./.RESTRICTEDWORLD TRADE
ORGANIZATIONG/PSI/WP/W/22
26 January 1999
(99-0288)
Working Party on Preshipment Inspection Original:  Spanish
COMMUNICATION FROM COLOMBIA
The Usefulness of Databases in the Context of Customs Procedures
The following communication, dated 25 January 1999, has been received from the Permanent
Mission of Colombia.
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The Agreement on Implementation of Article VII of the General Agreement on Tariffs and
Trade 1994 - Agreement on Customs Valuation - undoubtedly constitutes a significant breakthrough
with regard to the system of customs clearance.  As is stated in the General Introductory Commentary,
there is a need for "a fair, uniform and neutral system for the valuation of goods for customs purposes
that precludes the use of arbitrary or fictitious customs values".
However, under-invoicing is a topic of constant concern to customs authorities.  Most of the
countries which have used the services of preshipment inspection entities have been motivated by the
belief that under-invoicing of the declared values of imported goods is practised on a large scale.1
The use of preshipment inspection entities must not be considered a permanent solution or a
substitute for national customs houses.  They should be transitional bodies, which basically provide
technical assistance, enabling the customs houses subsequently to resume full control of all customsclearance functions.  Accordingly, the Colombian authorities have required authorized preshipment
inspection entities to "extend all necessary cooperation to the National Customs and Excise
Directorate to help it set up and put into operation a database on valuation and prices".
From the standpoint of the Colombian customs authorities, the database must be an extensive
information system comprising various price modules, as follows:
Reference price module.  This covers internationally quoted prices of foreign goods, taken
from specialized publications, or prices provided by foreign suppliers.  Domestic sales prices of goods
produced in Colombia and prices of goods on the national market of the exporting country are on noaccount used as reference values.
Module of decisions on past cases.  These are customs values determined and accepted by the
customs authority.  They include customs values for goods imported into Colombia, as recorded in
value and import declarations.
                                                     
1 In this connection, see the documents on national experience presented to the Working Party on
Preshipment Inspection by the WTO Members which use preshipment inspection entities.G/PSI/WP/W/22
Page 2
The Colombian authorities take the view that reference prices based on market prices are
useful at the verification stage, in the context of the checks carried out in this regard by inspectors
(valuation for customs purposes), during the importation process (clearance for consumption).  They
thus become a valuable tool enabling the customs authority to contest a declared value on a
reasonable basis, and thus to determine the amount of the securities to be lodged for possibly higherduties payable as a condition for withdrawal of me rchandise from customs, in accordance with the
provisions of Article 13 of the Agreement on Customs Valuation.
Consequently, there is no infringement of the importer's right to provide evidence, after
withdrawal of the goods from customs, of the pric e actually negotiated and the actual payment made.
On the other hand, the decisions on past cases, referred to as decisions on valuation in Part II,
Chapter 2 of the Handbook on Customs Valuation Control of the Customs Cooperation Council, apart
from being useful at the verification stage prior to  the withdrawal of goods from customs, are of
undeniable value for the checks carried out after th e withdrawal of the goods, specifically pursuant to
Articles 1, 2, 3 and 7 of the Agreement on Customs Valuation.
In the opinion of the Colombian authorities, reference prices may only be used as a basis for
customs valuation in an analysis undertaken after the goods have been cleared, in accordance with
Article 7 of the Agreement on Customs Valuation, following exhaustion of prior methods.
The above is justified by the fact that reference prices are not included in the exceptions
provided for in Article 7.2, subparagraphs (a) to (g) of the Agreement on Customs Valuation.  This is
consistent with the terms of Article 7.1 which states that "…the customs value shall be determined
using reasonable means consistent with the principles and general provisions of this Agreement and of
Article VII of GATT 1994 and on the basis of da ta available in the country of importation".
It is the improper application of reference prices, therefore, not the fact that their use may be
inconsistent with the Agreement on Customs Valuation, which constitutes the problem.
Consequently, particular importance attaches to the criteria applied to the establishment of databases.
They should be composed of customs values arrived at in cases previously resolved, as well as the
prices provided by foreign suppliers.  On no account, however, should sales prices in the country of
importation be used as reference values.
Finally, the information contained in the price da tabase should remain confidential, for which
reason it is not considered appropriate that reference prices be divulged to importers.  If such prices
are public knowledge, the same importers are likely to collude with the sellers in converting them into
minimum prices or "customs value" prices for the payment of customs duties by the importers, which
would be in breach of the provisions of the Agreement on Customs Valuation.
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