               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 to 7, inclusive, provide methods of 
determining the customs value whenever it cannot be determined under the 
provisions of Article 1. 

2.    Where the customs value cannot be 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 Articles 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 he 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 the GATT 1994 and to secure 
additional benefits for the international trade of developing countries; 

      Recognizing the importance of the provisions of Article VII of the 
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 of this 
           Article. 

2.    (a)  In determining whether the transaction value is acceptable for 
           the purposes of paragraph 1 of this Article, 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 he 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 of this Article 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 he and the buyer are not related 
           that are not incurred by the seller in sales in which he and the 
           buyer are related. 

      (c)  The tests set forth in paragraph 2(b) of this Article 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) of this Article. 

                               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) of this Article, 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 ninety 
           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) of this Article. 

                               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 to 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 the 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 he 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.  He shall also 
be informed of his rights of any further appeal. 

                               Article 12 

      Laws, regulations, judicial decisions and administrative rulings of 
general application giving effect to this Agreement shall be published in 
conformity with Article X of the 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 shall nevertheless be able to withdraw his goods from customs 
if, where so required, he 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.    (a)  In this Agreement "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)  In this Agreement "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 of this Article. 

                               Article 16 

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

                               Article 17 

      Nothing in this Agreement shall be construed as restricting or calling 
into question the rights of customs administrations to satisfy 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 

      There shall be established under this Agreement: 

1.    A Committee on Customs Valuation (hereinafter referred to 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 MTO Secretariat shall act as the secretariat to 
the Committee. 

2.    A Technical Committee on Customs Valuation (hereinafter referred to as 
"the Technical Committee") under the auspices of the Customs Co-operation 
Council (hereinafter referred to 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 Understanding on Rules and 
Procedures Governing the Settlement of Disputes 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 with 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 (1979) on 
Implementation of Article VII of the General Agreement on Tariffs and Trade, 
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 Agreement 
Establishing the MTO for such Members.  Developing country Members who 
choose to delay application of this Agreement shall notify the 
Director-General of the MTO accordingly. 

2.    In addition to paragraph 1 above, developing country Members, not 
party to the Agreement (1979) on Implementation of Article VII of the 
General Agreement on Tariffs and Trade, 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 MTO 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 MTO Secretariat except in 
regard to those responsibilities specifically assigned to the Technical 
Committee, which will be serviced by the Secretariat of the CCC. 











                                ANNEX I 

                          INTERPRETATIVE NOTES 

                              General Note 

Sequential Application of Valuation Methods 

1.    Articles 1 to 7, inclusive, define how the customs value of imported 
goods is to be determined under the provisions of this Agreement.  The 
methods of valuation 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 to 6, inclusive, it is to be determined under the provisions of 
Article 7. 

Use of Generally Accepted Accounting Principles 

1.    "Generally accepted accounting principles" refers to 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 

      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. 

      Activities undertaken by the buyer on his own account, other than 
those for which an adjustment is provided in Article 8, are not considered 
to be an indirect payment to the seller, even though they might be regarded 
as of benefit to the seller.  The costs of such activities shall not, 
therefore, be added to the price actually paid or payable in determining the 
customs value. 

      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. 

      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) 

      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 he will receive a specified quantity of 
           the finished goods. 

      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 his 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 him, 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. 

                           Note to Article 2 

1.    In applying Article 2, the customs administration shall, wherever 
possible, use a sale of identical goods at the same commercial level and in 
substantially the same quantities as the goods being valued.  Where no such 
sale is found, a sale of identical goods that takes place under any one of 
the following three conditions may be used: 

      (a)  a sale at the same commercial level but in different quantities; 

      (b)  a sale at a different commercial level but in substantially the 
           same quantities;  or 

      (c)  a sale at a different commercial level and in different 
           quantities. 

2.    Having found a sale under any one of these three conditions 
adjustments will then be made, as the case may be, for: 

      (a)  quantity factors only; 

      (b)  commercial level factors only;  or 

      (c)  both commercial level and quantity factors. 

3.    The expression "and/or" allows the flexibility to use the sales and 
make the necessary adjustments in any one of the three conditions described 
above. 

4.    For the purposes of Article 2, the transaction value of identical 
imported goods means a customs value, adjusted as provided for in paragraphs 
1(b) and 2 of this Article, which has already been accepted under Article 1. 

