Multilateral Trade Negotiations (1986- 1994) - Annex 1 - Annex 1A - Agreement on Implementation
Article VII
the General Agreement on Tariffs and Trade 1994 - Interpretative Notes (WTO-GATT 1994) WTO-"GATT 1994"
ficial Journal L 336 , 23/12/1994 p. 0119 - 0137 Finnish special edition....: Chapter 11 Volume 38 p. 121 Swedish special edition...: Chapter 11 Volume 38 p. 121 Dates:
DOCUMENT: 22/12/1994
EFFECT: 01/01/1995; ENTRY INTO FORCE SEE 294A1223
END
VALIDITY: 99/99/9999 Authentic language: FRENCH ; ENGLISH ; SPANISH Author: EUROPEAN COMMUNITY Subject matter: EXTERNAL RELATIONS ; COMMERCIAL POLICY ; GATT ; World Trade Organization ; PROVISIONS UNDER ARTICLE 235 EEC Directory code: 11301000 EUROVOC descriptor: Uruguay Round ; GATT ; World Trade Organization ; customs valuation ; settlement
disputes ; comitology Legal basis: 192E043................... ADOPTION 192E054................... ADOPTION 192E057................... ADOPTION 192E06.................... ADOPTION 192E075................... ADOPTION 192E084-P2................ 192E099................... ADOPTION 192E100................... ADOPTION 192E100A.................. ADOPTION 192E113................... ADOPTION 192E235................... ADOPTION 192E228-P3L2.............. ADOPTION Amended by: ADOPTED-BY.... 394D0800.......... FR 22/12/94 AGREEMENT ON IMPLEMENTATION
ARTICLE VII
THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994 GENERAL INTRODUCTORY COMMENTARY
the value for customs purposes are incurred by the buyer but are not included in the price actually paid or payable for the imported goods. Article 8 also provides for the inclusion in the transaction value
certain considerations which may pass from the buyer to the seller in the form
specified goods or services rather than in the form
money. Articles 2 through 7 provide methods
determining the customs value whenever it cannot be determined under the provisions
Where the customs value cannot be determined under the provisions
there should normally be a process
consultation between the customs administration and importer with a view to arriving at a basis
value under the provisions
It may occur, for example, that the importer has information about the customs value
identical or similar imported goods which is not immediately available to the customs administration in the port
importation. On the other hand, the customs administration may have information about the customs value
identical or similar imported goods which is not readily available to the importer. A process
consultation between the two parties will enable information to be exchanged, subject to the requirements
commercial confidentiality, with a view to determining a proper basis
value for customs purposes. 3. Articles 5 and 6 provide two bases for determining the customs value where it cannot be determined on the basis
the transaction value
the imported goods or
identical or similar imported goods. Under paragraph 1
the customs value is determined on the basis
the price at which the goods are sold in the conditions as imported to an unrelated buyer in the country
importation. The importer also has the right to have goods which are further processed after importation valued under the provisions
Under Article 6 the customs value is determined on the basis
the computed value. Both these methods present certain difficulties and because
this the importer is given the right, under the provisions
, to choose the order
application
the two methods. 4. Article 7 sets out how to determine the customs value in cases where it cannot be determined under the provisions
any
the preceding Articles. MEMBERS, Having regard to the Multilateral Trade Negotiations; Desiring to further the objectives
GATT 1994 and to secure additional benefits for the international trade
developing countries; Recognizing the importance
the provisions
Article VII
GATT 1994 and desiring to elaborate rules for their application in order to provide greater uniformity and certainty in their implementation; Recognizing the need for a fair, uniform and neutral system for the valuation
goods for customs purposes that precludes the use
arbitrary or fictitious customs values; Recognizing that the basis for valuation
goods for customs purposes should, to the greatest extent possible, be the transaction value
the goods being valued; Recognizing that customs value should be based on simple and equitable criteria consistent with commercial practices and that valuation procedures should be
general application without distinction between sources
supply; Recognizing that valuation procedures should not be used to combat dumping; HEREBY AGREE AS FOLLOWS: PART I RULES ON CUSTOMS VALUATION Article 1 1. The customs value
imported goods shall be the transaction value, that is the price actually paid or payable for the goods when sold for export to the country
importation adjusted in accordance with the provisions
, provided: (a) that there are no restrictions as to the disposition or use
the goods by the buyer other than restrictions which: (i) are imposed or required by law or by the public authorities in the country
importation; (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value
the goods; (
the proceeds
any subsequent resale, disposal or use
the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions
; 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 customs purposes under the provisions
paragraph
paragraph 1, the fact that the buyer and the seller are related within the meaning
shall not in itself be grounds for regarding the transaction value as unacceptable. In such case the circumstances surrounding the sale shall be examined and the transaction value shall be accepted provided that the relationship did not influence the price. If, in the light
information provided by the importer or otherwise, the customs administration has grounds for considering that the relationship influenced the price, it shall communicate its grounds to the importer and the importer shall be given a reasonable opportunity to respond. If the importer so requests, the communication
the grounds shall be in writing. (b) In a sale between related persons, the transaction value shall be accepted and the goods valued in accordance with the provisions
paragraph 1 whenever the importer demonstrates that such value closely approximates to one
the following occurring at or about the same time: (i) the transaction value in sales to unrelated buyers
identical or similar goods for export to the same country
importation; (ii) the customs value
identical or similar goods as determined under the provisions
; (iii) the customs value
identical or similar goods as determined under the provisions
; In applying the foregoing tests, due account shall be taken
demonstrated differences in commercial levels, quantity levels, the elements enumerated in Article 8 and costs incurred by the seller in sales in which the seller and the buyer are not related that are not incurred by the seller in sales in which the seller and the buyer are related. (c) The tests set forth in paragraph 20(b) are to be used at the initiative
the importer and only for comparison purposes. Substitute values may not be established under the provisions
paragraph 2(b). Article 2 1. (a) If the customs value
the imported goods cannot be determined under the provisions
, the customs value shall be the transaction value
identical goods sold for export to the same country
importation and exported at or about the same time as the goods being valued. (b) In applying this Article, the transaction value
identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the customs value. Where no such sale is found, the transaction value
identical goods sold at a different commercial level and/or in different quantitities, adjusted to take account
differences attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can be made on the basis
demonstrated evidence which clearly establishes the reasonableness and accuracy
the adjustment, whether the adjustment leads to an increase or a decrease in the value. 2. Where the costs and charges referred to in paragraph 2
are included in the transaction value, an adjustment shall be made to take account
