Page171
AGREEMENT ONIMPLEMENTATION OFARTICLE VII
OFTHE GENERAL AGREEMENT ONTARIFFS AND TRADE 1994
GENERAL INTRODUCTORY COMMENTARY
1. Theprimary basis forcustoms value under thisAgreement is"transaction value" asdefined
inArticle 1.Article 1istobereadtogether withArticle 8which provides, interalia,foradjustments
totheprice actually paidorpayable incases where certain specific elements which areconsidered
toformapartofthevalue forcustoms purposes areincurred bythebuyer butarenotincluded inthe
price actually paidorpayable fortheimported goods. Article 8alsoprovides fortheinclusion inthe
transaction value ofcertain considerations which maypassfrom thebuyer totheseller intheform
ofspecified goods orservices rather thanintheformofmoney. Articles 2through 7provide methods
ofdetermining thecustoms value whenever itcannot bedetermined under theprovisions ofArticle 1.
2. Where thecustoms value cannot bedetermined under theprovisions ofArticle 1thereshould
normally beaprocess ofconsultation between thecustoms administration andimporter withaview
toarriving atabasis ofvalue under theprovisions ofArticle 2or3.Itmayoccur, forexample, that
theimporter hasinformation about thecustoms value ofidentical orsimilar imported goods which
isnotimmediately available tothecustoms administration intheportofimportation. Ontheother
hand, thecustoms administration mayhaveinformation about thecustoms value ofidentical orsimilar
imported goods which isnotreadily available totheimporter. Aprocess ofconsultation between the
twoparties willenable information tobeexchanged, subject totherequirements ofcommercial
confidentiality, withaviewtodetermining aproper basis ofvalue forcustoms purposes.
3. Articles 5and6provide twobases fordetermining thecustoms value where itcannot be
determined onthebasisofthetransaction value oftheimported goods orofidentical orsimilar imported
goods. Under paragraph 1ofArticle 5thecustoms value isdetermined onthebasis oftheprice at
which thegoods aresoldinthecondition asimported toanunrelated buyer inthecountry ofimportation.
Theimporter alsohastheright tohavegoods which arefurther processed afterimportation valued
under theprovisions ofArticle 5iftheimporter sorequests. Under Article 6thecustoms value is
determined onthebasis ofthecomputed value. Boththese methods present certain difficulties and
because ofthistheimporter isgiven theright, under theprovisions ofArticle 4,tochoose theorder
ofapplication ofthetwomethods.
4. Article 7setsouthowtodetermine thecustoms value incases where itcannot bedetermined
under theprovisions ofanyofthepreceding Articles.Page172
Members,
Having regard totheMultilateral Trade Negotiations;
Desiring tofurther theobjectives ofGATT 1994 andtosecure additional benefits forthe
international trade ofdeveloping countries;
Recognizing theimportance oftheprovisions ofArticle VIIofGATT 1994 anddesiring to
elaborate rules fortheir application inorder toprovide greater uniformity andcertainty intheir
implementation;
Recognizingtheneedforafair,uniformandneutralsystemforthevaluationofgoodsforcustoms
purposes thatprecludes theuseofarbitrary orfictitious customs values;
Recognizing thatthebasisforvaluation ofgoods forcustoms purposes should, tothegreatest
extent possible, bethetransaction value ofthegoods being valued;
Recognizing thatcustoms value should bebased onsimple andequitable criteria consistent
withcommercial practices andthatvaluation procedures should beofgeneral application without
distinction between sources ofsupply;
Recognizing thatvaluation procedures should notbeusedtocombat dumping;
Hereby agree asfollows:
PART I
RULES ONCUSTOMS VALUATION
Article 1
1. Thecustoms value ofimported goods shallbethetransaction value, thatistheprice actually
paidorpayable forthegoods when soldforexport tothecountry ofimportation adjusted inaccordance
withtheprovisions ofArticle 8,provided:
(a) thattherearenorestrictions astothedisposition oruseofthegoods bythebuyer other
thanrestrictions which:
(i) areimposed orrequired bylaworbythepublic authorities inthecountry of
importation;
(ii) limitthegeographical areainwhich thegoods mayberesold; or
(iii) donotsubstantially affect thevalue ofthegoods;
(b) thatthesaleorpriceisnotsubject tosome condition orconsideration forwhich avalue
cannot bedetermined withrespect tothegoods being valued;
(c) thatnopartoftheproceeds ofanysubsequent resale, disposal oruseofthegoods by
thebuyer willaccrue directly orindirectly totheseller, unless anappropriate adjustment
canbemade inaccordance withtheprovisions ofArticle 8;andPage173
(d) thatthebuyer andseller arenotrelated, orwhere thebuyer andseller arerelated,
thatthetransaction value isacceptable forcustoms purposes under theprovisions of
paragraph 2.
2. (a) Indetermining whether thetransaction value isacceptable forthepurposes of
paragraph 1,thefactthatthebuyer andtheseller arerelated within themeaning of
Article 15shall notinitself begrounds forregarding thetransaction value as
unacceptable. Insuchcasethecircumstances surrounding thesaleshallbeexamined
andthetransaction value shall beaccepted provided thattherelationship didnot
influence theprice. If,inthelight ofinformation provided bytheimporter or
otherwise, thecustoms administration hasgrounds forconsidering thattherelationship
influenced theprice, itshallcommunicate itsgrounds totheimporter andtheimporter
shallbegiven areasonable opportunity torespond. Iftheimporter sorequests, the
communication ofthegrounds shallbeinwriting.
(b) Inasalebetween related persons, thetransaction value shallbeaccepted andthegoods
valued inaccordance withtheprovisions ofparagraph 1whenever theimporter
demonstrates thatsuchvalue closely approximates tooneofthefollowing occurring
atorabout thesame time:
(i) thetransaction value insalestounrelated buyers ofidentical orsimilar goods
forexport tothesame country ofimportation;
(ii) thecustoms value ofidentical orsimilar goods asdetermined under the
provisions ofArticle 5;
(iii) thecustoms value ofidentical orsimilar goods asdetermined under the
provisions ofArticle 6;
Inapplying theforegoing tests, dueaccount shallbetaken ofdemonstrated differences
incommercial levels, quantity levels, theelements enumerated inArticle 8andcosts
incurred bytheseller insales inwhich theseller andthebuyer arenotrelated that
arenotincurred bytheseller insalesinwhich theseller andthebuyer arerelated.
(c) Thetestssetforth inparagraph 2(b)aretobeusedattheinitiative oftheimporter
andonlyforcomparison purposes. Substitute values maynotbeestablished under
theprovisions ofparagraph 2(b).
Article 2
1. (a) Ifthecustoms value oftheimported goods cannot bedetermined under theprovisions
ofArticle 1,thecustoms value shallbethetransaction value ofidentical goods sold
forexport tothesame country ofimportation andexported atorabout thesame time
asthegoods being valued.
(b) Inapplying thisArticle, thetransaction value ofidentical goods inasaleatthesame
commercial levelandinsubstantially thesamequantity asthegoods being valued shall
beusedtodetermine thecustoms value. Where nosuchsaleisfound, thetransaction
value ofidentical goods soldatadifferent commercial level and/or indifferent
quantities,adjustedtotakeaccountofdifferencesattributabletocommercialleveland/or
toquantity, shallbeused, provided thatsuchadjustments canbemade onthebasis
ofdemonstrated evidence which clearly establishes thereasonableness andaccuracyPage174
oftheadjustment, whether theadjustment leads toanincrease oradecrease inthe
value.
2. Wherethecostsandchargesreferredtoinparagraph2ofArticle8areincludedinthetransaction
value, anadjustment shallbemade totakeaccount ofsignificant differences insuchcostsandcharges
between theimported goods andtheidentical goods inquestion arising from differences indistances
andmodes oftransport.
3. If,inapplying thisArticle, more thanonetransaction value ofidentical goods isfound, the
lowest suchvalue shallbeusedtodetermine thecustoms value oftheimported goods.
Article 3
1. (a) Ifthecustoms value oftheimported goods cannot bedetermined under theprovisions
ofArticles 1and2,thecustoms value shallbethetransaction value ofsimilar goods
soldforexport tothesame country ofimportation andexported atorabout thesame
timeasthegoods being valued.
(b) Inapplying thisArticle, thetransaction value ofsimilar goods inasaleatthesame
commercial levelandinsubstantially thesamequantity asthegoods being valued shall
beusedtodetermine thecustoms value. Where nosuchsaleisfound, thetransaction
value ofsimilar goods soldatadifferent commercial leveland/or indifferent quantities,
adjusted totakeaccount ofdifferences attributable tocommercial level and/or to
quantity, shallbeused, provided thatsuchadjustments canbemade onthebasis of
demonstrated evidence which clearly establishes thereasonableness andaccuracy of
theadjustment, whether theadjustment leadstoanincrease oradecrease inthevalue.
