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AGREEMENT ON IMPLEMENTATION OF ARTICLE VII
OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994
 

                                    GENERAL INTRODUCTORY COMMENTARY  

1.         The primary basis for customs value under this Agreement is "transaction value" as defined in Article 1.  Article 1 is to be read together with Article 8 which provides, inter alia, for adjustments to the price actually paid or payable in cases where certain specific elements which are considered to form a part of 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 of certain considerations which may pass from the buyer to the seller in the form of specified goods or services rather than in the form of money.  Articles 2 through 7 provide methods of determining the customs value whenever it cannot be determined under the provisions of Article 1.  

2.         Where the customs value cannot be determined under the provisions of Article 1 there should normally be a process of consultation between the customs administration and importer with a view to arriving at a basis of value under the provisions of Article 2 or 3.  It may occur, for example, that the importer has information about the customs value of identical or similar imported goods which is not immediately available to the customs administration in the port of importation.  On the other hand, the customs administration may have information about the customs value of identical or similar imported goods which is not readily available to the importer.  A process of consultation between the two parties will enable information to be exchanged, subject to the requirements of commercial confidentiality, with a view to determining a proper basis of 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 of the transaction value of the imported goods or of identical or similar imported goods.  Under paragraph 1 of Article 5 the customs value is determined on the basis of the price at which the goods are sold in the condition as imported to an unrelated buyer in the country of importation.  The importer also has the right to have goods which are further processed after importation valued under the provisions of Article 5 if the importer so requests.  Under Article 6 the customs value is determined on the basis of the computed value.  Both these methods present certain difficulties and because of this the importer is given the right, under the provisions of Article 4, to choose the order of application of the two methods.  

4.         Article 7 sets out how to determine the customs value in cases where it cannot be determined under the provisions of any of the preceding Articles. 
  

Members,  

            Having regard to the Multilateral Trade Negotiations;  

            Desiring to further the objectives of GATT 1994 and to secure additional benefits for the international trade of developing countries;  

            Recognizing the importance of the provisions of Article VII of 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 of goods for customs purposes that precludes the use of arbitrary or fictitious customs values;  

            Recognizing that the basis for valuation of goods for customs purposes should, to the greatest extent possible, be the transaction value of the goods being valued;  

            Recognizing that customs value should be based on simple and equitable criteria consistent with commercial practices and that valuation procedures should be of general application without distinction between sources of 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 of 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 of importation adjusted in accordance with the provisions of Article 8, provided:  

            (a)        that there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which:  

                        (i)         are imposed or required by law or by the public authorities in the country of importation;  

                        (ii)        limit the geographical area in which the goods may be resold;  or  

                        (iii)       do not substantially affect the value of the goods;  

            (b)        that the sale or price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued;  

            (c)        that no part of the proceeds of any subsequent resale, disposal or use of 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 of Article 8;  and  

            (d)       that the buyer and seller are not related, or where the buyer and seller are related, that the transaction value is acceptable for customs purposes under the provisions of paragraph 2.  

2.         (a)        In determining whether the transaction value is acceptable for the purposes of paragraph 1, the fact that the buyer and the seller are related within the meaning of Article 15 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 of 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 of 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 of paragraph 1 whenever the importer demonstrates that such value closely approximates to one of the following occurring at or about the same time:  

                        (i)         the transaction value in sales to unrelated buyers of identical or similar goods for export to the same country of importation;  

                        (ii)        the customs value of identical or similar goods as determined under the provisions of Article 5;  

                        (iii)       the customs value of identical or similar goods as determined under the provisions of Article 6;  

                        In applying the foregoing tests, due account shall be taken of 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 2(b) are to be used at the initiative of the importer and only for comparison purposes.  Substitute values may not be established under the provisions of paragraph 2(b).                                                                        


Article 2

1.         (a)        If the customs value of the imported goods cannot be determined under the provisions of Article 1, the customs value shall be the transaction value of identical goods sold for export to the same country of importation and exported at or about the same time as the goods being valued.  

            (b)        In applying this Article, the transaction value of 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 of identical goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or a decrease in the value.  

