Valuation’s basic definition as a word is to put a value on something, an estimation of the true worth of an item. This translates to the world of international trade, where the General Agreement on Tariffs and Trade (GATT) states an article on Valuation for Customs Purposes. In accordance to this article, “… contracting parties recognize the validity of the general principles of valuation” that are discussed and set forth in Article VII of the GATT. Contracting parties, which refer to the nations that are currently a part of the WTO, “…undertake to give effect to such principles, in respect of all products subject to duties or other charges”. This also includes products that are subject to trade restrictions or regulations.
This section on valuation also states that a contracting party can request another contracting party to review the operation of any laws or regulations that can relate to the value of products for customs purposes, based on the mentioned principles in the article itself. The article states that the value for customs purposes of imported goods must be based on the actual value of the goods on which duty is assessed. Therefore, the value cannot be determined by the country of origin or any other arbitrary factor.
The actual value of a product should be the price at which it is sold in the ordinary course of trade under fully competitive conditions, according to the GATT. In the case that the actual value of a product cannot be calculated in such a way, the value for customs purposes must be based on the nearest determinable equivalent of such a value. In other words, if there is a valuation discrepancy between the countries, the closest attainable value must be used to determine the actual value for customs purposes.
Although this is merely the tip of the proverbial iceberg regarding product valuation as laid out by the GATT, these elements will have a direct influence on the value of your goods when exporting them to other countries. BlueBlox can assist in these matters, being your trade compliance consultancy house for international trade in countries from Africa, Eastern Europe, and the Middle East.
For more info on how we can assist your business with cross-border trade, please contact us today with any enquiries.