2. Wherethecostsandchargesreferredtoinparagraph2ofArticle8areincludedinthetransaction
value, anadjustment shallbemade totakeaccount ofsignificant differences insuchcostsandcharges
between theimported goods andthesimilar goods inquestion arising from differences indistances
andmodes oftransport.
3. If,inapplying thisArticle, morethanonetransaction value ofsimilar goods isfound, thelowest
suchvalue shallbeusedtodetermine thecustoms value oftheimported goods.
Article 4
Ifthecustoms value oftheimported goods cannot bedetermined under theprovisions of
Articles 1,2and3,thecustoms value shallbedetermined under theprovisions ofArticle 5or,when
thecustoms value cannot bedetermined under thatArticle, under theprovisions ofArticle 6except
that,attherequest oftheimporter, theorder ofapplication ofArticles 5and6shallbereversed.
Article 5
1. (a) Iftheimported goods oridentical orsimilar imported goods aresoldinthecountry
ofimportation inthecondition asimported, thecustoms value oftheimported goods
under theprovisions ofthisArticle shallbebased ontheunitpriceatwhich theimported
goods oridentical orsimilar imported goods aresosoldinthegreatest aggregate
quantity, atorabout thetimeoftheimportation ofthegoods being valued, topersonsPage175
whoarenotrelated tothepersons from whom theybuysuch goods, subject to
deductions forthefollowing:
(i) either thecommissions usually paidoragreed tobepaidortheadditions usually
made forprofit andgeneral expenses inconnection withsalesinsuchcountry
ofimported goods ofthesame classorkind;
(ii) theusual costsoftransport andinsurance andassociated costsincurred within
thecountry ofimportation;
(iii) where appropriate, thecostsandcharges referred toinparagraph 2ofArticle 8;
and
(iv) thecustomsdutiesandothernationaltaxespayableinthecountryofimportation
byreason oftheimportation orsaleofthegoods.
(b) Ifneither theimported goods noridentical norsimilar imported goods aresoldator
about thetimeofimportation ofthegoods being valued, thecustoms value shall, subject
otherwise totheprovisions ofparagraph 1(a),bebased ontheunitprice atwhich the
imported goods oridentical orsimilar imported goods aresoldinthecountry of
importation inthecondition asimported attheearliest dateaftertheimportation of
thegoods being valued butbefore theexpiration of90daysaftersuchimportation.
2. Ifneither theimported goods noridentical norsimilar imported goods aresoldinthecountry
ofimportation inthecondition asimported, then, iftheimporter sorequests, thecustoms value shall
bebased ontheunitpriceatwhich theimported goods, afterfurther processing, aresoldinthegreatest
aggregate quantity topersons inthecountry ofimportation whoarenotrelated tothepersons from
whom theybuysuchgoods, dueallowance being made forthevalue added bysuchprocessing and
thedeductions provided forinparagraph 1(a).
Article 6
1. Thecustoms value ofimported goods under theprovisions ofthisArticle shallbebased on
acomputed value. Computed value shallconsist ofthesumof:
(a) thecostorvalue ofmaterials andfabrication orotherprocessing employed inproducing
theimported goods;
(b) anamount forprofit andgeneral expenses equal tothatusually reflected insalesof
goods ofthesameclassorkindasthegoods being valued which aremade byproducers
inthecountry ofexportation forexport tothecountry ofimportation;
(c) thecostorvalue ofallother expenses necessary toreflect thevaluation option chosen
bytheMember under paragraph 2ofArticle 8.
2. NoMember mayrequire orcompel anyperson notresident initsownterritory toproduce
forexamination, ortoallow access to,anyaccount orother record forthepurposes ofdetermining
acomputed value. However, information supplied bytheproducer ofthegoods forthepurposes of
determining thecustoms value under theprovisions ofthisArticle maybeverified inanother country
bytheauthorities ofthecountry ofimportation withtheagreement oftheproducer andprovided they
givesufficient advance notice tothegovernment ofthecountry inquestion andthelatter doesnotobject
totheinvestigation.Page176
Article 7
1. Ifthecustoms value oftheimported goods cannot bedetermined under theprovisions of
Articles 1through 6,inclusive, thecustoms value shallbedetermined using reasonable means consistent
withtheprinciples andgeneral provisions ofthisAgreement andofArticle VIIofGATT 1994 and
onthebasis ofdataavailable inthecountry ofimportation.
2. Nocustoms value shallbedetermined under theprovisions ofthisArticle onthebasis of:
(a) theselling price inthecountry ofimportation ofgoods produced insuchcountry;
(b) asystem which provides fortheacceptance forcustoms purposes ofthehigher oftwo
alternative values;
(c) theprice ofgoods onthedomestic market ofthecountry ofexportation;
(d) thecostofproduction other thancomputed values which havebeendetermined for
identical orsimilar goods inaccordance withtheprovisions ofArticle 6;
(e) theprice ofthegoods forexport toacountry other thanthecountry ofimportation;
(f) minimum customs values; or
(g) arbitrary orfictitious values.
3. Iftheimporter sorequests, theimporter shallbeinformed inwriting ofthecustoms value
determined under theprovisions ofthisArticle andthemethod usedtodetermine suchvalue.
Article 8
1. Indetermining thecustoms value under theprovisions ofArticle 1,there shallbeadded to
theprice actually paidorpayable fortheimported goods:
(a) thefollowing, totheextent thattheyareincurred bythebuyer butarenotincluded
intheprice actually paidorpayable forthegoods:
(i) commissions andbrokerage, except buying commissions;
(ii) thecostofcontainers which aretreated asbeing oneforcustoms purposes with
thegoods inquestion;
(iii) thecostofpacking whether forlabour ormaterials;
(b) thevalue, apportioned asappropriate, ofthefollowing goods andservices where
supplied directly orindirectly bythebuyer freeofcharge oratreduced costforuse
inconnection withtheproduction andsaleforexport oftheimported goods, tothe
extent thatsuchvalue hasnotbeenincluded intheprice actually paidorpayable:
(i) materials, components, parts andsimilar items incorporated intheimported
goods;Page177
(ii) tools, dies,moulds andsimilar items usedintheproduction oftheimported
goods;
(iii) materials consumed intheproduction oftheimported goods;
(iv) engineering, development, artwork, design work, andplans andsketches
undertaken elsewhere thaninthecountry ofimportation andnecessary forthe
production oftheimported goods;
(c) royalties andlicence feesrelated tothegoods being valued thatthebuyer mustpay,
either directly orindirectly, asacondition ofsaleofthegoods being valued, tothe
extent thatsuchroyalties andfeesarenotincluded inthepriceactually paidorpayable;
(d) thevalue ofanypartoftheproceeds ofanysubsequent resale, disposal oruseofthe
imported goods thataccrues directly orindirectly totheseller.
2. Inframing itslegislation, eachMember shallprovide fortheinclusion inortheexclusion from
thecustoms value, inwhole orinpart,ofthefollowing:
(a) thecostoftransport oftheimported goods totheportorplace ofimportation;
(b) loading, unloading andhandling charges associated withthetransport oftheimported
goods totheportorplace ofimportation; and
(c) thecostofinsurance.
3. Additions totheprice actually paidorpayable shallbemade under thisArticle onlyonthe
basis ofobjective andquantifiable data.
4. Noadditions shallbemade totheprice actually paidorpayable indetermining thecustoms
value except asprovided inthisArticle.
Article 9
1. Where theconversion ofcurrency isnecessary forthedetermination ofthecustoms value,
therateofexchange tobeusedshallbethatdulypublished bythecompetent authorities ofthecountry
ofimportation concerned andshallreflect aseffectively aspossible, inrespect oftheperiod covered
byeachsuchdocument ofpublication, thecurrent value ofsuchcurrency incommercial transactions
interms ofthecurrency ofthecountry ofimportation.
2. Theconversion ratetobeusedshallbethatineffect atthetimeofexportation orthetime
ofimportation, asprovided byeachMember.
Article 10
Allinformation which isbynature confidential orwhich isprovided onaconfidential basis
forthepurposes ofcustoms valuation shallbetreated asstrictly confidential bytheauthorities concerned
whoshallnotdisclose itwithout thespecific permission oftheperson orgovernment providing such
information, except totheextent thatitmayberequired tobedisclosed inthecontext ofjudicial
proceedings.Page178
Article 11
1. Thelegislation ofeachMember shallprovide inregard toadetermination ofcustoms value
fortherightofappeal, without penalty, bytheimporter oranyother person liable forthepayment
oftheduty.
