WORLD TRADE ORGANIZATION

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1 WORLD TRADE ORGANIZATION RESTRICTED 4 July 2011 ( ) Committee on Customs Valuation MINUTES OF THE MEETING OF 12 MAY 2011 Chairman: Tamás Vattai (Hungary) The agenda proposed for the meeting, circulated in WTO/AIR/3746 was adopted as follows: I. REPORT OF THE WORK OF THE TECHNICAL COMMITTEE ON CUSTOMS VALUATION... 2 II. INFORMATION ON IMPLEMENTATION AND ADMINISTRATION OF THE AGREEMENT... 2 III. INFORMATION ON THE APPLICATION OF DECISIONS OF THE COMMITTEE ON CUSTOMS VALUATION... 9 IV. TECHNICAL ASSISTANCE... 9 A. INFORMATION ON TECHNICAL ASSISTANCE... 9 B. ARTICLE 20.3 TECHNICAL ASSISTANCE AND TRADE-RELATED TECHNICAL ASSISTANCE... 9 V. PRESHIPMENT INSPECTION VI. PARAGRAPH 12 OF THE DOHA MINISTERIAL DECLARATION (WT/MIN(01)/DEC/1): IMPLEMENTATION-RELATED ISSUES VII. OTHER BUSINESS A. WORKSHOP ON CUSTOMS VALUATION B. CAPE VERDE - GRANT OF A WAIVER RELATED TO THE IMPLEMENTATION OF ARTICLE VII OF GATT 1994 AND THE AGREEMENT ON IMPLEMENTATION OF ARTICLE VII OF THE GATT C. CHAIR'S CONSULTATIONS ON WAYS TO IMPROVE THE TIMELINESS AND COMPLETENESS OF NOTIFICATIONS AND OTHER RELEVANT INFORMATION ON TRADE MEASURES FALLING WITHIN THE AMBIT OF THE AGREEMENT ON CUSTOMS VALUATION D. DATE OF THE NEXT MEETING VIII. ELECTION OF OFFICERS ANNEX I... 14

2 Page 2 I. REPORT OF THE WORK OF THE TECHNICAL COMMITTEE ON CUSTOMS VALUATION 1.1 The representative of the World Customs Organization (WCO) reported on the activities of the Technical Committee on Customs Valuation at its 32 th session, held on 11 to 15 April This report is contained in Annex I. 1.2 The representative of the United States noted that his delegation remained interested in the questions posed on whether the WCO and the Technical Committee could undertake more areas of work in order to further uniformity, interpretation and application of the Valuation Agreement such as those listed in Annex II, paragraph 2 of the Valuation Agreement. 1.3 The Customs Valuation Committee (hereafter the Committee) took note of the statements made and of the report. II. INFORMATION ON IMPLEMENTATION AND ADMINISTRATION OF THE AGREEMENT 2.1 The Chairman recalled that Article 22 of the Agreement on Customs Valuation (hereafter, the Agreement) required each Member to inform the Committee of any changes in its laws and regulations relevant to the Agreement, and of any changes in the administration of such laws and regulations. In addition, the Decision on Notification and Circulation of National Legislation, adopted by the Committee, required each Member to notify its legislation to the Committee. He suggested that, the Committee dealt with the legislations in sequence as listed in the agenda. He further recalled that the notification of legislation by the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu had been presented to the Committee. However, since the Committee's meeting on 4-5 November 2002, the examination of this notification had remained suspended, pending resolution of the difference in views between the parties involved on notifications across the WTO. - Kingdom of Bahrain 2.2 The Chairman recalled that agreement had been made to revert to the examination of Bahrain's legislation at this meeting, pending responses to questions posed at the last meeting by the United States. These questions were circulated in document G/VAL/W/181. Responses from Bahrain were circulated in document G/VAL/W/191. However, the United States had more questions which were circulated in document G/VAL/W/ The representative of the United States noted that his delegation had some additional followup questions about several technical issues that were submitted in February 2011 and looked forward to receiving written responses to these questions. 2.4 The representative of Kindom of Bahrain thanked the delegation of United States for the questions posed to Bahrain's legislation and said that his delegation would need more time to reply to these questions. 2.5 The Committee took note of the statement made and agreed to revert to the notification of Bahrain at its next meeting.

