DEPUTY DIRECTOR-GENERAL YI XIAOZHUN
Dr. Kunio Mikuriya, Secretary General, WCO:
Mr. Jan Birkhoff, Chairperson of the TCCV,
Mr. John W.H. Denton AO, Secretary General, International Chamber of Commerce,
Former Chairpersons of the TCCV,
Members of the TCCV
Ladies and gentlemen,
I am honoured to join you in commemorating the 50th Session of the Technical Committee on Customs Valuation. I would like to express my heartiest congratulations to all of you on reaching this significant milestone. On behalf of the four Deputy Directors-General Interim of the WTO, I also wish to express the sincere gratitude of the WTO to the WCO for its excellent custodianship of the Technical Committee on Customs Valuation over the past 25 years. The Technical Committee is one of the pillars of the Customs Valuation Agreement and has the pivotal task of ensuring, at a technical level, uniformity in the interpretation and application of the Agreement. The fact that we are today at the opening of the 50th Session is testament to the continual commitment shown by the WCO Secretariat and the members of the Technical Committee to its implementation.
While 2020 marks the 25th anniversary of the Customs Valuation Agreement, you will recall that the issue was first regulated internationally under Article VII of the GATT in 1947. However, it was the plurilateral customs valuation code concluded in 1979 under the GATT Tokyo Round that provided for the first time a detailed regulation of customs valuation and sought to bring a uniform set of detailed rules. The Uruguay Round paved the way for this plurilateral code to become a multilateral agreement.
Aware of the importance of fair, uniform and neutral customs valuation processes on international trade flows, it was important for the negotiators that the Customs Valuation Agreement act as a bulwark against any erosion or elimination of the market access opportunities achieved through tariff reductions as a result of arbitrary, fictitious or non-transparent valuation methodologies. And considerable trade and capacity building was foreseen in order to assist developing countries and LDCs to fully implement the CVA after 2004.
The trading environment 70, 41 and 25 years ago was a world away from that in which we operate today. Global trade has grown and developed in ways that the negotiators of the Customs Valuation Agreement could never have foreseen. I would like to focus on just one aspect of international trade, which is that of the reshaping of global value chains. The reshaping of value chains will give rise to new and emerging business models and trade developments that in all likelihood will require further interpretation of the application of the Customs Valuation Agreement, at least at the technical level.
In 1995, when the Agreement entered into force, technological advances together with predictable market conditions gave rise to the phenomenon of global value chains that currently dominate manufacturing production and trade. Over the years, multinational enterprises have increasingly grown to take the lion’s share of overall trade in many countries even though SMEs were estimated to account for between 80-99 per cent of firms in any given country. As a result, SMEs had a lower participation rate in international trade and global value chains than big business, and most SMEs did not export at all.
Today, however, those global value chains are being reshaped as a result of rising demand and new industry capabilities in the developing world as well as a wave of new technologies. Instant and low-cost digital communication is lowering transaction costs. New business models are being created through the digital economy which could result in an increasing number of small and medium enterprises being in a better position to gain increased access to foreign markets through online sales and ecommerce. New research finds that development of a website by manufacturing SMEs facilitates its participation in GVCs and trade. Similar opportunities would also extend to Micro business and individuals that want to engage in international trade. And those technological developments also impacted many other areas that are important for valuation purpose: 3-d printing and bitcoin are also just examples of issues that became relevant for international trade only a few years ago.
These varying and uncertain developments will likely impact the day-to-day interpretation and application of the CVA to changing valuation issues. How will the Committee on Customs Valuation respond? How can the Technical Committee ensure, at the technical level, uniformity in interpretation and application of this Agreement in this constantly evolving and changing trading environment, which has been further bustled by the Covid-19 pandemic? There are important and challenging discussions ahead.
While raising potential upcoming challenges, it is necessary to continue our work to address the ongoing challenges that persist for some of the Membership. I know that for some Members, in particular developing and least developed countries, the challenges are real and heavy. For example, customs duties represent an important revenue stream for a number of countries; their trade policy can include the imposition of high tariffs, their economies can have a large informal trading sector which is not regulated. In addition, their customs administrations can suffer from the lack of the customs expertise that is required to implement the customs valuation agreement, as well as a lack of resources in general. These are all challenges to the application of the Customs Valuation Agreement in a number of developing and least-developed countries. The assistance provided by the on-going technical work of the Technical Committee on Customs Valuation continues to play an important role in addressing these challenges.
As I conclude my remarks, I would like to highlight the fact that today, customs valuation cannot be looked at in a silo. This was brought home, in particular by the WTO Trade Facilitation agreement which resulted in significant changes, many of which are directly relevant to customs valuation.
The Customs Valuation Agreement itself facilitates trade by ensuring that the customs value of goods will be based on the true value of goods that was negotiated between buyer and seller. Other measures such as the separation of the release from the final determination of the customs duties are also trade-facilitating. It could actually be considered a forward-looking agreement for its time.
The implementation of the Trade Facilitation Agreement directly supports the use of transaction value through its provisions on pre-arrival processing, post-clearance audit, advance rulings, risk management, authorized operators and independent appeal mechanisms. The TFA transparency and consultation provisions can strengthen the possibility for the private sector to engage with customs administrations as a means of resolving potential undervaluation issues while not unnecessarily impeding trade. At the WTO, the Committee on Customs Valuation has engaged with the Committee on Trade Facilitation in an effort to raise the awareness within the membership of the linkage between both agreements and encouraging consideration of means by which the Trade Facilitation Agreement can enhance the implementation of the Customs Valuation Agreement, particularly for developing and least-developed counties.
By requiring that customs value be based on simple and equitable criteria consistent with commercial practices, the CVA has proven to be very flexible and successful at adapting to a changing environment. However, the changes are coming in more quickly and are more transformational. So, as we look to the future, my invitation to you is to consider a closer working relationship between the Technical Committee, which after all is an integral part of the Agreement, and the Customs Valuation Committee in Geneva to explore options for further mutual benefits in the implementation of the Customs Valuation Agreement.
In all cases, we at the WTO look forward to continuing our constructive and fruitful partnership with you as we look ahead to the next 25 years of implementation of the Customs Valuation Agreement in cooperation with the essential supporting role of the Technical Committee on Customs Valuation.
Once again, I thank you for the opportunity to participate in this commemorative event and I wish you a successful 50th session.