Meaning
International standards for assessing the value of imported goods focus on the actual transaction price paid or payable by the buyer to the seller. Use of GATT Article VII valuation prevents customs authorities from using arbitrary or fictitious values to determine import duties. This approach creates a predictable environment for global trade by grounding the duty calculation in verified commercial invoices and objective market data.
Transaction Foundation
Primary valuation comes from the literal amount printed on the shipping documents for the specific cargo. When GATT Article VII valuation is applied, adjustments include royalties, insurance and commissions that directly affect the cost of the items. Customs officers must prove the invoice is incorrect before moving to secondary methods.
This preference for the invoice price simplifies the entry process.
Adjustment Rule
Specific costs incurred by the buyer but not included in the purchase price are added back to create the total customs value. Under GATT Article VII valuation, these include toolings and molds provided to the producer for free. Deductions are also allowed for internal taxes or storage charges incurred inside the importing country.
Precision here avoids overpaying duties.
Valuation Hierarchy
Secondary methods such as identical goods or computed values only activate if the initial transaction price is rejected. A firm using GATT Article VII valuation benefits from the tiered approach that restricts the officer’s discretion. The logic follows market reality rather than administrative convenience.
This sequence offers a defense against unfair trade barriers.
