The tool employed by the EU to estimate the fair import prices of the UK under scrutiny

Abstract

The EU Commission recently convinced the Court of Justice of the EU to reject a good number of transaction prices of Chinese imports to the UK, namely, of textiles and footwear items imported into the UK at the time the UK was an EU member, in favor of “fair” prices estimated via a statistical tool. Indeed, the UK was fined by the Court in 2022 and in early 2023paid the EU Commission close to 2.7 billion euro in lost customs duties. The paper looks into the tool’s assumptions and mechanics and finds a number of deficiencies that ought to disqualify the particular tool from being used in the manner it was used in the trial against the UK.

JEL classifications: C20, F10, H87

Keywords: Import undervaluation, transaction value, statistical value, fair price estimation, customs duty losses