Which statement describes Computed Value in WTO valuation?

Which statement describes Computed Value in WTO valuation?

• A. It is based on the total cost of manufacturing, including man hours, rent, electricity, etc.
• B. It is based on the price actually paid or payable by the importer.
• C. It is based on the price of identical goods in the domestic market.
• D. It is based on the freight value alone.

Answer: (A)

Computed value focuses on what it costs to produce the goods. When this method is used, the value is based on the total cost of manufacturing in the exporting country, including the costs of inputs and processing—materials, labor, overhead, utilities like electricity, rent, and other production-related expenses—along with a reasonable profit for the producer. This approach ensures the declared value reflects production costs rather than what the importer paid or what prices are found in the domestic market. The other concepts belong to different valuation methods: using the price actually paid or payable by the importer corresponds to the transaction value method; using the price of identical goods in the domestic market relates to a deductive/market-based approach; and basing value on freight alone ignores production costs and isn’t how computed value is determined.

Computed value focuses on what it costs to produce the goods. When this method is used, the value is based on the total cost of manufacturing in the exporting country, including the costs of inputs and processing—materials, labor, overhead, utilities like electricity, rent, and other production-related expenses—along with a reasonable profit for the producer. This approach ensures the declared value reflects production costs rather than what the importer paid or what prices are found in the domestic market.

The other concepts belong to different valuation methods: using the price actually paid or payable by the importer corresponds to the transaction value method; using the price of identical goods in the domestic market relates to a deductive/market-based approach; and basing value on freight alone ignores production costs and isn’t how computed value is determined.