significant differences in such costs and charges between the imported goods and the identical goods in question arising from differences in distances and modes
transport. 3. If, in applying this Article, more than one transaction value
identical goods is found, the lowest such value shall be used to determine the customs value
the imported goods. Article 3 1. (a) If the customs value
the imported goods cannot be determined under the provisions
Articles 1 and 2, the customs value shall be the transaction value
similar goods sold for export to the same country
importation and exported at or about the same time as the goods being valued. (b) In applying this Article, the transaction value
similar goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the customs value. Where no such sale is found, the transaction value
similar goods sold at a different commercial level and/or in different quantities, adjusted to take account
differences attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can be made on the basis
demonstrated evidence which clearly establishes the reasonableness and accuracy
the adjustment, whether the adjustment leads to an increase or a decrease in the value. 2. Where the costs and charges referred to in paragraph 2
are included in the transaction value, an adjustment shall be made to take account
significant differences in such costs and charges between the imported goods and the similar goods in question araising from differences in distances and modes
transport. 3. If, in applying this Article, more than one transaction value
similar goods is found, the lowest such value shall be used to determine the customs value
the imported goods. Article 4 If the customs value
the imported goods cannot be determined under the provisions
Articles 1, 2 and 3, the customs value shall be determined under the provisions
or, when the customs value cannot be determined under that Article, under the provisions
except that, at the request
the importer, the order
application
Articles 5 and 6 shall be reversed. Article 5 1. (a) If the imported goods or identical or similar imported goods are sold in the country
importation in the condition as imported, the customs value
the imported goods under the provisions
this Article shall be based on the unit price at which the imported goods or identical or similar imported goods are so sold in the greatest aggregate quantity, at or about the time
the importation
the goods being valued, to persons who are not related to the persons from whom they buy such goods, subject to deductions for the following: (i) either the commissions usually paid or agreed to be paid or the additions usually made for profit and general expenses in connection with sales in such country
imported goods
the same class or kind; (ii) the usual costs
transport and insurance and associated costs incurred within the country
importation; (iii) where appropriate, the costs and charges referred to in paragraph 2
; and (iv) the customs duties and other national taxes payable in the country
importation by reason
the importation or sale
the goods. (b) If neither the imported goods nor identical nor similar imported goods are sold at or about the time
importation
the goods being valued, the customs value shall, subject otherwise to the provisions
paragraph 1(a), be based on the unit price at which the imported goods or identical or similar imported goods are sold in the country
importation in the condition as imported at the earliest date after the importation
the goods being valued but before the expiration
90 days after such importation. 2. If neither the imported goods nor identical nor similar imported goods are sold in the country
importation in the condition as imported, then, if the importer so requests, the customs value shall be based on the unit price at which the imported goods, after further processing, are sold in the greatest aggregate quantity to persons in the country
importation who are not related to the persons from whom they buy such goods, due allowance being made for the value added by such processing and the deductions provided for in paragraph 1(a). Article 6 1. The customs value
imported goods under the provisions
this Article shall be based on a cumputed value. Computed value shall consist
the sum
: (a) the cost or value
materials and fabrication or other processing employed in producing the imported goods; (b) an amount for profit and general expenses equal to that usually reflected in sales
goods
the same class or kind as the goods being valued which are made by producers in the country
exportation for export to the country
importation; (c) the cost or value
all other expenses necessary to reflect the valuation option chosen by the Member under paragraph 2
No Member may require or compel any person not resident in its own territory to produce for examination, or to allow access to, any account or other record for the purposes
determining a computed value. However, information supplied by the producer
the goods for the purposes
determining the customs value under the provisions
this Article may be verified in another country by the authorities
the country
importation with the agreement
the producer and provided they give sufficient advance notice to the government
the country in question and the latter does not object to the investigation. Article 7 1. If the customs value
the imported goods cannot be determined under the provisions
Articles 1 through 6, inclusive, the customs value shall be determined using reasonable means consistent with the principles and general provisions
this Agreement and
Article VII
GATT 1994 and on the basis
data available in the country
importation. 2. No customs value shall be determined under the provisions
this Article on the basis
: (a) the selling price in the country
importation
goods produced in such country; (b) a system which provides for the acceptance for customs purposes
the higher
two alternative values; (c) the price
goods on the domestic market
the country
exportation; (d) the cost
production other than computed values which have been determined for identical or similar goods in accordance with the provisions
; (e) the price
the goods for export to a country other than the country
importation; (
the customs value determined under the provisions
this Article and the method used do determine such value. Article 8 1. In determining the customs value under the provisions
, there shall be added to the price actually paid or payable for the imported goods: (
containers which are treated as being one for customs purposes with the goods in question; (iii) the cost
packing whether for labour or materials; (b) the value, apportioned as appropriate,
the following goods and services where supplied directly or indirectly by the buyer free
charge or at reduced cost for use in connection with the production and sale for export
the imported goods, to the extent that such value has not been included in the price actually paid or payable: (
the imported goods; (iii) materials consumed in the production
the imported goods; (iv) engineering, development, artwork, design work, and plans and sketches undertaken elsewhere than in the country
importation and necessary for the production
the imported goods; (c) royalties and licence fees related to the goods being valued that the buyer must pay, either directly or indirectly, as a condition
sale
the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable; (d) the value
any part
the proceeds
any subsequent resale, disposal or use
the imported goods that accrues directly or indirectly to the seller. 2. In framing its legislation, each Member shall provide for the inclusion in or the exclusion from the customs value, in whole or in part,
the following: (a) the cost
transport
the imported goods to the port or place
importation; (b) loading, unloading and handling charges associated with the transport
the imported goods to the port or place
importation; and (c) the cost
insurance. 3. Additions to the price actually paid or payable shall be made under this Article only on the basis
objective and quantifiable data.