3 Page 3 - Belize 2.6 The Chairman recalled that the Committee had agreed to revert to this notification following questions posed to Belize by the United States and Canada. These questions were circulated in documents G/VAL/W/175 and G/VAL/W/176, respectively. Belize had responded to some of these questions in document G/VAL/W/183. However, the United States had more questions which were circulated in document G/VAL/W/ The representative of the United States said that his delegation remained interested in receiving responses to the questions circulated in November 2009, regarding the incorporation of the interpretative notes on Article 16 in Belize's legislation. 2.8 The representative of Canada supported the United States with respect to the inclusion of the interpretative notes in the code of law of the country. 2.9 The Committee took note of the statements made and agreed to revert to this matter at its next meeting. - Cambodia 2.10 The Chairman said that at the last meeting it was agreed to revert to Cambodia's legislation at this meeting. The United States had posed questions on Cambodia which were circulated in document G/VAL/W/193. Cambodia circulated its responses in document G/VAL/W/195. However, in February 2011, the United States had more questions which were circulated in document G/VAL/W/ The representative of the United States said that his delegation continued to have questions concerning Cambodia's customs valuation legislation, as well as how long the transitional period would last. His delegation expected written responses to these questions and also encouraged Cambodia to submit its responses to the check list of issues The representative of Cambodia thanked the delegations of the United States and Canada for their follow-up questions and responses. The first question, as highlighted by the United States delegation, was regarding when Cambodia would end the transitional use of methods other than those contained in the Agreement for certain sensitive and high risks goods. Cambodia's Praka 32 of the Prakas No. 387 on Customs Valuation on imported goods of the Ministry of Economy and Finance, actually allowed the General Department of Customs and Excise to temporarily use the price list methods for the valuation of certain sensitive items and high risk goods, for example, used vehicles and other used items as well as petroleum products, taking into consideration the level of their economic development and limited capacity of their customs. These methods were transitional, which gave the Department just enough time to take appropriate steps towards the full implementation of the WTO Customs Valuation Agreement. His delegation was pleased to confirm that on 31 December 2010, the Royal Government of Cambodia terminated the transitional use of the above methods. Secondly, in response to questions posed by the United States contained in document G/VAL/W/201 regarding petroleum products and reference pricing, he confirmed that Cambodia did not use the reference pricing system anymore. Thirdly, he informed the committee that the check list of issues had been finalized by his capital and would be submitted to the WTO Secretariat as soon as their internal process had been completed, perhaps at the end of this month. Consequently, his delegation thought that Cambodia's customs valuation was now in full compliance with the WTO Customs Valuation Agreement. Finally, he hoped that Cambodia's answers had satisfied the delegations of the United States and Canada and requested the Committee to close this issue and remove Cambodia from the Agenda of the next meeting.

4 Page The representative of United States thanked Cambodia for his good replies. His delegation, however, asked to see these particular responses in writing before taking the issue off the agenda. He supposed that this issue was to be reviewed up until this year and once confirmed his delegation would be open to remove it from the agenda in due course The representative of Canada supported the United States and thanked Cambodia for the information provided. She would report back to her capital on this matter, and stated that her delegation would have an open mind in removing this item from the agenda, but firstly, these matters would have to be checked The Committee took note of the statements made and agreed to revert to this matter at its next meeting. - China 2.16 The Chairman recalled that at the last meeting, it was agreed that at this meeting they would revert to China's notification in G/VAL/N/1/CHN/5. The United States had posed questions to China which was contained in G/VAL/W/168 and Corr.1. China had responded to these questions in document G/VAL/W/184. The United States had more questions which were circulated in document G/VAL/W/192. China's replies to the second questions were circulated in document G/VAL/W/ The representative of the United States thanked China for submitting the written response to their follow-up questions and said that his delegation continued to have concerns about the incorporation of the Interpretative Notes to the Agreement, and whether China had fully notified all its customs laws and regulations. He understood from China that these were contained in the official interpretative notes for implementing Decree 148, which was published in His delegation requested China to notify these to the Committee so that all Members could review them, as they were integral to full implementation of Agreement The representative of Canada wanted to share its view with the Committee that the interpretative notes to the Agreement should be fully incorporated into domestic law The representative of China thanked the United States and Canada for their remarks and stated that his delegation had provided two sets of replies to the questions put by the United States delegation, regarding the Chinese Valuation method. Concerning the incorporation of the interpretative notes to China's customs legislation, he said that he had taken note of the comments made by the United States and Canada, and would convey this issue to his capital in order to revert to this matter in the future work of the Committee The Committee took note of the statement made and agreed to revert to this matter at its next meeting. - Nigeria 2.21 The Chairman recalled that as Nigeria had not been present at the last meeting, the Committee agreed to revert to Nigeria's notification at this meeting. The United States and Canada had posed some questions to the Nigerian delegation which had been circulated in documents G/VAL/W/175 and G/VAL/W/176, respectively The representative of the United States said that his delegation continued to be interested in the questions put forth to Nigeria and requested that this agenda item remained open until those questions had been addressed.

