G/VAL/W/241/Rev.1
2 May 2014
(14-2675)
Page: 1/3
Original: Spanish
Committee on Customs Valuation
PROPOSAL FOR UPDATING THE "DECISION ON THE VALUATION
OF CARRIER MEDIA BEARING SOFTWARE FOR
DATA PROCESSING EQUIPMENT"
Revision
The following communication, dated 24 April 2014, is being circulated at the request of the
delegation of Uruguay.
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1 BACKGROUND
1.1
On 17 May 2013, the Chairman of the Technical Committee on Customs Valuation advised1
that, at its 36th Session, held in Brussels from 15 to 19 April 2013, the Technical Committee
had examined the question raised by Uruguay concerning the application of WTO Decision 4.1
(Valuation of Carrier Media Bearing Software for Data Processing Equipment) in cases where
the carrier media are in the form of "USB flash drives or similar devices".
1.2
Pursuant to this Decision, Members applying the second paragraph determine the customs
value of imported carrier media bearing data or instructions (software) by taking into account only
the cost or value of the carrier medium itself. The customs value does not, therefore, in such cases
include the cost or value of the data or instructions (software), provided that this is distinguished
from the cost or the value of the carrier medium.
1.3
In mentioning this "unique situation", the Decision refers, in its footnote, to paragraph 5
of GATT document VAL/M/10, which reproduces the statement made by the Chairman
of the Committee on Customs Valuation at the meeting of 24 September 1984.2 On that occasion,
the Chairman underscored, among other things, that:
"In the case of imported carrier media bearing data or instructions for use in data processing
equipment (software), it is essentially the carrier media itself, e.g. the tape or the magnetic
disc, which is liable to duty under the Customs tariff.
However, the importer is, in fact, interested in using the instructions or data; the carrier
medium is incidental. Indeed, if the technical facilities are available to the Parties
to the transaction, the software can be transmitted by wire or satellite, in which case
the question of Customs duties does not arise. In addition, the carrier medium is usually
a temporary means of storing the instructions or data; in order to use it, the buyer has
to transfer or reproduce the data or instructions into the memory or data-base of his
own system.
…
In taking this decision on the valuation of carrier media bearing software for data processing
equipment, it is understood that should any difficulties arise in the implementation
1
2
See document G/VAL/W/229.
This statement is reproduced on page 9 of document G/VAL/W/229.
G/VAL/W/241/Rev.1
-2and application of the decision, it would be useful for those difficulties to be considered
by the Parties to the Agreement." [Emphasis added.]
2 PROBLEM IDENTIFIED
2.1
Given the definition of "carrier medium" set forth in the third subparagraph of paragraph 2
of the Decision3, data and instructions (software) imported by means of one of the new types
of carrier medium (e.g. a USB key) must be subject to treatment different from that which they
would have been granted if they had been carried on an optical or magnetic medium
(e.g. a CD-ROM). Because of the rapid advances in the development of new information
technologies, there is obviously a risk that trade in software may be adversely affected as a result
of the type of carrier medium used, which would run counter to the spirit of the Decision.
2.2
Uruguay accordingly considers that the Decision should be updated to take into account
situations in which data or instructions (software) are carried and presented to Customs on new
types of carrier medium (e.g. of the "USB flash drives" type or similar devices, which have been
developed or are to be developed in the future).
3 SPECIFIC PROPOSAL
3.1
At its 36th Session, the Technical Committee examined the question of updating this second
paragraph. Some Members, including Uruguay, pointed out that the wording of the third
subparagraph could be amended to include carrier media which, although containing integrated
circuits, semiconductors and similar devices, are presented to Customs solely as means
of temporary software storage, for subsequent transfer to data processing equipment in order
to be used. The Technical Committee unanimously decided to request that the Chairman refer
the matter to the Committee on Customs Valuation in order for the latter to take whatever action
it deemed appropriate.
3.2
Consequently, Uruguay, which shares the position taken by the Technical Committee
as a whole, proposes that the third subparagraph of paragraph 2 of the Decision be worded
as follows:
Current version of the third subparagraph
of paragraph 2 of the Decision
For the purpose of this Decision, the expression
"carrier medium" shall not be taken to include
integrated circuits, semiconductors and similar
devices or articles incorporating such circuits
or devices; the expression "data or instructions"
shall not be taken to include sound, cinematic
or video recordings.
Proposed version (new text in bold)
For the purpose of this Decision, the expression
"carrier medium" shall not be taken to include
integrated circuits, semiconductors and similar
devices or articles incorporating such circuits or
devices, with the exception of those which are
presented to Customs solely as a means of
temporary storage for transfer of data or
instructions (software) to data processing
equipment in order to be used; the expression
"data or instructions" shall not be taken to include
sound, cinematic or video recordings.
"The expression 'carrier medium' shall not be taken to include integrated circuits, semiconductors
and similar devices or articles incorporating such circuits or devices."
3
G/VAL/W/241/Rev.1
-3-
ANNEX
Full Text of the Decision, Including Uruguay's Proposal
"Decision on the
Equipment (VAL/8)
Valuation
of
Carrier
Media
Bearing
Software
for
Data
Processing
Adopted by the Committee on 24 September 1984 (VAL/M/10, paragraph 7)
The Committee on Customs Valuation DECIDES as follows:
1.
It is reaffirmed that transaction value is the primary basis of valuation under
the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade
(the Agreement) and that its application with regard to data or instructions (software) recorded
on carrier media for data processing equipment is fully consistent with the Agreement.
2.
Given the unique situation1 with regard to data or instructions (software) recorded on carrier
media for data processing equipment, and that some Parties have sought a different approach,
it would also be consistent with the Agreement for those Parties which wish to do so to adopt
the following practice:
In determining the customs value of imported carrier media bearing data or instructions,
only the cost or value of the carrier medium itself shall be taken into account. The customs
value shall not, therefore, include the cost or value of the data or instructions, provided that
this is distinguished from the cost or the value of the carrier medium.
For the purpose of this Decision, the expression "carrier medium" shall not be taken
to include integrated circuits, semiconductors and similar devices or articles incorporating
such circuits or devices, with the exception of those which are presented to Customs
solely as a means of temporary storage for transfer of data or instructions
(software) to data processing equipment in order to be used; the expression
"data or instructions" shall not be taken to include sound, cinematic or video recordings.
3.
Those Parties adopting the practice referred to in paragraph 2 of this Decision shall notify
the Committee of the date of its application.
4.
Those Parties adopting the practice in paragraph 2 of this Decision will do so on
a most-favoured-nation (m.f.n.) basis, without prejudice to the continued use by any Party
of the transaction value practice."
Note: Uruguay's proposal is highlighted in bold.
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1
See paragraph 5 of document VAL/M/10.