or evidence provided, has reasonable
doubts that, the relationship between the buyer and seller did influence the transaction value,
customs administration may refuse to accept the declared value and determine the customsvalue in accordance with the provisions in Article 7 to Article 11.
(iv) How has Article 1.2(b) been implemented?
According to Article 6, where the seller and the buyer are related, the transaction value shall
be accepted whenever the customs administration considers that the relationship did notinfluence the price or the importer demonstrates that such value closely approximates to the
one of the following occurring at or about the same time:
(a) the transaction value in sales to unrelated buyers of identical or similar goods for
export to the People’s Republic of China;
(b) the customs value of identical or similar goods as determined under Article 9;G/VAL/N/2/CHN/1
Page 3
(c) the customs value of identical or similar goods as determined under Article 10.
In applying the foregoing tests, due account shall be taken of demonstrated differences in
commercial levels, quantity levels, the elements enumerated in Article 4 and Article 5 and
costs incurred by the seller in sales in which the seller and buyer are not related and that arenot incurred by the seller in sales in which the seller and the buyer are related.
(b) Price of lost or damaged goods:
Are there any special provisions or practical arrangements concerning the valuation of lost or
damaged goods?
According to Article 56 of the Customs Law of the People’s Republic of China, if the goods
is lost or damaged before customs clearance, the relevant duty shall be reduced or exempted.
2. How has the provisions of Article 4 to allow the importer an option to reverse the order
of application of Article 5 and 6 been implemented?
According to Article 7 of the Rules, where the customs value of the imported goods cannot be
determined under the provisions of Article 3, customs administration shall apply the following
methods in its sequential order:
(a) transaction value of the identical goods;
(b) transaction value of the similar goods;(c) deductive value;
(d) computed value; and
(e) reasonable means.
    At the request of the importer, the order of the application of the deductive value and the
computed value might be reversed, provided that sufficient information been submitted.
3. How has Articles 5.2 been implemented?
According to paragraph 4 of Article 9, where ne ither the goods being valued nor the identical
nor similar goods are sold within the customs territory of the P. R. China in the condition as imported,
at the request of importer, the price of the goods after further processing shall be used to determine the
customs value, due allowance being made for the value added for such processing, provided otherconditions set in paragraph 1 are satisfied.
4. How has Article 6.2 been implemented?
According to paragraph 2 of Article 10, in determining the customs value of the imports,
Customs may conduct on-site verification of the information provided by the producer of the goods inanother country with the agreement of the producer  and notification in advance to the government of
the country or region in question.
5. Questions concerning Article 7?
(a) What provisions have been made for making value determinations pursuant to Article 7?
According to Article 11, in applying reasonabl e means, the customs value of imported goods
shall be determined in a manner consistent with the principles and general provisions of the Rules andG/VAL/N/2/CHN/1
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on the basis of information available in the customs territory of the People’s Republic of China, other
than the prices of the following:
(a) the selling price in the customs territory of the People’s Republic of China of the
goods wherein produced;
         (b) the higher of the alternative values;
         (c) the selling price of the goods on the domestic market of the country of exportation;
         (d) the price computed other than the values or costs of the first paragraph of Article 10;
         (e) the selling price of the goods for export to a third country or region other than the
People’s Republic of China;
         (f) minimum customs value, arbitrary or fictitious values.
(b) What is the provision for informing the impor ter of the customs value determined under
Article 7?
According to Article 36, upon written request, the importer or exporter shall have the right to
ask for an explanation in writing from the customs administration as to how the customs value of the
imported or exported goods was determined.
(c) Are the prohibitions found in Article 7.2 delineated?
According to Article 11, no customs value of imported goods shall be determined on the basis
of:
(a) the selling price in the customs territory of the People’s Republic of China of the
goods wherein produced;
         (b) the higher of the alternative values;
         (c) the selling price of the goods on the domestic market of the country of exportation;
         (d) the price computed other than the values or costs of the first paragraph of Article 10;
         (e) the selling price of the goods for export to a third country or region other than the
People’s Republic of China;
         (f) minimum customs value, arbitrary or fictitious values.
6. How have the options found in Article 8.2 been handled? In the case of f.o.b. application,
are ex-factory prices also accepted?