2. Aninitialrightofappealwithoutpenaltymaybetoanauthoritywithinthecustomsadministration
ortoanindependent body, butthelegislation ofeachMember shallprovide fortherightofappeal
without penalty toajudicial authority.
3. Notice ofthedecision onappeal shallbegiven totheappellant andthereasons forsuchdecision
shallbeprovided inwriting. Theappellant shallalsobeinformed ofanyrights offurther appeal.
Article 12
Laws, regulations, judicial decisions andadministrative rulings ofgeneral application giving
effect tothisAgreement shallbepublished inconformity withArticle XofGATT 1994bythecountry
ofimportation concerned.
Article 13
If,inthecourse ofdetermining thecustoms value ofimported goods, itbecomes necessary
todelay thefinaldetermination ofsuchcustoms value, theimporter ofthegoods shallnevertheless
beabletowithdraw themfromcustoms if,where sorequired, theimporter provides sufficient guarantee
intheformofasurety, adeposit orsome other appropriate instrument, covering theultimate payment
ofcustoms duties forwhich thegoods maybeliable. Thelegislation ofeachMember shallmake
provisions forsuchcircumstances.
Article 14
Thenotes atAnnex ItothisAgreement formanintegral partofthisAgreement andtheArticles
ofthisAgreement aretobereadandapplied inconjunction withtheirrespective notes. Annexes II
andIIIalsoform anintegral partofthisAgreement.
Article 15
1. InthisAgreement:
(a) "customs value ofimported goods" means thevalue ofgoods forthepurposes oflevying
advalorem duties ofcustoms onimported goods;
(b) "country ofimportation" means country orcustoms territory ofimportation; and
(c) "produced" includes grown, manufactured andmined.Page179
2. InthisAgreement:
(a) "identical goods" means goods which arethesame inallrespects, including physical
characteristics, quality andreputation. Minor differences inappearance would not
preclude goods otherwise conforming tothedefinition frombeing regarded asidentical;
(b) "similar goods" means goods which, although notalike inallrespects, have like
characteristics andlikecomponent materials which enable them toperform thesame
functions andtobecommercially interchangeable. Thequality ofthegoods, their
reputation andtheexistence ofatrademark areamong thefactors tobeconsidered
indetermining whether goods aresimilar;
(c) theterms "identical goods" and"similar goods" donotinclude, asthecasemaybe,
goods which incorporate orreflect engineering, development, artwork, design work,
andplansandsketchesforwhichnoadjustmenthasbeenmadeunderparagraph1(b)(iv)
ofArticle 8because suchelements were undertaken inthecountry ofimportation;
(d) goods shallnotberegarded as"identical goods" or"similar goods" unless theywere
produced inthesame country asthegoods being valued;
(e) goods produced byadifferent person shallbetaken intoaccount onlywhen there are
noidentical goods orsimilar goods, asthecasemaybe,produced bythesame person
asthegoods being valued.
3. InthisAgreement "goods ofthesame classorkind" means goods which fallwithin agroup
orrange ofgoods produced byaparticular industry orindustry sector, andincludes identical orsimilar
goods.
4. Forthepurposes ofthisAgreement, persons shallbedeemed toberelated onlyif:
(a) theyareofficers ordirectors ofoneanother 'sbusinesses;
(b) theyarelegally recognized partners inbusiness;
(c) theyareemployer andemployee;
(d) anyperson directly orindirectly owns, controls orholds 5percentormore ofthe
outstanding voting stock orshares ofbothofthem;
(e) oneofthem directly orindirectly controls theother;
(f) bothofthem aredirectly orindirectly controlled byathirdperson;
(g) together theydirectly orindirectly control athirdperson; or
(h) theyaremembers ofthesame family.
5. Persons whoareassociated inbusiness withoneanother inthatoneisthesoleagent, sole
distributor orsoleconcessionaire, however described, oftheother shallbedeemed toberelated for
thepurposes ofthisAgreement iftheyfallwithin thecriteria ofparagraph 4.Page180
Article 16
Upon written request, theimporter shallhavetherighttoanexplanation inwriting fromthe
customs administration ofthecountry ofimportation astohowthecustoms value oftheimporter ’s
goods wasdetermined.
Article 17
Nothing inthisAgreement shallbeconstrued asrestricting orcalling intoquestion therights
ofcustoms administrations tosatisfy themselves astothetruthoraccuracy ofanystatement, document
ordeclaration presented forcustoms valuation purposes.
PART II
ADMINISTRATION, CONSULTATIONS AND DISPUTE SETTLEMENT
Article 18
Institutions
1. There ishereby established aCommittee onCustoms Valuation (referred tointhisAgreement
as"theCommittee") composed ofrepresentatives from eachoftheMembers. TheCommittee shall
electitsownChairman andshallnormally meetonceayear,orasisotherwise envisaged bytherelevant
provisionsofthisAgreement,forthepurposeofaffordingMemberstheopportunitytoconsultonmatters
relating totheadministration ofthecustoms valuation system byanyMember asitmight affect the
operation ofthisAgreement orthefurtherance ofitsobjectives andcarrying outsuch other
responsibilitiesasmaybeassignedtoitbytheMembers.TheWTOSecretariatshallactasthesecretariat
totheCommittee.
2. There shallbeestablished aTechnical Committee onCustoms Valuation (referred tointhis
Agreement as"theTechnical Committee") under theauspices oftheCustoms Co-operation Council
(referred tointhisAgreement as"theCCC"), which shallcarry outtheresponsibilities described in
Annex IItothisAgreement andshalloperate inaccordance withtherulesofprocedure contained therein.
Article 19
Consultation sandDispute Settlement
1. Except asotherwise provided herein, theDispute Settlement Understanding isapplicable to
consultations andthesettlement ofdisputes under thisAgreement.
2. IfanyMember considers thatanybenefit accruing toit,directly orindirectly, under this
Agreement isbeing nullified orimpaired, orthattheachievement ofanyobjective ofthisAgreement
isbeing impeded, asaresult oftheactions ofanother Member orofother Members, itmay, with
aviewtoreaching amutually satisfactory solution ofthismatter, request consultations withtheMember
orMembers inquestion. Each Member shallafford sympathetic consideration toanyrequest from
another Member forconsultations.Page181
3. TheTechnicalCommitteeshallprovide,uponrequest,adviceandassistancetoMembersengaged
inconsultations.
4. Attherequest ofaparty tothedispute, oronitsowninitiative, apanel established toexamine
adispute relating totheprovisions ofthisAgreement mayrequest theTechnical Committee tocarry
outanexamination ofanyquestions requiring technical consideration. Thepanel shalldetermine the
terms ofreference oftheTechnical Committee fortheparticular dispute andsetatimeperiod forreceipt
ofthereport oftheTechnical Committee. Thepanel shalltakeintoconsideration thereport ofthe
Technical Committee. Intheevent thattheTechnical Committee isunable toreach consensus ona
matter referred toitpursuant tothisparagraph, thepanel should afford theparties tothedispute an
opportunity topresent theirviews onthematter tothepanel.
5. Confidentialinformationprovidedtothepanelshallnotbedisclosedwithoutformalauthorization
fromtheperson, bodyorauthority providing suchinformation. Where suchinformation isrequested
fromthepanel butrelease ofsuchinformation bythepanel isnotauthorized, anon-confidential summary
ofthisinformation, authorized bytheperson, body orauthority providing theinformation, shallbe
provided.
PART III
SPECIAL AND DIFFERENTIAL TREATMENT
Article 20
1. Developing country Members notparty totheAgreement onImplementation ofArticle VII
oftheGeneral Agreement onTariffs andTrade doneon12April 1979 maydelay application ofthe
provisions ofthisAgreement foraperiod notexceeding fiveyears from thedateofentry intoforce
oftheWTO Agreement forsuchMembers. Developing country Members whochoose todelay
application ofthisAgreement shallnotify theDirector-General oftheWTO accordingly.
2. Inaddition toparagraph 1,developing country Members notparty totheAgreement on
Implementation ofArticle VIIoftheGeneral Agreement onTariffs andTrade doneon12April 1979
maydelay application ofparagraph 2(b)(iii) ofArticle 1andArticle 6foraperiod notexceeding three
yearsfollowingtheirapplicationofallotherprovisionsofthisAgreement.DevelopingcountryMembers
thatchoose todelay application oftheprovisions specified inthisparagraph shallnotify theDirector-
General oftheWTO accordingly.
3. Developed country Members shallfurnish, onmutually agreed terms, technical assistance to
developing country Members thatsorequest. Onthisbasis developed country Members shalldraw
upprogrammes oftechnical assistance which mayinclude, interalia,training ofpersonnel, assistance
inpreparing implementation measures, access tosources ofinformation regarding customs valuation
methodology, andadvice ontheapplication oftheprovisions ofthisAgreement.Page182
PART IV
FINAL PROVISIONS
Article 21
Reservations
Reservations maynotbeentered inrespect ofanyoftheprovisions ofthisAgreement without
theconsent oftheother Members.