5 Page The representative of Canada asked for an expected time when her delegation would receive answers from Nigeria The Chairman suggested that as Nigeria was not present in the room, the Secretariat should contact the Nigerian delegation and ask them to provide some answers to these concerns The Committee took note of the statements made and agreed to revert to this matter at its next meeting. - Saint Vincent and the Grenadines 2.26 The Chairman recalled that as Saint Vincent and the Grenadines had not been present in the room at the last meeting, it had been agreed to revert to this notification at this meeting. The United States had posed questions to the delegation of Saint Vincent and the Grenadines which had been circulated in document G/VAL/W/ The representative of United States said that although the representative of Saint Vincent and the Grenadines had responded verbally to their questions in May of last year, his delegation requested that responses to these questions be formally circulated in writing. In addition, during that meeting the representatives of Saint Vincent and the Grenadines had mentioned that the draft harmonized legislation was being examined by its government for being implemented in July of His delegation continued to seek an update on the status of Saint Vincent and the Grenadines' legislation The Committee took note of the statement made and agreed to revert to this notification at its next meeting. - Thailand 2.29 The Chairman recalled that, at the last meeting, it had been agreed to revert to this notification at this meeting. The United States had circulated questions to Thailand in G/VAL/W/128 and Thailand's replies were circulated in G/VAL/W/130. Follow-up questions from the United States were circulated in document G/VAL/W/143 of November Thailand's responses to these questions were circulated in document G/VAL/W/158. Additional questions from the European Union and the United States regarding Thailand's valuation of alcoholic beverages imports were circulated in document G/VAL/W/160, and from the Philippines regarding Thailand's valuation of cigarettes in G/VAL/W/164. Following this, the United States circulated additional questions on the legislation in G/VAL/W/165. Thailand submitted responses which were subsequently circulated in document G/VAL/W/174. Finally, the United States posed additional questions to Thailand which was circulated in document G/VAL/W/181. At the last meeting, Thailand responded to these questions which were circulated in document G/VAL/W/ The representative of the United States followed up with some of the questions raised in the last meeting. Thailand had indicated that the use of reference prices had been abolished in the draft amendment which was pending approval. In this sense, his delegation wanted to clarify whether preference prices were still being used, since the amendment was still in draft form and was not officially approved through the legislative amendment process. Thus, his delegation requested clarification on the status of this amendment given the upcoming elections in Thailand. He also remained interested in the draft customs regulation that would amend Thailand's previous notified customs valuation legislation. Therefore, he appreciated it if Thailand could share the most current version of the draft customs regulation. Finally, he informed the Committee that his delegation would submit these as well as other questions in writing following the meeting.

6 Page The representative of the Canada said that her delegation was also concerned with the reference pricing practice The representative of Thailand had been informed by his customs department that Thailand had not used any reference pricings in the customs regime. As the delegation of United States indicated, his delegation had answered these questions in their previous responses saying that sections 11 bis had been abolished. The current status was that this amendment had received cabinet approval and was pending parliament approval. He also informed the Committee that, as of 10 May 2011, his government had enacted the Decree on Resolutions of the House of Representatives and Thailand's general elections would be held on the 3 July, however, this did not mean that either the work of the parliament or the work of the government would not be done. Also, it did not mean that the draft legislations in parliament that were in the pipe line had to start from scratch, it simply meant that it would have to wait until the general election was over and that members of the parliament had resumed their duties. As always indicated in previous Committee meetings, his delegation were certainly happy to answer any additional questions and would kindly request Members to provide these questions in writing The Committee took note of the statements made and agreed to revert to this notification at its next meeting. - Tunisia 2.34 The Chairman recalled that, the United States had posed some questions to Tunisia concerning Tunisia's legislation on its notification. These had been circulated in document G/VAL/W/188. The Secretariat had received Tunisia's replies to these questions the previous day and the replies were available in the room as document G/VAL/W/ The representative of Tunisia apologized for having to provide this document so late. These were replies from capital to questions put by the United States, and also the Decree of the Ministry of Finance of January 2009 with respect to Article 6 of the Customs Code. His delegation remained disposed to give further clarification and additional replies to the delegation of the United States and other delegations that had certified and indicated their requests The representative of United States thanked the delegation of Tunisia for providing responses to its questions. Obviously his delegation would review them carefully and would provide in writing any further questions The Committee agreed to revert to this notification at its next meeting. - Ukraine 2.38 The Chairman recalled that at the last meeting it had been agreed to revert to this notification at this meeting. The European Union, supported by the United States, had posed some questions to Ukraine which had now been circulated in document G/VAL/W/179. Ukraine had provided responses to these questions which had been circulated in document G/VAL/W/182. Both the European Union and the United States had further questions for Ukraine on its notification. The European Union posed its questions orally and the United States circulated them in document G/VAL/W/188. Ukraine had provided responses to the questions from the United States which had been circulated in document G/VAL/W/200. Moreover, Norway had circulated some questions to Ukraine which had been circulated in document G/VAL/W/ The representative of Norway thanked Ukraine for its response dated 1 February 2011 and to the questions that were posed by her delegation in this Committee in November Norway

