Toys Dolls Us is a toy manufacturer from Goldtown, Richland, with production facilities in Richland, Newland and Farawayland. Dolls Us produces a wide range of toys but is best known for a doll named Carlie. In view of Carlie's success in the United States, Dolls Us wants to explore the possibility of marketing Carlie in the United Kingdom. Carlie is a Barbie-like doll with a plastic body, artificial hair and three sets of clothes. The plastic body parts are produced in Newland. 

The hair and the clothes are produced in Farawayland. Carlie is only assembled and packaged in Richland. It is expected to sell at £10 per doll in the United Kingdom. The UK’s Customs Service has informed Dolls Us that the customs duty on Carlie will amount to 15 per cent ad valorem and that the value will be determined on the basis of the sales price on the domestic market in Richland. Dolls Us challenges both the level of the duty and the manner in which the Customs Service intends to determine the value of the dolls for customs purposes. It also disagrees with the Customs Service that the country of origin of Carlie is Richland and not Newland. Furthermore, Dolls Us considers that Carlie is not really a toy but rather a collector's item. 

Finally, it wonders whether, for the customs classification of Carlie, it makes a difference whether Carlie is imported as a finished product or in parts still to be assembled. The UK Customs Service also informs Dolls Us that all imported dolls are subject to an import surcharge of £0.30 per doll as well as a special customs- handling fee of 0.2 per cent ad valorem. This fee goes to the Customs Service's Fund for Disfavoured Children. To boost its sales of Carlie in the United Kingdom, Dolls Us plans to send buyers of this doll, upon their request, short movies on the wondrous adventures of Carlie. 

These movies are sent from Richland by e-mail. Dolls Us is concerned about the rumour that the European Commission is considering the introduction of a customs duty on movies imported into the European Union via the Internet. The Government of Newland, eager to promote the development of its toy industry, has announced that they will introduce an export duty of 10 per cent ad valorem on plastic body parts of dolls. 

Dolls Us is ‘disappointed’ by the information received from the UK’s Customs Service, and concerned about the rumours on the ‘movies duty’ as well as about Newland's planned introduction of an export duty. It has asked its law firm, Gandhi, Bhatia & Ganesan, an Indian law firm with offices in London, for legal advice on the WTO-consistency of the various measures referred to above. You are a junior lawyer working at Gandhi, Bhatia & Ganesan and you have been tasked with preparing a note on the legal advice sought by Dolls Us. The senior partner of the law firm has warned you not to forget to check the EU’s Goods Schedule as well as the EU’s Common Customs Tariff.