currency is necessary for the determination
the customs value, the rate
exchange to be used shall be that duly published by the competent authorities
the country
importation concerned and shall reflect as effectively as possible, in respect
the period covered by each such document
publication, the current value
such currency in commercial transactions in terms
the currency
the country
importation. 2. The conversion rate to be used shall be that in effect at the time
exportation or the time
importation, as provided by each Member. Article 10 All information which is by nature confidential or which is provided on a confidential basis for the purposes
customs valuation shall be treated as strictly confidential by the authorities concerned who shall not disclose it without the specific permission
the person or government providing such information, except to the extent that it may be required to be disclosed in the context
judicial proceedings. Article 11 1. The legislation
each Member shall provide in regard to a determination
customs value for the right
appeal, without penalty, by the importer or any person liable for the payment
the duty. 2. An initial right
appeal without penalty may be to an authority within the customs administration or to an independent body, but the legislation
each Member shall provide for the right
appeal without penalty to a judicial authority. 3. Notice
the decision on appeal shall be given to the appellant and the reasons for such decision shall be provided in writing. The appellant shall also be informed
any rights
further appeal. Article 12 Laws, regulations, judicial decisions and administrative rulings
general application giving effect to this Agreement shall be published in conformity with Article X
GATT 1994 by the country
importation concerned. Article 13 If, in the course
determining the customs value
imported goods, it becomes necessary to delay the final determination
such customs value, the importer
the goods shall nevertheless be able to withdraw them from customs if, where so required, the importer provides sufficient guarantee in the form
a surety, a deposit or some other appropriate instrument, covering the ultimate payment
customs duties for which the goods may be liable. The legislation
each Member shall make provisions for such circumstances. Article 14 The notes at Annex I to this Agreement form an integral part
this Agreement and the Articles
this Agreement are to be read and applied in conjunction with their respective notes. Annexes II and III also form an integral part
this Agreement. Article 15 1. In this Agreement: (a) 'customs value
imported goods' means the value
goods for the purposes
levying ad valorem duties
customs on imported goods; (b) 'country
importation' means country or customs territory
importation; and (
the goods, their reputation and the existence
a trademark are among the factors to be considered in determining whether goods are similar; (c) the terms 'identical goods' and 'similar goods' do not include, as the case may be, goods which incorporate or reflect engineering, development, artwork, design work, and plans and sketches for which no adjustment has been made under paragraph 1(b)(iv)
because such elements were undertaken in the country
importation; (
the same class or kind' means goods which fall within a group or range
goods produced by a particular industry or industry sector, and includes identical or similar goods. 4. For the purposes
this Agreement, persons shall be deemed to be related only if: (a) they are
ficers or directors
one another's businesses; (
the outstanding voting stock or shares
both
them; (e) one
them directly or indirectly controls the other; (f) both
them are directly or indirectly controlled by a third person; (
the same family. 5. Persons who are associated in business with one another in that one is the sole agent, sole distributor or sole concessionaire, however described,
the other shall be deemed to be related for the purposes
this Agreement if they fall within the criteria
paragraph 4. Article 16 Upon written request, the importer shall have the right to an explanation in writing from the customs administration
the country
importation as to how the customs value
the importer's goods was determined. Article 17 Nothing in this Agreement shall be construed as restricting or calling into question the rights
customs administrations to satisfy themselves as to the truth or accuracy
any statement, document or declaration presented for customs valuation purposes. PART II ADMINISTRATION, CONSULTATIONS AND DISPUTE SETTLEMENT Article 18 Institutions 1. There is hereby established a Committee on Customs Valuation (referred to in this Agreement as 'the Committee') composed
representatives from each
the Members. The Committee shall elect its own Chairman and shall normally meet once a year, or as is otherwise envisaged by the relevant provisions
this Agreement, for the purpose
affording Members the opportunity to consult on matters relating to the administration
the customs valuation system by any Member as it might affect the operation
this Agreement or the furtherance
its objectives and carrying out such other responsibilities as may be assigned to it by the Members. The WTO Secretariat shall act as the secretariat to the Committee. 2. There shall be established a Technical Committee on Customs Valuation (referred to in this Agreement as 'the Technical Committee') under the auspices
the Customs Co-operation Council (referred to in this Agreement as 'the CCC'), which shall carry out the responsibilities described in Annex II to this Agreement and shall operate in accordance with the rules
procedure contained therein. Article 19 Consultations and Dispute Settlement 1. Except as otherwise provided herein, the Dispute Settlement Understanding is applicable to consultations and the settlement
disputes under this Agreement. 2. If any Member considers that any benefit accruing to it, directly or indirectly, under this Agreement is being nullified or impaired, or that the achievement
any objective
this Agreement is being impeded, as a result
the actions
another Member or
other Members, it may, with a view to reaching a mutually satisfactory solution
this matter, request consultations with the Member or Members in question. Each Member shall afford sympathetic consideration to any request from another Member for consultations.
