FOLLOW-UP
WORKSHOPS ON WTO VALUATION AGREEMENT IN MOZAMBIQUE – MARCH 2003: PAPER
PRESENTED BY THE USAID/RCSA SOUTHERN AFRICA GLOBAL COMPETITIVENESS HUB
The Role of
stakeholders and Pre-conditions for the successful implementation of the WTO
Valuation Agreement
Mozambique was one of the two SADC
Countries which had not yet implemented the World Trade Organization (WTO)
Customs Valuation Agreement. The WTO had given Mozambique until January 2003 to
implement the worldwide valuation system.
In 2002, the Mozambique Customs
Administration approached the USAID/RCSA Southern Africa Global Competitiveness
Hub (the “Hub”), based in Gaborone, Botswana, for technical assistance in the
preparation and implementation of the WTO Valuation Agreement. As the Hub’s
role is, amongst others, to assist in the facilitation of trade through
modernization of Customs procedures, the request was accepted. A team from the
Hub visited Mozambique in August 2002 to ascertain actual needs in this
technical assistance program.
In November 2002, the Hub sent three
Customs Experts to assist in the preparation of the new WTO Valuation
legislation and train Mozambique Customs officers in the new valuation system.
This was accomplished, and Mozambique gazetted the valuation legislation, which
came into force on 1st January 2003. The Hub is happy that
Mozambique has joined other members of the international community in
implementing the new valuation system.
The Hub is also pleased to give
further technical assistance, which has facilitated this workshop and those to
be held in Beira and Nampula later this week. It is hoped that these workshops,
which are aimed at private sector stakeholders, will result in better
understanding and cooperation in the successful implementation of the new
valuation system.
Role of stakeholders and
pre-conditions for successful implementation of the WTO Valuation Agreement
The new WTO Valuation Agreement, which
has just been implemented in Mozambique, promotes predictability, certainty,
transparency and fairness, and it creates a partnership between the Customs
Department and its stakeholders, who are the importers and their clearing
agents (brokers). For the new valuation system to work properly, the two
partners must work together as a team and consult each other whenever possible.
The cooperation of all stakeholders is
therefore required in order to successfully implement the new valuation system.
In order to get the cooperation of
these stakeholders in the implementation of the WTO Valuation Agreement, the
following pre-conditions must be met: -
Transparency
The WTO Valuation Agreement calls for
each Customs Administration to administer its laws, regulations, decisions and
rulings in a uniform, transparent, impartial and reasonable manner. In
addition, each contracting party must maintain or institute judicial, arbitral
or administrative tribunals or procedures for the prompt review and correction
of administrative action relating to Customs matters.
The key provision in the WTO Valuation
Agreement covering the concept of transparency is Article 12, which provides
that laws, regulations, judicial decisions and administrative rulings which
give effect to the Agreement shall be published in conformity with Article X of
the GATT 1994.
Article 11 of the WTO Valuation
Agreement provides for the right of appeal without penalty against a Customs
determination of value, either administratively or to a judicial authority.
This guarantees an importer the opportunity to have any valuation dispute reviewed
and decided by a party other than the original deciding official.
Customs’ objective should be to make
well-reasoned decisions that will not be subsequently overturned by the
judicial system. Defending cases at Court is a very costly and time-consuming
way to fix Customs mistakes. Customs officers must therefore possess a
sufficient level of technical expertise so that logical defensive decisions are
made in the first place. If the technical expertise is not present in the
Customs Administration, poor decisions will be issued and Court cases will be
lost, resulting in the importing public not having any faith in the Customs
Administration’s competence and capabilities.
Training
and Awareness
Whilst there are many considerations
to be addressed in implementing the WTO Valuation Agreement, the training and
education in the context of the Valuation Agreement is an essential ingredient
in order to achieve a smooth and successful implementation.
The stakeholders are responsible for
the compilation of Customs entry details and the provisions of information on
which the Customs Valuation officer would make initial clearance decisions.
Training directed at this group should therefore be detailed within a realistic
and commercially acceptable time frame.
To ensure total benefit for the
Customs Administration, the stakeholders must fully be cognizant of not only
the Valuation Agreement and regional legislation, but also of their obligations
and rights within the new valuation system.
In addition to training, a precise
information and consultation program is critical in facilitating implementation
of the new valuation system. Where stakeholders have a greater awareness and
understanding of the new valuation system, the major advantages for Customs
will be a greater level of compliance from the stakeholders in commercial
declarations on importation. Stakeholders will have become aware of the new
system and procedures as a direct result of the public information sessions and
consultation. Once they possess the necessary information about the valuation
system, the onus is on them to comply with the requirements of the new law.