Article 22
National Legislation
1. Each Member shallensure, notlaterthanthedateofapplication oftheprovisions ofthis
Agreement forit,theconformity ofitslaws, regulations andadministrative procedures withthe
provisions ofthisAgreement.
2. EachMember shallinform theCommittee ofanychanges initslawsandregulations relevant
tothisAgreement andintheadministration ofsuchlawsandregulations.
Article 23
Review
TheCommitteeshallreviewannuallytheimplementationandoperationofthisAgreementtaking
intoaccount theobjectives thereof. TheCommittee shallannually inform theCouncil forTrade in
Goods ofdevelopments during theperiod covered bysuchreviews.
Article 24
Secretariat
This Agreement shall beserviced bytheWTO Secretariat except inregard tothose
responsibilities specifically assigned totheTechnical Committee, which willbeserviced bytheCCC
Secretariat.Page183
ANNEX I
INTERPRETATIVE NOTES
General Note
Sequential Application ofValuation Methods
1. Articles 1through 7define howthecustoms value ofimported goods istobedetermined under
theprovisions ofthisAgreement. Themethods ofvaluation aresetoutinasequential order of
application. Theprimary method forcustoms valuation isdefined inArticle 1andimported goods
aretobevalued inaccordance withtheprovisions ofthisArticle whenever theconditions prescribed
therein arefulfilled.
2. Where thecustoms value cannot bedetermined under theprovisions ofArticle 1,itistobe
determined byproceeding sequentially through thesucceeding Articles tothefirstsuchArticle under
which thecustoms value canbedetermined. Except asprovided inArticle 4,itisonlywhen thecustoms
value cannot bedetermined under theprovisions ofaparticular Article thattheprovisions ofthenext
Article inthesequence canbeused.
3. Iftheimporter doesnotrequest thattheorder ofArticles 5and6bereversed, thenormal order
ofthesequence istobefollowed. Iftheimporter doessorequest butitthenproves impossible to
determine thecustoms value under theprovisions ofArticle 6,thecustoms value istobedetermined
under theprovisions ofArticle 5,ifitcanbesodetermined.
4. Where thecustoms value cannot bedetermined under theprovisions ofArticles 1through 6
itistobedetermined under theprovisions ofArticle 7.
UseofGenerally Accepted Accounting Principles
1. "Generally accepted accounting principles" refers totherecognized consensus orsubstantial
authoritative support within acountry ataparticular timeastowhich economic resources andobligations
should berecorded asassets andliabilities, which changes inassets andliabilities should berecorded,
howtheassets andliabilities andchanges inthem should bemeasured, whatinformation should be
disclosed andhowitshould bedisclosed, andwhich financial statements should beprepared. These
standards maybebroad guidelines ofgeneral application aswellasdetailed practices andprocedures.
2. Forthepurposes ofthisAgreement, thecustoms administration ofeachMember shallutilize
information prepared inamanner consistent withgenerally accepted accounting principles inthecountry
which isappropriate fortheArticle inquestion. Forexample, thedetermination ofusual profit and
general expenses under theprovisions ofArticle 5would becarried oututilizing information prepared
inamanner consistent withgenerally accepted accounting principles ofthecountry ofimportation.
Ontheother hand, thedetermination ofusual profit andgeneral expenses under theprovisions of
Article 6would becarried oututilizing information prepared inamanner consistent withgenerally
accepted accounting principles ofthecountry ofproduction. Asafurther example, thedetermination
ofanelement provided forinparagraph 1(b)(ii) ofArticle 8undertaken inthecountry ofimportation
would becarried oututilizing information inamanner consistent withthegenerally accepted accounting
principles ofthatcountry.Page184
NotetoArticle 1
Price Actually PaidorPayable
1. Theprice actually paidorpayable isthetotalpayment made ortobemade bythebuyer to
orforthebenefit oftheseller fortheimported goods. Thepayment neednotnecessarily taketheform
ofatransfer ofmoney. Payment maybemade bywayofletters ofcredit ornegotiable instruments.
Payment maybemade directly orindirectly. Anexample ofanindirect payment would bethesettlement
bythebuyer, whether inwhole orinpart,ofadebtowed bytheseller.
2. Activities undertaken bythebuyer onthebuyer 'sownaccount, other thanthose forwhich
anadjustment isprovided inArticle 8,arenotconsidered tobeanindirect payment totheseller, even
though theymight beregarded asofbenefit totheseller. Thecostsofsuchactivities shallnot,therefore,
beadded totheprice actually paidorpayable indetermining thecustoms value.
3. Thecustoms value shallnotinclude thefollowing charges orcosts, provided thattheyare
distinguished from theprice actually paidorpayable fortheimported goods:
(a) charges forconstruction, erection, assembly, maintenance ortechnical assistance,
undertaken afterimportation onimported goods suchasindustrial plant, machinery
orequipment;
(b) thecostoftransport afterimportation;
(c) duties andtaxes ofthecountry ofimportation.
4. Theprice actually paidorpayable refers totheprice fortheimported goods. Thus theflow
ofdividends orother payments from thebuyer totheseller thatdonotrelate totheimported goods
arenotpartofthecustoms value.
Paragraph 1(a)(iii )
Among restrictions which would notrender aprice actually paidorpayable unacceptable are
restrictions which donotsubstantially affect thevalue ofthegoods. Anexample ofsuchrestrictions
would bethecasewhere aseller requires abuyer ofautomobiles nottosellorexhibit them prior to
afixed datewhich represents thebeginning ofamodel year.
Paragraph 1(b)
1. Ifthesaleorprice issubject tosome condition orconsideration forwhich avalue cannot be
determined withrespect tothegoods being valued, thetransaction value shallnotbeacceptable for
customs purposes. Some examples ofthisinclude:
(a) theseller establishes theprice oftheimported goods oncondition thatthebuyer will
alsobuyother goods inspecified quantities;
(b) thepriceoftheimported goods isdependent uponthepriceorprices atwhich thebuyer
oftheimported goods sellsother goods totheseller oftheimported goods;
(c) theprice isestablished onthebasis ofaform ofpayment extraneous totheimported
goods, suchaswhere theimported goods aresemi-finished goods which havebeen
provided bytheseller oncondition thattheseller willreceive aspecified quantity of
thefinished goods.Page185
2. However, conditions orconsiderations relating totheproduction ormarketing oftheimported
goods shallnotresult inrejection ofthetransaction value. Forexample, thefactthatthebuyer furnishes
theseller withengineering andplansundertaken inthecountry ofimportation shallnotresult inrejection
ofthetransaction value forthepurposes ofArticle 1.Likewise, ifthebuyer undertakes onthebuyer ’s
ownaccount, eventhough byagreement withtheseller, activities relating tothemarketing ofthe
imported goods, thevalue ofthese activities isnotpartofthecustoms value norshallsuchactivities
result inrejection ofthetransaction value.
Paragraph 2
1. Paragraphs 2(a)and2(b)provide different means ofestablishing theacceptability ofatransaction
value.
2. Paragraph 2(a)provides thatwhere thebuyer andtheseller arerelated, thecircumstances
surrounding thesaleshallbeexamined andthetransaction value shallbeaccepted asthecustoms value
provided thattherelationship didnotinfluence theprice. Itisnotintended thatthere should bean
examination ofthecircumstances inallcases where thebuyer andtheseller arerelated. Such
examination willonlyberequired where there aredoubts about theacceptability oftheprice. Where
thecustoms administration havenodoubts about theacceptability oftheprice, itshould beaccepted
without requesting further information from theimporter. Forexample, thecustoms administration
mayhavepreviously examined therelationship, oritmayalready havedetailed information concerning
thebuyer andtheseller, andmayalready besatisfied fromsuchexamination orinformation thatthe
relationship didnotinfluence theprice.
3. Wherethecustomsadministrationisunabletoacceptthetransactionvaluewithoutfurtherinquiry,
itshouldgivetheimporteranopportunitytosupplysuchfurtherdetailedinformationasmaybenecessary
toenable ittoexamine thecircumstances surrounding thesale. Inthiscontext, thecustoms
administration should beprepared toexamine relevant aspects ofthetransaction, including theway
inwhich thebuyer andseller organize theircommercial relations andthewayinwhich theprice in
question wasarrived at,inorder todetermine whether therelationship influenced theprice. Where
itcanbeshown thatthebuyer andseller, although related under theprovisions ofArticle 15,buyfrom
andselltoeachother asiftheywerenotrelated, thiswould demonstrate thattheprice hadnotbeen
influenced bytherelationship. Asanexample ofthis,ifthepricehadbeensettled inamanner consistent
withthenormal pricing practices oftheindustry inquestion orwiththewaytheseller settles prices
forsalestobuyers whoarenotrelated totheseller, thiswould demonstrate thatthepricehadnotbeen
influenced bytherelationship. Asafurther example, where itisshown thattheprice isadequate to
ensure recovery ofallcosts plusaprofit which isrepresentative ofthefirm'soverall profit realized
overarepresentative period oftime(e.g.onanannual basis) insalesofgoods ofthesame classor
kind, thiswould demonstrate thattheprice hadnotbeeninfluenced.
