CUSTOMS VALUATION 81
AGREEMENT ON IMPLEMENTATION
OF ARTICLE VII
OF THE GENERAL AGREEMENT
ON TARIFFS AND TRADE
GENERAL INTRODUCTORY COMMENTARY
1. The primarybasis for customs value under this Agreementi s "transactionvalue"
as defined in Article 1. Article 1 is to be read together with A rticle 8 which provides,
inter alia , for adjustments to the price actually paid or payable in cas es where certain
specific elements which are considered to form a part of the v alue for customs purposes
are incurred by the buyer but are not included in the price act ually paid or payable
for the imported goods. Article 8 also provides for the inclu sion in the transaction
value of certain considerations which may pass from the buye r to the seller in the
form of specified goods or services rather than in the form of money. Articles 2
to 7, inclusive, provide methods of determining the customs value whenever it cannot
be determined under the provisions of Article 1.
2. Where the customs value cannot be determinedunder the pro visionsof Article 1
there should normally be a process of consultation between t he customs administration
and importer with a view to arriving at a basis of value under t he provisions of
Articles 2 or 3. It may occur, for example, that the importer h as information about
the customs value of identical or similar imported goods whi ch is not immediately
available to the customs administration in the port of impor tation. On the other hand,
the customs administrationmay have informationabout the c ustoms value ofidentical
or similar imported goods which is not readily available to t he importer. A process
of consultation between the two parties will enable informa tion to be exchanged, subject
to the requirements of commercial confidentiality, with a v iew to determining a proper
basis of value for customs purposes.
3. Articles 5 and 6 provide two bases for determining the cust oms value where
it cannot be determined on the basis of the transaction value of the imported goods
or of identical or similar imported goods. Under Article 5.1 the customs value is
determined on the basis of the price at which the goods are sol d in the condition as
imported to an unrelated buyer in the country of importation . The importer also has
the right to have goods which are further processed after imp ortation valued under
the provisions of Article 5 if he so requests. Under Article 6 the customs value is
determined on the basis of the computed value. Both these met hods present certain82 TOKYO ROUND AGREEMENTS
difficulties and because of this the importer is given the ri ght, under the provisions
of Article 4, to choose the order of application of the two met hods.
4. Article 7 sets out how to determine the customs value in cas es where it cannot
be determined under the provisions of any of the preceding Ar ticles.
PREAMBLE
Having regard to the Multilateral Trade Negotiations, the Parties to this
Agreement (hereinafter referred to as "Parties"),
Desiring to further the objectives of the General Agreement on Tariff s and Trade
(hereinafter referredto as "General Agreement" or "GATT") and to secure additional
benefits for the international trade of developing countri es;
Recognizing the importance of the provisions of Article VII of the Genera l
Agreement and desiring to elaborate rules for their applica tion in order to provide
greater uniformity and certainty in their implementation;
Recognizing the need for a fair, uniform and neutral system for the valuat ion
of goods for customs purposes that precludes the use of arbit raryor fictitious customs
values;
Recognizing that the basis for valuation of goods for customs purposes sh ould,
to the greatest extent possible, be the transaction value of the goods being valued;
Recognizing that customs value should be based on simple and equitable cr iteria
consistent with commercial practices and that valuation pr ocedures should be of general
application without distinction between sources of supply ;
Recognizing that valuation procedures should not be used to combat dumpi ng;
Hereby agree as follows:
PART I
RULES ON CUSTOMS VALUATION
Article 1
1. The customs value of imported goods shall be the transacti on value, that is the
price actually paid or payable for the goods when sold for exp ort to the country of
importation adjusted in accordance with the provisions of A rticle 8, provided:CUSTOMS VALUATION 83
(a) that there are no restrictions as to the disposition or use o fthe goods by
the buyer other than restrictions which:
(i) are imposed or required by law or by the public authoritie s in the
country of importation;
(ii) limit the geographical area in which the goods may be res old; or
(iii) do not substantially affect the value of the goods;
(b) that the sale or price is not subject to some condition or con sideration for
which a value cannot be determinedwith respectto the goods b eing valued;
(c) that no part of the proceeds of any subsequent resale, dispo sal or use of
the goods by the buyer will accrue directly or indirectly to t he seller, unless
an appropriate adjustment can be made in accordance with the provisions
of Article 8; and
(d) that the buyer and seller are not related, or where the buyer and seller are
related, that the transaction value is acceptable for custo ms purposes under
the provisions of paragraph 2 of this Article.
2. ( a) In determining whether the transaction value is acceptabl e for the purposes
of paragraph 1, the fact that the buyer and the seller are rela ted within the
meaning of Article 15 shall not in itself be grounds for regar ding the
transaction value as unacceptable. In such case the circums tances
surrounding the sale shall be examined and the transaction v alue shall be
accepted provided that the relationship did not influence t he price. If, in
the light of information provided by the importer or otherwi se, the customs
administration has grounds for considering that the relati onship influenced
the price, it shall communicate its grounds to the importer a nd he shall be
given a reasonable opportunity to respond. If the importer s o requests,
the communication of the grounds shall be in writing.
(b) In a sale between related persons, the transaction value sh all be accepted
and the goods valued in accordance with the provisions of par agraph 1
whenever the importer demonstrates that such value closely approximates
to one of the following occurring at or about the same time:
(i) the transaction value in sales to unrelated buyers of ide ntical or similar
goods for export to the same country of importation;
(ii) the customs value of identical or similar goods as deter mined under
the provisions of Article 5;
(iii) the customs value of identical or similar goods as dete rmined under
the provisions of Article 6;84 TOKYO ROUND AGREEMENTS
*(iv) the transaction value in sales to unrelated buyers for e xport to the
same country of importation of goods which would be identica l to
the imported goods except for having a different country of p roduction
provided that the sellers in any two transactions being comp ared are
not related.
In applying the foregoing tests, due account shall be taken o f demonstrated
differences in commercial levels, quantity levels, the ele ments enumerated in Article 8
and costs incurred by the seller in sales in which he and the bu yer are not related
that are not incurred by the seller in sales in which he and the buyer are related.
(c) The tests set forth in paragraph 2 ( b) are to be used at the initiative of the
importer and only for comparison purposes. Substitute valu es may not be
established under the provisions of paragraph 2 ( b).
Article 2
1. ( a) If the customs value of the imported goods cannot be determi ned under
the provisions of Article 1, the customs value shall be the tr ansaction value
of identical goods sold for export to the same country of impo rtation and
exported at or about the same time as the goods being valued.
(b) In applying this Article, the transaction value of identic al goods in a sale
at the same commercial level and in substantially the same qu antity as the
goods being valued shall be used to determine the customs val ue. Where
no such sale is found, the transaction value of identical goo ds sold at a
different commercial level and/or in different quantities , adjusted to take
account of differences attributable to commercial level an d/or to quantity,
shall be used, provided that such adjustments can be made on t he basis of
demonstrated evidence which clearly establishes the reaso nableness and
accuracy of the adjustment, whether the adjustment leads to an increase
or a decrease in the value.
2. Where the costs and charges referred to in Article 8.2 are i ncluded in the
transaction value, an adjustment shall be made to take accou nt of significant differences
in such costs and charges between the imported goods and the i dentical goods in
question arising from differences in distances and modes of transport.
3. If, in applying this Article, more than one transaction va lue of identical goods
is found, the lowest such value shall be used to determine the customs value of the
imported goods.
_______________
*The provision of Article 1.2 ( b)(iv) of the Agreement is deleted by paragraph 1:1 of the Prot ocol
of the Agreement.CUSTOMS VALUATION 85
Article 3
1. ( a) If the customs value of the imported goods cannot be determi ned under
the provisionsof Articles 1 and 2, the customs value shall be the transaction
value of similar goods sold for export to the same country of i mportation
and exported at or about the same time as the goods being value d.
(b) In applying this Article, the transaction value of similar goods in a sale
at the same commercial level and in substantially the same qu antity as the
goods being valued shall be used to determine the customs val ue. Where
no such sale is found, the transaction value of similar goods sold at a
different commercial level and/or in different quantities , adjusted to take
account of differences attributable to commercial level an d/or to quantity,
shall be used, provided that such adjustments can be made on t he basis of
demonstrated evidence which clearly establishes the reaso nableness and
accuracy of the adjustment, whether the adjustment leads to an increase
or a decrease in the value.
2. Where the costs and charges referred to in Article 8.2 are i ncluded in the
transaction value, an adjustment shall be made to take accou nt of significant differences
in such costs and charges between the imported goods and the s imilar goods in question
arising from differences in distances and modes of transpor t.
3. If, in applying this Article, more than one transaction va lue of similar goods
is found, the lowest such value shall be used to determine the customs value of the
imported goods.
