./.  WORLD TRADE  
ORGANIZATION  G/VAL/W/134 
22 March 2004  
 
(04-1268) 
Committee on Customs Valuation Original:   English 
   
NOTIFICATION UNDER ARTICLE 22 OF THE CUSTOMS  
VALUATION AGREEMENT 
 
US questions regarding China's legisl ation related to customs valuation
 
  
 The following communication, dated 16 March 2004,  is being circulated at the request of the 
Delegation of the United States. 
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 Regarding document G/VAL/N/1/CHN/2, the Cu stoms Law of the PRC, we request that 
China answer the questions we included in G/VAL/W/127 last October.   Regarding document G/VAL/N/1/CHN/3,
 "The Customs Regulations of The People’s 
Republic of China Regarding Dete rmination on Customs Value of Royalties and License Fees Related 
to the Imported Goods," we have the following questions. 
 
• Article 3 provides that "royalties and license fees shall be added to the customs value of 
imported goods provided the payments meet both the following conditions..." This provision 
does not address the situation where the royalty or license fee is already included in the price.  
Is provision made elsewhere for this situation?  
• Article 4 provides that royalties and license fees  in accordance with the provisions of articles 
5 through 8  shall be deemed  to be related to the imported goods. Does this mean that an 
importer could not present evidence that in the particular circumstances presented that the 
royalties and license fees are not related to the imported goods?   
 
• Article 5 addresses royalties and license fees pa id for the right of patent or know-how.  
Paragraph 2 of Article 5 provides that where pa tent or know-how is im ported in the form of 
magnetic tapes and disks, CDs or other similar media, whether downloaded from network, or 
transmitted via satellite, it shall be  deemed to be related to the imported goods in terms of the 
above provisions.  We would like further e xplanation of this provision. How will it be 
determined whether this media is related to  the categories of goods listed in the first 
paragraph of Article 5?  
 
• Under Article 6 royalties and license fees paid for the right of trademark would be deemed 
related to the imported goods wh ere the trademark is affixed after importation . We would like 
further explanation of this provision. How would you address the situation where the imported goods are assembled and/or processed in  China and the trademark is affixed to the 
assembled/processed good?  
 
• Articles 5 and 7 both refer to imported software .  How do these provisions relate to China's 
application of the WTO Committee on Customs Valuation Decision 4.1?  We have some 
concerns that these provisions could be used to circumvent that decision.  
 G/VAL/W/134 
Page 2  
 
• Reference is made to minor processing in Article 6 and 8.  This term is defined in Article 15 
to include primary assembling.  Can you provide  an explanation of primary assembling?   
 
• The scope of Article 11 is very broad.  What is the reason for requiring importers to declare 
royalties and license fees paid in any form?  Wh at can the importer do when it is not possible 
to provide objective and quantifiable data at the time of entry?  Would this subject the 
importer to potential crimin al penalties under Article 14? 
 
• In what situations would a violation of the ro yalty regulations constitute a crime pursuant to 
Article 14?  
• Can China include examples in their regulations or policy directives of royalty payments that 
would not be included in the customs value? 
 
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