5.    A condition for adjustment because of different 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 of 
demonstrated evidence that clearly establishes the reasonableness and 
accuracy of the adjustments, e.g. valid price lists containing prices 
referring to different levels or different quantities.  As an example of 
this, if the imported goods being valued consist of a shipment of 10 units 
and the only identical imported goods for which a transaction value exists 
involved a sale of 500 units, and it is recognized that the seller grants 
quantity discounts, the required adjustment may be accomplished by resorting 
to the seller's price list and using that price applicable to a sale of 10 
units.  This does not require that a sale had to have been made in 
quantities of 10 as long as the price list has been established as being 
bona fide through sales at other quantities.  In the absence of such an 
objective measure, however, the determination of a customs value under the 
provisions of Article 2 is not appropriate. 


                           Note to Article 3 

1.    In applying Article 3, the customs administration shall, wherever 
possible, use a sale of similar goods at the same commercial level and in 
substantially the same quantities as the goods being valued.  Where no such 
sale is found, a sale of similar goods that takes place under any one of the 
following three conditions may be used: 

      (a)  a sale at the same commercial level but in different quantities; 

      (b)  a sale at a different commercial level but in substantially the 
           same quantities;  or 

      (c)  a sale at a different commercial level and in different 
           quantities. 

2.    Having found a sale under any one of these three conditions 
adjustments will then be made, as the case may be, for: 

      (a)  quantity factors only; 

      (b)  commercial level factors only;  or 

      (c)  both commercial level and quantity factors. 

3.    The expression "and/or" allows the flexibility to use the sales and 
make the necessary adjustments in any one of the three conditions described 
above. 

4.    For the purpose of Article 3, the transaction value of similar 
imported goods means a customs value, adjusted as provided for in paragraphs 
1(b) and 2 of this Article, which has already been accepted under Article 1. 

5.    A condition for adjustment because of different 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 of 
demonstrated evidence that clearly establishes the reasonableness and 
accuracy of the adjustment, e.g. valid price lists containing prices 
referring to different levels or different quantities.  As an example of 
this, if the imported goods being valued consist of a shipment of 10 units 
and the only similar imported goods for which a transaction value exists 
involved a sale of 500 units, and it is recognized that the seller grants 
quantity discounts, the required adjustment may be accomplished by resorting 
to the seller's price list and using that price applicable to a sale of 10 
units.  This does not require that a sale had to have been made in 
quantities of 10 as long as the price list has been established as being 
bona fide through sales at other quantities.  In the absence of such an 
objective measure, however, the determination of a customs value under the 
provisions of Article 3 is not appropriate. 

                           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 of 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 of this, goods are sold from a price list which grants 
favourable unit prices for purchases made in larger quantities. 




Sale quantity
           Unit price
                          
                          Number of sales Total quantity 
                                          sold at each price

1-10 units 100            10 sales of 5 units
                           5 sales of 3 units65

11-25 units95              5 sales of 11 units55

over 25 units90            1 sale of 30 units
                           1 sale of 50 units80
      The greatest number of units sold at a price is 80;  therefore, the 
unit price in the greatest aggregate quantity is 90. 

3.    As another example of this, two sales occur.  In the first sale 500 
units are sold at a price of 95 currency units each.  In the second sale 400 
units are sold at a price of 90 currency units each.  In this example, the 
greatest number of units sold at a particular price is 500;  therefore, the 
unit price in the greatest aggregate quantity is 95. 

4.    A third example would be the following situation where various 
quantities are sold at various prices. 



   (a)   Sales       

   Sale quantity     Unit price

   40 units          100 

   30 units          90

   15 units          100 

   50 units          95

   25 units          105 

   35 units          90

    5 units          100 


   (b) Totals        

   Total quantity soldUnit price

   65                90

   50                95

   60                100 

   25                105 
      In this example, the greatest number of units sold at a particular 
price is 65;  therefore, the unit price in the greatest aggregate quantity 
is 90. 

5.    Any sale in the importing country, as described in paragraph 1 above, 
to a person who supplies directly or indirectly free of charge or at reduced 
cost for use in connection with the production and sale for export of the 
imported goods any of the elements specified in paragraph 1(b) of Article 8, 
should not be taken into account in establishing the unit price for the 
purposes of Article 5. 

6.    It should be noted that "profit and general expenses" referred to in 
paragraph 1 of Article 5 should be taken as a whole.  The figure for the 
purposes of this deduction should be determined on the basis of information 
supplied by or on behalf of the importer unless his figures are inconsistent 
with those obtained in sales in the country of importation of imported goods 
of 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 of the 
importer. 