Article 4
If the customs value of the imported goods cannot be determin ed under the
provisions of Articles 1, 2 and 3 the customs value shall be de termined under the
provisions of Article 5 or, when the customs value cannot be d etermined under that
Article, under the provisions of Article 6 except that, at th e request of the importer,
the order of application of Articles 5 and 6 shall be reversed .
Article 5
1. ( a) If the imported goods or identical or similar imported good s are sold in
the country of importation in the condition as imported, the customs value
of the imported goods under the provisions of this Article sh all be based86 TOKYO ROUND AGREEMENTS
on the unit price at which the imported goods or identical or s imilar
imported goods are so sold in the greatest aggregate quantit y, at or about
the time of the importation of the goods being valued, to pers ons who are
not related to the persons from whom they buy such goods, subj ect to
deductions for the following:
(i) either the commissions usually paid or agreed to be paid o r the
additions usually made for profit and general expenses in co nnection
with sales in such country of imported goods of the same class or
kind;
(ii) the usual costs of transport and insurance and associat ed costs incurred
within the country of importation;
(iii) where appropriate, the costs and charges referred to i n Article 8.2;
and
(iv) the customs duties and other national taxes payable in t he country
of importation by reason of the importation or sale of the goo ds.
(b) If neither the imported goods nor identical nor similar imp orted goods are
sold at or about the time of importation of the goods being val ued, the
customs value shall, subject otherwise to the provisions of paragraph 1 ( a)
of this Article, be based on the unit price at which the import ed goods or
identical or similar imported goods are sold in the country o f importation
in the condition as imported at the earliest date after the im portation of the
goods being valued but before the expiration of ninety days a fter such
importation.
2. If neither the imported goods nor identical nor similar im ported goods are sold
in the country of importation in the condition as imported, t hen, if the importer so
requests, the customs value shall be based on the unit price a t which the imported
goods, after further processing, are sold in the greatest ag gregate quantity to persons
in the country of importation who are not related to the perso ns from whom they
buy such goods, due allowance being made for the value added b y such processing
and the deductions provided for in paragraph 1 ( a) of this Article.
Article 6
1. The customs value of imported goods under the provisions o f this Article shall
be based on a computed value. Computed value shall consist of the sum of:CUSTOMS VALUATION 87
(a) the cost or value of materials and fabrication or other proc essing employed
in producing the imported goods;
(b) an amount for profit and general expenses equal to that usua lly reflected
in sales of goods of the same class or kind as the goods being va lued which
are made by producers in the country of exportation for expor t to the
country of importation;
(c) the cost or value of all other expenses necessary to reflect the valuation
option chosen by the Party under Article 8.2.
2. No Party may require or compel any person not resident in it s own territory
to produce for examination, or to allow access to, any accoun t or other record for
the purposes of determining a computed value. However, info rmation supplied by
the producer of the goods for the purposes of determining the customs value under
the provisions of this Article may be verified in another cou ntry by the authorities
of the country of importation with the agreement of the produ cer and provided they
give sufficient advance notice to the government of the coun try in question and the
latter does not object to the investigation.
Article 7
1. If the customs value of the imported goods cannot be determ ined under the
provisions of Articles 1 to 6, inclusive, the customs value s hall be determined using
reasonable means consistent with the principles and genera l provisions of this
Agreement and of Article VII of the General Agreement and on t he basis of data
available in the country of importation.
2. No customs value shall be determined under the provisions of this Article on
the basis of:
(a) the selling price in the country of importation of goods pro duced in such
country;
(b) a system which provides for the acceptance for customs purp oses of the
higher of two alternative values;
(c) the price of goods on the domestic market of the country of ex portation;
(d) the cost of production other than computed values which hav e been
determined for identical or similar goods in accordance wit h the provisions
of Article 6;
(e) the price of the goods for export to a country other than the c ountry of
importation;
(f) minimum customs values; or88 TOKYO ROUND AGREEMENTS
(g) arbitrary or fictitious values.
3. If he so requests, the importer shall be informed in writin g of the customs value
determined under the provisions of this Article and the meth od used to determine
such value.
Article 8
1. In determining the customs value under the provisions of A rticle 1, there shall
be added to the price actually paid or payable for the importe d goods:
(a) the following, to the extent that they are incurred by the bu yer but are not
included in the price actually paid or payable for the goods:
(i) commissions and brokerage, except buying commissions;
(ii) the cost of containers which are treated as being one for customs
purposes with the goods in question;
(iii) the cost of packing whether for labour or materials;
(b) the value, apportioned as appropriate, of the following go ods and services
where supplied directly or indirectly by the buyer free of ch arge or at
reduced cost for use in connection with the production and sa le for export
of the imported goods, to the extent that such value has not be en included
in the price actually paid or payable:
(i) materials, components, parts and similar items incorpo rated in the
imported goods;
(ii) tools, dies, moulds and similar items used in the produc tion of the
imported goods;
(iii) materials consumed in the production of the imported g oods;
(iv) engineering, development, artwork, design work, and p lans and
sketches undertaken elsewhere than in the country of import ation and
necessary for the production of the imported goods;
(c) royalties and licence fees related to the goods being value d that the buyer
must pay, either directly or indirectly, as a condition of sa le of the goods
being valued, to the extent that such royalties and fees are n ot included
in the price actually paid or payable;
(d) the value of any part of the proceeds of any subsequent resal e, disposal
or use of the imported goods that accrues directly or indirec tly to the seller.CUSTOMS VALUATION 89
2. In framing its legislation, each Party shall provide for t he inclusion in or the
exclusion from the customs value, in whole or in part, of the f ollowing:
(a) the cost of transport of the imported goods to the port or pla ce of
importation;
(b) loading, unloading and handling charges associated with t he transport of
the imported goods to the port or place of importation; and
(c) the cost of insurance.
3. Additions to the price actually paid or payable shall be ma de under this Article
only on the basis of objective and quantifiable data.
4. No additions shall be made to the price actually paid or pay able in determining
the customs value except as provided in this Article.
Article 9
1. Where the conversion of currency is necessary for the dete rmination of the
customs value, the rate of exchange to be used shall be that du ly published by the
competent authorities of the country of importation concer ned and shall reflect as
effectively as possible, in respect of the period covered by each such document of
publication, the current value of such currency in commerci al transactions in terms
of the currency of the country of importation.
2. The conversion rate to be used shall be that in effect at the time of exportation
or the time of importation, as provided by each Party.
Article 10
All information which is by nature confidential or which is p rovided on a
confidential basis for the purposes of customs valuation sh all be treated as strictly
confidential by the authorities concerned who shall not dis close it without the specific
permission of the person or government providing such infor mation, except to the
extent that it may be required to be disclosed in the context o f judicial proceedings.
Article 11
1. The legislation of each Party shall provide in regard to a d etermination of customs
value for the right of appeal, without penalty, by the import er or any other person
liable for the payment of the duty.90 TOKYO ROUND AGREEMENTS
2. An initial right of appeal without penalty may be to an auth ority within the
customs administration or to an independent body, but the le gislation of each Party
shall provide for the right of appeal without penalty to a jud icial authority.
3. Notice of the decision on appeal shall be given to the appel lant and the reasons
for such decision shall be provided in writing. He shall also be informed of his rights
of any further appeal.
Article 12
Laws, regulations, judicial decisions and administrative rulings of general
application giving effect to this Agreement shall be publis hed in conformity with
Article X of the General Agreement by the country of importat ion concerned.
Article 13
If, in the course of determining the customs value of importe d goods, it becomes
necessary to delay the final determination of such customs v alue, the importer shall
nevertheless be able to withdraw his goods from customs if, w here so required, he
provides sufficient guarantee in the form of a surety, a depo sit or some other
appropriate instrument, covering the ultimate payment of c ustoms duties for which
the goods may be liable. The legislation of each Party shall m ake provisions for such
circumstances.
Article 14
The notes at Annex I to this Agreement form an integral part of this Agreement
and the Articles of this Agreement are to be read and applied i n conjunction with
their respective notes. Annexes II and III also form an integ ral part of this Agreement.
Article 15
1. In this Agreement:
(a) "customs value of imported goods" means the value of goods f or the
purposes of levying ad valorem duties of customs on imported goods;
(b) "country of importation" means country or customs territo ry of importation;
and
(c) "produced" includes grown, manufactured and mined.CUSTOMS VALUATION 91
2. ( a) In this Agreement "identical goods" means goods which are t he same in
all respects, including physical characteristics quality and reputation. Minor
differences in appearance would not preclude goods otherwi se conforming
to the definition from being regarded as identical.