a party to the dispute, or on its own initiative, a panel established to examine a dispute relating to the provisions
this Agreement may request the Technical Committee to carry out an examination
any questions requiring technical consideration. The panel shall determine the terms
reference
the Technical Committee for the particular dispute and set a time period for receipt
the report
the Technical Committee. The panel shall take into consideration the report
the Technical Committee. In the event that the Technical Committee is unable to reach consensus on a matter referred to it pursuant to this paragraph, the panel should afford the parties to the dispute an opportunity to present their views on the matter to the panel. 5. Confidential information provided to the panel shall not be disclosed without formal authorization from the person, body or authority providing such information. Where such information is requested from the panel but release
such information by the panel is not authorized, a non-confidential summary
this information, authorized by the person, body or authority providing the information, shall be provided. PART III SPECIAL AND DIFFERENTIAL TREATMENT Article 20 1. Developing country Members not party to the Agreement on Implementation
Article VII
the General Agreement on Tariffs and Trade done on 12 April 1979 may delay application
the provisions
this Agreement for a period not exceeding five years from the date
entry into force
the WTO Agreement for such Members. Developing country Members who choose to delay application
this Agreement shall notify the Director-General
the WTO accordingly. 2. In addition to paragraph 1, developing country Members not party to the Agreement on Implementation
Article VII
the General Agreement on Tariffs and Trade done one 12 April 1979 may delay application
paragraph 2(b)(iii)
and Article 6 for a period not exceeding three years following their application
all other provisions
this Agreement. Developing country Members that choose to delay application
the provisions specified in this paragraph shall notify the Director-General
the WTO accordingly. 3. Developed country Members shall furnish, on mutually agreed terms, technical assistance to developing country Members that so request. On this basis developed country Members shall draw up programmes
technical assistance which may include inter alia training
personnel, assistance in preparing implementation measures, access to sources
information regarding customs valuation methodology, and advice on the application
the provisions
this Agreement. PART IV FINAL PROVISIONS Article 21 Reservations Reservations may not be entered in respect
any
the provisions
this Agreement without the consent
the other Members. Article 22 National Legislation 1. Each Member shall ensure, not later than the date
application
the provisions
this Agreement for it, the conformity
its laws, regulations and administrative procedures with the provisions
this Agreement. 2. Each Member shall inform the Committee
any changes in its laws and regulations relevant to this Agreement and in the administration
such laws and regulations. Article 23 Review The Committee shall review annually the implementation and operation
this Agreement taking into account the objectives thereof. The Committee shall annually inform the Council for Trade in Goods
developments during the period covered by such reviews. Article 24 Secretariat This Agreement shall be serviced by the WTO Secretariat except in regard to those responsibilities specifically assigned to the Technical Committee, which will be serviced by the CCC Secretariat. ANNEX I INTERPRETATIVE NOTES General Note Sequential application
Valuation Methods 1. Articles 1 through 7 define how the customs value
imported goods is to be determined under the provisions
this Agreement. The methods
valuation are set out in a sequential order
application. The primary method for customs valuation is defined in Article 1 and imported goods are to be valued in accordance with the provisions
this Article whenever the conditions prescribed therein are fulfilled. 2. Where the customs value cannot be determined under the provisions
, it is to be determined by proceeding sequentially through the succeeding Articles to the first such Article under which the customs value can be determined. Except as provided in Article 4, it is only when the customs value cannot be determined under the provisions
a particular Article that the provisions
the next Article in the sequence can be used. 3. If the importer does not request that the order
Articles 5 and 6 be reversed, the normal order
the sequence is to be followed. If the importer does so request but it then proves impossible to determine the customs value under the provisions
, the customs value is to be determined under the provisions
4. Where the customs value cannot be determined under the provisions
Articles 1 through 6 it is to be determined under the provisions
. Use
Generally Accepted Accounting Principles 1. 'Generally accepted accounting principles' refers to the 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 assets and liabilities and changes in them should be measured, what information should be disclosed and how it should be disclosed, and which financial statements should be prepared. These standards may be broad guidelines
general application as well as detailed practices and procedures. 2. For the purposes
this Agreement, the customs administration
each Member shall utilize information prepared in a manner consistent with generally accepted accounting principles in the country which is appropriate for the Article in question. For example, the determination
usual profit and general expenses under the provisions
would be carried out utilizing information prepared in a manner consistent with generally accepted accounting principles
the country
importation. On the other hand, the determination
usual profit and general expenses under the provisions
would be carried out utilizing information prepared in a manner consistent with generally accepted accounting principles
the country
production. As a further example, the determination
an element provided for in paragraph 1(b)(ii)
undertaken in the country
importation would be carried out utilizing information in a manner consistent with the generally accepted accounting principles
that country. Note to Article 1 Price Actually Paid or Payable 1. The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit
the seller for the imported goods. The payment need not necessarily take the form
a transfer
money. Payment may be made by way
letters
credit or negotiable instruments. Payment may be made directly or indirectly. An example
an indirect payment would be the settlement by the buyer, whether in whole or in part,
a debt owed by the seller. 2. Activities undertaken by the buyer on the buyer's 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
benefit to the seller. The costs
such activities shall not, therefore, be added to the price actually paid or payable in determining the customs value. 3. 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 goods: (
transport after importation; (c) duties and taxes
the country
importation. 4. The price actually paid or payable refers to the price for the imported goods. Thus the flow
dividends or other payments from the buyer to the seller that do not relate to the imported goods are not part
the customs value. Paragraph 1(a)(iii) Among restrictions which would not render a price actually paid or payable unacceptable are restrictions which do not substantially affect the value
the goods. An example
such restrictions would be the case where a seller requires a buyer
automobiles not to sell or exhibit them prior to a fixed date which represents the beginning
a model year. Paragraph 1(b) 1. If the sale or price is subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued, the transaction value shall not be acceptable for customs purposes. Some examples
this include: (a) the seller establishes the price
the imported goods on condition that the buyer will also buy other goods in specified quantities; (b) the price
the imported goods is dependent upon the price or prices at which the buyer
the imported goods sells other goods to the seller
