RESTRICTEDWORLD TRADE
ORGANIZATIONG/VAL/W/66
7 April 2000
(00-1429)
Committee on Customs Valuation Original:  English
RESPONSES TO THE QUESTIONS RAISED BY INDIA
Communication from the European Communities
The following communication, dated 7 April 2000, has been received from the Permanent
Delegation of the European Communities.
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1. India has referred to Commission Regulation (EC) No. 3223/941 and has requested
clarification2 with respect to the application of "standard import values" in the context of this
regulation.
2. Replies to the questions received from India are enclosed.3. General information on the purpose and scope of Regulation 3223/94 is also included.
I. GENERAL INFORMATION
Commission Regulation (EC) No. 3223/94 on detailed rules for the import arrangements for
fruit and vegetables was adopted in 1994 and entered into force in January 1995.
This Regulation provides detailed rules for the application of import tariffs for fruit and
vegetables, particularly in the lights of the results of the multilateral trade negotiations in the Uruguay
Round which made it necessary to introduce a new sy stem for the importation of the fresh fruit and
vegetables listed in the Annex to the Regulation in question.  This system is fully compliant withArticle 4(2) of the Agreement on Agriculture, which provides that a Member shall not require or
resort to minimum import prices.  This Regulation also provides for the use of standard import values
in a well-defined context.  Standard import values are established only with respect to the products
covered by this regulation, in order to determine the applicable entry price and, consequently, the
tariff position and duty applicable as set out in the customs tariff.  These duty levels are listed in the
relevant EC schedules (CXL).
As a consequence of the tariffication approach adopted during the Uruguay Round, the EC
agreed upon tariff concessions for a number of fresh fruit and vegetables, more particularly the
non-application of the specific amount of duty listed in the EC schedule if entry prices exceeded acertain level.
                                                     
1 Published in Official Journal No. L 337 of 24.12.1994, as amended.
2 WTO Customs Valuation Committee – G/VAL/W/51.G/VAL/W/66
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Since the entry price system does not seem to be of specific interest for India as far as exports
are concerned, the following randomly chosen example pertaining to clementines will suffice to
illustrate this approach.  For clementines, the EC applies a bound duty of 16 per cent + 106 ε/t.  In
addition, the EC has undertaken to reduce the specific rate of duty to zero if the entry price per tonne
is not less than 649 ε/t.  If the entry price is less than 649 ε/t, a proportion of the basic bound duty is
applied in function of the actual level of the entry price.
II. RESPONSES TO THE QUESTIONS FROM THE DELEGATION OF INDIA
Reply to Question 1
Commission Regulation 3223/94 gives effect to tariff concessions made in the context of the
Uruguay Round, as regards agriculture.
The system is known as the "Entry Price System", and it includes so-called standard import
values as one of a number of methods in its implementation.  The system indicates the means to
determine the tariff position and consequently the level of import duties applicable to the products
covered.  This is achieved in three stages:
(i) firstly, the entry price of the goods is determined.  This is done on the basis of a
choice of methods.  The importer can select the method to be used in this context.
The main choice is between the FOB price or a standard import value.  (The term
"standard import values" used here does not refer to customs values);
(ii) the tariff position is then determined on the basis of the entry price;(iii) the tariff position determines the rate of duty applicable.
Regulation 3223/94 did not introduce a system fo r fixing standard customs valuation.  It
provided a basis for the determination and use by importers of average values (or amounts) for the
purposes of determining the tariff position and duty rate applicable.
Reply to Question 2
Import duties are charged on the customs value of the imported goods in the case of produce
subject to ad valorem  duties.  In addition to transaction value, importers also have the choice inter
alia of using standard import values if available.   While such an option would normally be only
available in the absence of a basis for transaction va lue, in the interests of efficiency the importer is
allowed to use standard import values.  However, in order to benefit from this possibility, the importer
must determine the entry price.  Some examples are given below.
Example 1
An importer who makes a customs value declaration on the basis of a particular transaction
(the FOB price paid or payable for the goods) is required to use the same methodology for thedetermination of the entry price which is used, in turn, for selecting the appropriate tariff
position.G/VAL/W/66
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Example 2
Similarly, where an importer indicates that a secondary method of customs valuation (e.g.
deductive method) is appropriate for the import in question, then the deductive method is alsoapplied for entry price purposes.
Example 3
As a further example, where an importer wishes to use standard import values for the
purposes of determination of the entry price, he will opt for the determination of customs
value to be on an equivalent basis.  In such cases, the importer will have had the choice to usetransaction value.  The importer will usually use standard values when no sale of goods exists,
but even then the importer may still elect to use standard import values if he wishes to do so.
Standard average values are used independently of the tariff structure, and would be used in
the context of the Regulation in question even in the absence of ad valorem  duties.  Some products in
fact attract a mixed duty, both ad valorem  and ad quantum .
Reply to Question 3
As indicated above, the Regulation in question pr ovides for detailed rules for the application
of the import arrangements for fruit and vegetables, and specifies the rules for determining the tariff
position and consequently the level of import duties applicable to the products in question.  Such
measures do not implement the Customs Valuation Agreement.
The rules on customs valuation are contained in a separate legal instrument (Council
Regulation 2913/92 and the Commission Regulation 2454/93).  Regulation 3223/94 does not alter or
amend the EC's rules on implementation of the WTO Customs Valuation Agreement.
Reply to Question 4
It is useful to recall here that the use of minimum customs values for valuation purposes is
only possible provided:  (i) such minimum values applied at the time of undertaking WTOcommitments, (ii) an appropriate reservation was made at that time and (iii) such minimum customs
values are retained for a limited and transitional period only.
Since the Regulation under discussion did not introduce minimum import values, an
application with respect to minimum values was not required.  In a customs valuation context, such areservation would not in any event have been possibl e in view of the conditions – outlined in the
preceding paragraph – which apply.
Reply to Question 5
The term "tariff position" does not appear in the Regulation in question.In the context of Regulation 3223/94, the entry price for an importation is used to find its
related tariff line created for the purpose of implementation of the entry price system.  These tariff
lines are subdivisions of tariff headings in th e EC's Combined Nomenclature.  The Combined
Nomenclature is in turn based on the Harmonized System.G/VAL/W/66
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Reply to Question 6
Relevant tariff subheadings are subdivided on the basis of different entry price levels.  The
tariff subheading for a particular product will be subdivided according to the different possible entry
prices applicable to that product.
As indicated above, the entry price and tariff line is determined on the basis of the
information declared by the importer.  The importer always has three choices – FOB price, standard
average value or an amount derived from applicati on of a method equivalent to the deductive value.
Reply to Question 7
See replies to Questions 1-3 above.
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