4. Paragraph 2(b)provides anopportunity fortheimporter todemonstrate thatthetransaction
value closely approximates toa"test" value previously accepted bythecustoms administration and
istherefore acceptable under theprovisions ofArticle 1.Where atestunder paragraph 2(b)ismet,
itisnotnecessary toexamine thequestion ofinfluence under paragraph 2(a). Ifthecustoms
administration hasalready sufficient information tobesatisfied, without further detailed inquiries, that
oneofthetestsprovided inparagraph 2(b)hasbeenmet,thereisnoreason forittorequire theimporter
todemonstrate thatthetestcanbemet. Inparagraph 2(b)theterm"unrelated buyers" means buyers
whoarenotrelated totheseller inanyparticular case.
Paragraph 2(b)
Anumber offactors mustbetaken intoconsideration indetermining whether onevalue "closely
approximates" toanother value. These factors include thenature oftheimported goods, thenaturePage186
oftheindustry itself, theseason inwhich thegoods areimported, and,whether thedifference invalues
iscommercially significant. Since these factors mayvaryfrom casetocase, itwould beimpossible
toapply auniform standard suchasafixed percentage, ineachcase. Forexample, asmall difference
invalue inacaseinvolving onetypeofgoods could beunacceptable while alargedifference inacase
involving another typeofgoods might beacceptable indetermining whether thetransaction value closely
approximates tothe"test" values setforth inparagraph 2(b)ofArticle 1.
NotetoArticle 2
1. Inapplying Article 2,thecustoms administration shall, wherever possible, useasaleofidentical
goods atthesame commercial levelandinsubstantially thesame quantities asthegoods being valued.
Where nosuchsaleisfound, asaleofidentical goods thattakes place under anyoneofthefollowing
three conditions maybeused:
(a) asaleatthesame commercial levelbutindifferent quantities;
(b) asaleatadifferent commercial levelbutinsubstantially thesame quantities; or
(c) asaleatadifferent commercial levelandindifferent quantities.
2. Having found asaleunder anyoneofthese three conditions adjustments willthenbemade,
asthecasemaybe,for:
(a) quantity factors only;
(b) commercial levelfactors only; or
(c) bothcommercial levelandquantity factors.
3. Theexpression"and/or"allowstheflexibilitytousethesalesandmakethenecessaryadjustments
inanyoneofthethree conditions described above.
4. Forthepurposes ofArticle 2,thetransaction value ofidentical imported goods means acustoms
value, adjusted asprovided forinparagraphs 1(b)and2,which hasalready been accepted under
Article 1.
5. Acondition foradjustment because ofdifferent commercial levels ordifferent quantities is
thatsuchadjustment, whether itleads toanincrease oradecrease inthevalue, bemade onlyonthe
basisofdemonstratedevidencethatclearlyestablishesthereasonablenessandaccuracyoftheadjustments,
e.g.validpricelistscontaining prices referring todifferent levels ordifferent quantities. Asanexample
ofthis,iftheimported goods being valued consist ofashipment of10units andtheonlyidentical
imported goods forwhich atransaction value exists involved asaleof500units, anditisrecognized
thattheseller grants quantity discounts, therequired adjustment maybeaccomplished byresorting
totheseller'sprice listandusing thatprice applicable toasaleof10units. Thisdoesnotrequire
thatasalehadtohavebeenmade inquantities of10aslongastheprice listhasbeenestablished as
being bonafidethrough salesatotherquantities. Intheabsence ofsuchanobjective measure, however,
thedetermination ofacustoms value under theprovisions ofArticle 2isnotappropriate.Page187
NotetoArticle 3
1. Inapplying Article 3,thecustoms administration shall, wherever possible, useasaleofsimilar
goods atthesame commercial levelandinsubstantially thesame quantities asthegoods being valued.
Where nosuchsaleisfound, asaleofsimilar goods thattakes place under anyoneofthefollowing
three conditions maybeused:
(a) asaleatthesame commercial levelbutindifferent quantities;
(b) asaleatadifferent commercial levelbutinsubstantially thesame quantities; or
(c) asaleatadifferent commercial levelandindifferent quantities.
2. Having found asaleunder anyoneofthese three conditions adjustments willthenbemade,
asthecasemaybe,for:
(a) quantity factors only;
(b) commercial levelfactors only; or
(c) bothcommercial levelandquantity factors.
3. Theexpression"and/or"allowstheflexibilitytousethesalesandmakethenecessaryadjustments
inanyoneofthethree conditions described above.
4. Forthepurpose ofArticle 3,thetransaction value ofsimilar imported goods means acustoms
value, adjusted asprovided forinparagraphs 1(b)and2,which hasalready beenaccepted under
Article 1.
5. Acondition foradjustment because ofdifferent commercial levels ordifferent quantities is
thatsuchadjustment, whether itleads toanincrease oradecrease inthevalue, bemade onlyonthe
basisofdemonstratedevidencethatclearlyestablishesthereasonablenessandaccuracyoftheadjustment,
e.g.validpricelistscontaining prices referring todifferent levels ordifferent quantities. Asanexample
ofthis,iftheimported goods being valued consist ofashipment of10unitsandtheonlysimilar imported
goods forwhich atransaction value exists involved asaleof500units, anditisrecognized thatthe
seller grants quantity discounts, therequired adjustment maybeaccomplished byresorting totheseller's
price listandusing thatprice applicable toasaleof10units. Thisdoesnotrequire thatasalehad
tohavebeenmade inquantities of10aslongastheprice listhasbeenestablished asbeing bonafide
through sales atother quantities. Intheabsence ofsuch anobjective measure, however, the
determination ofacustoms value under theprovisions ofArticle 3isnotappropriate.
NotetoArticle 5
1. Theterm"unit price atwhich ...goods aresoldinthegreatest aggregate quantity" means the
priceatwhich thegreatest number ofunitsissoldinsalestopersons whoarenotrelated tothepersons
from whom theybuysuchgoods atthefirstcommercial levelafterimportation atwhich suchsales
takeplace.Page188
2. Asanexample ofthis,goods aresoldfrom aprice listwhich grants favourable unitprices
forpurchases made inlarger quantities.
Salequantity Unitprice Number ofsalesTotal quantity
soldateachprice
1-10units 100 10salesof5units
5salesof3units65
11-25 units 95 5salesof11units 55
over25units 90 1saleof30units
1saleof50units80
Thegreatest number ofunits soldataprice is80;therefore, theunitprice inthegreatest
aggregate quantity is90.
3. Asanother example ofthis,twosalesoccur. Inthefirstsale500unitsaresoldataprice of
95currency units each. Inthesecond sale400units aresoldataprice of90currency units each.
Inthisexample, thegreatest number ofunitssoldataparticular price is500; therefore, theunitprice
inthegreatest aggregate quantity is95.
4. Athirdexample would bethefollowing situation where various quantities aresoldatvarious
prices.
(a)Sales
Salequantity Unitprice
40units 100
30units 90
15units 100
50units 95
25units 105
35units 90
5units 100
(b)Totals
Total quantity sold Unitprice
65 90
50 95
60 100
25 105
Inthisexample, thegreatest number ofunits soldataparticular price is65;therefore,
theunitprice inthegreatest aggregate quantity is90.Page189
5. Anysaleintheimporting country, asdescribed inparagraph 1above, toaperson whosupplies
directly orindirectly freeofcharge oratreduced costforuseinconnection withtheproduction and
saleforexport oftheimported goods anyoftheelements specified inparagraph 1(b)ofArticle 8,
should notbetaken intoaccount inestablishing theunitprice forthepurposes ofArticle 5.
6. Itshould benoted that"profit andgeneral expenses" referred toinparagraph 1ofArticle 5
should betaken asawhole. Thefigure forthepurposes ofthisdeduction should bedetermined on
thebasis ofinformation supplied byoronbehalf oftheimporter unless theimporter 'sfigures are
inconsistent withthose obtained insalesinthecountry ofimportation ofimported goods ofthesame
classorkind. Where theimporter 'sfigures areinconsistent withsuchfigures, theamount forprofit
andgeneral expenses maybebased uponrelevant information other thanthatsupplied byoronbehalf
oftheimporter.