7 Page 7 appreciated that the Ukrainian legislation on customs valuation appeared to give precedence to the transaction value as the customs value also reflected the general rule of the Agreement. In the Ukrainian answers to its questions, the Ukrainian authorities referred to the relevant provisions of the customs legislation and stated that a system of calculation of reference prices did not exist. However, they had received reports from economic operators about serious difficulties related to the customs valuation of goods exported to the Ukraine. According to this information, the customs authorities had routinely questioned the declared customs values, that is to say, the transaction prices and had applied the so called reference prices instead. This practice had led to customs value that was far above the actual transaction prices. According to the customs valuation agreement any departure from the general rule of valuation to the subsidiary valuation methods must be substantiated. It was unclear to her delegation on which justification the Ukraine had based its use of reference prices, and therefore, Norway was not entirely satisfied with the Ukrainian answers and considered that this dialogue needed to be continued The representative of the European Union said that her delegation had continued to keep the Ukrainian legislation under active review, and did the same for its application. Regarding the implementation of the Ukrainian legislation, she recalled that in the technical meeting on customs valuation held with the State Customs Service of Ukraine on 16 March 2011, the European Commission proposed a concrete action plan aimed at a swift and sustainable solution of what it perceived as a problem with customs valuation. The proposal consisted of a number of short-term action points that would help bring valuation control fully in line with the WTO standards. The European Union believed that implementation of these actions would bring positive effects in the short term and lead to a reduction in the number of complaints by traders. Furthermore, her delegation continued to review the trade effects arising with respect to the application by the customs service of Ukraine of the legislation in question. Moreover, as already stated on past occasions, in her view, the content and scope of this legislation still required further clarification, notably in the light of the on-going monitoring of real trade operations. A persistent issue was whether valuation indicators or schedules were being applied in practice, and this concern was a question which applied to the notified legislation as a whole The representative of the European Union continued her statement that there were, of course, a number of other outstanding matters arising as regards to this legislation. A key point was that the drafting of the legislation indicated numerous examples where there was a lack of clarity as to the scope and content of the rules. For instance, Article 267 was the equivalent provision in the Ukrainian law of a fundamental provision of the Agreement (i.e., Article 1, which sets out the primary method of customs value i.e., the transaction value method). However, here in the Ukrainian law, the European Commission had several examples of terminology which varied, sometimes quite considerably, from Article 1 of the Agreement. (See for example, the references to the "correction" of the price, the addition of "further expenses", the taking into account of payments made "proxy", etc.). In addition, this problem could therefore, be expressed as a second question of a general nature, which was: "In all of the many examples in the notified legislation, did the Ukrainian legislation intend to use language different from the WTO Agreement, and if so, for what purpose?" Finally, her delegation had also heard that the relevant Ukrainian authorities were currently working on a new codification of customs law, including customs valuation law. Her delegation requested to hear more about this, as it might affect the progress on the work of this Committee with respect to this notification The representative of Switzerland supported Norway and the European Union. As already indicated at the last meeting of the CTG in March, Swiss companies had faced the same problems as the European Union and Norwegian companies concerning customs valuation. The problem faced seemed to be an implementation issue as Ukrainian customs authorities did not seem to follow the WTO methodology in defining the customs value. It appeared that there had been no change of practice since the last meeting. His delegation wanted to recall that it had raised the issue with

