CCS Trade Agreements & Valuation 2 — Questions and Answers
Question 1: Under the WTO Customs Valuation Agreement, which of the following costs must be ADDED to the price paid or payable when determining transaction value?
- Ocean freight and insurance paid by the seller
- Commissions paid by the buyer to its buying agent
- Assists provided by the buyer free of charge to the producer (Correct answer)
- Post-importation warranty repair costs
Correct answer: Assists provided by the buyer free of charge to the producer
Assists (tools, molds, engineering, artwork, etc.) provided by the buyer free of charge or at reduced cost are dutiable additions to transaction value under 19 USC 1401a(b)(1)(C).
Question 2: A U.S. importer purchases goods for $10,000 and also pays $500 in buying commissions to its agent abroad. How is the $500 commission treated for customs valuation purposes?
- Added to transaction value as a dutiable assist
- Deducted from the price to determine entered value
- Not added to transaction value because buying commissions are excluded (Correct answer)
- Added only if the buying agent is related to the seller
Correct answer: Not added to transaction value because buying commissions are excluded
Buying commissions are specifically excluded from customs value under 19 USC 1401a(b)(3)(A); only selling commissions are included in transaction value.
Question 3: When goods are sold through a middleman before importation, U.S. Customs may allow 'first sale' valuation. What is the primary condition for using first sale?
- The first sale price must be lower than the last sale price
- The goods must be clearly destined for the United States at the time of the first sale (Correct answer)
- The middleman must be located in the country of export
- The importer must have a binding ruling from CBP authorizing first sale
Correct answer: The goods must be clearly destined for the United States at the time of the first sale
For first sale valuation, CBP requires that the goods be clearly destined for the U.S. at the time of the first (manufacturer-to-middleman) sale, per T.D. 96-87.
Question 4: Under USMCA, what is the de minimis threshold for non-originating materials that allows a good to still qualify as originating even if the tariff shift rule is not met?
- 5% of the transaction value or net cost
- 7% of the transaction value or net cost
- 10% of the transaction value or net cost (Correct answer)
- 15% of the transaction value or net cost
Correct answer: 10% of the transaction value or net cost
USMCA Article 32.6 provides a 10% de minimis allowance — non-originating materials that do not undergo the required tariff classification change may still be disregarded if they do not exceed 10% of the good's value.
Question 5: A textile product fails the tariff shift rule under USMCA. Which de minimis rule applies?
- 10% of the transaction value, same as non-textile goods
- 7% by weight of the total fiber or yarn, or 10% of the value
- 10% by weight of the total fiber or yarn of the good (Correct answer)
- There is no de minimis provision for textile goods under USMCA
Correct answer: 10% by weight of the total fiber or yarn of the good
For textile and apparel goods, USMCA Article 32.6.3 applies a separate de minimis based on 10% by weight of the total fiber or yarn of the component that determines classification.
Question 6: Under the USMCA Regional Value Content (RVC) calculation, what does the 'build-down' (BD) method measure?
- The value of originating materials divided by transaction value
- Transaction value minus the value of non-originating materials, divided by transaction value (Correct answer)
- Net cost minus non-originating materials, divided by net cost
- The sum of all domestic labor and overhead divided by net cost
Correct answer: Transaction value minus the value of non-originating materials, divided by transaction value
The build-down method calculates RVC as (TV − VNM) / TV × 100, where TV is transaction value and VNM is the value of non-originating materials.
Question 7: Which of the following is NOT a recognized basis for customs valuation under 19 USC 1401a?
- Transaction value of identical merchandise
- Deductive value
- Market value as assessed by CBP appraisers (Correct answer)
- Computed value
Correct answer: Market value as assessed by CBP appraisers
CBP appraisers cannot arbitrarily assign a 'market value'; the six statutory methods (transaction value, TV of identical goods, TV of similar goods, deductive value, computed value, and fallback) must be applied in hierarchical order.
CCS Trade Agreements & Valuation 2
Under the WTO Customs Valuation Agreement, which of the following costs must be ADDED to the price paid or payable when determining transaction value?