Bill proposes changes in customs assessment

Press, 8 August 1981, Page 12

Bill proposes changes in customs assessment

Parliamentary reporter

A new system of assessing the value of imported, goods for customs duties will be introduced next year under a bill which had its first reading in Parliament this week.

The Customs Amendment Bill seeks to bring New Zealand into line with its main trading partners, all of whom have adopted, or are in the process of adopting the Customs Valuation Code drawn up under the General Agreement on Tariffs and Trade (G.A.T.T.).

At present imported goods are assessed for customs duty according to their value on the domestic market of their country of origin.

This is known as the domestic value system and is no longer in international use, having been dropped by all other countries and being unacceptable under G.A.T.T. The main thrust of the new bill will be to change this from July 1 next year to a valuation system based on the f.o.b. value of the imported goods. The Customs Valuation Code was one of the agreements to emerge from the Tokyo round of G.A.T.T. multilateral trade negotiations in 1979. Its purpose is to ensure greater uniformity in the application of a system of evaluating goods for customs purposes.

The code also seeks to remove arbitrary or fictitious customs value and to conform to commercial reality. As a result, it also, seeks to make customs evaluation more predictable for the business community. Introducing the bill, the Minister of Customs (Mr Templeton) said that the domestic value system had served New Zealand well, but was now “thoroughly outdated.”

Under the existing system, importers relied on declarations by overseas exporters to obtain a value on which duty was payable. After the change, valuation would be based to the maximum extent possible on the price actually paid or payable between the buyer and seller, said Mr Templeton .

The code would enable importers to ascertain duty pajunents with much more certainty. Mr Templeton said that the bill would also confer on importers the- right to an explanation in writing from the Customs Department as to how the value of the imported goods was determined. That did not exist at present. The bill would also confer a right on importers to appeal against a customs assessment to a judicial authority. instead of to the Minister. as occurred at present.

Under the bill, all iniormation supplied for the purpose of evaluation by the Customs Department would be confidential and could not be disclosed without the specific permission of the provider, unless it was required .in legal proceedings. “In all respects, the code, as embodied in the bill, offers a much greater degree of openness in customs evaluation," said Mr Templeton.

Talks had been held with commercial interests before the bill was prepared. These included the Manufacturers' Federation, the Bureau of Importers and Exporters, the Chambers of Commerce, and the Society of Customs Agents.

“All parties consulted have expressed ’ agreement both with the code itself and with its adoption of an f.o.b. basis,” said Mr Templeton.

“It is not expected that the code will have any significant effect on revenue or on protective tariff levels.”

Nevertheless, he said, the importing community and representatives of the manufacturing sectors had been invited to make submissions where it was felt that the change of the valuation system could influence tariff protection on any particular

goods. No such .representations had been made to date, said Mr Templeton.

The bill would ensure that New Zealand legislation conformed' with the G.A.T.T. code and would be subject to G.A.T.T. scrutiny and acceptance by the other countries who are G.A.T.T. signatories. “This means that the scope for expressing the code provisions is limited to the framework of the code itself. We really have no basis for significant national variation.”

Apart from consequential amendments to the existing act which would result from the change to the system, the bill proposed a new schedule which made clear the way in which duty should be assessed.

Under it. imported goods would be valued by one of six methods which would be applied in sequence. Mr Templeton said that the first method should enable valuations to be made for 90 per cent of imported goods quickly and without reference to the other methods.

It would be only when the transaction price was not suitable to use for assessment (such as when a special relationship between a buyer and seller had influenced the price) that the other methods would be necessary. Mr Templeton said that countries which had already adopted the code included Argentina. Austria. Canada, the European Economic Community, Finland, Hungary, India. Japan, Korea. Norway, Rumania, Spain. Sweden, Switzerland, the United Kingdom territories, and Yugoslavia.

The United States and Australia, with Mexico, would apply the code later this year, he said. Because the rules set out by the code would be followed by all G.A.T.T. signatories, it should result in a far greater degree of uniformity and certainty in international trade.

The bill was given its first reading and set down for its second reading on the Parliamentary Order Paper. It will not be referred to a select committee.