This paper addresses the issue of how to determine the customs value of goods that are imported as genuine gifts, that is, goods that are neither the subject of an export sale nor sold in the country of importation. The goods used as an example for purposes of the analysis are publications and electronic media (e.g., CD, DVD and Video) of denomination-specific religious content, imported and then passed on free of charge to believers and/or the general public based on religious, non-commercial motives. This paper argues that the customs value of such goods has to be determined based on Article 7 of the Customs Valuation Agreement, which sets forth the fall-back method, since none of the other customs valuation methods under the Customs Valuation Agreement is applicable to the aforementioned goods due to their non-commercial nature. The customs valuation of the goods in question based on the fall-back method involves a modified application of the computed value method, excluding an amount for profit given that these goods are not the subject of commercial sales transactions.
This paper is structured as follows: section A briefly explains the link between customs valuation and market access commitments undertaken by WTO Members. Section B provides an overview of the two key principles underlying the Customs Valuation Agreement, namely transaction value and the sequential order of application of customs valuation methods. Sections C and D assess whether the customs value of the goods at issue can be established on the basis of the customs valuation methods set out in Articles 1-6 of the Customs Valuation Agreement. As this assessment leads to the conclusion that none of these methods is applicable in the present case, section D deals with the application of the fall-back method.Global Trade and Customs Journal