8 Page 8 Ukraine several times and would continue to do so. Moreover, they remained ready to work constructively to find a satisfactory solution and expected to see concrete and real results on the ground very soon. Switzerland invited Ukraine to bring the implementation of its customs valuation legislation into full conformity with its WTO commitment, and to instruct local customs authorities to apply the rules in a transparent, uniform and consistent manner. Finally, at the last CTG meeting, Ukraine indicated that it would undertake a major administrative reform, which would also include customs. He therefore, asked Ukraine to provide more details about the progress of this reform and how it would address the current problems with customs valuation The representative of the United States said that his delegation had similar concerns as those raised by the European Union, Norway and Switzerland. He said that the United States was interested in receiving written responses to the questions posed. In one issue raised by the European Union that dealt with the language in the legislation, he stated that the United States would appreciate an explanation on why Ukraine did not use the term transaction value in its legislation. Additionally, his delegation wanted to hear how Ukraine determined alternative customs value in cases where the customs authority questioned the declared value of the goods. Specifically, he was interested in hearing what sources Ukraine used to obtain prices for identical or substantial goods for the value of materials. After this meeting, his delegation was going to submit more detailed questions in writing on these issues. Finally, he also wanted to inform the Committee that his delegation was engaged in bilateral discussions with Ukraine and looked forward to resolving this issue and receiving responses to the questions contained in document G/VAL/W/ The representative of Ukraine thanked delegations from the European Union, Norway and Switzerland for the consultations held in Geneva and in capital. The representatives from the European Union, Norway and the United States had had a series of constructive meetings with the customs administration in capital, where many issues had been clarified. She considered this as a positive sign and appreciated understanding of its partners of the steps taken by the customs authorities to fight fraud and corruptive practices, to streamline the customs control and make it more efficient. She informed the Committee that the Ukrainian Customs was working to ensure proper risk management by various instruments, first and foremost the legislation which Ukraine had brought into conformity with the requirements of the Agreement. Moreover, the Ukrainian legislation ensured that the main valuation method was based on the transaction value. GATT Article VII and the Customs Valuation Agreement provided for the order of customs valuation; however, the issue of accuracy of valuation was not laid out in them. Neither Members rights could be restricted, nor the rights of its customs administrations to satisfy themselves as to the truth or accuracy of any statement, document or declaration presented for valuation purposes which could be called into question. Procedures in Ukraine were therefore, only those that were used widely with WTO Members, which envisaged checks of submitted documents, compared declared values with values of identical or similar goods and conducted verification of authenticity of documents submitted to customs by making enquiries to the customs administrations of exporting countries. Ukraine also used and relied upon an automated system of risk management in line with the Kyoto Convention. Its recommendation was a basis for customs officers to use additional methods of customs controls, such as verification of documents and information submitted for clearance Furthermore, Ukraine also had the right to request additional documentation as envisaged by the Decision Regarding Cases Where Customs Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value. In cases where there was a delay in final determination of value, an importer had the right to have the goods released upon provision of a guarantee. Ukrainian customs administration was constantly improving its controls and works to install more trade-facilitating systems. The customs administration had established a working dialogue with all operators and business associations representing different businesses in Ukraine. In addition, there was a Working Group recently created in the Department of Customs Control and Clearance, where the leading experts provided assistance and clarifications upon request. The customs administration was taking

9 Page 9 further practical steps to facilitate trade by way of establishing a special monitoring center which would very soon be operational, to respond to uncertain situations which might arise, and answer enquiries from both national companies and foreign trade operators. Additionally, Ukraine was also working on a new Customs Code. Finally, she believed this additional clarification/information was helpful and remained open for further contacts, and was willing to provide information and answers to Members questions and provide them in writing The representative of the European Union thanked the Ukrainian delegation for replying and was grateful if the Ukraine could circulate or submit the statements to Members The representative of Ukraine informed the Committee that her delegation would circulate the statements The Committee took note of the statements made and agreed to revert to this matter at its next meeting The Chairman recalled that he had been informed by the Secretariat that there were 41 Members who had not yet notified their implementing legislation in accordance with Article 22 of the Agreement. As this was an important transparency obligation, he urged Members who had not yet notified to do so as early as possible. He also informed delegations that a table summarizing the main notification requirements on customs valuation could be used as reference and was available in the room. III. INFORMATION ON THE APPLICATION OF DECISIONS OF THE COMMITTEE ON CUSTOMS VALUATION 3.1 The Chairman recalled that under this agenda item, the Committee noted new notifications of application of the Decisions of the Committee on Customs Valuation on, first, the "Treatment of Interest Charges in the Customs Value of Imported Goods" and, second, the "Valuation of Carrier Media Bearing Software for Data Processing Equipment", both adopted by the Committee and contained in document G/VAL/5. Since the last meeting, there had not been any new notifications. 3.2 The Committee took note of this information. IV. TECHNICAL ASSISTANCE A. INFORMATION ON TECHNICAL ASSISTANCE 4.1 The Chairman recalled that, under this item, the Secretariat informed Members of the technical assistance activities carried out under the auspices of the WCO. Document G/VAL/8/Add.24 contained the most recent information compiled by the Technical Committee on Customs Valuation of technical assistance activities carried out by Members as well as by the WCO Secretariat. B. ARTICLE 20.3 TECHNICAL ASSISTANCE AND TRADE-RELATED TECHNICAL ASSISTANCE 4.2 The Chairman recalled that the Committee s Work Programme on Technical Assistance for capacity building as regards the implementation and administration of the WTO Agreement on Customs Valuation was now incorporated in the WTO-wide Technical Assistance Program. The TA Plan was presently being implemented. This plan foresaw regional activities on Market Access issues which would include customs valuation training as one of the areas covered. Three such activities were scheduled for 2010; the first and second activities were carried out in July in Laos and in October in Qatar, respectively. Four more activities were scheduled for The