the imported goods; (c) the price is established on the basis
a form
payment extraneous to the imported goods, such as where the imported goods are semi-finished goods which have been provided by the seller on condition that the seller will receive a specified quantity
the finished goods. 2. However, conditions or considerations relating to the production or marketing
the imported goods shall not result in rejection
the transaction value. For example, the fact that the buyer furnishes the seller with engineering and plans undertaken in the country
importation shall not result in rejection
the transaction value for the purposes
. Likewise, if the buyer undertakes on the buyer's own account, even though by agreement with the seller, activities relating to the marketing
the imported goods, the value
these activities is not part
the customs value nor shall such activities result in rejection
the transaction value. Paragraph 2 1. Paragraphs 2(
establishing the acceptability
a transaction value. 2. Paragraph 2(a) provides that where the buyer and the seller are related, the 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 intended that there should be an examination
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
the price. Where the customs administration have no doubts about the acceptability
the price, it should be accepted 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 buyer 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 transaction value without further inquiry, it should give the importer an opportunity to supply such further detailed information as may be necessary to enable it to examine the circumstances surrounding the sale. In this context, the customs administration should be prepared to examine relevant aspects
the transaction, including the way in which the buyer and seller organize their commercial relations and the way in which the price in question was arrived at, in order to determine whether the relationship influenced the price. Where it can be shown that the buyer and seller, although related under the provisions
, buy from and sell to each other as if they were not related, this would demonstrate that the price had not been influenced by the relationship. As an example
this, if the price had been settled in a manner consistent with the normal pricing practices
the industry in question or with the way the seller settles prices for sales to buyers who are not related to the seller, this would demonstrate that the price had not been influenced by the relationship. As a further example, where it is shown that the price is adequate to ensure recovery
all costs plus a profit which is representative
the firm's overall profit realized over a representative period
time (e.g. on an annual basis) in sales
goods
the same class or kind, this would demonstrate that the price had not been influenced. 4. Paragraph 2(b) provides an opportunity for the importer to demonstrate that the transaction value closely approximates to a 'test' value previously accepted by the customs administration and is therefore acceptable under the provisions
. Where a test under paragraph 2(b) is met, it is not necessary to examine the question
influence under paragraph 2(a). If the customs administration has already sufficient information to be satisfied, without further detailed inquiries, that one
the tests provided in paragraph 2(
factors must be taken into consideration in determining whether one value 'closely approximates' to another value. These factors include the nature
the imported goods, the nature
the industry itself, the season in which the goods are imported, and, whether the difference in values is commercially significant. Since these factors may vary from case to case, it would be impossible to apply a uniform standard such as a fixed percentage, in each case. For example, a small difference in value in a case involving one type
goods could be unacceptable while a large difference in a case involving another type
goods might be acceptable in determining whether the transaction value closely approximates to the 'test' values set forth in paragraph 2(b)
In applying Article 2, the customs administration shall, wherever possible, use a sale
identical goods at the same commercial level and in substantially the same quantities as the goods being valued. Where no such sale is found, a sale
identical goods that takes place under any one
the following three conditions may be used: (
these three conditions adjustments will then be made, as the case may be, for: (
the three conditions described above. 4. For the purposes
, the transaction value
identical imported goods means a customs value, adjusted as provided for in paragraphs 1(b) and 2, which has already been accepted under Article 1. 5. A condition for adjustment because
different commercial levels or different quantities is that such adjustment, whether it leads to an increase or a decrease in the value, be made only on the basis
demonstrated evidence that clearly establishes the reasonableness and accuracy
the adjustments, e.g. valid price lists containing prices referring to different levels or different quantities. As an example
this, if the imported goods being valued consist
a shipment
10 units and the only identical imported goods for which a transaction value exists involved a sale
500 units, and it is recognized that the seller grants quantity discounts, the required adjustment may be accomplished by resorting to the seller's price list and using that price applicable to a sale
10 units. This does not require that a sale had to have been made in quantities
10 as long as the price list has been established as being bona fide through sales at other quantities. In the absence
such an objective measure, however, the determination
a customs value under the provisions
Note to Article 3 1. In applying Article 3, the customs administration shall, wherever possible, use a sale
similar goods at the same commercial level and in substantially the same quantities as the goods being valued. Where no such sale is found, a sale
similar goods that takes place under any one
the following three conditions may be used: (
these three conditions adjustments will then be made, as the case may be, for: (
the three conditions described above. 4. For the purpose
, the transaction value
similar imported goods means a customs value, adjusted as provided for in paragraphs 1(b) and 2, which has already been accepted under Article 1. 5. A condition for adjustment because
different commercial levels or different quantities is that such adjustment, whether it leads to an increase or a decrease in the value, be made only on the basis
demonstrated evidence that clearly establishes the reasonableness and accuracy
the adjustment, e.g. valid price lists containing prices referring to different levels or different quantities. As an example
this, if the imported goods being valued consist
a shipment
10 units and the only similar imported goods for which a transaction value exists involved a sale
500 units, and it is recognized that the seller grants quantity discounts, the required adjustment may be accomplished by resorting to the seller's price list and using that price applicable to a sale
10 units. This does not require that a sale had to have been made in quantities
10 as long as the price list has been established as being bona fide through sales at other quantities. In the absence
such an objective measure, however, the determination
a customs value under the provisions
Note to Article 5 1. The term 'unit price at which . . . goods are sold in the greatest aggregate quantity' means the price at which the greatest number
units is sold in sales to persons who are not related to the persons from whom they buy such goods at the first commercial level after importation at which such sales take place. 2. As an example
this, goods are sold from a price list which grants favourable unit prices for purchases made in larger quantities. >TABLE POSITION> The greatest number
units sold at a price is 80; therefore, the unit price in the greatest aggregate quantity is 90. 3. As another example
this, two sales occur. In the first sale 500 units are sold at a price
95 currency units each. In the second sale 400 units are sold at a price
