Customs valuation: transaction value and the 6 WTO methods explained

The six methods, in order

• Transaction value of the imported goods.
• Transaction value of identical goods.
• Transaction value of similar goods.
• Deductive value, based on the resale price in the importing country.
• Computed value, based on the cost of production; the importer may ask to use it before the deductive value.
• Fall-back method, using reasonable means consistent with the agreement.

What goes into the transaction value

The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods. Article 8 adds certain costs if the buyer bears them and they are not already in the price: commissions and brokerage except buying commissions, the cost of containers and packing, assists (goods or services supplied free or at reduced cost by the buyer for production), royalties and licence fees related to the goods, and any proceeds of later resale that go to the seller. Whether transport, insurance and related charges to the place of import are included is left to each member, which is why some countries value on a CIF basis and others on FOB.

When the transaction value cannot be used

The transaction value applies only if there are no restrictions on the buyer's use of the goods other than those imposed by law, no conditions whose value cannot be determined, enough information for the Article 8 adjustments, and, where buyer and seller are related, the relationship did not influence the price. Otherwise customs moves down the list of methods. Under the fall-back method, customs may not use, among others, the selling price in the importing country, the higher of two alternative values, the domestic price in the exporting country, minimum values, or arbitrary or fictitious values.