10 Page 10 first activity was carried out in March in Barbados. The second, third and fourth activities were planned for Africa in July (French speaking countries), South Africa in August (English speaking countries) and Austria in October for Central Eastern Europe, Central Asia and the CAUCUSES Countries (CEECAC). In addition, requests for technical assistance on customs valuation could be made at any time by individual Members and would be met by a national activity designed to meet the needs of the recipient. In November 2010, the WTO held a national activity on customs valuation in The Bahamas. 4.3 The Committee took note of the statements made and the information presented. V. PRESHIPMENT INSPECTION 5.1 The Chairman recalled that Preshipment Inspection was a standing item on the agenda of the Committee on Customs Valuation. He drew attention to the most recent update of the notifications received from Members under Article 5 of the Agreement on Preshipment Inspection. It was contained in document G/PSI/N/1/Add.14. At the last meeting, the United States said that it still had not received responses to the questions that it had posed to Indonesia on its new Preshipment Inspection programme. These were circulated in documents G/VAL/W/167 and G/VAL/W/ The representative of Indonesia said that his delegation would take note of the concerns and would consult further with capital. 5.3 The representative of the United States thanked the delegation of Indonesia. It had been almost two years since his delegation had requested information to their questions and they looked forward to a response. He continued to be concerned about the fact that Indonesia had not notified to the Committee of the PSI requirements which were implemented as part of the regulation known as Decree 56 and believed were extended by the Ministry of Trade with Regulations 57 in December His delegation asked Indonesia to confirm whether the inspection requirements had been renewed in Decree 57 and to clarify whether there were any changes made to the Preshipment Inspection regime. Finally, he continued to urge Indonesia to submit its notification on this requirement as soon as possible and then his delegation could also submit these questions directly to Indonesia. 5.4 The representative of Canada supported the United States regarding the lack of notification on the issue of Preshipment Inspection requirement. 5.5 The Committee took note of the information presented. VI. PARAGRAPH 12 OF THE DOHA MINISTERIAL DECLARATION (WT/MIN(01)/DEC/1): IMPLEMENTATION-RELATED ISSUES - Paragraph 8.3 of document WT/MIN/(01)/ The Chairman recalled that the General Council, at its meeting in December 2002, authorized the Committee to continue its work under the existing mandate in paragraph 8.3 of the Decision on Implementation-Related Issues and Concerns, and to report back to the General Council once its work had been completed. Under this item India had argued that recognizing the legitimate concerns of importing Members on the accuracy of the declared value, Ministers had directed this Committee to identify and assess practical means to address these concerns including exchange of information on export values, thus this was a separate mandate and India urged Members that these should be addressed by this Committee. However, some other Members had reiterated that the Negotiating Group on Trade Facilitation was the appropriate venue to continue these discussions, given that the

