The Agreement on Implementation of Article VII of the GATT 1994, also known as the Customs Valuation Agreement, is a crucial international trade agreement that has brought about significant changes in the trade industry. The agreement was established to ensure that all participating countries follow a uniform set of rules when it comes to valuing goods for customs purposes. In this article, we’ll take a closer look at what the agreement entails and its impact on international trade.
What is the Agreement on Implementation of Article VII of the GATT 1994?
The Agreement on Implementation of Article VII of the GATT 1994 was established as part of the Uruguay Round of negotiations under the General Agreement on Tariffs and Trade (GATT). The aim of the agreement was to create a set of principles for the determination of customs value for all imported goods.
Under the agreement, the customs value of imported goods is determined based on the transaction value of the goods, which is the price actually paid or payable for the goods. This means that the customs value must reflect the actual value of the goods, rather than an arbitrary value assigned by customs officials.
What are the key provisions of the agreement?
The agreement outlines a set of rules that must be followed by participating countries when valuing goods for customs purposes. Some of the key provisions of the agreement include:
– The use of transaction value as the primary basis for determining customs value
– The inclusion of all payments made by the buyer to the seller as part of the customs value, including commissions, royalties, and other expenses
– The use of declared values as a fallback method for determining customs value in cases where transaction value cannot be established
– The requirement for customs authorities to provide a written explanation for any adjustments made to the declared customs value
– The establishment of a Committee on Customs Valuation to oversee the implementation of the agreement and provide a forum for consultation and dispute resolution
What is the impact of the agreement on international trade?
The Customs Valuation Agreement has had a significant impact on international trade by creating a level playing field for all participating countries. By establishing a uniform set of rules for the determination of customs value, the agreement has reduced the likelihood of disputes between countries and provided greater certainty for importers and exporters.
The agreement has also been instrumental in combating customs fraud and other illegal practices in the trade industry. By requiring customs authorities to provide a written explanation for any adjustments made to the declared customs value, the agreement has helped to prevent the undervaluation of goods for customs purposes.
Overall, the Agreement on Implementation of Article VII of the GATT 1994 has been a crucial development in the history of international trade. By establishing a uniform set of rules for the determination of customs value, the agreement has helped to create a fair and transparent trading environment that benefits all participating countries.