7.    The "general expenses" include the direct and indirect costs of 
marketing the goods in question. 

8.    Local taxes payable by reason of the sale of the goods for which a 
deduction is not made under the provisions of paragraph 1(a)(iv) of Article 
5 shall be deducted under the provisions of  paragraph 1(a)(i) of Article 5. 

9.    In determining either the commissions or the usual profits and general 
expenses under the provisions of paragraph 1 of Article 5, the question 
whether certain goods are "of 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 of importation of the narrowest group or 
range of imported goods of the same class or kind, which includes the goods 
being valued, for which the necessary information can be provided, should be 
examined.  For the purposes of Article 5, "goods of the same class or kind" 
includes goods imported from the same country as the goods being valued as 
well as goods imported from other countries. 

10.   For the purposes of paragraph 1(b) of Article 5, the "earliest date" 
shall be the date by which sales of the imported goods or of identical or 
similar imported goods are made in sufficient quantity to establish the unit 
price. 

11.   Where the method in paragraph 2 of Article 5 is used, deductions made 
for the value added by further processing shall be based on objective and 
quantifiable data relating to the cost of such work.  Accepted industry 
formulas, recipes, methods of construction, and other industry practices 
would form the basis of the calculations. 

12.   It is recognized that the method of valuation provided for in 
paragraph 2 of Article 5 would normally not be applicable when, as a result 
of the further processing, the imported goods lose their identity. However, 
there can be instances where, although the identity of 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 of importation that the use of this 
valuation method would be unjustified.  In view of the above, each situation 
of 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 of information readily available in the country of importation.  
In order to determine a computed value, however, it may be necessary to 
examine the costs of producing the goods being valued and other information 
which has to be obtained from outside the country of importation.  
Furthermore, in most cases the producer of the goods will be outside the 
jurisdiction of the authorities of the country of importation.  The use of 
the computed value method will generally be limited to those cases where the 
buyer and seller are related, and the producer is prepared to supply to the 
authorities of the country of 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) of Article 6 is to 
be determined on the basis of information relating to the production of the 
goods being valued supplied by or on behalf of the producer.  It is to be 
based upon the commercial accounts of 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 of elements specified in 
paragraphs 1(a)(ii) and (iii) of Article 8.  It shall also include the 
value, apportioned as appropriate under the provisions of the relevant note 
to Article 8, of any element specified in paragraph 1(b) of Article 8 which 
has been supplied directly or indirectly by the buyer for use in connection 
with the production of the imported goods.  The value of the elements 
specified in paragraph 1(b)(iv) of Article 8 which are undertaken in the 
country of 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 of 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) of Article 6 is to be determined on the basis of information supplied 
by or on behalf of the producer unless his figures are inconsistent with 
those usually reflected in sales of goods of the same class or kind as the 
goods being valued which are made by producers in the country of exportation 
for export to the country of importation. 

5.    It should be noted in this context that the "amount for 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 his general 
expenses are high, his profit and general expenses taken together may 
nevertheless be consistent with that usually reflected in sales of goods of 
the same class or kind.  Such a situation might occur, for example, if a 
product were being launched in the country of importation and the producer 
accepted a nil or low profit to offset high general expenses associated with 
the launch.  Where the producer can demonstrate that he is taking a low 
profit on his sales of the imported goods because of particular commercial 
circumstances, his actual profit figures should be taken into account 
provided that he has valid commercial reasons to justify them and his 
pricing policy reflects usual pricing policies in the branch of industry 
concerned.  Such a situation might occur, for example, where producers have 
been forced to lower prices temporarily because of an unforeseeable drop in 
demand, or where they sell goods to complement a range of goods being 
produced in the country of 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 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, the amount for profit and general expenses may be based upon 
relevant information other than that supplied by or on behalf of the 
producer of the goods. 

6.    Where information other than that supplied by or on behalf of the 
producer is used for the purposes of determining a computed value, the 
authorities of the importing country shall inform the importer, if the 
latter so requests, of the source of such information, the data used and the 
calculations based upon such data, subject to the provisions of Article 10. 

7.    The "general expenses" referred to in paragraph 1(b) of Article 6 
covers the direct and indirect costs of producing and selling the goods for 
export which are not included under paragraph 1(a) of Article 6. 