According to paragraph 1 of Article 3, the customs value of the imported goods shall be
determined by customs administration on the basis of the transaction value, including the charges
associated with the transport of imported goods and the cost of insurance and associated costs
incurred prior to unloading of the goods at the port within the customs territory of the People’s
Republic of China.
7. Where is the rate of exchange published, as required by Article 9.1?
The People’s Bank of China publishes the official rate of exchange.
8. What steps have been taken to ensure confidentiality, as required by Article 10?
According to Article 38, customs administration shall keep confidential of the information,
which is proprietary information provided by the buyer, the seller or other parties relating to thetransaction.G/VAL/N/2/CHN/1
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9. Questions concerning Article 11?
(a) What rights of appeal are open to the importer or any other person?
According to Article 39, the importer or expor ter who dissent from the decision of the
customs administration on the customs valuation may apply for appeal in accordance with the relevant
provisions of the Customs Law of the People’s Republic of China and the  Regulations on Import and
Export Tariff of the People’s Republic of China .
(b) How is he to be informed of his right to further appeal?
According to Article 64 of the Customs Law of the People’s Republic of China, where the
importer is involved in a dispute over duty paymen t with the customs administration, he shall pay the
duties and then, apply to the customs for a reconsideration of the case. If the decision of
reconsideration is still considered unacceptable, the importer may sue at the People’ Court.
10. Provide information on the publication, as required by Article 12,of:
(a) 
(i) The relevant national laws;
According to the Law for Legislation, all national laws shall be officially published in the
Official Gazette. The Customs Law of the People’s Republic of China adopted by the
National People’s Congress on 8 July 2000, promulgated on 1 January 2001 by Decree No.35
of the Chairman of the People’s Republic of China, has been officially published.
(ii) The regulations concerning the application of the Agreement;
According to the Law for Legislation, all nationa l regulations shall be officially published in
the Official Gazette. The Regulations on Verification and Determination of Customs Value of
Imported and Exported Goods adopted by the Conference of Commissioners of the General
Administration of Customs of the People’s Republic of China on 25 December 2001,
promulgated on 1 January 2002, has been officially published.
(iii) The judicial decision and administrative rulings of general application to the Agreement;
They shall be officially published as well.
(iv) General or specific laws being referred to in the rules of implementation or application.
They shall be officially published as well.
(b) Is the publication of further rules anticipated? Which topics would they cover?
The Regulations on Import and Export Tariff of the People’s Republic of China are being in
the process of revision and shall be published upon the date of its approval. The said Regulations will
cover the issues related to customs valuation of imported and exported goods.G/VAL/N/2/CHN/1
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11. Questions concerning Article13:
(a) How is the obligation of Article 13(last sentence) being dealt with in the respective
legislation?
According to paragraph 1 of Article 37, where customs administration decides that the
determination of customs value needs to be postponed, the importer or exporter may, after submittinga guarantee according to the relevant regulations, request the goods be released from customs custody.
(b) Have additional explanations been laid down?
According to paragraph 2 of Article 37, customs administration shall complete, within 90
days from the date of submitting guarantee, the verification of the goods released under a customs
bond and send a notice regarding the conclusion to the importer or exporter.
12. Questions concerning Article16:
(a) Does the respective national legislation contain a provision requiring customs authorities to
give an explanation in writing as to how the customs value was determined?
According to Article 36, upon written request, the importer or exporter shall have the right to
ask for an explanation in writing from the customs administration as to how the customs value of theimported or exported goods was determined.
(b) Are there any further regulations concerning above-mentioned requests?
There are no other regulations concerning the above- mentioned request.
13. How have the Interpretative Note s of the Agreement been included?
The Interpretative Notes of the Agreement on Implementation of Article VII of GATT 1994
were included in the Chapter2 & 8 of the Rules.
14. How have the provisions of the Decision on  the Treatment of Interest Charges in the
Customs Value of Imported goods been implemented?
The provision of the Decision of 26 April 1984 on the Treatment of Interest Charges in the
Customs Value of Imported goods has not been implemented in China.
15. For those countries applying paragraph 2 of the Decision on the Valuation of Carrier
Media Bearing Software for Data Processing Equipment, how have the provisions of this
paragraph been implemented?
The provision of paragraph 2 of the Decision 24 September 1984 on the Valuation of Carrier
Media Bearing Software for Data Processing Equipment has not been implemented in China.
-For all questions listed above, an indication of the references is requested.
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