90 currency units each. In this example, the greatest number
units sold at a particular price is 500; therefore, the unit price in the greatest aggregate quantity is
units sold at a particular price is 65; therefore, the unit price in the greatest aggregate quantity is
charge or at reduced cost for use in connection with the production and sale for export
the imported goods any
the elements specified in paragraph 1(b)
, should not be taken into account in establishing the unit price for the purposes
It should be noted that 'profit and general expenses' referred to in paragraph 1
The figure for the purposes
this deduction should be determined on the basis
information supplied by or on behalf
the importer unless the importer's figures are inconsistent with those obtained in sales in the country
importation
imported goods
the same class or kind. Where the importer's figures are inconsistent with such figures, the amount for profit and general expenses may be based upon relevant information other than that supplied by or on behalf
the importer. 7. The 'general expenses' include the direct and indirect costs
marketing the goods in question. 8. Local taxes payable by reason
the sale
the goods for which a deduction is not made under the provisions
paragraph 1(a)(iv)
shall be deducted under the provisions
paragraph 1(a)(i)
In determining either the commissions or the usual profits and general expenses under the provisions
paragraph 1
, the question whether certain goods are '
the same class or kind' as other goods must be determined on a case-by-case basis by reference to the circumstances involved. Sales in the country
importation
the narrowest group or range
imported goods
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
, 'goods
the same class or kind' includes goods imported from the same country as the goods being valued as well as goods imported from other countries. 10. For he purposes
paragraph 1(b)
, the 'earliest date' shall be the date by which sales
the imported goods or
identical or similar imported goods are made in sufficient quantity to establish the unit price. 11. Where the method in paragraph 2
is used, deductions made for the value added by further processing shall be based on objective and quantifiable data relating to the cost
such work. Accepted industry formulas, recipes, methods
construction, and other industry practices would form the basis
the calculations. 12. It is recognized that the method
valuation provided for in paragraph 2
would normally not be applicable when, as a result
the further processing, the imported goods lose their identity. However, there can be instances where, although the identity
the imported goods is lost, the value added by the processing can be determined accurately without unreasonable difficulty. On the other hand, there can also be instances where the imported goods maintain their identity but form such a minor element in the goods sold in the country
importation that the use
this valuation method would be unjustified. In view
the above, each situation
this type must be considered on a case-by-case basis. Note to Article 6 1. As a general rule, customs value is determined under this Agreement on the basis
information readily available in the country
importation. In order to determine a computed value, however, it may be necessary to examine the costs
producing the goods being valued and other information which has to be obtained from outside the country
importation. Furthermore, in most cases the producer
the goods will be outside the jurisdiction
the authorities
the country
importation. The use
the computed value method will generally be limited to those cases where the buyer and seller are related, and the producer is prepared to supply to the authorities
the country
importation the necessary costings and to provide facilities for any subsequent verification which may be necessary. 2. The 'cost or value' referred to in paragraph 1(a)
is to be determined on the basis
information relating to the production
the goods being valued supplied by or on behalf
the producer. It is to be based upon the commercial accounts
the producer, provided that such accounts are consistent with the generally accepted accounting principles applied in the country where the goods are produced. 3. The 'cost or value' shall include the cost
elements specified in paragraphs 1(a)(ii) and (iii)
. It shall also include the value, apportioned as appropriate under the provisions
the relevant note to Article 8,
any element specified in paragraph 1(b)
which has been supplied directly or indirectly by the buyer for use in connection with the production
the imported goods. The value
the elements specified in paragraph 1(b)(iv)
which are undertaken in the country
importation shall be included only to the extent that such elements are charged to the producer. It is to be understood that no cost or value
the elements referred to in this paragraph shall be counted twice in determining the computed value. 4. The 'amount for profit and general expenses' referred to in paragraph 1(b)
is to be determined on the basis
information supplied by or on behalf
the producer unless the producer's figures are inconsistent with those usually reflected in sales
goods
the same class or kind as the goods being valued which are made by producers in the country
exportation for export to the country
importation. 5. It should be noted in this context that the 'amount for profit and general expenses' has to be taken as a whole. It follows that if, in any particular case, the producer's profit figure is low and the producer's general expenses are high, the producer's profit and general expenses taken together may nevertheless be consistent with that usually reflected in sales
goods
the same class or kind. Such a situation might occur, for example, if a product were being launched in the country
importation and the producer accepted a nil or low profit to
fset high general expenses associated with the launch. Where the producer can demonstrate a low profit on sales
the imported goods because
particular commercial circumstances, the producer's actual profit figures should be taken into account provided that the producer has valid commercial reasons to justify them and the producer's pricing policy reflects usual pricing policies in the branch
industry concerned. Such a situation might occur, for example, where producers have been forced to lower prices temporarily because
an unforeseeable drop in demand, or where they sell goods to complement a range
goods being produced in the country
importation and accept a low profit to maintain competitivity. Where the producer's own figures for profit and general expenses are not consistent with those usually reflected in sales
goods
the same class or kind as the goods being valued which are made by producers in the country
exportation for export to the country
importation, the amount for profit and general expenses may be based upon relevant information other than that supplied by or on behalf
the producer
the goods. 6. Where information other than that supplied by or on behalf
the producer is used for the purposes
determining a computed value, the authorities
the importing country shall inform the importer, if the latter so requests,
the source
such information, the data used and the calculations based upon such data, subject to the provisions
The 'general expenses' referred to in paragraph 1(b)
covers the direct and indirect costs
producing and selling the goods for export which are not included under paragraph 1(a)
Whether certain goods are '
the same class or kind' as other goods must be determined on a case-by-case basis with reference to the circumstances involved. In determining the usual profits and general expenses under the provisions
, sales for export to the country
importation
the narrowest group or range
goods, which includes the goods being valued, for which the necessary information can be provided, should be examined. For the purposes
, 'goods
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
should, to the greatest extent possible, be based on previously determined customs values. 2. The methods
valuation to be employed under Article 7 should be those laid down in Articles 1 through 6 but a reasonable flexibility in the application