8.    Whether certain goods are "of 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 of Article 6, sales for export to the country 
of importation of the narrowest group or range of goods, which includes the 
goods being valued, for which the necessary information can be provided, 
should be examined.  For the purposes of Article 6, "goods of the same class 
or kind" must be from the same country as the goods being valued. 

                           Note to Article 7 

1.    Customs values determined under the provisions of Article 7 should, to 
the greatest extent possible, be based on previously determined customs 
values. 

2.    The methods of valuation to be employed under Article 7 should be 
those laid down in Articles 1 to 6, inclusive, but a reasonable flexibility 
in the application of such methods would be in conformity with the aims and 
provisions of Article 7. 

3.    Some examples of reasonable flexibility are as follows: 

      (a)  Identical goods - the requirement that the identical goods should 
           be 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 of exportation of the goods 
           being valued could be the basis for customs valuation;  customs 
           values of identical imported goods already determined under the 
           provisions of 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 of exportation of the goods 
           being valued could be the basis for customs valuation;  customs 
           values of similar imported goods already determined under the 
           provisions of Articles 5 and 6 could be used. 

      (c)  Deductive method - the requirement that the goods shall have been 
           sold in the "condition as imported" in paragraph 1(a) of Article 
           5 could be flexibly interpreted;  the "ninety 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 his 
agent for the service of representing him abroad in the purchase of the 
goods being valued. 

Paragraph 1(b)(ii) 

1.    There are two factors involved in the apportionment of the elements 
specified in paragraph 1(b)(ii) of Article 8 to the imported goods - the 
value of the element itself and the way in which that value is to be 
apportioned to the imported goods.  The apportionment of these elements 
should be made in a reasonable manner appropriate to the circumstances and 
in accordance with generally accepted accounting principles. 

2.    Concerning the value of the element, if the importer acquires the 
element from a seller not related to him at a given cost, the value of the 
element is that cost.  If the element was produced by the importer or by a 
person related to him, its value would be the cost of producing it.  If the 
element had been previously used by the importer, regardless of whether it 
had been acquired or produced by such importer, the original cost of 
acquisition or production would have to be adjusted downward to reflect its 
use in order to arrive at the value of 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 of units produced up to the time of the first shipment.  As a further 
example, he may request that the value be apportioned over the entire 
anticipated production where contracts or firm commitments exist for that 
production.  The method of apportionment used will depend upon the 
documentation provided by the importer. 

4.    As an illustration of the above, an importer provides the producer 
with a mould to be used in the production of the imported goods and 
contracts with him to buy 10,000 units.  By the time of arrival of the first 
shipment of 1,000 units, the producer has already produced 4,000 units.  The 
importer may request the customs administration to apportion the value of 
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) of Article 
8 should be based on objective and quantifiable data.  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 of the purchase or the 
lease.  No addition shall be made for those elements available in the public 
domain, other than the cost of obtaining copies of them. 

3.    The ease with which it may be possible to calculate the values to be 
added will depend on a particular firm's structure and management practice, 
as well as its accounting methods. 

4.    For example, it is possible that a firm which imports a variety of 
products from several countries maintains the records of its design centre 
outside the country of 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 of Article 8. 

5.    In another case, a firm may carry the cost of the design centre 
outside the country of importation as a general overhead expense without 
allocation to specific products.  In this instance, an appropriate 
adjustment could be made under the provisions of Article 8 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, of course, require 
different factors to be considered in determining the proper method of 
allocation. 

7.    In cases where the production of the element in question involves a 
number of countries and over a period of time, the adjustment should be 
limited to the value actually added to that element outside the country of 
importation. 

Paragraph 1(c) 

1.    The royalties and licence fees referred to in paragraph 1(c) of 
Article 8 may include, among other things, payments in respect to patents, 
trade marks and copyrights.  However, the charges for the right to reproduce 
the imported goods in the country of importation shall not be 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 of the sale for 
export to the country of importation of 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 of Article 8, the 
transaction value cannot be determined under the provisions of Article 1.  
As an illustration of this, a royalty is paid on the basis of the price in a 
sale in the importing country of a litre of a particular product that was 
imported 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 of this royalty is based only on the imported goods and can be 
readily quantified, an addition to the price actually paid or payable can be 
made. 