2.         Where the costs and charges referred to in paragraph 2 of Article 8 are included in the transaction value, an adjustment shall be made to take account of significant differences in such costs and charges between the imported goods and the identical goods in question arising from differences in distances and modes of transport.

3.         If, in applying this Article, more than one transaction value of identical goods is found, the lowest such value shall be used to determine the customs value of the imported goods.  
                                                                       


Article 3

 

1.         (a)        If the customs value of the imported goods cannot be determined under the provisions of Articles 1 and 2, the customs value shall be the transaction value of similar goods sold for export to the same country of importation and exported at or about the same time as the goods being valued.  

            (b)        In applying this Article, the transaction value of 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 of similar goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or a decrease in the value.  

2.         Where the costs and charges referred to in paragraph 2 of Article 8 are included in the transaction value, an adjustment shall be made to take account of significant differences in such costs and charges between the imported goods and the similar goods in question arising from differences in distances and modes of transport.  

3.         If, in applying this Article, more than one transaction value of similar goods is found, the lowest such value shall be used to determine the customs value of the imported goods.  
                                                                     


Article 4  

            If the customs value of the imported goods cannot be determined under the provisions of Articles 1, 2 and 3, the customs value shall be determined under the provisions of Article 5 or, when the customs value cannot be determined under that Article, under the provisions of Article 6 except that, at the request of the importer, the order of application of Articles 5 and 6 shall be reversed.                                                                       


Article 5  

1.         (a)        If the imported goods or identical or similar imported goods are sold in the country of importation in the condition as imported, the customs value of the imported goods under the provisions of this Article 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 of the importation of 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 of imported goods of the same class or kind;  

                        (ii)        the usual costs of transport and insurance and associated costs incurred within the country of importation;  

                        (iii)       where appropriate, the costs and charges referred to in paragraph 2 of Article 8;  and  

                        (iv)       the customs duties and other national taxes payable in the country of importation by reason of the importation or sale of the goods.  

            (b)        If neither the imported goods nor identical nor similar imported goods are sold at or about the time of importation of the goods being valued, the customs value shall, subject otherwise to the provisions of 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 of importation in the condition as imported at the earliest date after the importation of the goods being valued but before the expiration of 90 days after such importation.  

2.         If neither the imported goods nor identical nor similar imported goods are sold in the country of 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 of 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 of imported goods under the provisions of this Article shall be based on a computed value.  Computed value shall consist of the sum of:  

            (a)        the cost or value of 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 of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to the country of importation;  

            (c)        the cost or value of all other expenses necessary to reflect the valuation option chosen by the Member under paragraph 2 of Article 8.  

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 of determining a computed value.  However, information supplied by the producer of the goods for the purposes of determining the customs value under the provisions of this Article may be verified in another country by the authorities of the country of importation with the agreement of the producer and provided they give sufficient advance notice to the government of the country in question and the latter does not object to the investigation.                                                                       


Article 7  

1.         If the customs value of the imported goods cannot be determined under the provisions of Articles 1 through 6, inclusive, the customs value shall be determined using reasonable means consistent with the principles and general provisions of this Agreement and of Article VII of GATT 1994 and on the basis of data available in the country of importation.  

2.         No customs value shall be determined under the provisions of this Article on the basis of:  

            (a)        the selling price in the country of importation of goods produced in such country;  

            (b)        a system which provides for the acceptance for customs purposes of the higher of two alternative values;  

            (c)        the price of goods on the domestic market of the country of exportation;  

            (d)       the cost of production other than computed values which have been determined for identical or similar goods in accordance with the provisions of Article 6;  

            (e)        the price of the goods for export to a country other than the country of importation;  

            (f)        minimum customs values;  or  

            (g)        arbitrary or fictitious values.  

