RESTRICTEDWORLD TRADE
ORGANIZATIONG/VAL/W/31
1 April 1999
(99-1330)
Committee on Customs Valuation Original:  Spanish
COMMUNICATION FROM PERU CONCE RNING ANNEX III, PARAGRAPH 1,
OF THE AGREEMENT ON IMPLEMENTATION OF ARTICLE VII OF
THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994
The following communication, dated 25 March 1999, has been received from the Permanent
Mission of Peru.
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The Permanent Mission of Peru to the United Nations Office and Other International
Organizations at Geneva presents its compliments to the Secretariat of the World Trade Organization
(WTO) and, with reference to Annex III, paragraph 1, of the Agreement on Implementation of
Article VII of the General Agreement on Tariffs an d Trade 1994 (former paragraph I.2 of the Protocol
to the Agreement on Implementation of Article VII of  the GATT), has the honour to inform it that the
Government of Peru wishes to request an extension, for a two-year period, of the delay in the
application of the provisions of the Agreement, which expires on 1 April 1999.
The Permanent Mission of Peru to the United Nations Office and Other International
Organizations at Geneva attaches hereto an explanation of the grounds for this request.G/VAL/W/31
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REQUEST FOR AN EXTENSION OF THE DELAY IN THE APPLICATION
OF THE WTO CUSTOMS VALUATION AGREEMENT
Background
In 1992 Peru launched a thorough-going reform of its Customs in order to create a modern
service whose principle objectives are:  facilitation of foreign trade operations, timely and efficient
collection of foreign trade taxes, and prevention and suppression of smuggling and Customs tax fraud.
The successes achieved have won it both national and international recognition as one of the most
efficient and up-to-date institutions, and the World Customs Organization (WCO) has labelled it a
Model Customs as regards reform and modernization.
Nevertheless, despite the progress made the reforms have not yet been completed, and there
are further targets to be achieved in order to consolidate the changes carried out.  In this endeavour,
the Peruvian Customs Service has had the support of the Inter-American Development Bank, which
has backed three technical cooperation agreements.  The first and second of these were aimed atsupporting the process of transforming the Customs, while the purpose of the third, currently under
way, is to enable the Customs to implement a quality assurance system for its operational and
administrative procedures, in accordance with the ISO 9000 Standard, and hence preserve the changes
made.  The Customs service has set itself the target of implementation of such a system by the end of
the year 2000.
In recent years Peru has undertaken a major effort of data collection in order to establish a
valuation database that will provide continuously updated information on transaction values of goods
to the operational Customs offices and officials involved in the valuation or inspection process.  Peru
intends this database, the application of which will be fully compatible with the relevant provisions ofthe Customs Valuation Agreement, to become a useful tool for a modern Customs administration.
However, uniform procedures must be in place for its application, and this will be achieved when the
Customs services provided reach the levels laid down in international standards for quality assurance
systems.
There has also been an increase in imports presenting a risk of valuation fraud and therefore
the Peruvian Customs have been working hard to avoid possible cases of under-valuation in Customsoperations.
In order to determine the value of imported goods, the Customs apply to imports of a value
exceeding US$5,000, with the exception of some commodities and motor vehicles regardless of value,
the method used by the Customs is that of the normal competition price, which presents somevariations with respect to the method set out in the Brussels Definition of Value.  The normal price
method is closely linked to actual commercial practices and is used by inspection companies to
determine the Customs value on which the Customs will calculate import taxes.
Peru considers that, in order to comply pr operly with the provisions of the Valuation
Agreement of the World Trade Organization (WTO), the reform process described above must be
completed:  this will require postponing the application of the Agreement for a period of two years,
during which time the preparation of regulatory standards, training and dissemination to foreign trade
operators will also be completed.
In this connection, paragraph I.2 of the Protocol to the Agreement on Implementation of
Article VII of the General Agreement on Tariffs and Trade (currently paragraph 1 of Annex  III of the
WTO Customs Valuation Agreement) provides for the possibility that a developing country may
request a delay in application of the Agreement if it considers that the five-year delay referred to inG/VAL/W/31
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Article 21.1 (currently Article 20.1 of the WTO Cust oms Valuation Agreement) for the application of
the provisions of the Agreement is insufficient.
Although Peru acceded to the GATT Agreement on Implementation of Article VII and is one
of the few developing countries that should implement the WTO Agreement before the year 2000, itneeds to request this two-year extension in order to  bring its national legislation fully into line with
the Agreement and complete the implementation of a quality assurance system for customs
procedures (ISO 9000 Standard), the training of all the country's Customs Personnel, and
dissemination of the Agreement among foreign trade operators.
Grounds for the request for an extension
The Peruvian Customs have thoroughly reviewed the documentation underpinning the quality
system, and primarily the operational procedures, which involves having to adapt the computer
modules supporting those procedures in the customs service.
However, taking into account that the programme for the introduction of the quality system in
the Peruvian Customs covers the entire service, it is necessary among other things to review, adjust
and standardize over 100 procedures of a general nature, which will in turn call for adjustments in the
Integrated Customs Management System (SIGAD) underpinning these procedures.
The SIGAD is a computerized system comprising all customs regimes and operations as well
as the control, inspection and administrative functio ns;  and it allows the exchange of information
with foreign trade operators.  The SIGAD consists of over 50 integrated modules and has over
2,500 programmes and more than 2 million lines of code.
The quality system being introduced in the Customs would not be complete and safe if the
private sector operators (customs brokers, supervisors and concessionaires of warehouses) who carry
out specific customs activities do not adapt their activities to the same standards as are being adopted
by the Peruvian Customs.  The two-year extension requested would enable the Peruvian Customs to
fulfill the above-mentioned targets.
Conclusions
The two-year extension that has been requested is of the utmost importance for Peru in order
to enable it to complete the programme of Customs reform under way and to ensure that the country is
not affected by the increase in imports presenting a risk of valuation fraud.  The national legislation
also has to be brought into line with the Custom s Valuation Agreement, which implies an evaluation
of the current provisions.
It will also enable the Customs to make its quality assurance system fully operational, as well
as the system for external agents involved in the provision of Customs services, and also to:
(a) Adapt the computerized modules of the Customs to the adjustment in operational
procedures resulting from the introduction of the Customs quality assurance system;
(b) fully institutionalize the internal quality audit system in the Customs;(c) rationalize the structure of the computerized system of the Customs service (SIGAD)
and its administration;
(d) refine and optimize the use of management indicators ensuring the control of the
quality system;G/VAL/W/31
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(e) assist commercial operators carrying out customs activities in adapting their quality
systems to the ISO 9000 Standards.
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