(b) In this Agreement "similar goods" means goods which, altho ugh not alike
in all respects, have like characteristics and like compone nt materials which
enable them to perform the same functions and to be commercia lly
interchangeable. The quality of the goods, their reputatio n and the existence
of a trademark are among the factors to be considered in deter mining
whether goods are similar.
(c) The terms"identical goods" and "similar goods" do not incl ude, as the case
may be, goods which incorporate or reflect engineering, dev elopment,
artwork, design work, and plans and sketches for which no adj ustment has
been made under Article 8.1 ( b)(iv) because such elements were undertaken
in the country of importation.
(d) Goods shall not be regarded as "identical goods" or "simila r goods" unless
they were produced in the same country as the goods being valu ed.
(e) Goods producedby a differentperson shall be taken into acc ount only when
there are no identical goods or similar goods, as the case may be, produced
by the same person as the goods being valued.
3. In this Agreement "goods of the same class or kind" means go ods which fall
within a group or range of goods produced by a particular indu stry or industry sector,
and includes identical or similar goods.
4. For the purposes of this Agreement, persons shall be deeme d to be related only
if:
(a) they are officers or directors of one another s businesses;
(b) they are legally recognized partners in business;
(c) they are employer and employee;
(d) any person directly or indirectly owns, controls or holds 5 per cent or more
of the outstanding voting stock or shares of both of them;
(e) one of them directly or indirectly controls the other;
(f) both of them are directly or indirectly controlled by a thir d person;
(g) together they directly or indirectly control a third perso n; or
(h) they are members of the same family.92 TOKYO ROUND AGREEMENTS
5. Persons who are associated in business with one another in that one is the sole
agent, sole distributor or sole concessionaire, however de scribed, of the other shall
be deemed to be related for the purposes of this Agreement if t hey fall within the
criteria of paragraph 4 of this Article.
Article 16
Upon written request, the importer shall have the right to an explanation in
writing from the customs administration of the country of im portation as to how the
customs value of his imported goods was determined.
Article 17
Nothing in this Agreement shall be construed as restricting or calling into question
the rights of customs administrations to satisfy themselve s as to the truth or accuracy
of any statement, document or declaration presented for cus toms valuation purposes.
PART II
ADMINISTRATION, CONSULTATION
AND DISPUTE SETTLEMENT
Institutions
Article 18
There shall be established under this Agreement:
1. A Committee on Customs Valuation (hereinafter referredt o as the Committee)
composed of representatives from each of the Parties. The Co mmittee shall elect
its own Chairman and shall normally meet once a year, or as is o therwise envisaged
by the relevant provisions of this Agreement, for the purpos e of affording Parties
the opportunity to consult on matters relating to the admini stration of the customs
valuation system by any Party as it might affect the operatio n of this Agreement or
the furtherance of its objectives and carrying out such othe r responsibilities as may
be assigned to it by the Parties. The GATT secretariat shall a ct as the secretariat
to the Committee.CUSTOMS VALUATION 93
2. A Technical Committee on Customs Valuation (hereinafter referred to as the
Technical Committee) under the auspices of the Customs Coop eration Council, which
shall carry out the responsibilities described in Annex II t o this Agreement and shall
operate in accordance with the rules of procedure contained therein.
Consultation
Article 19
1. If any Party considers that any benefit accruing to it, dir ectly or indirectly, under
this Agreement is being nullified or impaired, or that the ac hievement of any objective
of this Agreement is being impeded, as a result of the actions of another Party or
of other Parties, it may, with a view to reaching a mutually sa tisfactory solution of
the matter, request consultations with the Party or Parties in question. Each Party
shall afford reaching a mutually satisfactory solution of t he matter, request consultations
with the Party or Parties in question. Each Party shall affor d sympathetic consideration
to any request from another Party for consultations.
2. The Parties concerned shall initiate requested consulta tions promptly.
3. Parties engaged in consultations on a particular matter a ffecting the operation
of this Agreement shall attempt to conclude such consultati ons within a reasonably
short period of time. The Technical Committee shall provide , upon request, advice
and assistance to Parties engaged in consultations.
Dispute settlement
Article 20
1. If no mutually satisfactory solution has been reached bet ween the Parties
concerned in consultations under Article 19 above, the Comm ittee shall meet at the
request of any party to the dispute, within thirty days of rec eipt of such a request,
to investigate the matter, with a view to facilitating a mutu ally satisfactory solution.
2. In investigating the matter and in selecting its procedur es, the Committee shall
take into account whether the issues in dispute relate to com mercial policy
considerations or to questions requiring detailed technic al consideration. The
Committee may request on its own initiative that the Technic al Committee carry out
an examination, as provided in paragraph 4 below, of any ques tion requiring technical
consideration. Upon the request of any party to the dispute t hat considers the issues94 TOKYO ROUND AGREEMENTS
to relate to questions of a technical nature, the Committee s hall request the Technical
Committee to carry out such an examination.
3. During any phase of a dispute settlement procedure, compe tent bodies and experts
in matters under consideration may be consulted; appropria te information and assistance
may be requested from such bodies and experts. The Committee shall take into
consideration the results of any work of the Technical Commi ttee that pertain to the
matter in dispute.
Technical issues
4. When the Technical Committee is requested under the provi sions of paragraph 2
above, it shall examine the matter and report to the Committe e no later than three
months from the date the technical issue was referred to it, u nless the period is
extended by mutual agreement between the parties to the disp ute.
Panel proceedings
5. In cases where the matter is not referred to the Technical C ommittee, the
Committee shall establish a panel upon the request of any par ty to the dispute if no
mutually satisfactory solution has been reached within thr ee months from the date
of the request to the Committee to investigate the matter. Wh ere the matter is referred
to the Technical Committee, the Committee shall establish a panel upon the request
of any party to the dispute if no mutually satisfactory solut ion has been reached within
one month from the date when the Technical Committee present s its report to the
Committee.
6. ( a) When a panel is established, it shall be governed by the proc edures as set
forth in Annex III.
(b) If the Technical Committee has made a report on the technica l aspects of
the matter in dispute, the panel shall use his report as the ba sis for its
consideration of the technical aspects of the matter in disp ute.
Enforcement
7. After the investigation is completed or after the report o f the Technical Committee
or panel is presented to the Committee, the Committee shall g ive the matter prompt
consideration. With respect to panel reports, the Committe e shall take appropriate
action normally within thirty days of receipt of the report. Such action shall include:
(i) a statement concerning the facts of the matter; and
(ii) recommendations to one or more Parties or any other ruli ng which it deems
appropriate.CUSTOMS VALUATION 95
8. If a Party to which recommendations are addressed conside rs itself unable to
implement them, it should promptly furnish reasons in writi ng to the Committee.
In that event, the Committee shall consider what further act ion may be appropriate.
9. If the Committee considers that the circumstances are ser ious enough to justify
such action, it may authorize one or more Parties to suspend t he application to any
other Party or Parties of such obligations under this Agreem ent as it determines to
be appropriate in the circumstances.
10. The Committee shall keep under surveillance any matter o n which it has made
recommendations or given rulings.
11. If a dispute arises between Parties relating to rights an d obligations under this
Agreement, Parties should complete the dispute settlement procedures under this
Agreement before availing themselves of any rights which th ey have under the GATT,
including invoking Article XXIII thereof.
PART III
SPECIAL AND DIFFERENTIAL TREATMENT
Article 21
1. Developing country Parties may delay application of its p rovisions for a period
not exceeding five years from the date of entry into force of t his Agreement for such
countries. Developing country Parties who choose to delay a pplication of this
Agreement shall notify the Director-General to the CONTRAC TING PARTIES to
the GATT accordingly.
2. In addition to paragraph 1 above, developing country Part ies may delay
application of Article 1.2 ( b)(iii) and Article 6 for a period not exceeding three years
following their application of all other provisions of this Agreement. Developing
country Parties that choose to delay application of the prov isions specified in this
paragraph shall notify the Director-General to the CONTRAC TING PARTIES to
the GATT accordingly.
3. Developed country Parties shall furnish, on mutually agr eed terms, technical
assistance to developing country Parties that so request. O n this basis developed
countryParties shall drawup programmesof technical assis tance which may include,96 TOKYO ROUND AGREEMENTS
inter alia , training of personnel, assistance in preparing implement ation measures,
access to sources of information regarding customs valuati on methodology, and advice
on the application of the provisions of this Agreement.
PART IV
FINAL PROVISIONS
Acceptance and accession
Article 22
1. This Agreement shall be open for acceptance by signature o r otherwise by
governments contracting parties to the GATT and by the Europ ean Economic
Community.
2. This Agreement shall be open for acceptance by signature o r otherwise by
governments having provisionally acceded to the GATT, on te rms related to the
effective application of rights and obligations under this Agreement, which take into
account rights and obligations in the instruments providin g for their provisional
accession.