11 Page 11 Negotiating Group on Trade Facilitation was currently examining proposals that contained elements very similar to India's proposal. 6.2 The representative of India said that it was not necessary to repeat the arguments as the Chairman had already stated what he had wanted to say. Nevertheless, after listening to the representative from the WCO, who had clearly stated in his report that many developing countries were facing the practical problems regarding the implementation of the Agreement, particularly, widespread under-invoicing, and that it was a major challenge to fair and efficient revenue collection. His delegation, in this sense, requested that its proposal should be discussed. The argument that this objective was being handled by a Negotiating Group was pointless. Therefore, as there already was a mandate, he strongly insisted to Members that there was a job to be completed and Members should fulfil the mandate and start to discuss this issue. 6.3 The representative of the United States disagreed with India and reiterated his delegation's position that the appropriate venue to continue this discussion was in the Negotiating Group on Trade Facilitation, given that trade facilitation was currently being examined in proposals that contained elements similar to the one that was contained in India's paper. 6.4 The representative of Canada continued to have the position that the proposal was contrary to the mandate given to this Committee, partly because of its monitoring nature and the need for any outcome to be consistent with domestic laws and procedures. 6.5 The representative of European Union said that her position remained unchanged on this issue. 6.6 The representative of the WCO clarified a point made by India by stating that the WCO secretariat was looking into an issue of widespread suspected under-invoicing and that therefore it would not be said that this issue was the responsibility of the Technical Committee. There were also several crosscutting issues that the Secretariat was working on; sometimes with other WCO committees on commercial fraud and enforcement where the Technical Committee had certainly a part to play in terms of application of the valuation rules. Therefore, the particular issue on underinvoicing was not an issue that the Technical Committee, would be responsible for. 6.7 The Committee took note of the statements and recorded these views in the minutes. VII. OTHER BUSINESS A. WORKSHOP ON CUSTOMS VALUATION 7.1 The Chairman recalled that the delegation of Japan had suggested that the Secretariat organize a workshop on customs valuation. 7.2 The representative of Japan suggested that the Secretariat organize a workshop on customs valuation mainly in technical aspects of the agreement immediately after the next meeting of the Committee. He thought that this could benefit all Members and hoped that other Members would agree with the idea. 7.3 The representative of the United States would consult with its capital on whether or not this was a useful workshop to conduct. However, he thanked the delegation of Japan for raising this issue. 7.4 The representative of the European Union said that as this was the first time she had heard this proposal, her delegation requested more information on the type of workshop that Japan wanted

12 Page 12 to have. For instance, what would be the agenda of such a workshop, if it were to be held? She considered that a very general workshop on customs valuation would not be useful; therefore, she requested to have more information on that before she could give an opinion. 7.5 The representative of Japan said that this workshop would be purely technical and conducted by the Secretariat. 7.6 The Committee took note of the statements made. B. CAPE VERDE - GRANT OF A WAIVER RELATED TO THE IMPLEMENTATION OF ARTICLE VII OF GATT 1994 AND THE AGREEMENT ON IMPLEMENTATION OF ARTICLE VII OF THE GATT The Chairman informed the Committee that the General Council, at its meeting on 3 May 2011, had decided to waive the obligation for Cape Verde concerning the implementation of Article VII of GATT 1994 and the Agreement on Customs Valuation until 1 January 2012, as recommended by the CTG at its meeting on 21 March Pursuant to this waiver, contained in document WT/L/812, Cape Verde would have to report to the Committee on Customs Valuation, by 30 September 2011 on its progress on fulfilling the Action Plan and the status of its implementation of the WTO Agreement on Customs Valuation. C. CHAIR'S CONSULTATIONS ON WAYS TO IMPROVE THE TIMELINESS AND COMPLETENESS OF NOTIFICATIONS AND OTHER RELEVANT INFORMATION ON TRADE MEASURES FALLING WITHIN THE AMBIT OF THE AGREEMENT ON CUSTOMS VALUATION 7.8 The Chairman recalled that on 7 May 2009 the former Chair of the Committee reported on an informal open-ended meeting of the Committee held on 17 March 2009 to consult with Members on ways to improve the timeliness and completeness of notifications and other information flows on trade measures falling within areas under the Agreement. At the time, suggestions on how to increase transparency through complying with notification obligations were made by four Members (Canada, the European Union, the United States and Pakistan). It was also agreed, as suggested by the former Chair, that Members would put them in writing if they wanted to pursue any of these suggestions. Up to now, no written suggestions had been received. 7.9 The Committee agreed to revert to this issue only when Members express their suggestions in writing. D. DATE OF THE NEXT MEETING 7.10 The Chairman informed the Committee that the next meeting was scheduled for 31 October VIII. ELECTION OF OFFICERS 8.1 The Chairman informed the Committee that the Chairman of the Council for Trade in Goods had carried out informal consultations on a slate of names for appointment of Chairpersons of standing bodies in accordance with the established Guidelines for Appointment of Officers. On the basis of consultations, he had proposed that the Committee elect Masafumi KOBAYASHI (Japan) as Chairperson, for He therefore, proposed that the Committee elect Mr Masafumi Kobayashi by acclamation.

