53ird Session of the WTO Technical Committee on Customs Valuation (TCCV): A New Advisory Opinion 4.19 Reinstatement of a royalty remunerating two separate rights

During its 53rd Session held from 18 to 20 October, the WCO Technical Committee on Customs Valuation (TCCV) has adopted Advisory Opinion 4.19 with respect to Royalties and Licenses Fees.

As a reminder, the TCCV is the body responsible for ensuring harmonized implementation of the WTO Agreement on Customs Valuation, and makes technical decisions that are published as instruments in the form of commentaries, cases studies, advisory opinions, explanatory notes or studies. These instruments, although not having binding force of law, are helpful tools for interpreting national rules on customs valuation in countries that have ratified and implemented the WTO Agreement on Customs Valuation, as it is the case in the EU.

Advisory Opinion 4.19 adds to the 19 existing instruments that deal with Royalties and Licence Fees under Article 8.1 (c) of the Customs Valuation Agreement. It deals with the way a single royalty paid in return of two licensed rights (right to use or incorporate a patented imported input in the production of a finished product in the country of importation and right to use a trademark on the finished product) is to be treated for customs valuation purposes.

The opinion concludes that the entire royalty has been reinstated in the value of the input, since the conditions of Article 8.1.c of the Customs Valuation Agreement (i.e., the relationship of the royalty with the input and its payment as a condition of the sale export of the input) are met.

Once officially approved by the WCO Council, this advisory opinion will be published and accessible for consultation.

DS Avocats International Trade and Customs team is an active member of the ICC delegation which attends TCCV sessions as an observer, and is at your disposal to provide you with any additional information.