3. This Agreement shall be open to accession by any other gove rnment on terms,
related to the effective application of rights and obligati ons under this Agreement,
to be agreed between that government and the Parties, by the d eposit with the
Director-General to the CONTRACTING PARTIES to the GATT of a n instrument
of accession which states the terms so agreed.
4. In regard to acceptance, the provisions of Article XXVI:5 (a) and ( b) of the
General Agreement would be applicable.
Reservations
Article 23
Reservations may not be entered in respect of any of the provi sions of this
Agreement without the consent of the other Parties.CUSTOMS VALUATION 97
Entry into force
Article 24
This Agreement shall enter into force on 1 January 1981 for th e governments1
which have accepted or acceded to it by that date. For each oth er government it shall
enter into force on the thirtieth day following the date of it s acceptance or accession
to this Agreement.
National legislation
Article 25
1. Each governmentaccepting or acceding to this Agreements hall ensure,not later
than the date of entry into force of this Agreement for it, the conformity of its laws,
regulations and administrative procedures with the provis ions of this Agreement.
2. Each Party shall inform the Committee of any changes in its laws and regulations
relevant to this Agreement and in the administration of such laws and regulations.
Review
Article 26
The Committee shall review annually the implementation and operation of this
Agreement taking into account the objectives thereof. The C ommittee shall annually
inform the CONTRACTING PARTIES to the GATT of developments d uring the
period covered by such reviews.
Amendments
Article 27
The Parties may amend this Agreement, having regard, inter alia, to the
experience gained in its implementation. Such an amendment , once the Parties have
_______________
1The term "governments" is deemed to include the competent au thorities of the European Economic
Community.98 TOKYO ROUND AGREEMENTS
concurred in accordance with procedures established by the Committee, shall not come
into force for any Party until it has been accepted by such Par ty.
Withdrawal
Article 28
Any Partymay withdrawfrom this Agreement. The withdrawals hall take effect
upon the expiration of sixty days from the date on which writt en notice of withdrawal
is received by the Director-Generalto the CONTRACTING PART IES to the GATT.
Any Party may, upon the receipt of such notice, request an imm ediate meeting of
the Committee.
Secretariat
Article 29
This Agreement shall be serviced by the GATT secretariat exc ept in regard to
those responsibilities specifically assigned to the Techn ical Committee, which will
be serviced by the secretariat of the Customs Co-operation C ouncil.
Deposit
Article 30
This Agreement shall be deposited with the Director-Genera l to the
CONTRACTING PARTIES to the GATT, who shall promptly furnish to each Party
and each contracting party to the GATT a certified copy there of and of each
amendment thereto pursuant to Article 27, and a notificatio n of each acceptance thereof
or accession thereto pursuantto Article 22 and of each withd rawal therefrompursuant
to Article 28.
Registration
Article 31
This Agreement shall be registered in accordance with the pr ovisions of
Article 102 of the Charter of the United Nations.
Done at Geneva this twelfth day of April nineteen hundred and seve nty-nine
in a single copy, in the English, French and Spanish language s, each text being
authentic.CUSTOMS VALUATION 99
ANNEX I
INTERPRETATIVE NOTES
General Note
Sequential application of valuation methods
1. Articles 1 to 7, inclusive, define how the customs value of imported goods is to be determined under
the provisions of this Agreement. The methods of valuation a re set out in a sequential order of application.
The primary method for customs valuation is defined in Artic le 1 and imported goods are to be valued
in accordance with the provisions of this Article whenever t he conditions prescribed therein are fulfilled.
2. Where the customs value cannot be determined under the pro visions of Article 1, it is to be determined
by proceeding sequentially through the succeeding Article s to the first such Article under which the customs
value can be determined. Except as provided in Article 4, it i s only when the customs value cannot be
determined under the provisions of a particular Article tha t the provisions of the next Article in the sequence
can be used.
3. If the importer does not request that the order of Articles 5 and 6 be reversed, the normal order
of the sequence is to be followed. If the importer does so requ est but it then proves impossible to determine
the customs value under the provisions of Article 6, the cust oms value is to be determined under the
provisions of Article 5, if it can be so determined.
4. Where the customs value cannot be determined under the pro visions of Articles 1 to 6, inclusive,
it is to be determined under the provisions of Article 7.
Use of generally accepted accounting principles
1. "Generally accepted accounting principles" refers to th e recognized consensus or substantial
authoritative support within a country at a particular time as to which economic resources and obligations
should be recorded as assets and liabilities, which changes in assets and liabilities should be recorded,
how the assetsand liabilities and changes in them should be m easured, what information should be disclosed
and how it should be disclosed, and which financial statemen ts should be prepared. These standards may
be broad guidelines of general application as well as detail ed practices and procedures.
2. For thepurposes of thisAgreement, the customsadministr ation of eachparty shallutilize information
prepared in a manner consistent with generally accepted acc ounting principles in the country which is
appropriate for the Article in question. For example, the de termination of usual profit and general expenses
under the provisions of Article 5 would be carried out utiliz ing information prepared in a manner consistent
with generally accepted accounting principles of the count ry of importation. On the other hand, the100 TOKYO ROUND AGREEMENTS
determination of usual profit and general expenses under th e provisions of Article 6 would be carried out
utilizing information prepared in a manner consistent with generally accepted accounting principles of
the country of production. As a further example, the determi nation of an element provided for in
Article 8.1 ( b)(ii) undertaken in the country of importation would be carr ied out utilizing information in
a manner consistent with the generally accepted accounting principles of that country.
Note to Article 1
Price actually paid or payable
The price actually paid or payable is the total payment made o r to be made by the buyer to or for
the benefit of the seller for the imported goods. The payment need not necessarily take the form of a
transfer of money. Payment may be made by way of letters of cre dit or negotiable instruments. Payment
may be made directly or indirectly. An example of an indirect payment would be the settlement by the
buyer, whether in whole or in part, of a debt owed by the seller .
Activities undertaken by the buyer on his own account, other than those for which an adjustment
is provided in Article 8, are not considered to be an indirect payment to the seller, even though they might
be regarded as of benefit to the seller. The costs of such acti vities shall not, therefore, be added to the
price actually paid or payable in determining the customs va lue.
The customs value shall not include the following charges or costs, provided that they are distinguished
from the price actually paid or payable for the imported good s:
(a) chargesfor construction,erection, assembly,maintenan ce ortechnical assistance, undertaken
after importation on imported goods such as industrial plan t, machinery or equipment;
(b) the cost of transport after importation;
(c) duties and taxes of the country of importation.
The price actually paid or payable refers to the price for the imported goods. Thus the flow of
dividends or other payments from the buyer to the seller that do not relate to the imported goods are not
part of the customs value.
Paragraph 1 (a)(iii)
Among restrictions which would not render a price actually p aid or payable unacceptable are
restrictions which do not substantially affect the value of the goods. An example of such restrictions would
be the case where a seller requires a buyer of automobiles not to sell or exhibit them prior to a fixed date
which represents the beginning of a model year.
Paragraph 1 (b)
If the sale or price is subject to some condition or considera tion for which a value cannot be
determined with respect to the goods being valued, the trans action value shall not be acceptable for customs
purposes. Some examples of this include:CUSTOMS VALUATION 101
(a) the seller establishes the price of the imported goods on co ndition that the buyer will also
buy other goods in specified quantities;
(b) the price of the imported goods is dependent upon the price o r prices at which the buyer of
the imported goods sells other goods to the seller of the impo rted goods;
(c) the price is established on the basis of a form of payment ext raneous to the imported goods,
such as where the imported goods are semi-finished goods whi ch have been provided by the
seller on condition that he will receive a specified quantit y of the finished goods.
However, conditions or considerations relating to the prod uction or marketing of the imported goods
shall not result in rejection of the transaction value. For e xample, the fact that the buyer furnishes the
seller with engineering and plans undertaken in the country of importation shall not result in rejection
of the transaction value for the purposes of Article 1. Likew ise, if the buyer undertakes on his own account,
even though by agreement with the seller, activities relati ng to the marketing of the imported goods, the
value of these activities is not part of the customs value nor shall such activities result in rejection of the
transaction value.
Paragraph 2
1. Paragraphs 2 ( a) and 2 ( b) provide different means of establishing the acceptabilit y of a transaction
value.
2. Paragraph 2 ( a) provides that where the buyer and the seller are related, th e circumstances surrounding
the sale shall be examined and the transaction value shall be accepted as the customs value provided that
the relationship did not influence the price. It is not inten ded that there should be an examination of the
circumstances in all cases where the buyer and the seller are related. Such examination will only be required
where there are doubts about the acceptability of the price. Where the customs administration have no
doubts about the acceptability of the price, it should be acc epted without requesting further information
from the importer. For example, the customs administration may have previously examined the relationship,
or it may already have detailed information concerning the b uyer and the seller, and may already be satisfied
from such examination or information that the relationship did not influence the price.