3.         If the importer so requests, the importer shall be informed in writing of the customs value determined under the provisions of this Article and the method used to determine such value.  
                                                                       


Article 8  

1.         In determining the customs value under the provisions of Article 1, there shall be added to the price actually paid or payable for the imported goods:  

            (a)        the following, to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the goods:  

                        (i)         commissions and brokerage, except buying commissions;  

                        (ii)        the cost of containers which are treated as being one for customs purposes with the goods in question;  

                        (iii)       the cost of packing whether for labour or materials;  

            (b)        the value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of the imported goods, to the extent that such value has not been included in the price actually paid or payable:  

                        (i)         materials, components, parts and similar items incorporated in the imported goods;  

                        (ii)        tools, dies, moulds and similar items used in the production of the imported goods;  

                        (iii)       materials consumed in the production of the imported goods;  

                        (iv)       engineering, development, artwork, design work, and plans and sketches undertaken elsewhere than in the country of importation and necessary for the production of 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 of sale of 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 of any part of the proceeds of any subsequent resale, disposal or use of 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, of the following:  

            (a)        the cost of transport of the imported goods to the port or place of importation;  

            (b)        loading, unloading and handling charges associated with the transport of the imported goods to the port or place of importation;  and  

            (c)        the cost of insurance.  

3.         Additions to the price actually paid or payable shall be made under this Article only on the basis of objective and quantifiable data.  

4.         No additions shall be made to the price actually paid or payable in determining the customs value except as provided in this Article.                                                                      


Article 9  

1.         Where the conversion of currency is necessary for the determination of the customs value, the rate of exchange to be used shall be that duly published by the competent authorities of the country of importation concerned and shall reflect as effectively as possible, in respect of the period covered by each such document of publication, the current value of such currency in commercial transactions in terms of the currency of the country of importation.  

2.         The conversion rate to be used shall be that in effect at the time of exportation or the time of importation, as provided by each Member.                                                                        


Article 10

            All information which is by nature confidential or which is provided on a confidential basis for the purposes of customs valuation shall be treated as strictly confidential by the authorities concerned who shall not disclose it without the specific permission of the person or government providing such information, except to the extent that it may be required to be disclosed in the context of judicial proceedings.  
                                                                      


Article 11  

1.         The legislation of each Member shall provide in regard to a determination of customs value for the right of appeal, without penalty, by the importer or any other person liable for the payment of the duty.  

2.         An initial right of appeal without penalty may be to an authority within the customs administration or to an independent body, but the legislation of each Member shall provide for the right of appeal without penalty to a judicial authority.

3.         Notice of 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 of any rights of further appeal.  
                                                                      


Article 12  

            Laws, regulations, judicial decisions and administrative rulings of general application giving effect to this Agreement shall be published in conformity with Article X of GATT 1994 by the country of importation concerned.                                                                      


Article 13  

            If, in the course of determining the customs value of imported goods, it becomes necessary to delay the final determination of such customs value, the importer of the goods shall nevertheless be able to withdraw them from customs if, where so required, the importer provides sufficient guarantee in the form of a surety, a deposit or some other appropriate instrument, covering the ultimate payment of customs duties for which the goods may be liable.  The legislation of each Member shall make provisions for such circumstances.                                                                       


Article 14  

            The notes at Annex I to this Agreement form an integral part of this Agreement and the Articles of this Agreement are to be read and applied in conjunction with their respective notes.  Annexes II and III also form an integral part of this Agreement.  
                                                                    


Article 15

1.         In this Agreement:  

            (a)        "customs value of imported goods" means the value of goods for the purposes of levying ad valorem duties of customs on imported goods;  

            (b)        "country of importation" means country or customs territory of importation;  and  

            (c)        "produced" includes grown, manufactured and mined.  

2.         In this Agreement:  

            (a)        "identical goods" means goods which are the same in all respects, including physical characteristics, quality and reputation.  Minor differences in appearance would not preclude goods otherwise conforming to the definition from being regarded as identical;  

            (b)        "similar goods" means goods which, although not alike in all respects, have like characteristics and like component materials which enable them to perform the same functions and to be commercially interchangeable.  The quality of the goods, their reputation and the existence of 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) of Article 8 because such elements were undertaken in the country of importation;

            (d)       goods shall not be regarded as "identical goods" or "similar goods" unless they were produced in the same country as the goods being valued;  

            (e)        goods produced by a different person shall be taken into account only when there are no identical goods or similar goods, as the case may be, produced by the same person as the goods being valued.  

3.         In this Agreement "goods of the same class or kind" means goods which fall within a group or range of goods produced by a particular industry or industry sector, and includes identical or similar goods.  