By providing an additional informal
program, the Customs Department benefit by acknowledging the needs of smaller
clients (e.g. one-off importers or informal traders as they are known in
Mozambique Customs circles) who need only a basic level of awareness.
The Customs Department needs to work
in close consultation especially with Clearing Agents, who are to the greatest
extent, representatives of the larger importer client base. This should be an
administrative priority. It will ensure a higher level of compliance. The
relationship developed can also be of assistance in future policy
consideration. Lack of compliance would result in non-expeditious release of
cargo as a result of legitimate Customs queries, with market place
ramifications, for example, delay in the availability of certain imported
products.
Consultations
It has been laid down in the General
Introductory Commentary of the Valuation Agreement that where the Customs value
cannot be determined under the provisions of Article 1, there should normally
be a process of consultation between the Customs Administration and the
importer with a view to arriving at a basis of value under the provisions of
Article 2 or 3. It may occur, for example, that the importer has the
information about the Customs value of identical or similar imported goods,
which are not immediately available to the Customs Administration in the port
of importation. On the other hand, the Customs Administration may have
information about the Customs value of identical or similar goods, which is not
readily available to the importer. A process of consultation between the two
parties will enable information to be exchanged, subject to the requirements of
commercial confidentiality, with a view to determining a proper basis of value
for Customs purposes.
Post-importation
verification
Customs are required to facilitate
trade and movement of goods through entry points, and in addition, to fulfill
their statutory obligation of collecting revenue for the Government. In
implementing this policy, it is essential that Customs adopt a system that
ensure importations are processed with a minimum of delay or interference, but
without compromising any of the regulatory requirements which Customs is
charged with administering.
It is a known fact that some Importers
and Clearing Agents only declare to Customs the information that is readily
identifiable from the commercial invoice. In certain cases they do not disclose
dutiable items enumerated in Article 8 of the WTO Valuation Agreement (Article
9 in the Mozambique legislation) such as insurance and freight. The
significance of the finer points of Article 1 to 7 and Article 15 of the WTO Valuation
Agreement sometimes do not register with Importers and Clearing Agents, whether
there was/was not a sale for export, the question of price influence, royalty
issues, Commissions etc.
In such cases, Customs will detain the
goods pending production of the required evidence of these dutiable items. This
problem can take a long time to resolve, and in the meantime, the importer is
denied his goods, which will be accumulating demurrage in warehouses.
The advent of post-clearance audit
plus a degree of specialization associated with Risk Assessment and Management
has drastically reduced Customs bureaucracy in these valuation matters. There
are three Articles in the WTO Valuation Agreement, which support the concept of
valuation verification post-entry: -
Ø
Article 13 describes circumstances where in the
course of determining the value it becomes
necessary to delay the final determination, the importer should be able
to have the goods released from Customs by providing sufficient guarantee to
cover ultimate payment of duty. Unless there are some particular
compliance-based reason (suspect importer, suspect goods, deliberate
under-valuation etc.) which means the goods cannot be released from Customs,
Article 13 indicates that as a matter of policy, goods should not be stopped
from being delivered because Customs and the importer are debating or arguing
about the value.
Ø
Article 17 states that nothing in the Valuation
Agreement shall be construed as restricting or calling into question the rights
of Customs to satisfy themselves as to the truth or accuracy of any statement,
document or declaration presented for Customs valuation purposes. Given this
Article is not limited to goods within the immediate control of Customs; it is
seen as not restraining compliance activity in a post-entry situation.
Ø
Article 11 provides the right for the importer to
appeal a Customs determination of value to a judicial authority without
penalty. This Article fosters the concept of an independent appeal authority in
a post-entry environment. By their very nature, such appeal authorities take
time to deliberate. To detain goods pending consideration of an appeal would
compromise the facilitation goals most modern economies operate under.
If Customs adopt the post-clearance
audit system, it will instill confidence with the importing fraternity,
resulting in voluntary compliance and successful implementation of the new
valuation system.
From the foregoing, it is clear that for successful implementation of the
WTO Valuation Agreement, there are some core elements. First there must be a
well-trained Customs staff and private sector stakeholders, who understand not
only Customs valuation but also the relationship of Customs valuation to other
trade laws concerning imported goods. The Customs staff must have the necessary
legal, analytical, and administrative support within its administration to
perform its function. There must be a system of mutual consultation and
transparency in all the transactions.
Finally, the public must have enough
confidence in the implementation process to ensure its success. A valuation
system, which promotes predictability, certainty, transparency and fairness,
will go along way toward ensuring cooperation of importers.
Customs
Transit Specialist
USAID/RCSA
Southern Africa Global Competitiveness Hub
P.O.
Box 602090
Gaborone,
Botswana
Telephone:
(267) 3900884