The above evaluation methods should be used in hierarchical order. Under the WTO agreement, developing countries have the right to delay the implementation of the assessment rules by up to five years from the date the WTO accession agreement came into force.90 developing countries that have decided to delay the implementation of the agreement must inform the WTO Director-General. Most developing countries have requested such a delay, but their five-year grace period ended in 2000. In the absence of this provision, customs authorities could keep goods under customs control until assessment issues are resolved. This can take time and cost the importer dearly. Since disputes generally involve terms and conditions and not the goods themselves, it is not necessary to retain the goods until these issues have been resolved. Transportation and insurance costs. Under Article 8.2, countries must include in their legislation a provision that includes transport costs, insurance, etc., in or excludes customs value (CAF or FOB valuation base). The vast majority of countries evaluate products on the basis of CIF, with the notable exception of Australia, Canada and the United States. Bypassing tariffs by undervaluing or mischaracterising imports is a serious problem for developing country administrations. This chapter looks at ways to address this. There has been serious concerns about the commitment of developing countries to implement the WTO Assessment Agreement in 2000. Many countries have not been well prepared to manage complex assessment rules that impose much of the duties of customs administration to show that a declared value is not correct.
For this reason, it is the responsibility of customs authorities to develop the systems and procedures necessary for effective monitoring of undervaluation. This requires an aggressive approach to detecting undervaluation, setting up well-trained and well-trained specialized staff and organizing them into post-publication verification and control units. These units verify selected transactions, conduct audits and perform reassessments when an undervaluation is found. On the one hand, most governments in developing countries have recognized the benefits of removing trade barriers. On the other hand, customs administrations often strive to bring systems and personnel back to the level needed to combat valuation fraud in a more relaxed regulatory environment. Valuation fraud is a serious problem in most countries, particularly in developing countries, where tariffs and other value taxes are relatively high on imported products. It is often compounded by a generally poor level of tax compliance across the country, a tendency for many importers to deliberately keep poor records, and the existence of “special relationships” with suppliers87. One view expressed by officials in many developing countries is that WTO rules require an administration to accept the declared value of the transaction (even if it is manifestly inappropriate), unless the authenticity of the support bill can be clearly denied by the authorities.