WORLD TRADE  
ORGANIZATION  G/VAL/W/184 
15 October 2009 
 (09-5060) 
Committee on Customs Valuation Original:   English 
  
NOTIFICATIONS UNDER ARTICLE 22 OF THE CUSTOMS  
VALUATION AGREEMENT 
 
Responses to questions from the United States contained in document G/VAL/W/168
 
  
 The following communication, dated 13 October 2009, is circulated at the request of the 
delegation of the People's Republic of China. 
 
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Question 1: Article 4 (Chapter I, General Provisions) states that Customs "shall not disclose such 
information outside Customs, unless otherwise provide d for by laws or administrative regulations."  
Please clarify what laws or administrative regula tions require that confidential information be 
disclosed? 
 Answer: Under provisions of Article 10 of the CV A,  confidential information should not be 
disclosed “except to the extent that it may be requi red to be disclosed in the context of judicial 
proceedings”.  The above mentioned provisions in the Ru les Regarding Determination on Customs 
Value of Imported and Exported Goods  (hereinafter referred to as the said Rules) are not only 
consistent with those national legislations at upper le vel but also in full conformity with the principle 
of CV A.  Any information relating to the determin ation of customs value, which is by nature of 
confidentiality, shall not be disclosed to any thir d parties outside customs unless in some cases as 
provided for by the following legislations:  
a)  Article 30 of the Lawyer Law of the People’ s Republic of China  stipulates that, a lawyer 
participating in litigation activities may, according to the provisions of procedure laws, collect 
and consult with the materials pertaining to the said cases he is undertaking, … 
 
b)  Article 45 of the Criminal Procedure Law of the People’ s Republic of China  stipulates that, 
the People's Courts, the People's Procuratorates and the public security organs shall have the 
authority to collect or obtain evidence from the units and individuals concerned.  The units 
and individuals concerned shall provide truthful evidence. 
 
Question 2: With regard to Article 6 (Chapter II, Sec tion I), on what basis does China require that 
the duty payer provide “sufficient information” in or der to have the order of deductive and computed 
value be reversed?  Article 4 of the Customs Valu ation Agreement states only that “at the request of 
the importer, the order of application of  Articles 5 and 6 shall be reversed.” 
 
Answer: Still, the Article 6 of the said Rules goes well along with Article 4 of the CVA, which 
stipulates that at the request of the importer, the order of application of Articles 5 and 6 shall be 
reversed.  It is clear that successful application of computed value method is based on relevant but 
sufficient information.  
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  Question 3: Articles 6(e) and 25 appear to be the provisions related to the implementation of 
Customs Valuation Agreement Article 7.  However,  it seems that Article 6(e) and 25 do not fully 
incorporate the provisions of Customs Valuation Agre ement Article 7 and the Note to Article 7.  For 
example, the definition of reasonable means does not appear to incorporate the Note to Article 7, 
which states that the methods of valuation to be  employed under Article 7 should be those laid down 
in Articles 1-6 but with a reasonable flexibility. 
 
Answer: Definitely, Article 7 of CVA stipulates that the application of reasonable means 
should be consistent with the pr inciples and general provisions of  CVA and should be based on the 
data available in the country of importation. Para graphs 2 and 3 of the Note to Article 7 of CVA 
emphasize that such methods would be in conformity  with the aims and provisions of Article 7 while 
following up a sequential order in a rather more flexib le way. Instead of making a strict definition of 
the reasonable method, Article 7 of the CVA only s tipulates the application rules and lists those 
valuation methods which could not be used.  Considering such facts, China Customs has set forth a 
definition-based clause for applying reasonable method in the said Rule s, which, to general 
understanding, embodies not only the norms and princi ples of Article 7 of the CVA but also those 
reflecting in its Interpretative Notes.  As a matter of  fact, the full text of Note to Article 7 of CVA has 
been rewritten with illustrations in the Official Interpretative Notes for Im plementing Decree 148(i.e. 
the said Rules).  And the Article 25 of the said Rules again reiterates the importance of using 
objective and quantifiable data as customs valuati on base, which says that the valuation method 
applied by Customs to determine the Customs valu e of the imported goods is on the basis of objective 
and quantifiable data and in cons istency with the principles of objectivity, fairness and uniformity 
prescribed in Article 2 thereof.  
 
Question 4: With regard to Related Parties, Articles 8 and 17 of the law appear only to allow test 
values to be used to establish the acceptability of transaction value.  Under Customs Valuation 
Agreement Article 1 and the Note to Article 1, ther e are two tests that can be applied to determine 
whether a related party transaction value is acceptable:  circumstances of sale and test values.  Please 
clarify whether the sale test is permitted.  If so, where in Chinese law is this incorporated? 
 Answer: The same question was once raised by the US delegation and replied by China vide 
G/VAL/W/141 dated 25 October 2004.  
Provisions under Article 1.2 and the corresponding In terpretative Notes of CVA are embodied in the 
said Rules. It is so provided that transaction valu e can not be simply refused on the ground that the 
seller and the buyer are related. China Customs shall carries out a price test or conduct an examination 
on the circumstances of sale in accordance with relati ve provisions stipulated in Article 17 and Article 
48 of the said Rules. 
   