3. Where the customs administration is unable to accept the t ransaction value without further inquiry,
it should give the importer an opportunity to supply such fur ther detailed information as may be necessary
to enable it to examine the circumstances surrounding the sa le. In this context, the customs administration
should be prepared to examine relevant aspects of the transa ction, including the way in which the buyer
and seller organize their commercial relations and the way i n which the price in question was arrived at,
in order to determine whether the relationship influenced t he price. Where it can be shown that the buyer
and seller, although related under the provisions of Articl e 15, buy from and sell to each other as if they
were not related, this would demonstrate that the price had n ot been influenced by the relationship. As
an example of this, if the price had been settled in a manner co nsistent with the normal pricing practices102 TOKYO ROUND AGREEMENTS
of the industry in question or with the way the seller settles prices for sales to buyers who are not related
to him, this would demonstrate that the price had not been inf luenced by the relationship. As a further
example, where it is shown that the price is adequate to ensur e recovery of all costs plus a profit which
is representative of the firm s overall profit realized over a representative period of ti me (e.g. on an annual
basis) in sales of goods of the same class or kind, this would d emonstrate that the price had not been
influenced.
4. Paragraph 2 ( b) provides an opportunity for the importer to demonstrate th at the transaction value
closely approximates to a "test" value previously accepted by the customs administration and is therefore
acceptable under the provisions of Article 1. Where a test un der paragraph 2 ( b) is met, it is not necessary
to examine the question of influence under paragraph 2 ( a). If the customs administration has already
sufficient information to be satisfied, without further de tailed inquiries, that one of the tests provided in
paragraph 2 ( b) has been met, there is no reason for it to require the importe r to demonstrate that the test
can be met. In paragraph 2 ( b) the term "unrelated buyers" means buyers who are not relate d to the seller
in any particular case.
Paragraph 2 (b )
A number of factors must be taken into consideration in deter mining whether one value "closely
approximates" to another value. These factors include the n ature of the imported goods, the nature of
the industry itself, the season in which the goods are import ed, and, whether the difference in values is
commercially significant. Since these factors may vary fro m case to case, it would be impossible to apply
a uniform standard such as a fixed percentage, in each case. F or example, a small difference in value
in a case involving one type of goods could be unacceptable wh ile a large difference in a case involving
anothertypeofgoodsmightbeacceptableindeterminingwhe therthetransactionvaluecloselyapproximates
to the "test" values set forth in Article 1.2 ( b).
Note to Article 2
1. In applying Article 2, the customs administration shall, wherever possible, use a sale of identical
goods at the same commercial level and in substantially the s ame quantities as the goods being valued.
Where no such sale is found, a sale of identical goods that tak es place under any one of the following
three conditions may be used:
(a) a sale at the same commercial level but in different quantit ies;
(b) a sale at a different commercial level but in substantially the same quantities; or
(c) a sale at a different commercial level and in different quan tities.
2. Having found a sale under any one of these three conditions adjustments will then be made, as the
case may be, for:
(a) quantity factors only;
(b) commercial level factors only; orCUSTOMS VALUATION 103
(c) both commercial level and quantity factors.
3. The expression "and/or" allows the flexibility to use the sales and make the necessary adjustments
in any one of the three conditions described above.
4. For the purposes of Article 2, the transaction value of ide ntical imported goods means a customs
value, adjusted as provided for in paragraphs 1 ( b) and 2 of this Article, which has already been accepted
under Article 1.
5. A condition for adjustment because of different commerci al levels or different quantities is that such
adjustment, whether it leads to an increase or a decrease in t he value, be made only on the basis of
demonstrated evidence that clearly establishes the reason ableness and accuracy of the adjustments, e.g.
valid price lists containing prices referring to different levels or different quantities. As an example of
this, if the imported goods being valued consist of a shipmen t of 10 units and the only identical imported
goods for which a transaction value exists involved a sale of 500 units, and it is recognized that the seller
grants quantity discounts, the required adjustment may be a ccomplished by resorting to the seller s price
list and using that price applicable to a sale of 10 units. Thi s does not require that a sale had to have
been made in quantities of 10 as long as the price list has been established as being bona fide through
sales at other quantities. In the absence of such an objectiv e measure, however, the determination of a
customs value under the provisions of Article 2 is not approp riate.
Note to Article 3
1. In applying Article 3, the customs administration shall, wherever possible, use a sale of similar
goods at the same commercial level and in substantially the s ame quantities as the goods being valued.
Where no such sale is found, a sale of similar goods that takes place under any one of the following three
conditions may be used:
(a) a sale at the same commercial level but in different quantit ies;
(b) a sale at a different commercial level but in substantially the same quantities; or
(c) a sale at a different commercial level and in different quan tities.
2. Having found a sale under any one of these three conditions adjustments will then be made, as the
case may be, for:
(a) quantity factors only;
(b) commercial level factors only; or
(c) both commercial level and quantity factors.
3. The expression "and/or" allows the flexibility to use the sales and make the necessary adjustments
in any one of the three conditions described above.
4. For the purpose of Article 3, the transaction value of simi lar imported goods means a customs value,
adjusted as provided for in paragraphs 1 ( b) and 2 of this Article, which has already been accepted under
Article 1.104 TOKYO ROUND AGREEMENTS
5. A condition for adjustment because of different commerci al levels or different quantities is that such
adjustment, whether it leads to an increase or a decrease in t he value, be made only on the basis of
demonstrated evidence that clearly establishes the reason ableness and accuracy of the adjustment, e.g.
valid price lists containing prices referring to different levels or different quantities. As an example of
this, if the imported goods being valued consist of a shipmen t of 10 units and the only similar imported
goods for which a transaction value exists involved a sale of 500 units, and it is recognized that the seller
grants quantity discounts, the required adjustment may be a ccomplished by resorting to the sellers price
list and using that price applicable to a sale of 10 units. Thi s does not require that a sale had to have
been made in quantities of 10 as long as the price list has been established as being bona fide through
sales at other quantities. In the absence of such an objectiv e measure, however, the determination of a
customs value under the provisions of Article 3 is not approp riate.
Note to Article 5
1. The term "unit price at which ... goods are sold in the great est aggregate quantity" means the price
at which the greatest number of units is sold in sales to perso ns who are not related to the persons from
whom they buy such goods at the first commercial level after i mportation at which such sales take place.
2. As an example of this, goods are sold from a price list which grants favourable unit prices for
purchases made in larger quantities.
Total quantity
Sale quantity Unit price Number of sales sold at each
price
1-10 units 100 10 sales of 5 units 65
5 sales of 3 units
11-25 units 95 5 sales of 11 units 55
over 25 units 90 1 sale of 30 units 80
1 sale of 50 units
The greatest number of units sold at a price is 80; therefore, the unit price in the greatest aggregate
quantity is 90.
3. As another example of this, two sales occur. In the first sa le 500 units are sold at a price of
95 currency units each. In the second sale 400 units are sold a t a price of 90 currency units each. In
this example, the greatest number of units sold at a particul ar price is 500; therefore, the unit price in
the greatest aggregate quantity is 95.
4. A third example would be the following situation where var ious quantities are sold at various prices.CUSTOMS VALUATION 105
(a) Sales
Sale quantity Unit price
40 units 100
30 units 90
15 units 100
50 units 95
25 units 105
35 units 90
5 units 100
(b) Totals
Total quantity sold Unit price
65 90
50 95
60 100
25 105
In this example, the greatest number of units sold at a partic ular price is 65; therefore, the unit price
in the greatest aggregate quantity is 90.
5. Any sale in the importing country, as described in paragra ph 1 above, to a person who supplies
directly or indirectly free of charge or at reduced cost for u se in connection with the production and sale
for export of the imported goods any of the elements specifie d in Article 8.1 ( b), should not be taken into
account in establishing the unit price for the purposes of Ar ticle 5.
6. It should be noted that "profit and general expenses" refe rred to in Article 5.1 should be taken as
a whole. The figure for the purposes of this deduction should be determined on the basis of information
supplied by or on behalf of the importer unless his figures ar e inconsistent with those obtaining in sales
in the country of importation of imported goods of the same cl ass or kind. Where the importer s figures
are inconsistent with such figures, the amount for profit an d general expenses may be based upon relevant
information other than that supplied by or on behalf of the im porter.
7. The "general expenses" include the direct and indirect co sts of marketing the goods in question.
8. Local taxes payable by reason of the sale of the goods for wh ich a deduction is not made under
the provisions of Article 5.1 ( a)(iv)shall be deducted under the provisions of Article 5.1 ( a)(i).
