WRITTEN QUESTION E-3692/01

by Konrad Schwaiger (PPE-DE) to the Commission

(17 January 2002)

Subject: WTO customs valuation and developing countries

The member countries of the World Trade Organisation (WTO) adopted a decision in Doha on issues and concerns linked to the implementation of certain WTO agreements, in response to difficulties encountered by the developing countries.

Because of insufficient human, technical and financial resources, the application of the Customs Valuation Agreement creates problems for many developing countries. In practice the customs officers in many of these countries are unable to combat the chronic undervaluation of goods and fraud. This situation places a heavy burden on the budget of such countries, since it means loss of revenue for the tax authorities.

A number of African countries would like another five-year exemption in order to maintain the reference values on a limited number of products and hence safeguard their customs revenue. In paragraph 8.2. of the Doha Decision the Ministerial Conference urges the Council for Trade in Goods to give positive consideration to requests that may be made by least-developed country Members .

In view of the importance of customs revenue for the development of these countries, will the Commission give a favourable response to applications for exemption from the application of the Customs Valuation Agreement submitted by the developing countries?

If so, is it ready to envisage a reasonable timetable to allow these countries to implement a training programme for their customs officers within the exemption period?

What forms of technical assistance will be mobilised by the Commission to help these countries to apply fully and efficiently the Customs Valuation Agreement?

Answer given by Mr Lamy on behalf of the Commission

(18 February 2002)

The World Trade Organisation's Customs Valuation Agreement came into being at the Tokyo Round in 1979. It was extended to all WTO members by the Marrakesh Agreement of April 1994, which closed the Uruguay Round. It lays down objective, fair, safe, stable and transparent rules for determining the customs value of imported goods for the purpose of calculating customs duties. The main rule is that the customs value of goods should reflect the commercial value of the transaction as closely as possible, and the WTO Agreement includes a number of calculation methods to that end. The aim is to establish an objective basis for calculation which avoids both fraud and undervaluation by importers and any tendency on the part of customs administrations to overvalue goods or calculate their value in an arbitrary manner. In no circumstances may customs valuation be used to gain extra protection for the domestic market, to cancel out tariff commitments or to inflate budget revenue artificially.

That said, the WTO Customs Valuation Agreement does take specific account of the developing countries, which can have difficulty applying the rules and associated procedures correctly. Special provision has been made so that they can ready themselves to apply the Agreement.

The WTO allows any developing country citing difficulties in implementing the Agreement a grace period of five years from first joining. An additional period may be granted, on a case-by-case basis, to any country that really needs it. Furthermore, developing countries that are able to implement the Agreement as a whole (legislation, rules, procedures) but need interim measures for its application to certain products or sectors may request authorisation to apply minimum values for a limited period. Such general or specific reservations are subject to the consent of the WTO's other members and to the submission and monitoring of work programmes showing how the countries in question use the additional periods to ready themselves for applying the Agreement.

The need for the developed countries and regional and international organisations (WTO, World Customs Organisation (WCO), United Nationals Conference on Trade and Development (UNCTAD), World Bank, etc.) to provide the developing countries with technical assistance to build their capacity to apply the Agreement has long been recognised. The Member States and the Commission have now been contributing to technical assistance programmes for the developing countries for over twenty years. Schemes cover a wide range of areas, such as drafting legislation and rules, the introduction of appropriate procedures, the organisation of customs administrations or training for customs officials. Prompted by the EU, the WTO Customs Valuation Committee last year adopted a work programme stepping up the activities of all donors and providers of technical assistance in this field.

The Commission, in association with the Member States, will continue to give careful consideration to requests for the extension of transition periods or reservations permitting the use of minimum values. At the same time, however, it will insist that real efforts are made, that commitments given in the applicant countries' work programmes are honoured and that such derogations are limited in time. As the decision of the Doha ministerial conference suggests, particular consideration will be given to the specific problems of the least developed countries.