such methods would be in conformity with the aims and provisions
Some examples
reasonable flexibility are as follows: (a) Identical goods - the requirement that the identical goods should be exported at or about the same time as the goods being valued could be flexibly interpreted; identical imported goods produced in a country other than the country
exportation
the goods being valued could be the basis for customs valuation; customs values
identical imported goods already determined under the provisions
Articles 5 and 6 could be used. (b) Similar goods - the requirement that the similar goods should be exported at 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
exportation
the goods being valued could be the basis for customs valuation; customs values
similar imported goods already determined under the provisions
Articles 5 and 6 could be used. (c) Deductive method - the requirement that the goods shall have been sold in the 'condition as imported' in paragraph 1(a)
could be flexibly interpreted; the '90 days' requirement could be administered flexibly. Note to Article 8 Paragraph 1(a)(i) The term 'buying commissions' means fees paid by an importer to the importer's agent for the service
representing the importer abroad in the purchase
the goods being valued. Paragraph 1(b)(ii) 1. There are two factors involved in the apportionment
the elements specified in paragraph 1(b)(ii)
to the imported goods - the value
the element itself and the way in which that value is to be apportioned to the imported goods. The apportionment
these elements should be made in a reasonable manner appropriate to the circumstances and in accordance with generally accepted accounting principles. 2. Concerning the value
the element, if the importer acquires the element from a seller not related to the importer at a given cost, the value
the element is that cost. If the element was produced by the importer or by a person related to the importer, its value would be the cost
producing it. If the element had been previously used by the importer, regardless
whether it had been acquired or produced by such importer, the original cost
acquisition or production would have to be adjusted downward to reflect its use in order to arrive at the value
the element. 3. Once a value has been determined for the element, it is necessary 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 value at one time. As another example, the importer may request that the value be apportioned over the number
units produced up to the time
the first shipment. As a further example, the importer may request that the value be apportioned over the entire anticipated production where contracts or firm commitments exist for that production. The method
apportionment used will depend upon the documentation provided by the importer. 4. As an illustration
the above, an importer provides the producer with a mould to be used in the production
the imported goods and contracts with the producer to buy 10 000 units. By the time
arrival
the first shipment
1 000 units, the producer has already produced 4 000 units. The Importer may request the customs administration to apportion the value
the mould over 1 000 units, 4 000 units or 10 000 units. Paragraph 1(b)(iv) 1. Additions for the elements specified in paragraph 1(b)(iv)
In order to minimize the burden for both the importer and 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 purchased or leased by the buyer, the addition would be the cost
the purchase or the lease. No addition shall be made for those elements available in the public domain, other than the cost
obtaining copies
them.
products from several countries maintains the records
its design centre outside the country
importation in such a way as to show accurately the costs attributable to a given product. In such cases, a direct adjustment may appropriately be made under the provisions
In another case, a firm may carry the cost
the design centre outside the country
importation as a general overhead expense without allocation to specific products. In this instance, an appropriate adjustment could be made under the provisions
with respect to the imported goods by apportioning total design centre costs over total production benefiting from the design centre and adding such apportioned cost on a unit basis to imports. 6. Variations in the above circumstances will,
course, require different factors to be considered in determining the proper method
allocation. 7. In cases where the production
the element in question involves a number
countries and over a period
time, the adjustment should be limited to the value actually added to that element outside the country
importation. Paragraph 1(c) 1. The royalties and licence fees referred to in paragraph 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
importation shall not be added 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 resell the imported goods shall not be added to the price actually paid or payable for the imported goods if such payments are not a condition
the sale for export to the country
importation
the imported goods. Paragraph 3 Where objective and quantifiable data do not exist with regard to the additions required to be made under the provisions
, the transaction value cannot be determined under the provisions
. As an illustration
this, a royalty is paid on the basis
the price in a sale in the importing country
a litre
a particular product that was imported by the kilogram and made up into a solution after importation. If the royalty is based partially on the imported 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 identifiable, or when the royalty cannot be distinguished from special financial arrangements between the buyer and the seller), it would be inappropriate to attempt to make an addition for the royalty. However, if the amount
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
, 'time
importation' may include the time
entry for customs purposes. Note to Article 11
fine merely because the importer chose to exercise the right
appeal. Payment
normal court costs and lawyers' fees shall not be considerd to be a fine. 3. However, nothing in Article 11 shall prevent a Member from requiring full payment
assessed customs duties prior to an appeal. Note to Article 15 Paragraph 4 For the purposes
Paragraph 4(e) For the purpose
this Agreement, one person shall be deemed to control another when the former is legally or operationally in a position to exercise restraint or direction over the latter. ANNEX II TECHNICAL COMMITTEE ON CUSTOMS VALUATION 1. In accordance with Article 18
this Agreement, the Technical Committee shall be established under the auspices
the CCC with a view to ensuring, at the technical level, uniformity in interpretation and application
this Agreement. 2. The responsibilities
the Technical Committee shall include the following: (a) to examine specific technical problems arising in the day-to-day administration
the customs valuation system
Members and to give advisory opinions on appropriate solutions based upon the facts presented; (b) to study, as requested, valuation laws, procedures and practices as they relate to this Agreement and to prepare reports on the results
such studies; (c) to prepare and circulate annual reports on the technical aspects
the operation and status
this Agreement; (d) to furnish such information and advice on any matters concerning the valuation
imported goods for customs purposes as may be requested by any Member or the Committee. Such information and advice may take the form
advisory opinions, commentaries or explanatory notes; (e) to facilitate, as requested, technical assistance to Members with a view to furthering the international acceptance
this Agreement; (f) to carry out an examination
a matter referred to it by a panel under Article 19
this Agreement; and (g) to exercise such other responsibilities as the Committee may assign to it. General 3. The Technical Committee shall attempt to conclude its work on specific matters, especially those referred to it by Members, the Committee or a panel, in a reasonably short period
time. As provided in paragraph 4
, a panel shall set a specific time period for receipt
a report
the Technical Committee and the Technical Committee shall provide its report within that period.