9. In determining either the commissions or the usual profit s and general expenses under the provisions
of Article 5.1, the question whether certain goods are "of th e same class or kind" as other goods must
be determined on a case-by-case basis by reference to the cir cumstances involved. Sales in the country
of importation of the narrowest group or range of imported go ods of the same class or kind, which includes
the goods being valued, for which the necessary information can be provided, should be examined. For
the purposes of Article 5, "goods of the same class or kind" in cludes goods imported from the same country
as the goods being valued as well as goods imported from other countries.106 TOKYO ROUND AGREEMENTS
10. For the purposes of Article 5.1 ( b), the "earliest date" shall be the date by which sales of the i mported
goods or of identical or similar imported goods are made in su fficient quantity to establish the unit price.
11. Where the method in Article 5.2 is used, deductions made f or the value added by further processing
shall be based on objective and quantifiable data relating t o the cost of such work. Accepted industry
formulas, recipes, methods of construction, and other indu stry practices would form the basis of the
calculations.
12. It is recognized that the method of valuation provided fo r in Article 5.2 would normally not be
applicable when, as a result of the further processing, the i mported goods lose their identity. However,
there can be instances where, although the identity of the im ported goods is lost, the value added by the
processing can be determined accurately without unreasona ble difficulty. On the other hand, there can
also be instances where the imported goods maintain their id entity but form such a minor element in the
goods sold in the country of importation that the use of this v aluation method would be unjustified. In
view of the above, each situation of this type must be conside red on a case-by-case basis.
Note to Article 6
1. As a general rule, customs value is determined under this A greement on the basis of information
readily available in the country of importation. In order to determine a computed value, however, it may
be necessary to examine the costs of producing the goods bein g valued and other information which has
to be obtained from outside the country of importation. Furt hermore, in most cases the producer of the
goods will be outside the jurisdiction of the authorities of the country of importation. The use of the
computed value method will generally be limited to those cas es where the buyer and seller are related,
and the producer is prepared to supply to the authorities of t he country of importation the necessary costings
and to provide facilities for any subsequent verification w hich may be necessary.
2. The "cost or value" referred to in Article 6.1 ( a) is to be determined on the basis of information
relating to the production of the goods being valued supplie d by or on behalf of the producer. It is to
be based upon the commercial accounts of the producer, provi ded that such accounts are consistent with
the generally accepted accounting principles applied in th e country where the goods are produced.
3. The "cost or value" shall include the cost of elements spec ified in Article 8.1 ( a)(ii) and (iii). It
shall also include the value, apportioned as appropriate un der the provisions of the relevant note to Article
8, of any element specified in Article 8.1 ( b) which has been supplied directly or indirectly by the buyer
for use in connection with the production of the imported goo ds. The value of the elements specified
in Article 8.1 ( b)(iv) which are undertaken in the country of importation sha ll be included only to the extent
that such elements are charged to the producer. It is to be und erstood that no cost or value of the elements
referred to in this paragraph shall be counted twice in deter mining the computed value.CUSTOMS VALUATION 107
4. The "amount for profit and general expenses" referred to i n Article 6.1 ( b) is to be determined on
the basis of information supplied by or on behalf of the produ cer unless his figures are inconsistent with
those usually reflected in sales of goods of the same class or kind as the goods being valued which are
made by producers in the country of exportation for export to the country of importation.
5. It should be noted in this context that the "amount for prof it and general expenses" has to be taken
as a whole. It follows that if, in any particular case, the pro ducer s profit figure is low and his general
expenses are high, his profit and general expenses taken tog ether may nevertheless be consistent with that
usually reflected in sales of goods of the same class or kind. Such a situation might occur, for example,
if a product were being launched in the country of importatio n and the producer accepted a nil or low
profit to offset high general expenses associated with the l aunch. Where the producer can demonstrate
that he is taking a low profit on his sales of the imported good s because of particular commercial
circumstances, his actual profit figures should be taken in to account provided that he has valid commercial
reasons to justify them and his pricing policy reflects usua l pricing policies in the branch of industry
concerned. Such a situation might occur, for example, where producers have been forced to lower prices
temporarily because of an unforeseeable drop in demand, or w here they sell goods to complement a range
of goods being produced in the country of importation and acc ept a low profit to maintain competitivity.
Where the producer s own figures for profit and general expenses are not consist ent with those usually
reflected in sales of goods of the same class or kind as the goo ds being valued which are made by producers
in the country of exportation for export to the country of imp ortation, the amount for profit and general
expenses may be based upon relevant information other than t hat supplied by or on behalf of the producer
of the goods.
6. Where information other than that supplied by or on behalf of the producer is used for the purposes
of determining a computed value, the authorities of the impo rting country shall inform the importer, if
the latter so requests, of the source of such information, th e data used and the calculations based upon
such data, subject to the provisions of Article 10.
7. The "general expenses" referred to in Article 6.1 ( b) covers the direct and indirect costs of producing
and selling the goods for export which are not included under Article 6.1 ( a).
8. Whether certain goods are "of the same class or kind" as oth er goods must be determined on a
case-by-casebasiswithreferencetothe circumstancesinv olved. Indeterminingtheusualprofitsandgeneral
expenses under the provisions of Article 6, sales for export to the country of importation of the narrowest
group or range of goods, which includes the goods being value d, for which the necessary information
can be provided, should be examined. For the purposes of Arti cle 6, "goods of the same class or kind"
must be from the same country as the goods being valued.
Note to Article 7
1. Customs values determined under the provisions of Articl e 7 should, to the greatest extent possible,
be based on previously determined customs values.108 TOKYO ROUND AGREEMENTS
2. The methods of valuation to be employed under Article 7 sho uld be those laid down in Articles 1
to 6 inclusive, but a reasonable flexibility in the applicat ion of such methods would be in conformity with
the aims and provisions of Article 7.
3. Some examples of reasonable flexibility are as follows:
(a)Identical goods - the requirement that the identical goods should be exporte d at or about the
same time as the goods being valued could be flexibly interpr eted; identical imported goods
produced in a country other than the country of exportation o f the goods being valued could
be the basis for customs valuation; customs values of identi cal imported goods already
determined under the provisions of Articles 5 and 6 could be u sed.
(b)Similar goods - the requirement that the similar goods should be exported a t or about the same
time as the goods being valued could be flexibly interpreted ; similar imported goods produced
in a country other than the country of exportation of the good s being valued could be the basis
for customs valuation; customs values of similar imported g oods already determined under
the provisions of Articles 5 and 6 could be used.
(c)Deductive method - the requirement that the goods shall have been sold in the "c ondition as
imported" in Article 5.1 ( a) could be flexibly interpreted; the "ninety days" requirem ent could
be administered flexibly.
Note to Article 8
Paragraph 1 (a)(i)
The term "buying commissions" means fees paid by an importer to his agent for the service of
representing him abroad in the purchase of the goods being va lued.
Paragraph 1 (b)(ii)
1. There are two factors involved in the apportionment of the elements specified in Article 8.1 ( b)(ii)
to the imported goods - the value of the element itself and the way in which that value is to be apportioned
to the imported goods. The apportionment of these elements s hould be made in a reasonable manner
appropriate to the circumstances and in accordance with gen erally accepted accounting principles.
2. Concerning the value of the element, if the importer acqui res the element from a seller not related
to him at a given cost, the value of the element is that cost. If the element was produced by the importer
or by a person related to him, its value would be the cost of pro ducing it. If the element had been previously
used by the importer, regardless of whether it had been acqui red or produced by such importer, the original
cost of acquisition or production would have to be adjusted d ownward to reflect its use in order to arrive
at the value of the element.CUSTOMS VALUATION 109
3. Once a value has been determined for the element, it is nece ssary to apportion that value to the
imported goods. Various possibilities exist. For example, the value might be apportioned to the first
shipment if the importer wishes to pay duty on the entire valu e at one time. As another example, the
importer may request that the value be apportioned over the n umber of units produced up to the time of
the first shipment. As a further example, he may request that the value be apportioned over the entire
anticipated production where contracts or firm commitment s exist for that production. The method of
apportionment used will depend upon the documentation prov ided by the importer.
4. As an illustration of the above, an importer provides the p roducer with a mould to be used in the
production of the imported goods and contracts with him to bu y 10,000 units. By the time of arrival of
the first shipment of 1,000 units, the producer has already p roduced 4,000 units. The importer may request
the customs administration to apportion the value of the mou ld over 1,000 units, 4,000 units or 10,000
units.
Paragraph 1 (b)(iv)
1. Additions for the elements specified in Article 8.1 ( b)(iv) should be based on objective and quantifiable
data. In order to minimize the burden for both the importer an d customs administration in determining
the values to be added, data readily available in the buyer s commercial record system should be used
in so far as possible.