13 Page The Committee elected Mr Kobayashi by acclamation. 8.3 Mr Kobayashi thanked Mr Vattai for his hard work during his tenure and also thanked all Members for their support on his election as a Chair of this Committee next year. He was looking forward to working with all delegations and the Secretariat in order to advance the work of this committee.

14 Page 14 ANNEX I Report to the Committee on Customs Valuation on the work of the Technical Committee on Customs Valuation and related activities of the WCO Secretariat The 32 nd Session of the TCCV took place from 11 to 15 April Technical Questions After long-running discussions, the Technical Committee finalized a new instrument which will be incorporated into the WCO Valuation Compendium; Commentary 25.1, "Third Party Royalty and Licence Fees General Commentary". This document will be presented to the Council for approval next month. It sets out some important points to be taken into consideration when determining whether a royalty or licence fee should be included in the customs value. Two case studies, from Brazil and Colombia, on this same issue, are still under discussion by the Technical Committee. Discussions continued on the links between transfer pricing and customs valuation. This topic is a high priority for the Technical Committee and the WCO. Many trade representatives (consultancies, multi-national companies etc.), have raised this issue in view of the additional administrative burden placed on commercial operators who must satisfy customs administrations on one hand and tax administrations on the other in regard to related party transactions. The WTO Agreement sets out conditions for examining prices where the parties to a sale are related in order to establish whether or not the relationship has influenced the price. If it has, the price cannot be accepted. Similarly, the OECD has produced guidelines to verify whether a transfer price is "arm's length". Customs administrations are often being asked to accept a transfer pricing study as evidence to demonstrate that price influence has not taken place. However, although these concepts are similar, there are many differences. The task for the Technical Committee, therefore, is to consider to what extent the text of the WTO Agreement, and its Interpretative Notes, permits the use of information taken from transfer pricing studies in relation to these cases. In relation to both the third party royalty and transfer pricing issues, challenges are being faced by the Technical Committee in reaching clear conclusions given that the WTO Agreement provides limited guidance in respect of these increasingly common modern and complex commercial arrangements. This factor was recognised at a special event held by the Technical Committee last year to recognise the 30 th anniversary of the WTO Agreement. The Technical Committee also discussed a question from Belarus concerning the valuation of industrial waste. New technical questions were also raised by Singapore which the Technical Committee agreed to examine at the next Session. Technical Assistance/Capacity Building At each Technical Committee, reports are made of both Secretariat and Members activities in valuation-related technical assistance and capacity building. At the 32 nd Session, the delegate of Japan reported a number of activities conducted by his administration. The Secretariat conducted a Valuation trainer accreditation workshop for the East and Southern Africa Region in Harare in January A regional Customs Valuation workshop is being held this week in Beirut, Lebanon for the Middle East and North Africa Region and a national workshop was help in Timor Leste, earlier this year.

15 Page 15 Other issues Review of Technical Committee Processes and Procedures As mentioned at the last CVC, the Technical Committee has now launched a review of its processes and procedures. This has the following objectives: - to ensure Members needs are being met - to become more effective and efficient - to ensure the Technical Committee continues to fulfil its mandate, as laid down in the WTO Valuation Agreement. At the 32 nd Session, the Technical Committee had some constructive discussions on this issue. It was agreed to reformat the agenda to ensure more time was spent on practical issues, such as technical questions, and reduce time spent on administrative issues, which can be adequately covered in written reports. Other proposals will be discussed at the next Session. Revenue Package The Technical Committee was updated on the latest developments of the Revenue Package programme currently being conducted by the Secretariat. The Revenue Package is a response to WCO Members concerns of falling revenue returns, particularly in the wake of the global financial crisis of Many developing country Customs administrations still face significant practical problems in the application of the WTO Agreement and dealing with widespread under-invoicing has been identified as the major challenge to fair and efficient revenue collection. The Secretariat is currently studying the valuation control programmes of a number of Customs administrations in order to identify good practices which can be shared and encouraged. Elections/ Date of next meeting - The Technical Committee reelected Mr. Guzmán MAÑES (Uruguay) as Chairperson and Mr N Shokai (Japan) and Mr O Aoufi (Morocco) as Vice Chairpersons for a one year period. - The 33 rd Session of the Technical Committee will be held at WCO Headquarters in Brussels from 17 to 21 October 2011 (dates provisional).