 
  WORLD TRADE  
ORGANIZATION  G/VAL/54/Suppl.1 
13 October 2004 
 
 (04-4290) 
Committee on Customs Valuation Original:   English/ 
                 French/                  Spanish 
 
  
TECHNICAL COMMITTEE ON CUSTOMS VALUATION – RESPONSE TO THE 
TERMS OF REFERENCE FOR THE WORK OF THE TECHNICAL COMMITTEE 
ON CUSTOMS VALUATION IN CONNECTION WITH CONCERNS ON  
THE ACCURACY OF THE DECLARED VALUE (G/VAL/51) 
 
Supplement
 
 
  The attached communication, dated 7 October 2004, together with the letter of transmission 
of the Chairperson of the TCCV below, is being circulated to Members.  
_______________ 
 
 
Brussels, 27 August 2004 
  In accordance with the mandate of the T echnical Committee on Customs Valuation (TCCV) 
under paragraph 8.3 of the Doha Decision and furt her to the response to that mandate which the 
TCCV communicated to the WTO Committee on Customs Valuation in May 2003, I have the honour 
to transmit herewith the text of the Guidelines on the Development and Use of a National Valuation 
Database as a Risk Assessment Tool, as adopted by the TCCV at its 18
th session and by the 
WCO Council during its sessions of June 2004.  
Chairperson 
Technical Committee on Customs Valuation 
 
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 G/VAL/54/Suppl.1 
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WCO 
 OMD 
 
 
   
GUIDELINES ON THE DEVELOPMENT AND USE  
OF A NATIONAL VALUATION DATABASE  
AS A RISK ASSESSMENT TOOL  
 
   G/VAL/54/Suppl.1 
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Table of Contents
 
  
Preamble  Introduction  
Use of a database 
 Caveat regarding the use of a database  Data to be included in a database 
 
Validity of the data  Possibility of cross-checking  Monitoring Mechanism 
 
 G/VAL/54/Suppl.1 
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 Preamble : 
 
1. These Guidelines address various issues pertaining to the development and use of a national 
valuation database.  A national valu ation database is a risk assessment tool which may be used by a 
Customs Administration along with other risk tools to assess potential risk regarding the truth or 
accuracy of the declared Customs value for impor ted goods.  The information in the database should 
be recent data reflecting the Customs value and ot her pertinent information for previously imported 
goods.  The values may not be used to determine the Customs value for imported goods, as a substitute value for imported goods, or as a mechanis m to establish minimum values.  In addition, 
recognizing that differences in prices, including substan tial declines, are a part of international trade, a 
difference between the declared value and the database value(s) is not by itself a reliable indicator of 
potential risk with respect to the truth or accuracy of  the declared value, subject to the provisions of 
Decision 6.1.  2. A Customs Administration that uses a valuation database should establish a monitoring 
mechanism to ensure that the datab ase is being used as a risk assessme nt tool and that the information 
stored in the database is updated on a regular basis.    G/VAL/54/Suppl.1 
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 Introduction 
 
3. The Agreement on Implementation of Article VII of the GATT 1994, more commonly known 
as the WTO Agreement on Customs Valuation (the Ag reement), introduces a fair, uniform and neutral 
system for the Customs valuation of imported goods , which is consistent with commercial practices 
and precludes the use of arbitrary or fictitious Customs values. 
 4. The basis for the valuation of goods under this sy stem is, to the greatest extent possible, the 
transaction value of the imported goods which is the price actually paid or payable for the goods when 
sold for export to the country of importation, adjusted in accordance with the provisions of Article 8 
of the Agreement. 
 5. Where the Customs value cannot be determined using the transaction value method, the 
Agreement provides for five other methods, to be used in turn.  
6. Customs has the right to satisfy itself as to the truth or accuracy of the value declared.  The 
application of an appropriate risk assessment and management procedure enables Customs to exercise 
this right in a pragmatic manner.  Such procedures may use, inter alia , a valuation database. 
 7. The data contained in a valuation database shoul d be treated in accordance with the applicable 
confidentiality provisions.   
 
8. Within the context of Customs controls, Chapte r 6 of the Guidelines on the General Annex to 
the Revised Kyoto Convention (Customs controls)  includes the following definitions of the concepts 
of risk assessment and risk management :  
Risk assessment
 : “The systematic determination of risk  management priorities by evaluating and 
comparing the level of risk against predetermined st andards, target risk levels or other criteria.”  
 
Risk management  : “The systematic application of management procedures and practices which 
provide Customs with the necessary information to address movements or consignments which 
present a risk.” 
 
9. In the context of Customs valuation, applica tion of the above concepts requires that risk 
assessment mechanisms must be selective and targeted.  It is not appropriate to apply simple statistical 
or price indicators to all imports on a comprehensiv e basis, as a means to m easure potential risk with 
regard to the truth or accuracy of Customs value.   The development and use of a valuation database 
must take account of the above-mentioned risk assessment and management procedures. G/VAL/54/Suppl.1 
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 Use of a database: 
 
10. A valuation database may be used by a Customs Administration only as a risk assessment tool.  
It has to be designed specially to assess potential risk  regarding the truth or accuracy of the declared 
value for imported goods. 
 
11. Database management systems will usually enab le a Customs Administration to compare the 
declared value to previously accepted Customs valu e(s).  Recognizing that price variations are a 
normal part of international trade, the results of any such comparison do not in themselves represent a 
comprehensive or sufficient indicator of potential risk.  Therefore, while an abnormally large 
difference between the declared value and the data bases value(s) for that product could constitute a 
potential risk factor, any such difference must be c onsidered along with other potential risk factors, 
such as the lack of supporting documentation, prio r problems with the importer, etc., in determining 
what further action, if any, is appropria te with regard to the declared value. 
 
