WTO Valuation Method - Transaction Value of Identical Goods

21 May 2020


Method 1 — Transaction value
Method 2 — Transaction value of identical goods
Method 3 — Transaction value of similar goods
Method 4 — Deductive method
Method 5 — Computed method
Method 6 — Fall-back method

We’re looking now at method 2 for a valuation which is ‘Transaction Value of Identical Goods’.

WTO – Transaction Value of Identical Goods

Article 2 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 provides for the valuation should the first method ‘Transaction Value’ fails to provide for a valuation.

Below is Article 2 verbatim,

1.            (a)    If the customs value of the imported goods cannot be determined under the provisions of Article 1, the customs value shall be the transaction value of identical goods sold for export to the same country of importation and exported at or about the same time as the goods being valued.

(b)    In applying this Article, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the customs value.  Where no such sale is found, the transaction value of identical goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or a decrease in the value.

2.     Where the costs and charges referred to in paragraph 2 of Article 8 are included in the transaction value, an adjustment shall be made to take account of significant differences in such costs and charges between the imported goods and the identical goods in question arising from differences in distances and modes of transport.

3.     If, in applying this Article, more than one transaction value of identical goods is found, the lowest such value shall be used to determine the customs value of the imported goods.

Customs will tend to use google to find the value of an item if there is any doubt. Some customs regimes will have a database of items imported previously and their values which can also be used.

A reason for this valuation not to work is a server for example which can have many different configurations which cannot be easily identified to give a previous or similar value. Or something custom built for a specific and unique function.

If a valuation still cannot be determined, then method 3 is applied.