4.         For the purposes of this Agreement, persons shall be deemed to be related only if:  

            (a)        they are officers or directors of one another's businesses;  

            (b)        they are legally recognized partners in business;  

            (c)        they are employer and employee;  

            (d)       any person directly or indirectly owns, controls or holds 5 per cent or more of the outstanding voting stock or shares of both of them;  

            (e)        one of them directly or indirectly controls the other;  

            (f)        both of them are directly or indirectly controlled by a third person;  

            (g)        together they directly or indirectly control a third person;  or  

            (h)       they are members of 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, of the other shall be deemed to be related for the purposes of this Agreement if they fall within the criteria of paragraph 4.    
                                                                      


Article 16  

            Upon written request, the importer shall have the right to an explanation in writing from the customs administration of the country of importation as to how the customs value of the importer?s goods was determined.                                                                      


Article 17  

            Nothing in this Agreement shall be construed as restricting or calling into question the rights of customs administrations to satisfy themselves as to the truth or accuracy of 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 of representatives from each of 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 of this Agreement, for the purpose of affording Members the opportunity to consult on matters relating to the administration of the customs valuation system by any Member as it might affect the operation of this Agreement or the furtherance of 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 of 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 of 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 of 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 of any objective of this Agreement is being impeded, as a result of the actions of another Member or of other Members, it may, with a view to reaching a mutually satisfactory solution of 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.  

3.         The Technical Committee shall provide, upon request, advice and assistance to Members engaged in consultations.  

4.         At the request of a party to the dispute, or on its own initiative, a panel established to examine a dispute relating to the provisions of this Agreement may request the Technical Committee to carry out an examination of any questions requiring technical consideration.  The panel shall determine the terms of reference of the Technical Committee for the particular dispute and set a time period for receipt of the report of the Technical Committee.  The panel shall take into consideration the report of 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 of such information by the panel is not authorized, a non-confidential summary of 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 of Article VII of the General Agreement on Tariffs and Trade done on 12 April 1979 may delay application of the provisions of this Agreement for a period not exceeding five years from the date of entry into force of the WTO Agreement for such Members.  Developing country Members who choose to delay application of this Agreement shall notify the Director-General of the WTO accordingly.  

2.         In addition to paragraph 1, developing country Members not party to the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade done on 12 April 1979 may delay application of paragraph 2(b)(iii) of Article 1 and Article 6 for a period not exceeding three years following their application of all other provisions of this Agreement.  Developing country Members that choose to delay application of the provisions specified in this paragraph shall notify the Director-General of 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 of technical assistance which may include, inter alia, training of personnel, assistance in preparing implementation measures, access to sources of information regarding customs valuation methodology, and advice on the application of the provisions of this Agreement.  
                                                                      


PART IV
FINAL PROVISIONS

Article 21 

Reservations  

            Reservations may not be entered in respect of any of the provisions of this Agreement without the consent of the other Members.                                                                     


Article 22

National Legislation

1.         Each  Member shall ensure, not later than the date of application of the provisions of this Agreement for it, the conformity of its laws, regulations and administrative procedures with the provisions of this Agreement.  

2.         Each Member shall inform the Committee of any changes in its laws and regulations relevant to this Agreement and in the administration of such laws and regulations.
 


Article 23

Review  

            The Committee shall review annually the implementation and operation of this Agreement taking into account the objectives thereof.  The Committee shall annually inform the Council for Trade in Goods of 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 of Valuation Methods  

1.         Articles 1 through 7 define how the customs value of imported goods is to be determined under the provisions of this Agreement.  The methods of valuation are set out in a sequential order of application.  The primary method for customs valuation is defined in Article 1 and imported goods are to be valued in accordance with the provisions of this Article whenever the conditions prescribed therein are fulfilled.  

2.         Where the customs value cannot be determined under the provisions of Article 1, 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 of a particular Article that the provisions of the next Article in the sequence can be used.  

3.         If the importer does not request that the order of Articles 5 and 6 be reversed, the normal order of the sequence is to be followed.  If the importer does so request but it then proves impossible to determine the customs value under the provisions of Article 6, the customs value is to be determined under the provisions of Article 5, if it can be so determined.  

