Uruguay Round Negotiations

In the Uruguay Round of Multilateral Trade Negotiations which took place during 1986-94, the foregoing concerns of both the developing and developed countries were voiced consistently. The developing countries stressed that more flexibility was needed in the Code to enable the Customs administrations to shift the burden of proof to the importer when the declared price was less than that noticed in earlier transactions of the identical or similar goods. These members maintained that the provisions like Article-17 of the Code and Paragraph 7 of the Tokyo Round Code Protocol were insufficient to deal with the problem of under-valuation. India was the first Member to submit a formal proposal on this issue. In order to attract more developing countries to sign on to the Tokyo Round Code, India drew attention to matters arising from Customs fraud, and proposed that if imported goods were priced well below that of previous shipments, the burden of proof for fraud should shift from Customs authority to the importer. India raised this point to respond to the concern that the Code's emphasis on"transaction value" had put pressure on Customs authorities to accept the declared value. Notably, the burden of proof until that time was on Customs to conclude why that value might not be accurate. The developed countries were initially reluctant to accept what they saw as an amendment to the already functioning Code. Further more, they felt that the current system effectively prevented arbitrary valuation practices on the part of the Customs officials. Nevertheless the subject remained open for discussion in the Uruguay Round, and numerous developing countries expressed their willingness to sign up if their concerns were addressed.

Negotiations on shifting the Burden of Proof

The majority of efforts were focussed on bringing in remainder of the developing countries into a multilateral agreement, and the issue of shifting the burden was again raised in October, 1989 followed by further negotiations in 1990. Meanwhile, by the end of 1989, Brazil also submitted a proposal on the shifting of the burden of proof. Brazil's proposal supported India's original text while also addressing the problem of illegal capital flight, another concern particularly for developing countries. Brazil also called for the Contracting Parties to increase their technical support and assistance to developing countries and increase the exchange of information amongst signatories. Because of these efforts by India and Brazil, the developing countries started expressing their interest in signing the Code if the language of the Text from India and Brazil's proposals were incorporated. As discussions progressed in 1990, Contracting Parties appeared to favour shifting the burden of proof to the importer when Customs authorities observed excessive price variation, whether over or under-valued, with respect to recent imports. Meanwhile Kenya also came up with a proposal on this issue. With these positive developments the Chairman of the negotiating group cobbled together a compromise text in an attempt to alleviate differences on the burden of proof issue and thus a draft decision which addressed the burden of proof issue was circulated on 23.7.1990. By October 1990 the Text was agreed to on an ad referendum basis to be formally transmitted to the negotiating group, and thus in a unique move for the Uruguay Round the draft final Text was submitted in time to meet the Chairman's original dead-line for conclusion of the Uruguay Round, at the ministerial meeting in Brussels in December, 1990.

Agreement on Customs Value (ACV) signed at Marrakesh in April, 1994

It has been argued by a few experts that to some degree Customs Valuation had diminished in importance by the advent of the Uruguay Round due to the fact that many of the key technical issues had already been addressed in the Tokyo Round, at least in the eyes of the developed world. Furthermore it was perceived that additional changes might upset a rather carefully balanced compromise. During the Uruguay Round negotiations, two issues raised by the developed countries related to minimum values and imports by sole agents, sole distributors, etc. Apart from these, the Code changed very little under the Uruguay Round of Negotiations. Finally the revised Agreement on Customs Value (ACV), later known as Agreement on Implementation of Article-VII of the GATT 1994 emerged from the Uruguay Round, and the said Agreement was signed at Marrakesh, Morocco on 15.04.1994. The Agreement ensured continuity in achievements of the Tokyo Round by adhering to the transaction value and it also inserted text to deal with suspected fraud as well as using officially established minimum values. It also introduced text encouraging policies that made Customs Data collection easier. Further, as a result of the efforts of countries like India and Brazil who depended heavily on Customs duty for their Government revenue, texts were added to encourage developing countries to implement the rules contained in the Agreement through studies of their existing Customs procedures. Thus, what started as a plurilateral Code which only applied to a handful of signatories finally became a multilateral agreement that takes into account even the needs of the developed countries. From an academic point of view, much can be learnt from how this once most contentious issue i.e. Customs Valuation has been resolved where it now receives only a passing mention in any modern trade text, so much so that in a lighter vein some even call Customs Valuation as a sunset issue. In this regard it would be important to recall that forward movement towards a Customs valuation agreement was achieved through a genuine willingness of the Contracting Parties to know each others valuation practice. By keeping an open mind, much of the key trade differences were ultimately bridged between the EEC and the US, and the genuine concerns of the developing countries were addressed.

Transition from GATT Valuation Code to WTO Valuation Agreement

As mentioned, after completion of the Uruguay Round the Agreement on Customs Value (ACV) was signed at Marrakesh, Morocco on 15.4.1994. On 1.1.1995 the World Trade Organization (WTO) was created with the requirement that all signatories to the WTO will accept all GATT instruments including the WTO Valuation Agreement as it became known by then. Meanwhile negotiations continued on the concerns of the developing countries relating to undervaluation of imported goods and the need for shifting the burden to importers in certain situations.

‘Uruguay Round' Technical Committee on Customs Valuation

Finally, the"Tokyo Round" Technical Committee on Customs Valuation comprising 44 members was formally terminated, and the"Uruguay Round" Technical Committee on Customs Valuation comprising 109 members held its first Session during 2 nd – 6 th October, 1995 under the auspices of WCO at Brussels. Mr. P.R.V. Ramanan who was then Joint Secretary (Customs) in the Central Board of Excise & Customs, India was the first Chairperson of the first Session of Uruguay Round Technical Committee on Customs Valuation held between 2 nd – 6 th October, 1995. Mr. Ramanan continued as Chairperson for the first four Sessions held during 1995-97. I may also add that I was fortunate to be given the opportunity to represent India in the aforesaid Technical Committee meetings under the Chairmanship of Shri Ramanan, and even thereafter.

(To Be Continued)

[The author is a member of the Indian Customs & Central Excise Service, and the views are his personal]