the Technical Committee'. Representatives
members
the Technical Committee may be assisted by advisers. The WTO Secretariat may also attend such meetings with observer status. 6. Members
the CCC which are not Members
the WTO may be represented at meetings
the Technical Committee by one delegate and one or more alternates. Such representatives shall attend meetings
the Technical Committee as observers. 7. Subject to the approval
the Chairman
the Technical Committee, the Secretary-General
the CCC (referred to in this Annex as 'the Secretary-General') may invite representatives
governments which are neither Members
the WTO nor members
the CCC and representatives
international governmental and trade organizations to attend meetings
the Technical Committee as observers. 8. Nominations
delegates, alternates and advisers to meetings
the Technical Committee shall be made to the Secretary-General. Technical Committee Meetings 9. The Technical Committee shall meet as necessary but at least two times a year. The date
each meeting shall be fixed by the Technical Committee at its preceding session. The date
the meeting may be varied either at the request
any member
the Technical Committee concurred in by a simple majority
the members
the Technical Committee or, in cases requiring urgent attention, at the request
the Chairman. Notwithstanding the provisions in sentence 1
this paragraph, the Technical Committee shall meet as necessary to consider matters referred to it by a panel under the provisions
this Agreement. 10. The meetings
the Technical Committee shall be held at the headquarters
the CCC unless otherwise decided. 11. The Secretary-General shall inform all members
the Technical Committee and those included under paragraphs 6 and 7 at least 30 days in advance, except in urgent cases,
the opening date
each session
the Technical Committee. Agenda 12. A provisional agenda for each session shall be drawn up by the Secretary-General and circulated to the members
the Technical Committee and to those included under paragraphs 6 and 7 at least 30 days in advance
the session, except in urgent cases. This agenda shall comprise all items whose inclusion has been approved by the Technical Committee during its preceding session, all items included by the Chairman on the Chairman's own initiative, and all items whose inclusion has been requested by the Secretary-General, by the Committee or by any member
the Technical Committee. 13. The Technical Committee shall determine its agenda at the opening
each session. During the session the agenda may be altered at any time by the Technical Committee.
ficers and Conduct
Business 14. The Technical Committee shall elect from among the delegates
its members a Chairman and one or more Vice-Chairmen. The Chairman and Vice-Chairmen shall each hold
fice for a period
one year. The retiring Chairman and Vice-Chairmen are eligible for re-election. The mandate
a Chairman or Vice-Chairman who no longer represents a member
the Technical Committee shall terminate automatically.
the meeting shall participate in the proceedings
the Technical Committee as such and not as the representative
a member
the Technical Committee. 17. In addition to exercising the other powers conferred upon the Chairman by these rules, the Chairman shall declare the opening and closing
each meeting, direct the discussion, accord the right to speak, and, pursuant to these rules, have control
the proceedings. The Chairman may also call a speaker to order if the speaker's remarks are not relevant. 18. During discussion
any matter a delegation may raise a point
order. In this event, the Chairman shall immediately state a ruling. If this ruling is challenged, the Chairman shall submit it to the meeting for decision and it shall stand unless overruled. 19. The Secretary-General, or
ficers
the CCC Secretariat designated by the Secretary-General, shall perform the secretarial work
meetings
the Technical Committee. Quorum and Voting 20. Representatives
a simple majority
the members
the Technical Committee shall constitute a quorum. 21. Each member
the Technical Committee shall have one vote. A decision
the Technical Committee shall be taken by a majority comprising at least two-thirds
the members present. Regardless
the outcome
the vote on a particular matter, the Technical Committee shall be free to make a full report to the Committee and to the CCC on that matter indicating the different views expressed in the relevant discussions. Notwithstanding the above provisions
this paragraph, on matters referred to it by a panel, the Technical Committee shall take decisions by consensus. Where no agreement is reached in the Technical Committee on the question referred to it by a panel, the Technical Committee shall provide a report detailing the facts
the matter and indicating the views
the members. Languages and Records 22. The
ficial languages
the Technical Committee shall be English, French and Spanish. Speeches or statements made in any
these three languages shall be immediately translated into the other
ficial languages unless all delegations agree to dispense with translation. 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 translation into English, French or Spanish. Only English, French and Spanish shall be used for the
ficial documents
the Technical Committee. Memoranda and correspondence for the consideration
the Technical Committee must be presented in one
the
ficial languages. 23. The Technical Committee shall draw up a report
all its sessions and, if the Chairman considers it necessary, minutes or summary records
its meetings. The Chairman or a designee
the Chairman shall report on the work
the Technical Committee at each meeting
the Committee and at each meeting
the CCC. ANNEX III 1. The five-year delay in the application
the provisions
the Agreement by developing country Members provided for in paragraph 1
In such cases a developing country Member may request before the end
the period referred to in paragraph 1
an extension
such period, it being understood that the Members will give sympathetic consideration to such a request in cases where the developing country Member in question can show good cause. 2. Developing countries which currently value goods on the basis
ficially established minimum values may wish to make a reservation to enable them to retain such values on a limited and transitional basis under such terms and conditions as may be agreed to by the Members. 3. Developing countries which consider that the reversal
the sequential order at the request
the importer provided for in Article 4
the Agreement may give rise to real difficulties for them, may wish to make a reservation to Article 4 in the following terms: 'The Government
. . . . . . reserves the right to provide that the relevant provision
the Agreement shall apply only when the customs authorities agree to the request to reverse the order
Articles 5 and 6.' If developing countries make such a reservation, the Members shall consent to it under Article 21
the Agreement. 4. Developing countries may wish to make a reservation with respect to paragraph 2
the Agreement in the following terms: 'The Government
. . . . . . reserves the right to provide that paragraph 2
the Agreement shall be applied in accordance with the provisions
the relevant note thereto whether or not the importer so requests.' If developing countries make such a reservation, the Members shall consent to it under Article 21
the Agreement. 5. Certain developing countries may have problems in the implementation
the Agreement insofar as it relates to importations into their countries by sole agents, sole distributors and sole concessionaires. If such problems arise in practice in developing country Members applying the Agreement, a study
this question shall be made, at the request
such Members, with a view to finding appropriate solutions. 6. Article 17 recognizes that in applying the Agreement, customs adminstrations may need to make enquiries concerning the truth or accuracy
any statement, document or declaration presented to them for customs valuation purposes. The Article thus acknowledges that enquiries may be made which are, for example, aimed at verifying that the elements
value declared or presented to customs in connection with a determination
customs value are complete and correct. Members, subject to their national laws and procedures, have the right to expect the full cooperation
importers in these enquiries. 7. The price actually paid or payable includes all payments actually made or to be made as a condition
sale
the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation
the seller.
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