. /.   WORLD TRADE  
ORGANIZATION  G/VAL/W/198 
4 November 2010 
 (10-5855) 
Committee on Customs Valuation Original:   English 
  
  
NOTIFICATIONS UNDER ARTICLE 22 OF THE CUSTOMS  
VALUATION AGREEMENT 
 
Replies from China to the United States
 
 
  The following communication, dated 3 November 2010, is circulated at the request of the 
delegation of China.  
_______________ 
 
 
 Replies to the Questionaire from the Delegation of the United States (G/VAL/W/192) 
 
Q1.  In its response to Question 3 of G/VAL/W/184, China indicates that the full text of the CVA 
Note to Article 7 has been included in the Offici al Interpretative Notes for Implementing Decree 148.  
Has China notified this legislation to the Committee?   If not, we kindly request that China provide a 
copy to the Committee so that we  can ensure that Article 7 and the Note to Article 7 are fully 
incorporated.  
Reply:   China Customs has integrated CVA’s Notes in to its legal framework as much applicable as 
possible.  It is because of the nature of our national customs law system, some of CVA’s Notes are embodied in the Official Interpretative Notes for Implementing Decree 148 (Interpretative Notes).  In 
addition to the Rules regarding Determination on Customs Value of Imported and Exported Goods, it 
functions as a guideline to customs valuation officers and helps traders better understand the 
Decree 148 as well. 
China would like to exchange views on the subject  with other continent law system Members and 
share each other the national experiences on the te chnique of integrating CVA’s Notes into their 
domestic legislations. Furthermore, The Interpretative Notes was pub lished in 2007 and is available in Chinese. 
 
Q2. In its response to question 4 of G/VAL/W/184, China indicates that the U.S. delegation 
previously asked the same question regarding th e examination of the circumstances of sale to 
establish acceptability of transaction va lue.  The reason that we have asked it yet again is because we 
again find China’s response to be unsatisfactory.  The provisions of Articles 17 and 48 do not provide 
for the examination of the circumstances of the sale in order to determine that the relationship did not 
influence the price.  We therefore continue to be co ncerned that Article 1 and the Note to Article 1 of 
the Customs Valuation Agreement have not been fully incorporated into China’s legislation. 
 Reply: It is obvious that CVA provides two methods, sales test and test price in examining the 
transaction value between related companies.  Only  when the examination taken is passed, can the 
Customs Authorities determine that the relations hip does not influence the transaction value. 
The Rules Regarding Determination on Customs Valu e of Imported and Exported Goods integrates 
the two examination methods above  mentioned.  Thereinto, Article 17 prescribes the examination G/VAL/W/198 
Page 2  
 
  method in narrow sense, to locate test price.  It  provides the most direct, economic and effective 
method to determine whether the relationship influe nces the price when the buyer and the seller are 
related, and it is also an approach provided for taxpayers to prove that relationship does not influence 
the price. Whereas, Article 48 Prescribes Customs valuation qu ery procedure.  If Customs believes that “the 
relationship influenced the transaction value”, Cust oms should ask the taxpayer to explain whether it 
influences the price.  Generally speaking, the taxpayer will make a response to specify the 
circumstances about the sale.  In order to prove whether it influenced the price, Customs needs to 
verify all the aspects of the sales, including how to  organize commercial activities between the traders 
and methods to establish and reach the price.  It is obvious that the provisions under Article 48 follow 
the sale test method embodied within CVA. 
  Q3. Paragraph 3 of Article 11 of the WTO Ag reement on Customs Valuation specifies that 
“notice of the decision on appeal shall be given to the appellant and the reasons for such decision shall 
be provided in writing.  The appellant shall also be informed of any rights of further appeal.”  Please 
specify where this provision is re flected in China’s Customs Law. 
 Reply : Yes, Article 64 of the Customs Law of the Pe ople's Republic of China specifies that appellant 
has rights to get the information of the decision on related appeal.  And the Customs Law has been 
notified to the WTO.  
Q4. Regarding China's laws and regulations on guara ntees:  we would appreciate clarification on 
China's statement that:  "Customs shall not rel ease goods against securities in circumstances... where 
the laws and administrative regulations have provide d for."  Under what circumstance, provided for in 
the laws and administrative regulations, would Cust oms not release the goods, even if the guarantee is 
paid?  Please clarify. 
 
Reply:  There aren’t such circ umstances that goods are put on hold by customs when the guarantee is 
paid.  Q5. In its response to question 10 in G/VAL/W/184, China claims that the Interpretative Notes are 
"virtually reflected in the said Rul es" and 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."  Upon 
further review of Articles 9 to 12, we are of th e view that these Articles do not incorporate the 
Interpretative Notes, explicitly or implicitly.  Article 9 reflects some of the principles stated in Note to 
Article 1 of the Valuation Agreemen t. Article 10 reflects some of the principles specified in Article 
1.1 of the Valuation Agreement.  Article 11 deals w ith the provisions which appear in Article 8 of the 
Valuation Agreement, and Article 12 specifies provisions  in Article 8.2 of the Valuation Agreement.  
None of the above mentioned Articles incorporate th e Interpretive Notes to Articles 1, 5, 6, and 7 
completely (and the remaining Interpretive Notes) .  We would like to request that appropriate 
provisions be made in China's legislation for the rest of the Interpretive Notes. 
 Reply : Please refer to the reply to question No. 1.
  
 
__________