Question 5: On what basis does China compel the duty payer to provide information? What are 
the consequences if the duty payer does not provide  the information?  Furthermore, could China 
explain why importers, according to Article 48, ar e only given 5-10 days to submit information to 
allay the doubt of Customs over the truth of its customs declarations?    
Answer: First of all, China customs does not compel the duty payer to provide information. 
According to the Article 1.2 of CVA “when the customs administration has grounds for considering 
that the relationship influenced the price, it sh all communicate its grounds to the importer and the 
importer shall be given a reasonable opportunity to respond” and the Note to Article 1.2 “where the 
customs administration is unable to accept the transac tion value without further inquiry, it should give 
the importer an opportunity to supply such further detailed information as may be necessary to enable 
it to examine the circumstances surrounding the sale”, we understand that providing information to Customs is an important right granted to the duty-pa yer to cooperate with Cu stoms to lessen or avoid 
misunderstanding.  We believe that mutual understanding and su ccessful consultation between two  G/VAL/W/184 
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  parties will enable customs value to be determined  in a fair, uniform and neutral system, avoiding 
unnecessary loss of the duty payer.   
Secondly, in such cases where the customs admini stration has grounds for considering that the 
relationship did influence the price, and the duty- payer does not provide the information to reassure 
Customs, then Customs value cannot be determined on the basis of the transaction value, and Customs 
will determine the Customs value by applying methods  of valuation laid down in Article 6 in its 
sequential orders. 
 
Thirdly, assuring speedy clearance remains one of the most important tasks for China Customs. 
Practically, most importers are able to provide the information within the said time limit.  Ten (10) 
more working days are permitted at the request of th e duty- payer.  That means, according to Article 
48 of the said Rules, the importers are possibl y given 5-15working days to submit relevant 
information.  Further more, under special cases, the extension could be considered to exceed 15 
working days. 
 Question 6: With regard to verification of informatio n provided for the computed value method in 
Article 24 (page 9 of G/VAL/N/1/CHN/5), China states that, “Customs may conduct on-site 
verification of the information”.  How does this co mply with Article 6.2 of the Customs Valuation 
Agreement? 
 
Answer:  There is no substantial difference between the texts of Article24 of the said Rules and 
Article 6.2 of the CVA if a thorough comparison is  made between them.  China Customs will notify 
the governments of the country or its region in ques tion and get the agreement of the producer before 
conducting on-site verification of the information  
  
Question 7: With regard to Chapter III, Customs Value of Special Imported Goods (pages 9-12 of 
G/VAL/N/1/CHN/5), please clarify which products are covered by these provisions.   
 
Answer: “Special imported goods” in the provisions of Chapter III of the said Rules does not 
refer to specific items, but rather refer to the goods that enter into Customs te rritory of P.R.China by 
special trade terms.  Examples are as follows: 
 
- Raw materials, components, semi-finished or  finished products, processed with imported 
materials in term of inward processing; 
- Finished products, processed or assembled in th e Free Trade Zones (including other special 
surveillance zones) and moved out of the zones for home use; 
- Goods for outward processing or repairing; 
- Temporarily imported goods; 
- Imported goods on lease; 
- Goods without transaction value, such as by barter, consignment and donation, etc; 
- Imported carrier media bearing software especially for data processing equipment, etc. 
 The whole ranges of the goods falling within the different categories are stipulated under the 
provisions of Articles of Chapter III. 
 Question 8: Please provide references in China’s laws a nd regulations for China’s implementation 
of Article 11 of the Customs Valuation Agreemen t, regarding appeals, and Article 13 regarding 
guarantees.  We would also appreciate if China w ould provide copies of such  laws and regulations. 
 G/VAL/W/184 
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  Answer:  The laws and regulations regarding appeals include: 
 
1) Customs Law of the People's Republic of China  
  Article 64. Where the obligatory duty payer is involved in a dispute over duty payment with 
the Customs, he shall pay the duties, and ma y apply for administrative reconsideration in 
accordance with relevant provisions; if the deci sion is still considered unacceptable, he may 
file a suit in a people's court according to law. 
 
2)  Regulations of the People's Republic of China on Import and Export Duties 
  Article 64. Where the duty payer or guarantor h as objections to the Customs' determination of 
the duty payer or customs value; goods classificati on; determination of origin, applicable duty 
rates or exchange rates; duty reduction, exempti on, recovery or refund; collection of fines for 
late payment; or determination of the manner and place of duty collection;  it shall pay the 
duties and may apply to the Customs at th e next higher level for administrative 
reconsideration according to law; if the duty pa yer or guarantor refuses to accept the decision 
of administrative reconsideration, it may lodg e a lawsuit to the People's court according to 
law. 
 3) The Rules Regarding Determination on Cu stoms Value of Imported and Exported Goods 
 
 Article 57. The duty payer who dissents from the decision by the Customs on the Customs 
valuation shall pay duties and taxes first accordi ng to relevant administrative decisions made 
by Customs and may submit an appeal for reconsideration of the case to Customs at a higher 
level in accordance with the law.  Should the duty payer refuse to accept the decision on the 
appeal, he may bring the case to the People’s Court. 
 