7. The"general expenses" include thedirect andindirect costsofmarketing thegoods inquestion.
8. Local taxes payable byreason ofthesaleofthegoods forwhich adeduction isnotmade under
theprovisions ofparagraph 1(a)(iv) ofArticle 5shall bededucted under theprovisions of
paragraph 1(a)(i) ofArticle 5.
9. Indetermining either thecommissions ortheusual profits andgeneral expenses under the
provisions ofparagraph 1ofArticle 5,thequestion whether certain goods are"ofthesame classor
kind" asother goods must bedetermined onacase-by-case basis byreference tothecircumstances
involved. Sales inthecountry ofimportation ofthenarrowest group orrange ofimported goods of
thesame classorkind, which includes thegoods being valued, forwhich thenecessary information
canbeprovided, should beexamined. Forthepurposes ofArticle 5,"goods ofthesameclassorkind"
includes goods imported fromthesame country asthegoods being valued aswellasgoods imported
from other countries.
10. Forthepurposes ofparagraph 1(b)ofArticle 5,the"earliest date" shallbethedatebywhich
salesoftheimported goods orofidentical orsimilar imported goods aremade insufficient quantity
toestablish theunitprice.
11. Where themethod inparagraph 2ofArticle 5isused, deductions made forthevalue added
byfurther processing shallbebased onobjective andquantifiable datarelating tothecostofsuchwork.
Accepted industry formulas, recipes, methods ofconstruction, andother industry practices would form
thebasis ofthecalculations.
12. Itisrecognized thatthemethod ofvaluation provided forinparagraph 2ofArticle 5would
normally notbeapplicable when, asaresult ofthefurther processing, theimported goods losetheir
identity. However, there canbeinstances where, although theidentity oftheimported goods islost,
thevalue added bytheprocessing canbedetermined accurately without unreasonable difficulty. On
theother hand, there canalsobeinstances where theimported goods maintain theiridentity butform
suchaminor element inthegoods soldinthecountry ofimportation thattheuseofthisvaluation method
would beunjustified. Inviewoftheabove, eachsituation ofthistypemustbeconsidered onacase-by-
casebasis.
NotetoArticle 6
1. Asageneral rule,customs value isdetermined under thisAgreement onthebasisofinformation
readily available inthecountry ofimportation. Inorder todetermine acomputed value, however,
itmaybenecessary toexamine thecosts ofproducing thegoods being valued andother information
which hastobeobtained from outside thecountry ofimportation. Furthermore, inmost cases thePage190
producer ofthegoods willbeoutside thejurisdiction oftheauthorities ofthecountry ofimportation.
Theuseofthecomputed value method willgenerally belimited tothose cases where thebuyer and
seller arerelated, andtheproducer isprepared tosupply totheauthorities ofthecountry ofimportation
thenecessary costings andtoprovide facilities foranysubsequent verification which maybenecessary.
2. The"cost orvalue" referred toinparagraph 1(a)ofArticle 6istobedetermined onthebasis
ofinformation relating totheproduction ofthegoods being valued supplied byoronbehalf ofthe
producer. Itistobebased uponthecommercial accounts oftheproducer, provided thatsuchaccounts
areconsistent withthegenerally accepted accounting principles applied inthecountry where thegoods
areproduced.
3. The"cost orvalue" shallinclude thecostofelements specified inparagraphs 1(a)(ii) and(iii)
ofArticle 8.Itshallalsoinclude thevalue, apportioned asappropriate under theprovisions ofthe
relevantnotetoArticle8,ofanyelementspecifiedinparagraph1(b)ofArticle8whichhasbeensupplied
directly orindirectly bythebuyer foruseinconnection withtheproduction oftheimported goods.
Thevalue oftheelements specified inparagraph 1(b)(iv) ofArticle 8which areundertaken inthecountry
ofimportation shallbeincluded onlytotheextent thatsuchelements arecharged totheproducer.
Itistobeunderstood thatnocostorvalue oftheelements referred tointhisparagraph shallbecounted
twice indetermining thecomputed value.
4. The"amount forprofit andgeneral expenses" referred toinparagraph 1(b)ofArticle 6isto
bedetermined onthebasisofinformation supplied byoronbehalf oftheproducer unless theproducer 's
figures areinconsistent withthose usually reflected insalesofgoods ofthesame classorkindasthe
goods being valued which aremade byproducers inthecountry ofexportation forexport tothecountry
ofimportation.
5. Itshould benoted inthiscontext thatthe"amount forprofit andgeneral expenses" hastobe
taken asawhole. Itfollows thatif,inanyparticular case, theproducer 'sprofit figure islowandthe
producer 'sgeneral expenses arehigh, theproducer 'sprofit andgeneral expenses taken together may
nevertheless beconsistent withthatusually reflected insalesofgoods ofthesame classorkind. Such
asituation might occur, forexample, ifaproduct werebeing launched inthecountry ofimportation
andtheproducer accepted anilorlowprofit tooffset highgeneral expenses associated withthelaunch.
Where theproducer candemonstrate alowprofit onsalesoftheimported goods because ofparticular
commercial circumstances, theproducer 'sactual profit figures should betaken intoaccount provided
thattheproducer hasvalidcommercial reasons tojustify themandtheproducer 'spricing policy reflects
usual pricing policies inthebranch ofindustry concerned. Suchasituation might occur, forexample,
where producers havebeenforced tolower prices temporarily because ofanunforeseeable dropin
demand, orwhere theysellgoods tocomplement arange ofgoods being produced inthecountry of
importation andaccept alowprofit tomaintain competitivity. Where theproducer 'sownfigures for
profit andgeneral expenses arenotconsistent withthose usually reflected insalesofgoods ofthesame
class orkindasthegoods being valued which aremade byproducers inthecountry ofexportation
forexport tothecountry ofimportation, theamount forprofit andgeneral expenses maybebased
upon relevant information other thanthatsupplied byoronbehalf oftheproducer ofthegoods.
6. Where information other thanthatsupplied byoronbehalf oftheproducer isusedforthe
purposes ofdetermining acomputed value, theauthorities oftheimporting country shallinform the
importer, ifthelatter sorequests, ofthesource ofsuchinformation, thedatausedandthecalculations
based upon suchdata, subject totheprovisions ofArticle 10.
7. The"general expenses" referred toinparagraph 1(b)ofArticle 6covers thedirect andindirect
costs ofproducing andselling thegoods forexport which arenotincluded under paragraph 1(a)of
Article 6.Page191
8. Whether certain goods are"ofthesame classorkind" asother goods mustbedetermined on
acase-by-case basis withreference tothecircumstances involved. Indetermining theusual profits
andgeneral expenses under theprovisions ofArticle 6,salesforexport tothecountry ofimportation
ofthenarrowestgrouporrangeofgoods,whichincludesthegoodsbeingvalued,forwhichthenecessary
information canbeprovided, should beexamined. Forthepurposes ofArticle 6,"goods ofthesame
classorkind" must befrom thesame country asthegoods being valued.
NotetoArticle 7
1. Customs values determined under theprovisions ofArticle 7should, tothegreatest extent
possible, bebased onpreviously determined customs values.
2. Themethods ofvaluation tobeemployed under Article 7should bethoselaiddown inArticles 1
through 6butareasonable flexibility intheapplication ofsuchmethods would beinconformity with
theaimsandprovisions ofArticle 7.
3. Some examples ofreasonable flexibility areasfollows:
(a) Identical goods -therequirement thattheidentical goods should beexported atorabout
thesametimeasthegoodsbeingvaluedcouldbeflexiblyinterpreted;identicalimported
goods produced inacountry other thanthecountry ofexportation ofthegoods being
valued could bethebasisforcustoms valuation; customs values ofidentical imported
goods already determined under theprovisions ofArticles 5and6could beused.
(b) Similar goods -therequirement thatthesimilar goods should beexported atorabout
thesametimeasthegoods being valued could beflexibly interpreted; similar imported
goods produced inacountry other thanthecountry ofexportation ofthegoods being
valued could bethebasis forcustoms valuation; customs values ofsimilar imported
goods already determined under theprovisions ofArticles 5and6could beused.
(c) Deductive method -therequirement thatthegoods shallhavebeensoldinthe"condition
asimported" inparagraph 1(a)ofArticle 5could beflexibly interpreted; the"90days"
requirement could beadministered flexibly.
NotetoArticle 8
Paragraph 1(a)(i)
Theterm"buying commissions" means feespaidbyanimporter totheimporter 'sagent for
theservice ofrepresenting theimporter abroad inthepurchase ofthegoods being valued.