4.         Where the customs value cannot be determined under the provisions of Articles 1 through 6 it is to be determined under the provisions of Article 7.  
 

Use of 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 of general application as well as detailed practices and procedures.  

2.         For the purposes of this Agreement, the customs administration of 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 of usual profit and general expenses under the provisions of Article 5 would be carried out utilizing information prepared in a manner consistent with generally accepted accounting principles of the country of importation.  On the other hand, the determination of usual profit and general expenses under the provisions of Article 6 would be carried out utilizing information prepared in a manner consistent with generally accepted accounting principles of the country of production.  As a further example, the determination of an element provided for in paragraph 1(b)(ii) of Article 8 undertaken in the country of importation would be carried out utilizing information in a manner consistent with the generally accepted accounting principles of that country.  

Note to Article 1

Price Actually Paid or Payable  

1.         The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods.  The payment need not necessarily take the form of a transfer of money.  Payment may be made by way of letters of credit or negotiable instruments.  Payment may be made directly or indirectly.  An example of an indirect payment would be the settlement by the buyer, whether in whole or in part, of a debt owed by the seller.  

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 of benefit to the seller.  The costs of 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:  

            (a)        charges for construction, erection, assembly, maintenance or technical assistance, undertaken after importation on imported goods such as industrial plant, machinery or equipment;  

            (b)        the cost of transport after importation;  

            (c)        duties and taxes of the country of importation.  

4.         The price actually paid or payable refers to the price for the imported goods.  Thus the flow of dividends or other payments from the buyer to the seller that do not relate to the imported goods are not part of the customs value.  

Paragraph 1(a)(iii)  

            Among restrictions which would not render a price actually paid or payable unacceptable are restrictions which do not substantially affect the value of the goods.  An example of such restrictions would be the case where a seller requires a buyer of automobiles not to sell or exhibit them prior to a fixed date which represents the beginning of a model year.  

Paragraph 1(b)  

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 of this include: 

            (a)        the seller establishes the price of the imported goods on condition that the buyer will also buy other goods in specified quantities;  

            (b)        the price of the imported goods is dependent upon the price or prices at which the buyer of the imported goods sells other goods to the seller of the imported goods;  

            (c)        the price is established on the basis of a form of 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 of the finished goods.  

2.         However, conditions or considerations relating to the production or marketing of the imported goods shall not result in rejection of the transaction value.  For example, the fact that the buyer furnishes the seller with engineering and plans undertaken in the country of importation shall not result in rejection of the transaction value for the purposes of Article 1.  Likewise, if the buyer undertakes on the buyer?s own account, even though by agreement with the seller, activities relating to the marketing of the imported goods, the value of these activities is not part of the customs value nor shall such activities result in rejection of the transaction value.  

Paragraph 2  

1.         Paragraphs 2(a) and 2(b) provide different means of establishing the acceptability of 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 of the circumstances in all cases where the buyer and the seller are related.  Such examination will only be required where there are doubts about the acceptability of the price.  Where the customs administration have no doubts about the acceptability of the price, it should be 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 of 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 of Article 15, 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 of this, if the price had been settled in a manner consistent with the normal pricing practices of 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 of all costs plus a profit which is representative of the firm's overall profit realized over a representative period of time (e.g. on an annual basis) in sales of goods of 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 of Article 1.  Where a test under paragraph 2(b) is met, it is not necessary to examine the question of influence under paragraph 2(a).  If the customs administration has already sufficient information to be satisfied, without further detailed inquiries, that one of the tests provided in paragraph 2(b) has been met, there is no reason for it to require the importer to demonstrate that the test can be met.  In paragraph 2(b) the term "unrelated buyers" means buyers who are not related to the seller in any particular case.  

Paragraph 2(b)  

            A number of factors must be taken into consideration in determining whether one value "closely approximates" to another value.  These factors include the nature of the imported goods, the nature of 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 of goods could be unacceptable while a large difference in a case involving another type of goods might be acceptable in determining whether the transaction value closely approximates to the "test" values set forth in paragraph 2(b) of Article 1.  
  

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