12. Where the application of appropriate da tabase technology indicates the existence of  potential 
risk in well-defined circumstances, Customs may a pply a number of measures.  For example, Customs 
may place the operations of a particular importe r under scrutiny and take appropriate monitoring 
action.  In other cases where there are concrete indi cations that the declared values represent a risk 
with respect to their truth or accuracy, and after ta king into account all the relevant risk factors the 
Customs Administration has doubts about the truth or accuracy of the declared value, it could follow 
the procedures set forth in Decision 6.1 of th e WTO Committee on Customs Valuation.  Such 
procedures start by asking the importer to provide fu rther evidence to support the declared value.  
Another example of a measure that can be taken by Customs Administration in cases of potential risk 
is a post-importation audit of the importer.  
13. The Customs Administration cannot reject the declared value based solely on a difference 
between the declared value and the database value(s) .  Rather, the value(s) stored in the database 
should, alongside other indicators applied by Customs, serve only as an indicator of potential risk and represents no more than initial indicative information helping to reinforce or dispel Customs’ doubts 
about the truth or accuracy of the declared value.  
14. The database can also be used as a risk assessment tool to perform cross-checks in order to 
target specific import declarations for examination.  15. Normally, a valuation database should form part  of a more extensive database embracing risk 
assessment linked to other aspects of the import/expor t operation, such as origin, tariff code number, 
importer’s profile, exporter’s profile, etc. 
 16. Each Customs Administration should determine,  with reference to its own needs, which 
authorized staff will have access to the national valuation database.  17. The use of databases in the risk assessment contex t may occur at any stage: prior to the lodging 
of the import declaration, at the time when the declar ation is lodged (verification of the data entered in 
the declaration), throughout the clearance process and/or after the goods have been released.  
 
Caveat regarding the use of a database : 
 18. A Customs Administration may not : 
 
• Use a database to determine the Customs valu e of imported goods, as a substitute value for 
imported goods or as a mechanism to establish minimum values;  G/VAL/54/Suppl.1 
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 • Reject the declared value solely on the basis of  a difference between the declared value and the 
database values; 
• Disregard the requirements of article 13 of th e WTO Valuation Agreement (concerning release 
of imported goods upon sufficient guarantee) in order to employ a valuation database; or 
• Use a valuation database as a substitute for other techniques, such as post-importation audit, to 
assess the truth or accuracy of the declared value. 
 
Data to be included in a database:  
19. Within the framework of a risk assessment policy for valuation, the data to be included in a 
valuation database may vary, depending on the state of  development of the risk management policy of 
the Member concerned and should be based on re levant elements from the WCO Customs Data 
Model. 
 
20. The usefulness of a valuation database as a risk  assessment tool depends on the reliability and 
relevance of the data for the purposes of determini ng the truth or accuracy of the declared value.  
Therefore, the data should include the Customs value for previous importations determined in 
accordance with the Agreement.  Th e data may also include the applicable method of valuation (for 
example, transaction value, computed value, etc. ) and elements included in the Customs value (for 
example, assists, royalties, selling commissions, etc.).   Other data from the import declaration, such as 
whether the parties are related, may also be included.  21. The data to be included in the database is gene rally the data found in the import declarations 
and supporting documents of previ ous importations.  The database may also include other pertinent 
and reliable data for risk assessment purposes.  22. In an automated database, virtually all of this  data could constitute key-words providing search 
access.  For example, doing a search on “country of origin” should, at least, make it possible to find 
information about all importations of goods from th e country concerned during a specified period; at 
best, it should provide a range of information about th e type of goods exported from that country, etc. 
 
Validity of the data: 
 
23. In order to properly perform its function as a ri sk assessment tool, data in the database should 
be recent and up-to-date.  What is considered recent and up-to-date may depend on the commodity 
involved, the frequency of price fluctu ations, and other pertinent factors. 
 
Possibility of cross-checking: 
 
24. The database can also be used as a means of pe rforming cross-checks in order to target those 
importations which are likely to contain a potential ri sk and, from that starting-point, select the import 
declarations concerned for examination.  25. Thus, for example, if it has been established in the past - under the provisions of paragraphs 1 
(d) and 2 of Article 1 of the Agre ement, and paragraph 4 of Article 15 thereof - that a buyer/importer 
is related to his supplier/seller, th at this relationship has influenced the price, and that this has caused 
the declared value to be rejected, there could be  a function in the system which selects all future 
declarations concerning transactions between that buyer/importer and that supplier/seller, so that 
Customs will be in a position to check whether the rela tionship still exists and, if so, whether it is still 
producing the same effects. 
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 26. Similarly, if it has been established in the past - under the provisions of paragraph 1 (a) of 
Article 8 - that commissions (other than buying commissions) have been paid in connection with a 
transaction between a buyer/importer and a supplier/se ller, and the declared value was adjusted as a 
result, the system should be able to select all fu ture declarations for transactions between that 
buyer/importer and that supplier/seller, so that Cu stoms can check whether this type of payment is 
still being made and, where appropriate, ad just the declared value accordingly. 
 27. The same would apply to several other provisions  of the Agreement (conditions of application 
of Article 1, goods and services supplied by the buyer, royalties, proceeds of resale, etc.).  Monitoring Mechanism:  
A Customs Administration that uses a valuation da tabase should establish a monitoring mechanism to 
ensure that it is being used only for the purpose of  risk assessment described  in these Guidelines and 
to ensure that the information in the datab ase is updated on a regular and continual basis. 
 
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