G/VAL/W/331  
 
22 May 2019  
(19-3521) Page: 1/2 
Committee on Customs Valuation  Original: English  
 
 NOTIFICATIONS UNDER ARTICLE 22 OF THE CU STOMS  
VALUATION AGREEMENT  
CHINA 
Replies from China to Questions from  
Canada contained in document G/VAL/W/318  
The following submission, dated 17 May 2019, is being circulated at the request of the delegation of 
China.  
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Question 1  
Article 3 : Article 3 of Decree No. 213, indicates that China currently applies different 
customs valuation procedures for casual and commercial goods. The CVA makes no 
distinction between commercial and casual goods, and  valuation procedures should be of 
general application without distinction between sources of supply and must apply to all 
imported goods.  
The CVA remains the sole legal framework constituting the reference for Customs 
Valuation which must be applied indis criminately to all imported goods. Could China 
explain the rules applicable for customs valuation of casual goods and how they are 
consistent with the WTO CVA?  
Answer:  
China currently applies different Customs valuation procedures for casual and commercia l goods. 
Casual goods mainly cover goods for personal use and personal postal items. Along with the 
development of China 's economy, China has witnessed a boom in incoming passengers and inward 
goods for personal use in recent years. In order to facilitate Customs clearance, it is necessary to 
adopt a simplified control program, together with effective risk management, to ensure fast 
clearance of passengers and goods concerned. All these urge China to implement a simplified duty 
collection system regulating goods for personal use and personal postal items.  
The China Customs has developed a differentiated approach to control inward and outward goods 
for personal use and personal postal items, including: 1) inward goods for personal use in a quantity 
within dut y exemption allowance shall be released free of duty; 2) inward goods for personal use in 
a quantity exceeding duty exemption allowance but within the reasonable limit shall be subject to a 
simplified duty collection procedure, i.e. the single tax rate, wi th the duty collected based on the 
value, which is consistent with International Convention on the Simplification and Harmonization of 
Customs Procedures  (Kyoto Convention); and 3) inward goods for personal use in a quantity 
exceeding the reasonable limit shall be regarded as commercial goods, and shall be subject to the 
rules regulating imported commercial goods.  
The principles that the China Customs currently applies for valuation of casual goods are the same 
as those applied for commercial goods, with tr ansaction value as the primary basis, which is 
consistent with WTO Valuation Agreement.  G/VAL/W/331  
 
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  Question 2  
Article 17 and Article 18 : The CVA provides that when Customs has doubts about the price, 
the importer demonstrates the value which closely approximates one of three test values 
or circumstances surrounding the sale is used to determine whether the relationship 
influenced the price.  However, Articles 17 and 18 of Decree No. 213 suggest that China 
verifies test values and the circumstances surrounding the sale.  
However, since test values are rarely available to importers, the application of both 
options by China  would mean that in practice the transaction value is automatically 
rejected in cases where the sale of goods is between related parties. Could China con firm 
our understanding that it verifies the transaction value in such cases by using both test 
values and assessing the circumstances of the sale?  
Answer:  
Concerning the test values, Article 17 of Decree No.  213 is in full conformity with the provisions of  
Article 1.2(b) of CVA. Article 17 states that "Where the seller and the buyer are related, it shall be 
deemed that the relationship did not influence the price of imported good when the duty payer can 
demonstrate that such value closely approximates to th e one of the following prices occurring 
at/about the same time…… ", so the examination of the test values  is not at the initiative of Customs 
administration. Article 1.2(b) of CVA sets out that, "In a sale between related persons, the 
transaction value shal l be accepted and the goods valued in accordance with the provisions of 
paragraph 1 whenever the importer demonstrates that such value closely approximates to one of 
the following occurring at or about the same time…… ". Thus, Article 17 of Decree No.  213 is in full 
conformity with Article 1.2(b) of CVA.  
Regarding examination of circumstances surrounding the sale, Article 1.2(a) of CVA stipulates that: 
"In such case the circumstances surrounding the sale shall be examined and the transaction value 
shall be a ccepted provided that the relationship did not influence the price "; Article 18 of Decree 
No. 213 provides that: "Having examined the circumstances surrounding the sale, where it can be 
shown that the price of the imported goods has been settled in a manner consistent with the normal 
business practice ，the Customs may determine that the price has not been influenced by the 
relationship. " Article 18 of Decree No.  213 is not contradictory with Article 1.2(a) of CVA.  
Article 44 of Decree N o. 213 provides t hat "Where the Customs has doubts about the truth or 
accuracy of the value declared by the duty payer, or consider the relationship between the buyer 
and the seller did influence the price, the Customs shall issue Notice to Query Declared Value by 
Customs of People 's Republic of China (hereinafter referred as Notice to Query Declared Value) and 
notify the duty payer or his agent of the grounds for doubts in written form. The duty payer or his 
agent shall, within 5 working days from the date of receipt of No tice to Query Declared Value, provide 
related documents or other evidence in writing that could demonstrate the truth or accuracy of the 
declared value or the declared value not being influenced by the relationship between the buyer and 
the seller. " These provisions are consistent with Article 1.2(a) of CVA, which reads "If, in the light 
of information provided by the importer or otherwise, the customs administration has grounds for 
considering that the relationship influenced the price, it shall communicat e its grounds to the 
importer and the importer shall be given a reasonable opportunity to respond. "  
According to Article 44 of Decree N o. 213, the Customs can initiate the price query process only 
when it has grounds to doubt that the transaction value ha s been influenced by the relationship 
between the buyer and the seller, and in that case it should notify the duty payer or his agent of the 
grounds for doubts in written form; the importers are given an opportunity to provide related 
documents or other ev idence that could demonstrate the truth or accuracy of the transaction value 
or the transaction value not being influenced by the relationship between the buyer and seller. 
Accordingly, the situation that "…transaction value is automatically rejected in ca ses where the sale 
of goods is between related parties "referred to by the Canada Customs does not exist.  
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