2. For those elements supplied by the buyer which were purcha sed or leased by the buyer, the addition
would be the cost of the purchase or the lease. No addition sha ll be made for those elements available
in the public domain, other than the cost of obtaining copies of them.
3. The ease with which it may be possible to calculate the valu es to be added will depend on a particular
firm s structure and management practice, as well as its accounti ng methods.
4. For example, it is possible that a firm which imports a vari ety of products from several countries
maintains the records of its design centre outside the count ry of importation in such a way as to show
accurately the costs attributable to a given product. In suc h cases, a direct adjustment may appropriately
be made under the provisions of Article 8.
5. In another case, a firm may carry the cost of the design cent re outside the country of importation
as a general overhead expense without allocation to specifi c products. In this instance, an appropriate
adjustment could be made under the provisions of Article 8 wi th respect to the imported goods by
apportioning total design centre costs over total producti on benefiting from the design centre and adding
such apportioned cost on a unit basis to imports.
6. Variations in the above circumstances will, of course, re quire different factors to be considered in
determining the proper method of allocation.
7. In cases where the production of the element in question in volves a number of countries and over
a period of time, the adjustment should be limited to the valu e actually added to that element outside the
country of importation.110 TOKYO ROUND AGREEMENTS
Paragraph 1 (c)
1. Theroyalties andlicence fees referred toin Article 8.1( c) may include,among other things, payments
in respect to patents, trade marks and copyrights. However, the charges for the right to reproduce the
imported goods in the country of importation shall not be add ed to the price actually paid or payable for
the imported goods in determining the customs value.
2. Payments made by the buyer for the right to distribute or re sell the imported goods shall not be
added to the price actually paid or payable for the imported g oods if such payments are not a condition
of the sale for export to the country of importation of the imp orted goods.
Paragraph 3
Where objective and quantifiable data do not exist with rega rd to the additions required to be made
under the provisions of Article 8, the transaction value can not be determined under the provisions of
Article 1. As an illustration of this, a royalty is paid on the basis of the price in a sale in the importing
country of a litre of a particular product that was imported b y the kilogram and made up into a solution
after importation. If the royalty is based partially on the i mported goods and partially on other factors
which have nothing to do with the imported goods (such as when the imported goods are mixed with
domestic ingredients and are no longer separately identifi able, or when the royalty cannot be distinguished
from special financial arrangements between the buyer and t he seller), it would be inappropriate to attempt
to make an addition for the royalty. However, if the amount of this royalty is based only on the imported
goods and can be readily quantified, an addition to the price actually paid or payable can be made.
Note to Article 9
For the purposes of Article 9, "time of importation" may incl ude the time of entry for customs
purposes.
Note to Article 11
1. Article 11 provides the importer with the right to appeal a gainst a valuation determination made
by the customs administration for the goods being valued. Ap peal may first be to a higher level in the
customs administration, but the importer shall have the rig ht in the final instance to appeal to the judiciary.
2. "Without penalty" means that the importer shall not be sub ject to a fine or threat of fine merely
because he chose to exercise his right of appeal. Payment of n ormal court costs and lawyers fees shall
not be considered to be a fine.
3. However, nothing in Article 11 shall prevent a Party from r equiring full payment of assessed customs
duties prior to an appeal.CUSTOMS VALUATION 111
Note to Article 15
Paragraph 4
For the purposes of this Article, the term "persons" include s legal persons, where appropriate.
Paragraph 4 (e)
For the purposes of this Agreement, one person shall be deeme d to control another when the former
is legally or operationally in a position to exercise restra int or direction over the latter.
ANNEX II
TECHNICAL COMMITTEE ON CUSTOMS VALUATION
1. In accordance with Article 18 of this Agreement, the Techn ical Committee shall be established under
the auspices of the Customs Co-operation Council with a view , at the technical level, towards uniformity
in interpretation and application of this Agreement.
2. The responsibilities of the Technical Committee shall in clude the following:
(a) to examine specific technical problems arising in the day- to-day administration of the customs
valuation system of Parties and to give advisory opinions on appropriate solutions based upon
the facts presented;
(b) to study, as requested, valuation laws, procedures and pra ctices as they relate to this Agreement
and to prepare reports on the results of such studies;
(c) to prepare and circulate annual reports on the technical as pects of the operation and status of
this Agreement;
(d) to furnish such information and advice on any matters conce rning the valuation of imported
goods for customs purposes as may be requested by any Party or the Committee. Such
information and advice may take the form of advisory opinion s, commentaries or explanatory
notes;
(e) to facilitate, as requested, technical assistance to Part ies with a view to furthering the
international acceptance of this Agreement; and
(f) to exercise such other responsibilities as the Committee m ay assign to it.
General
3. The Technical Committee shall attempt to conclude its wor k on specific matters, especially those
referred to it by Parties or the Committee, in a reasonably sh ort period of time.112 TOKYO ROUND AGREEMENTS
4. The Technical Committee shall be assisted as appropriate in its activities by the Secretariat of the
Customs Co-operation Council.
Representation
5. Each Party shall have the right to be represented on the Tec hnical Committee. Each Party may
nominate one delegate and one or more alternates to be its rep resentatives on the Technical Committee.
Such a Party so represented on the Technical Committee is her einafter referred to as a member of the
Technical Committee. Representatives of members of the Tec hnical Committee may be assisted by advisers.
The GATT secretariat may also attend such meetings with obse rver status.
6. Members of the Customs Co-operation Council who are not Pa rties may be represented at meetings
of the Technical Committee by one delegate and one or more alt ernates. Such representatives shall attend
meetings of the Technical Committee as observers.
7. Subject to the approval of the Chairman of the Technical Co mmittee, the Secretary-General of the
Customs Co-operation Council (hereinafter referred to as " the Secretary-General") may invite representatives
of governments which are neither Parties nor members of the C ustoms Co-operation Council and
representatives of international governmental and trade o rganizations to attend meetings of the Technical
Committee as observers.
8. Nominations of delegates, alternates and advisers to mee tings of the Technical Committee shall be
made to the Secretary-General.
Technical Committee meetings
9. The Technical Committee shall meet as necessary but at lea st two times a year. The date of each
meeting shall be fixed by the Technical Committee at its prec eding session. The date of the meeting may
be varied either at the request of any member of the Technical Committee concurred in by a simple majority
of the members of the Technical Committee or, in cases requir ing urgent attention, at the request of the
Chairman.
10. The meetings of the Technical Committee shall be held at t he headquarters of the Customs Co-operation
Council unless otherwise decided.
11. The Secretary-General shall inform all members of the Te chnical Committee and those included
under paragraphs 6 and 7 at least thirty days in advance, exce pt in urgent cases, of the opening date of
each session of the Technical Committee.
Agenda
12. A provisional agenda for each session shall be drawn up by the Secretary-General and circulated
to the members of the Technical Committee and to those includ ed under paragraphs 6 and 7 at least thirty
days in advance of the session, except in urgent cases. This a genda shall comprise all items whose inclusion
has been approved by the Technical Committee during its prec eding session, all items included by theCUSTOMS VALUATION 113
Chairman on his own initiative, and all items whose inclusio n has been requested by the Secretary-General,
by the Committee or by any member of the Technical Committee.
13. The Technical Committee shall determine its agenda at th e opening of each session. During the
session the agenda may be altered at any time by the Technical Committee.
Officers and conduct of business
14. The Technical Committee shall elect from among the deleg ates of its members a Chairman and one
or more Vice-Chairmen. The Chairman and Vice-Chairmen shal l each hold office for a period of one
year. Theretiring Chairmanand Vice-Chairmenare eligible forre-election. A Chairmanor Vice-Chairman
who ceases to represent a member of the Technical Committee s hall automatically lose his mandate.
15. If the Chairman is absent from any meeting or part thereof , a Vice-Chairman shall preside. In that
event, the latter shall have the same powers and duties as the Chairman.
16. The Chairman of the meeting shall participate in the proc eedings of the Technical Committee as
such and not as the representative of a member of the Technica l Committee.
17. In addition to exercising the powers conferred upon him e lsewhere by these rules, the Chairman
shall declare the opening and closing of each meeting, direc t the discussion, accord the right to speak,
and, pursuant to these rules, have control of the proceeding s. The Chairman may also call a speaker to
order if his remarks are not relevant.
18. During discussion of any matter a delegation may raise a p oint of order. In this event, the Chairman
shall immediately state his ruling. If this ruling is challe nged, the Chairman shall submit it to the meeting
for decisions and it shall stand unless overruled.
19. The Secretary-General, or officers of the Secretariat d esignated by him, shall perform the secretarial
work of meetings of the Technical Committee.
