FairTrade Six-Point Proposal on Transaction Valuation

1.    Adhere to the WTO’s general guiding principle. According to WTO Valuation Agreement, customs administrators have the right to ‘satisfy themselves as to the truth or accuracy of any statement, document or declaration.’

The implementing law on the WTO transaction valuation, RA 9135, also states ‘the right of the Collector of Customs to satisfy himself as to the truth or accuracy of any statement, document or declaration presented for customs valuation purposes’

2.    Amend the proviso of the TV law which says that “Where the Commissioner of Customs has reason to doubt the truth or accuracy of the declaration or particulars or documents provided in support of declared value of the importation, he may require the importer to give further explanation thereof and to submit additional documents or other evidence to show that the declared value represents the total amount paid or payable for the imported goods.”  Instead of the weak “he may require,” state that “he may reject the declared value in cases of reasonable doubt” as is the case in India and other countries.

This way, undesirable haggling and negotiations can be avoided. The burden of proof must be put squarely on the importer.

In other countries, such as Belgium, customs examiners, when in doubt, simply tell the importers to go back and present more realistic values, no ifs and buts.

In the absence of any enabling law, can the BOC come up with rules that will demonstrate the same decisiveness against erring importers.

3.    Emulate other countries’ efforts to curb under-valuation without departing from the WTO’s system.

Examples:

China has notified WTO that it is imputing royalties and license fees into the value of the imported goods.

India has notified WTO that to prevent “situations of valuation fraud,” it has come up with an amendment ‘to specify the potential situations of valuation fraud so as to facilitate identification of genuine cases of transaction valuation.” Thus, in addition to the WTO criteria for acceptance of transaction valuation (under Method 1), it added the following criteria:

“The sale is in the ordinary course of trade under fully competitive conditions”,

“The sale does not involve any abnormal discount or reduction from the ordinary competitive price”,

“The sale does not involve special discounts limited to exclusive agents”, and

“Objective and quantifiable data exist with regard to the adjustments required to be made under the provisons…to the transaction value.”

Given the BOC experience with TV system since 2000 and earlier, with export valuation from 1996 t0 1999, can it not do a similar listing of additional criteria for immediate consideration of our legislators without violating the WTO Valuation Agreement?

4.    Mag-sampol. Identify notorious importers engaged in gross undervaluation, e.g., declaring a pair o shoes worth only $.10 cents or so, and subject them to the rigors of the post-entry audit. Publicize the results and make a blacklist of erring importers.

5.    Strengthen the risk management process by adopting the proposals of FPI-FTA (as outlined by Atty. Nap Ng), specifically the use of Revision Orders to test the truthfulness and accuracy of a given value.

6.    Support the proposed anti-smuggling law imposing higher penalties an outright and technical smuggling.

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