A commentary issued by the International Chamber of GATT Customs Valuation Code states with regard to royalties and license fees: 'there is no part of the Code where so much is left to interpretation and implementation, and so little can be derived from a literal reading of the words used. Some critics have thought the authors of the Code did not explore the subject sufficiently, and it is true that the subject was only reached rather late in the Geneva negotiations and revealed considerable differences between governments (often as to what problems required attention, rather how they should be resolved)'.
This article serves as a legal analysis of a variety of royalty payment scenarios and the resulting impact on final duty payments taking into account the legislation and practices in the Andean Community and Peru, the European Union (EU), and the United States. As a general matter, the term 'royalties' simply refers to a means by which consideration is paid for the right to use an intangible property. As such, royalty payments themselves are not inherently dutiable or not dutiable. Instead, one must look in particular to the nature of the intangible property that is being conveyed and the issue of whether it relates to the goods being valued and whether it must be paid, either directly or indirectly, as a condition of the sale.Global Trade and Customs Journal