Quorum and voting
20. Representatives of a simple majority of the members of th e Technical Committee shall constitute
a quorum.
21. Each member of the Technical Committee shall have one vot e. A decision of the Technical Committee
shall be taken by a majority comprising at least two thirds of the members present. Regardless of the
outcome of the vote on a particular matter, the Technical Com mittee shall be free to make a full report
to the Committee and to the Customs Co-operation Council on t hat matter indicating the different views
expressed in the relevant discussions.
Languages and records
22. The official languages of the Technical Committee shall be English, French and Spanish. Speeches
or statements made in any of these three languages shall be im mediately translated into the other official114 TOKYO ROUND AGREEMENTS
languages unless all delegations agree to dispense with tra nslation. Speeches or statements made in any
other language shall be translated into English, French and Spanish, subject to the same conditions, but
in that event the delegation concerned shall provide the tra nslation into English, French or Spanish. Only
English, French and Spanish shall be used for the official do cuments of the Technical Committee.
Memoranda and correspondence for the consideration of the T echnical Committee must be presented in
one of the official languages.
23. The Technical Committee shall draw up a report of all its s essions and, if the Chairman considers
it necessary, minutes or summary records of its meetings. Th e Chairman or his designee shall report
on the work of the Technical Committee at each meeting of the C ommittee and at each meeting of the
Customs Co-operation Council.
ANNEX III
AD HOC PANELS
1. Ad hoc panels established by the Committee under this Agreement sh all have the following
responsibilities:
(a) to examine the matter referred to it by the Committee;
(b) to consult with the parties to the dispute and give full oppo rtunity for them to develop a mutually
satisfactory solution; and
(c) to make a statement concerning the facts of the matter as the y relate to the application of the
provisions of this Agreement and, make such findings as will assist the Committee in making
recommendations or giving rulings on the matter.
2. In order to facilitate the constitution of panels, the Cha irman of the Committee shall maintain an
informal indicative list of government officials knowledg eable in the area of customs valuation and
experienced in the field of trade relations and economic dev elopment. This list may also include persons
other than government officials. In this connection, each P arty shall be invited to indicate at the beginning
of every year to the Chairman of the Committee the name(s) of t he one or two governmental experts whom
the Parties would be willing to make available for such work. When a panel is established, the Chairman,
after consultation with the Parties concerned, shall, with in seven days of such establishment propose the
composition of the panel consisting of three or five members and preferably government officials. The
Parties directly concerned shall react within seven workin g days to nominations of panel members by the
Chairman and shall not oppose nominations except for compel ling reasons.
Citizens of countries whose governments are parties to a dis pute shall not be eligible for membership
of the panel concerned with that dispute. Panel members shal l serve in their individual capacities andCUSTOMS VALUATION 115
not as government representatives, nor as representatives of any organization. Governments or organizations
shall therefore not give them instructions with regard to ma tters before a panel.
3. Each panel shall develop its own working procedures. All P arties having a substantial interest in
the matter and having notified this to the Committee shall ha ve an opportunity to be heard. Each panel
may consult and seek information and technical advice from a ny source it deems appropriate. Before
a panel seeks such information or technical advice from a sou rce within the jurisdiction of a Party, it shall
inform the government of that Party. Any Party shall respond promptly and fully to any request by a
panel for such information as the panel considers necessary and appropriate. Confidential information
provided to the panel shall not be disclosed without the spec ific permission of the person or government
providing such information. Where such information is requ ested from the panel but release of such
information by the panel is not authorized, a non-confident ial summary of the information, authorized
by the person or government providing the information, will be provided.
4. Where the parties to the dispute have failed to reach a sati sfactory solution the panel shall submit
its findings in writing. The report of a panel should normall y set out the rationale behind its findings.
Where a settlement of the matter is reached between the parti es, the report of the panel may be confined
to a brief description of the dispute and to a statement that a solution has been reached.
5. Panels shall use such report of the Technical Committee as may have been issued under Article 20.4
of this Agreement as the basis for their consideration of iss ues that involve questions of a technical nature.
6. The time required by panels will vary with the particular c ase. They should aim to deliver their
findings, andwhereappropriate,recommendations, totheC ommitteewithout unduedelay,normallywithin
a period of three months from the date that the panel was estab lished.
7. To encourage development of mutually satisfactory solut ions between the parties to a dispute and
with a view to obtaining their comments, each panel should fi rst submit the descriptive part of its report
to the Parties concerned, and should subsequently submit to the parties to the dispute its conclusions, or
an outline thereof, a reasonable period of time before they a re circulated to the Parties.116 TOKYO ROUND AGREEMENTS
PROTOCOL TO THE AGREEMENT
ON IMPLEMENTATION OF ARTICLE VII
OF THE GENERAL AGREEMENT
ON TARIFFS AND TRADE
The Parties to the Agreement on Implementation of Article VI I of the General
Agreement on Tariffs and Trade (hereinafter referred to as " the Agreement").
Having regardto the Multilateral Trade Negotiations and to the des ire expressed
by the Trade Negotiations Committee at its meeting of 11 and 1 2 April 1979 to arrive
at a single text of an Agreement on Implementation of Article VII of the General
Agreement on Tariffs and Trade;
Recognizing that developing countriesmay have particularproblemsin a pplying
the Agreement;
Considering that the provisions of Article 27 of the Agreement relating t o
amendments have not yet entered into force;
Hereby :
I
1. Agree to the deletion of the provision of Article 1.2 ( b)(iv) of the Agreement;
2. Recognize that the five-year delay in the application of the provision s of the
Agreement by developing countries provided for in Article 2 1.1 may, in practice,
be insufficient for certain developing countries. In such c ases a developing country
Party to the Agreement may request before the end of the perio d referred to in
Article 21.1 an extension of such period, it being understoo d that the Parties to the
Agreement will give sympathetic consideration to such a req uest in cases where the
developing country in question can show good cause;
3. Recognize that developing countries which currently value goods on th e basis
of officially established minimum values may wish to make a r eservation to enable
them to retain such values on a limited and transitional basi s under such terms and
conditions as may be agreed to by the Parties to the Agreement ;CUSTOMS VALUATION 117
4. Recognize that developing countries which consider that the reversal of the
sequential order at the request of the importer provided for in Article 4 of the
Agreement may give rise to real difficulties for them may wis h to make a reservation
to Article 4 in the following terms:
"The Government of ............. reserves the right to prov ide that the relevant
provision of Article 4 of the Agreement shall apply only when the customs
authorities agree to the request to reverse the order of Arti cles 5 and 6."
If developing countries make such a reservation, the Partie s to the Agreement shall
consent to it under Article 23 of the Agreement;
5. Recognize that developing countriesmay wish to make a reservationwit h respect
to Article 5.2 of the Agreement in the following terms:
"The Government of ............ reserves the right to provi de that Article 5.2
of the Agreement shall be applied in accordance with the prov isions of the
relevant note thereto whether or not the importer so request s."
If developing countries make such a reservation, the Partie s to the Agreement shall
consent to it under Article 23 of the Agreement;
6. Recognize that certain developing countries have expressed concern t hat there
may be problems in the implementation of Article 1 of the Agre ement in so far as
it relates to importations into their countries by sole agen ts, sole distributors and sole
concessionaires. The Parties to the Agreement agree that, i f such problems arise
in practice in developing countries applying the Agreement , a study of this question
shall be made, at the request of such countries, with a view to finding appropriate
solutions;
7. Agree that Article 17 recognizes that in applying the Agreement, c ustoms
administrations may need to make enquiries concerning the t ruth or accuracy of any
statement, document or declaration presented to them for cu stoms valuation purposes.
They further agree that the Article thus acknowledges that e nquiries may be made
which are, for example, aimed at verifying that the elements of value declared or
presented to customs in connection with a determination of c ustoms value are complete
and correct. They recognize that Parties to the Agreement, s ubject to their national
laws and procedures, have the right to expect the full co-ope ration of importers in
these enquiries;
8. Agree that the price actually paid or payable includes all payment s actually made
or to be made as a condition of sale of the imported goods, by th e buyer to the seller,
or by the buyer to a third party to satisfy an obligation of the seller.118 TOKYO ROUND AGREEMENTS
II
1. Upon the entry into force of the Agreement the provisions o f this Protocol shall
be deemed to be part of the Agreement.
2. This Protocol shall be deposited with the Director-Gener al to the CONTRACTING
PARTIES to the GATT. It is open for acceptance, by signature o r otherwise, by
signatories of the Agreement on Implementation of Article V II of the General
Agreement on Tariffs and Trade and by other governments acce pting or acceding
to the Agreement pursuant to the provisions of Article 22 the reof.
Done at Geneva this first day of November 1979 in a single copy in th e English,
French and Spanish languages, each text being authentic.