Paragraph 1(b)(ii )
1. There aretwofactors involved intheapportionment oftheelements specified in
paragraph 1(b)(ii) ofArticle 8totheimported goods -thevalue oftheelement itself andthewayin
which thatvalue istobeapportioned totheimported goods. Theapportionment ofthese elements
shouldbemadeinareasonablemannerappropriatetothecircumstancesandinaccordancewithgenerally
accepted accounting principles.
2. Concerning thevalue oftheelement, iftheimporter acquires theelement from aseller not
related totheimporter atagiven cost,thevalue oftheelement isthatcost. Iftheelement wasproducedPage192
bytheimporter orbyaperson related totheimporter, itsvalue would bethecostofproducing it.
Iftheelement hadbeenpreviously usedbytheimporter, regardless ofwhether ithadbeenacquired
orproduced bysuchimporter, theoriginal costofacquisition orproduction would havetobeadjusted
downward toreflect itsuseinorder toarrive atthevalue oftheelement.
3. Once avalue hasbeendetermined fortheelement, itisnecessary toapportion thatvalue to
theimported goods. Various possibilities exist. Forexample, thevalue might beapportioned tothe
firstshipment iftheimporter wishes topaydutyontheentire value atonetime. Asanother example,
theimporter mayrequest thatthevalue beapportioned overthenumber ofunitsproduced uptothe
timeofthefirstshipment. Asafurther example, theimporter mayrequest thatthevalue beapportioned
overtheentire anticipated production where contracts orfirmcommitments existforthatproduction.
Themethod ofapportionment usedwilldepend upon thedocumentation provided bytheimporter.
4. Asanillustration oftheabove, animporter provides theproducer withamould tobeused
intheproduction oftheimported goods andcontracts withtheproducer tobuy10,000 units. Bythe
timeofarrival ofthefirstshipment of1,000 units, theproducer hasalready produced 4,000 units.
Theimporter mayrequest thecustoms administration toapportion thevalue ofthemould over
1,000 units, 4,000 units or10,000 units.
Paragraph 1(b)(iv )
1. Additions fortheelements specified inparagraph 1(b)(iv) ofArticle 8should bebased on
objective andquantifiable data. Inorder tominimize theburden forboththeimporter andcustoms
administration indetermining thevalues tobeadded, datareadily available inthebuyer 'scommercial
record system should beusedinsofaraspossible.
2. Forthose elements supplied bythebuyer which werepurchased orleased bythebuyer, the
addition would bethecostofthepurchase orthelease. Noaddition shallbemade forthose elements
available inthepublic domain, other thanthecostofobtaining copies ofthem.
3. Theeasewithwhich itmaybepossible tocalculate thevalues tobeadded willdepend ona
particular firm'sstructure andmanagement practice, aswellasitsaccounting methods.
4. Forexample, itispossible thatafirmwhich imports avariety ofproducts fromseveral countries
maintains therecords ofitsdesign centre outside thecountry ofimportation insuchawayastoshow
accurately thecostsattributable toagiven product. Insuchcases, adirect adjustment mayappropriately
bemade under theprovisions ofArticle 8.
5. Inanother case,afirmmaycarry thecostofthedesign centre outside thecountry ofimportation
asageneral overhead expense without allocation tospecific products. Inthisinstance, anappropriate
adjustment could bemade under theprovisions ofArticle 8withrespect totheimported goods by
apportioning totaldesign centre costsovertotalproduction benefiting fromthedesign centre andadding
suchapportioned costonaunitbasis toimports.
6. Variations intheabove circumstances will,ofcourse, require different factors tobeconsidered
indetermining theproper method ofallocation.
7. Incases where theproduction oftheelement inquestion involves anumber ofcountries and
overaperiod oftime,theadjustment should belimited tothevalue actually added tothatelement outside
thecountry ofimportation.Page193
Paragraph 1(c)
1. Theroyalties andlicence feesreferred toinparagraph 1(c)ofArticle 8mayinclude, among
other things, payments inrespect topatents, trade marks andcopyrights. However, thecharges for
therighttoreproduce theimported goods inthecountry ofimportation shallnotbeadded totheprice
actually paidorpayable fortheimported goods indetermining thecustoms value.
2. Payments made bythebuyer fortherighttodistribute orresell theimported goods shallnot
beadded tothepriceactually paidorpayable fortheimported goods ifsuchpayments arenotacondition
ofthesaleforexport tothecountry ofimportation oftheimported goods.
Paragraph 3
Where objective andquantifiable datadonotexistwithregard totheadditions required tobe
made under theprovisions ofArticle 8,thetransaction value cannot bedetermined under theprovisions
ofArticle 1.Asanillustration ofthis,aroyalty ispaidonthebasis oftheprice inasaleinthe
importing country ofalitreofaparticular product thatwasimported bythekilogram andmade up
intoasolution afterimportation. Iftheroyalty isbased partially ontheimported goods andpartially
onother factors which havenothing todowiththeimported goods (such aswhen theimported goods
aremixed withdomestic ingredients andarenolonger separately identifiable, orwhen theroyalty cannot
bedistinguished from special financial arrangements between thebuyer andtheseller), itwould be
inappropriate toattempt tomake anaddition fortheroyalty. However, iftheamount ofthisroyalty
isbased onlyontheimported goods andcanbereadily quantified, anaddition totheprice actually
paidorpayable canbemade.
NotetoArticle 9
Forthepurposes ofArticle 9,"time ofimportation" mayinclude thetimeofentry forcustoms
purposes.
NotetoArticle 11
1. Article 11provides theimporter withtherighttoappeal against avaluation determination made
bythecustoms administration forthegoods being valued. Appeal mayfirstbetoahigher levelin
thecustoms administration, buttheimporter shallhavetherightinthefinalinstance toappeal tothe
judiciary.
2. "Without penalty" means thattheimporter shallnotbesubject toafineorthreat offinemerely
because theimporter chose toexercise therightofappeal. Payment ofnormal court costsandlawyers '
feesshallnotbeconsidered tobeafine.
3. However, nothing inArticle 11shallprevent aMember fromrequiring fullpayment ofassessed
customs duties prior toanappeal.Page194
NotetoArticle 15
Paragraph 4
Forthepurposes ofArticle 15,theterm"persons" includes alegalperson, where appropriate.
Paragraph 4(e)
Forthepurposes ofthisAgreement, oneperson shallbedeemed tocontrol another when the
former islegally oroperationally inaposition toexercise restraint ordirection overthelatter.Page195
ANNEX II
TECHNICAL COMMITTEE ONCUSTOMS VALUATION
1. Inaccordance withArticle 18ofthisAgreement, theTechnical Committee shallbeestablished
under theauspices oftheCCCwithaviewtoensuring, atthetechnical level, uniformity ininterpretation
andapplication ofthisAgreement.
2. Theresponsibilities oftheTechnical Committee shallinclude thefollowing:
(a) toexamine specific technical problems arising intheday-to-day administration ofthe
customs valuation system ofMembers andtogiveadvisory opinions onappropriate
solutions based upon thefactspresented;
(b) tostudy, asrequested, valuation laws, procedures andpractices astheyrelate tothis
Agreement andtoprepare reports ontheresults ofsuchstudies;
(c) toprepare andcirculate annual reports onthetechnical aspects oftheoperation and
status ofthisAgreement;
(d) tofurnish suchinformation andadvice onanymatters concerning thevaluation of
imported goods forcustoms purposes asmayberequested byanyMember orthe
Committee. Such information andadvice maytaketheform ofadvisory opinions,
commentaries orexplanatory notes;
(e) tofacilitate, asrequested, technical assistance toMembers withaviewtofurthering
theinternational acceptance ofthisAgreement;
(f) tocarry outanexamination ofamatter referred toitbyapanel under Article 19of
thisAgreement; and
(g) toexercise suchother responsibilities astheCommittee mayassign toit.
General
3. TheTechnical Committee shallattempt toconclude itswork onspecific matters, especially
those referred toitbyMembers, theCommittee orapanel, inareasonably short period oftime.
Asprovided inparagraph 4ofArticle 19,apanel shallsetaspecific timeperiod forreceipt ofareport
oftheTechnical Committee andtheTechnical Committee shallprovide itsreport within thatperiod.
4. TheTechnicalCommitteeshallbeassistedasappropriateinitsactivitiesbytheCCC Secretariat.
Representation
5. EachMember shallhavetherighttoberepresented ontheTechnical Committee. EachMember
maynominate onedelegate andoneormore alternates tobeitsrepresentatives ontheTechnical
Committee. SuchaMember sorepresented ontheTechnical Committee isreferred tointhisAnnex
asa"member oftheTechnical Committee". Representatives ofmembers oftheTechnical Committee
maybeassisted byadvisers. TheWTO Secretariat mayalsoattend suchmeetings withobserver status.Page196
6. Members oftheCCC which arenotMembers oftheWTO mayberepresented atmeetings
oftheTechnical Committee byonedelegate andoneormore alternates. Such representatives shall
attend meetings oftheTechnical Committee asobservers.