The laws and regulations regarding guarantees include: 
 
1) Customs Law of the People's Republic of China 
 
- Chapter VI Customs Security (thereof); 
 
- Article 66. In case where the importer or exporter asks the Customs to release the 
goods before the determination of goods classification or Customs Valuation, or 
presentation of effective declaration docum ents or completion of other Customs 
formalities, the Customs shall release the goods against the securities provided by the 
importer or exporter which is compatible w ith his legal obligation according to law. 
Securities shall not be required in case as provided by laws and administrative 
regulations; 
 - Laws and administrative regulations specially  provided for the securities for obligation 
of fulfilling Customs formalities shall be abided by first; 
 
- The Customs shall not release goods agai nst securities in circumstances where the 
import or export goods and inward or outward  articles related are subject to national 
restriction and relevant license or documents could not be provided, and other 
circumstances where the laws and administrative regulations have provided for; 
 - Article 67. Any legal person, other organiza tion and natural person who is capable of 
fulfilling Customs security may be the surety, unless the law otherwise provided; 
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  - Article 68. The guarantor may provide secur ity by the following property and rights: 
  - Chinese Yuan (Renminbi) and other convertible currencies; 
 - Draft, cashier's check, check, bond and certificate of deposit; 
 - Letter of guarantee issued by the ba nk and other financial institutions; and 
 - Other property and rights ratified by the Customs according to law; 
 
- Article 69. The surety shall assume his oblig ation within the guaranty period.  The 
guarantor's performance of security obliga tion shall not prevent the guaranteed from 
fulfilling other Customs formalities. 
 2) The Rules Regarding Determination on Cu stoms Value of Imported and Exported Goods 
 
 Article 54. Where, in the course of determin ing the Customs value of import and export goods 
by Customs, the duty payer shall be able to withdraw them from Customs after providing 
guarantee according to the releva nt rules and regulations.   
 
Question 9: Article 23(a) regarding deductions unde r the deductive value method appears to 
include profit, general expenses and commissions.  Under Customs Valuation Agreement Article 5, a 
deduction can be made either  for commissions or for profit and general expenses.  Could China 
explain whether Article 23(e) re quires deduction of profit, genera l expenses and commissions, or 
instead allows for deduction either of commi ssions or of profit and general expenses? 
 
Answer: Generally speaking, it is rather clear that the mentioned deduction is made either for 
commissions or for profit and general expenses.  Since the role of the person who is playing in 
business is easy to be identified, i.e. it is not ha rd to distinguish the identity of importer from his 
agent, whose roles are hard to be overlapped.  Both  of the sums might eventually but respectively be 
deducted from the Customs value.  Anyway, the origin al Chinese wordings in para1 (a) of Article 23 
of the said Rules solely reflects the Oriental logi c thinking, which specifies the whole as captured and 
will not mislead to next conclusions other than this  indicated under the provisions of Article 5 of CVA 
and its corresponding Note for it really has the meani ng of deduction for commissions usually paid or 
agreed to be paid as well as for usual profit and general expenses though the precondition to tell one 
from another is apparently absent.  It will not con sequently be taken to mean that the scope of duty 
base is so narrowed for the purpose of Customs valuation. 
 
Question 10: Interpretative Notes: 
 
Based on the review of the Decree that the Unite d States has undertaken, it appears that China has 
incorporated only some of the Interpretive Notes.  Many important provisions appear to be missing, such as circumstance of the sale value (Note to Ar ticle 1), the application of Article 7 (Note to 
Article 7), and some elements relating to genera l expenses and profit (Note to Articles 5 and 6), 
among others. In view of the fact that the Interpre tive Notes are integral to the proper implementation 
of the Agreement, the inclusion of some, and the absence of other, interpretative notes in the Decree, 
regulations, or elsewhere raises concerns.  Does China have any plans to incorporate them?  
 
Answer: China has been committed to fully implem enting the CVA since its accession to the 
WTO, and is constantly making its best endeavours to improve the national legislation in relation to 
Customs valuation, including the formal incorpora tion of those Interpretative Notes to the Articles 
within the framework of the CVA, for which are treated as inseparable parts of the formal upper 
sources for dealing with all matters  relating to customs valuation. 
 
Obviously, it can be found that Interpretative No tes to Article 1, 5, 6, 7 mentioned in the 
Questionnaire from the United States, are virtually refl ected in the said Rules.  Examples can be found G/VAL/W/184 
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  as to the implementation of provisions concerning sale test (implied by Note to Article 1).  Apart from 
that, other Interpretative Notes are, to the greatest extent possible, put explicitly or implicitly through 
the Article 9 to Article 12 of the said Rules. 
 
 
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