5489.0 - International Merchandise Trade, Australia: Concepts, Sources and Methods, 2015  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 11/11/2015   
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3.10 The World Trade Organisation (WTO) Agreement on customs valuation defines the rules on customs value for imported goods. Broadly speaking the rules state that the customs value is the transaction value, which is the price actually paid or payable for the goods when sold to the country of importation, provided that certain conditions for a fair, uniform and neutral valuation are met. This is usually the market price (i.e. the basic valuation reference in the system of national accounts), or a very close approximation to it, which is recorded in the accounts of the transactors or in the administrative records used as data sources. The market price is the amount of money that a willing buyer pays to acquire something from a willing seller, when such an exchange is between independent parties and involves only commercial considerations.

3.11 For Australia's international merchandise trade statistics the transaction value is used. If the transaction value reported by the exporter/importer does not meet the conditions described above in paragraph 3.10, the WTO Agreement prescribes a hierarchy of valuation methods (see paragraph 3.17 below).


3.12 Delivery of goods by the exporter to the importer may occur at any time and place, from the point at which the goods are produced, to the point at which they are finally used. The UN guidelines recommend the use of a cost, insurance and freight (CIF) type valuation for imports (i.e. the value at the border of the importing country) and a free on board (FOB) type valuation for exports (i.e. the value at the border of the exporting country). The point of valuation is independent of the time payment is made or received, but may occur at the same time.

3.13 In Australia, import statistics are published using the customs value, (described below) which is a FOB type value, but imports on a CIF basis are also available (see paragraph 3.19 below). Export statistics are published on a FOB type basis, and the transaction values reported are assessed to be the most practical approximation of market price.

3.14 A FOB price at the customs frontier includes the transaction value of the goods, the value of outside packaging (other than international containers used for containerised cargo), and related distributive services used, up to and including loading the goods onto the carrier at the customs frontier of the exporting country. A FOB type point of valuation applies whether the goods are transported by sea, air or pipeline. The CIF price is equal to the FOB transaction value, plus the cost of freight and merchandise insurance involved in transporting the goods beyond the place of export to the customs frontier of the importing country. The movement of goods across customs frontiers and the appropriate points of valuation are shown in Diagram 3.1 where the goods are seen moving within the exporting country from the supplier (factory/farm/store) via domestic transport (tuck/train/airplane) to the customs frontier (wharf/airport) and then loaded on board for international transport (e.g. container). It is at this point that the FOB valuation occurs. The goods are then transported internationally to the customs frontier (wharf/airport) of the importing country. This is point of the CIF valuation.

Diagram: Diagram 3.1 is a flowchart that shows the physical movement of goods

3.15 Also depicted in Diagram 3.1 is the point of valuation for goods transported via a pipeline. These transactions are also subject to FOB and CIF type valuations. These goods while not loaded onto a ship or aircraft for international transportation can still be valued at the time they enter the pipeline (approximation for valuation point at the frontier of the exporting country (FOB type)) and their arrival at the frontier of the importing country (CIF type).


3.16 The conceptual basis for the Australian customs value is defined by the DIBP. The starting point for establishing the customs value is the price actually paid, or payable to, the supplier (transaction value), provided a number of conditions are met. The most important of these conditions is that the buyer and seller are not related, or where they are related that the relationship has not affected the price of the imported goods.

3.17 If the DIBP determines that the reported transactions value does not meet the requirement for a fair, uniform and neutral valuation they will use one of the following methods to replace the value. These methods are consistent with the rules in the WTO Agreement on customs valuation.
  • Identical goods value - the value of identical goods sold for export to Australia
  • Similar goods value - the value of similar goods sold for export to Australia
  • Deductive value - the price of identical or similar goods placed for sale in Australia. To determine the deductive value the price must be reduced by the value of costs incurred between the place of export and the time of sale in Australia
  • Computed value - a method to calculate the value of producing the goods, plus any costs relating to importation including profits
  • Fall-back value - if in the event that there is no suitable method for valuing the goods, the DIBP will decide on the value by taking into account the above methods and any other related information.

3.18 The customs value (which in Australia's case is a FOB valuation) does not include the international freight and international insurance costs involved in transporting the goods from the place of export, see Valuation of Imported Goods. However, any inland freight and inland insurance costs incurred by the purchaser before the goods leave the place of export are included in the customs value.


3.19 Importers who import goods with values above the customs value thresholds described in paragraph 2.7 (in Value Thresholds for Customs Declarations) are required to complete a full imports declaration. Included on all import declarations are the customs value for each commodity as well as the total customs, FOB and CIF values for the consignment. The ABS processing system apportions the consignment values to the commodities using the ratio between the customs value for the commodity and the customs value for the consignment. All three imports values are available in international merchandise trade statistics, however only customs value is available on imports clearances, see Data Dimensions (Table 10.1).


3.20 The compilation of international merchandise trade statistics can be complicated by the fact that transaction values may initially be expressed in a variety of currencies. The conversion of these values into a single currency is a prerequisite for the compilation of consistent and meaningful statistics. In Australia's case, the data are presented in terms of Australian dollars, though for international comparisons it is customary to convert to US dollars. For countries where the exchange rate is volatile it may be more meaningful to present the time series in US dollars.

3.21 In Australia, import values are reported to the DIBP in the invoice currency of the transaction. The Integrated Cargo System (ICS) automatically converts the values to Australian dollars, using exchange rates applicable on the date of export. The rates used are the daily average selling rates of currencies against the Australian dollar, as advised by the Reserve Bank of Australia (RBA). The ABS receives details of the reported invoice currency, together with the value of the import transaction in Australian dollars.

3.22 Since October 2004, for export transactions, the FOB value has been reported to the DIBP in the currency used on the invoice for the goods (provided that this currency was Australian dollars or one of the 28 allowable foreign currencies). Appendix 4 in the 'Downloads' tab, shows the 28 foreign currencies that the DIBP allows exporters, or their agents, to report in. Goods invoiced in all other currencies need to be converted to Australian dollars by the exporter or their agent.

3.23 The ABS receives export data as reported to the DIBP and converts any values reported in one of the accepted foreign currencies to Australian dollars. This conversion uses an indicative reference rate supplied daily by the RBA that is applied on the date of departure of the goods from Australia. The invoice currency in which the transaction was negotiated and sold is also reported to the DIBP.