7. Subject totheapproval oftheChairman oftheTechnical Committee, theSecretary-General
oftheCCC (referred tointhisAnnex as"theSecretary-General") mayinvite representatives of
governments which areneither Members oftheWTO normembers oftheCCC andrepresentatives
ofinternational governmental andtrade organizations toattend meetings oftheTechnical Committee
asobservers.
8. Nominations ofdelegates, alternates andadvisers tomeetings oftheTechnical Committee shall
bemade totheSecretary-General.
Technical Committee Meetings
9. TheTechnical Committee shallmeetasnecessary butatleasttwotimes ayear. Thedateof
eachmeeting shallbefixedbytheTechnical Committee atitspreceding session. Thedateofthemeeting
maybevaried either attherequest ofanymember oftheTechnical Committee concurred inbyasimple
majority ofthemembers oftheTechnical Committee or,incases requiring urgent attention, atthe
request oftheChairman. Notwithstanding theprovisions insentence 1ofthisparagraph, theTechnical
Committee shallmeetasnecessary toconsider matters referred toitbyapanel under theprovisions
ofArticle 19ofthisAgreement.
10. Themeetings oftheTechnical Committee shallbeheldattheheadquarters oftheCCC unless
otherwise decided.
11. TheSecretary-General shallinform allmembers oftheTechnical Committee andthose included
under paragraphs 6and7atleast30daysinadvance, except inurgent cases, oftheopening dateof
eachsession oftheTechnical Committee.
Agenda
12. Aprovisional agenda foreachsession shallbedrawn upbytheSecretary-General andcirculated
tothemembers oftheTechnical Committee andtothose included under paragraphs 6and7atleast
30daysinadvance ofthesession, except inurgent cases. Thisagenda shallcomprise allitems whose
inclusion hasbeenapproved bytheTechnical Committee during itspreceding session, allitems included
bytheChairman ontheChairman 'sowninitiative, andallitems whose inclusion hasbeenrequested
bytheSecretary-General, bytheCommittee orbyanymember oftheTechnical Committee.
13. TheTechnical Committee shalldetermine itsagenda attheopening ofeachsession. During
thesession theagenda maybealtered atanytimebytheTechnical Committee.
Officers andConduct ofBusiness
14. TheTechnical Committee shallelectfrom among thedelegates ofitsmembers aChairman
andoneormore Vice-Chairmen. TheChairman andVice-Chairmen shalleachholdoffice foraperiod
ofoneyear. Theretiring Chairman andVice-Chairmen areeligible forre-election. Themandate of
aChairman orVice-Chairman whonolonger represents amember oftheTechnical Committee shall
terminate automatically.
15. IftheChairman isabsent from anymeeting orpartthereof, aVice-Chairman shallpreside.
Inthatevent, thelatter shallhavethesame powers andduties astheChairman.Page197
16. TheChairman ofthemeeting shallparticipate intheproceedings oftheTechnical Committee
assuchandnotastherepresentative ofamember oftheTechnical Committee.
17. Inaddition toexercising theother powers conferred upon theChairman bythese rules, the
Chairman shalldeclare theopening andclosing ofeachmeeting, direct thediscussion, accord theright
tospeak, and,pursuant tothese rules, havecontrol oftheproceedings. TheChairman mayalsocall
aspeaker toorder ifthespeaker 'sremarks arenotrelevant.
18. During discussion ofanymatter adelegation mayraiseapoint oforder. Inthisevent, the
Chairman shallimmediately statearuling. Ifthisruling ischallenged, theChairman shallsubmit it
tothemeeting fordecision anditshallstand unless overruled.
19. TheSecretary-General, orofficers oftheCCCSecretariat designated bytheSecretary-General,
shallperform thesecretarial work ofmeetings oftheTechnical Committee.
Quorum andVoting
20. Representatives ofasimple majority ofthemembers oftheTechnical Committee shallconstitute
aquorum.
21. Each member oftheTechnical Committee shallhaveonevote. Adecision oftheTechnical
Committee shall betaken byamajority comprising atleast twothirds ofthemembers present.
Regardless oftheoutcome ofthevoteonaparticular matter, theTechnical Committee shallbefree
tomake afullreport totheCommittee andtotheCCC onthatmatter indicating thedifferent views
expressedintherelevantdiscussions.Notwithstandingtheaboveprovisionsofthisparagraph,onmatters
referred toitbyapanel, theTechnical Committee shall takedecisions byconsensus. Where no
agreement isreached intheTechnical Committee onthequestion referred toitbyapanel, theTechnical
Committee shall provide areport detailing thefactsofthematter andindicating theviews ofthe
members.
Languages andRecords
22. Theofficial languages oftheTechnical Committee shall beEnglish, French andSpanish.
Speeches orstatements made inanyofthese three languages shallbeimmediately translated intothe
otherofficial languages unless alldelegations agree todispense withtranslation. Speeches orstatements
made inanyother language shallbetranslated intoEnglish, French andSpanish, subject tothesame
conditions, butinthatevent thedelegation concerned shallprovide thetranslation intoEnglish, French
orSpanish. OnlyEnglish, French andSpanish shallbeusedfortheofficial documents oftheTechnical
Committee. Memoranda andcorrespondence fortheconsideration oftheTechnical Committee must
bepresented inoneoftheofficial languages.
23. TheTechnicalCommitteeshalldrawupareportofallitssessionsand,iftheChairmanconsiders
itnecessary, minutes orsummary records ofitsmeetings. TheChairman oradesignee oftheChairman
shallreport onthework oftheTechnical Committee ateachmeeting oftheCommittee andateach
meeting oftheCCC.Page198
ANNEX III
1. Thefive-year delay intheapplication oftheprovisions oftheAgreement bydeveloping country
Members provided forinparagraph 1ofArticle 20may, inpractice, beinsufficient forcertain
developing country Members. Insuchcases adeveloping country Member mayrequest before the
endoftheperiod referred toinparagraph 1ofArticle 20anextension ofsuchperiod, itbeing understood
thattheMembers willgivesympathetic consideration tosucharequest incases where thedeveloping
country Member inquestion canshow good cause.
2. Developingcountrieswhichcurrentlyvaluegoodsonthebasisofofficiallyestablishedminimum
values maywishtomake areservation toenable themtoretain suchvalues onalimited andtransitional
basis under suchterms andconditions asmaybeagreed tobytheMembers.
3. Developing countries which consider thatthereversal ofthesequential order attherequest
oftheimporter provided forinArticle 4oftheAgreement maygiverisetorealdifficulties forthem
maywishtomake areservation toArticle 4inthefollowing terms:
"The Government of............ reserves theright toprovide thattherelevant provision of
Article 4oftheAgreement shallapply onlywhen thecustoms authorities agree totherequest
toreverse theorder ofArticles 5and6."
Ifdeveloping countries make suchareservation, theMembers shallconsent toitunder Article 21of
theAgreement.
4. Developing countries maywishtomake areservation withrespect toparagraph 2ofArticle 5
oftheAgreement inthefollowing terms:
"The Government of............ reserves therighttoprovide thatparagraph 2ofArticle 5of
theAgreement shallbeapplied inaccordance withtheprovisions oftherelevant notethereto
whether ornottheimporter sorequests."
Ifdeveloping countries make suchareservation, theMembers shallconsent toitunder Article 21of
theAgreement.
5. Certain developing countries mayhaveproblems intheimplementation ofArticle 1ofthe
Agreement insofar asitrelates toimportations intotheircountries bysoleagents, soledistributors
andsoleconcessionaires. Ifsuchproblems ariseinpractice indeveloping country Members applying
theAgreement, astudy ofthisquestion shallbemade, attherequest ofsuchMembers, withaview
tofinding appropriate solutions.
6. Article 17recognizes thatinapplying theAgreement, customs administrations mayneedto
make enquiries concerning thetruthoraccuracy ofanystatement, document ordeclaration presented
tothem forcustoms valuation purposes. TheArticle thusacknowledges thatenquiries maybemade
which are,forexample, aimed atverifying thattheelements ofvalue declared orpresented tocustoms
inconnection withadetermination ofcustoms value arecomplete andcorrect. Members, subject to
theirnational lawsandprocedures, havetherighttoexpect thefullcooperation ofimporters inthese
enquiries.
7. Theprice actually paidorpayable includes allpayments actually made ortobemade asa
condition ofsaleoftheimported goods, bythebuyer totheseller, orbythebuyer toathird party
tosatisfy anobligation oftheseller.