Page 276 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

International Trade and Finance

Notes The agreement recognizes that the prices obtained by different importers for the same product may
vary. The mere fact that the price obtained by a particular importer is lower than that at which other
importers have imported the product, cannot be used as a ground for rejecting the transaction value.
Customs can reject the transaction value in such situations only if it has reasons to doubt the truth or
accuracy of the declared price of the imported goods. Even in such cases it has to give importers an
opportunity to justify their price and if this justification is not accepted, customs has to provide
importers in writing the reasons for rejecting the transaction value and for determining the dutiable
value by using other methods. Further, by providing importers the right to be consulted throughout
all stages of the determination of value, the agreement ensures that the discretion available to customs
for scrutinizing declared value is used objectively.
The agreement also requires national legislation on the valuation of goods to prove the following
rights to importers :
• Right to withdraw imported goods from customs, when there is likely to be a delay in the
determination of customs value, by providing sufficient quantities, in the form of surety or a
deposit, covering the payment of customs duties for which goods may be liable
• Right to expect that any information of a confidential nature that is made available to customs
shall be treated as confidential
• Right to appeal, without fear of penalty, to an independent body within the customs
administration and to judicial authority against decisions taken by customs

The basic aim of the agreement is to protect the interests of firms engaged in international
trade by requiring that customs should accept the price actually paid by the importer in
the particular transaction for determining dutiable value. This applies to both arms-length
and related-party transactions.

Pre-shipment inspection
Pre-shipment inspection is the practice of employing specialized private companies (or ‘independent
entities’) to check shipment details—essentially price, quantity, and quality—of goods ordered
overseas. The basic purpose of pre-shipment inspection is to safeguard national financial interests
(preventing capital flight, commercial fraud, and customs duty evasion, for instance) and to compensate
for inadequacies in administrative infrastructures.
The Pre-shipment Inspection Agreement places obligations on governments which use pre-shipment
inspection. Such obligations include non-discrimination, transparency, protection of confidential
business information, avoiding unreasonable delay, the use of specific guidelines for conducting
price verification, and avoiding conflicts of interest by the inspection agencies. The obligations of
exporting members towards countries using pre-shipment inspection include non-discrimination in
the application of domestic laws and regulations, prompt publication of those laws and regulations,
and wherever requested, the provision of technical assistance.
The agreement establishes an independent review procedure administered jointly by the International
Federation of Inspection Agencies (IFIA), representing inspection agencies, and the International
Chamber of Commerce (ICC), representing exporters. Its purpose is to resolve disputes between an
exporter and an inspection agency.
Rules of origin

‘Rules of origin’ are used as the criteria to define where a product was made. They are an essential
part of trade rules because a number of policies, such as quotas, preferential tariffs, anti-dumping
actions, countervailing duty (charged to counter export subsidies), etc., discriminate between exporting
countries. Rules of origin are also used to compile trade statistics, and for ‘made in...’ labels that are

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