                           Note to Article 9 

      For the purposes of Article 9, "time of importation" may include the 
time of entry for customs purposes. 
                           Note to Article 11 

1.    Article 11 provides the importer with the right to appeal against a 
valuation determination made by the customs administration for the goods 
being valued.  Appeal may first be to a higher level in the customs 
administration, but the importer shall have the right in the final instance 
to appeal to the judiciary.

2.    "Without penalty" means that the importer shall not be subject to a 
fine or threat of fine merely because he chose to exercise his right of 
appeal.  Payment of normal court costs and lawyers' fees shall not be 
considered to be a fine. 

3.    However, nothing in Article 11 shall prevent a Member from requiring 
full payment of assessed customs duties prior to an appeal. 

                           Note to Article 15 

Paragraph 4 

      For the purposes of this Article, the term "persons" includes legal 
person, where appropriate. 

Paragraph 4(e) 

      For the purposes of 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 of this Agreement, the Technical 
Committee shall be established under the auspices of the CCC with a view, at 
the technical level, towards uniformity in interpretation and application of 
this Agreement. 

2.    The responsibilities of the Technical Committee shall include the 
following: 

      (a)  to examine specific technical problems arising in the day-to-day 
           administration of the customs valuation system of 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 of such studies; 

      (c)  to prepare and circulate annual reports on the technical aspects 
           of the operation and status of this Agreement; 

      (d)  to furnish such information and advice on any matters concerning 
           the valuation of imported goods for customs purposes as may be 
           requested by any Member or the Committee.  Such information and 
           advice may take the form of advisory opinions, commentaries or 
           explanatory notes; 

      (e)  to facilitate, as requested, technical assistance to Members with 
           a view to furthering the international acceptance of this 
           Agreement;  

      (f)  to carry out an examination of a matter referred to it by a panel 
           under Article 19 of 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 of time.   As provided in paragraph 4 of 
Article 19, a panel shall set a specific time period for receipt of a report 
of the Technical Committee and the Technical Committee shall provide its 
report within that period.

4.    The Technical Committee shall be assisted as appropriate in its 
activities by the Secretariat of the CCC. 

Representation 

5.    Each Member shall have the right to be represented on the Technical 
Committee.  Each Member may nominate one delegate and one or more alternates 
to be its representatives on the Technical Committee.  Such a Member so 
represented on the Technical Committee is hereinafter referred to as a 
member of the Technical Committee. Representatives of members of the 
Technical Committee may be assisted by advisers.  The MTO Secretariat may 
also attend such meetings with observer status. 

6.    Members of the CCC who are not Members of the MTO may be represented 
at meetings of the Technical Committee by one delegate and one or more 
alternates.  Such representatives shall attend meetings of the Technical 
Committee as observers. 

7.    Subject to the approval of the Chairman of the Technical Committee, 
the Secretary-General of the CCC (hereinafter referred to as "the 
Secretary-General") may invite representatives of governments which are 
neither Members of the MTO nor members of the CCC and representatives of 
international governmental and trade organizations to attend meetings of the 
Technical Committee as observers. 

8.    Nominations of delegates, alternates and advisers to meetings of 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 of each meeting shall be fixed by the Technical Committee 
at its preceding session.  The date of the meeting may be varied either at 
the request of any member of the Technical Committee concurred in by a 
simple majority of the members of the Technical Committee or, in cases 
requiring urgent attention, at the request of the Chairman.   
Notwithstanding the provisions in sentence 1 of this paragraph, the 
Technical Committee shall meet as necessary to consider matters referred to 
it by a panel under the provisions of Article 19 of this Agreement.

10.   The meetings of the Technical Committee shall be held at the 
headquarters of the CCC unless otherwise decided. 

11.   The Secretary-General shall inform all members of the Technical 
Committee and those included under paragraphs 6 and 7 at least thirty days 
in advance, except in urgent cases, of the opening date of each session of 
the Technical Committee. 

Agenda 

12.   A provisional agenda for each session shall be drawn up by the 
Secretary-General and circulated to the members of the Technical Committee 
and to those included under paragraphs 6 and 7 at least thirty days in 
advance of 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 his own 
initiative, and all items whose inclusion has been requested by the 
Secretary-General, by the Committee or by any member of the Technical 
Committee. 

13.   The Technical Committee shall determine its agenda at the opening of 
each session.  During the session the agenda may be altered at any time by 
the Technical Committee. 

Officers and Conduct of Business 

14.   The Technical Committee shall elect from among the delegates of its 
members a Chairman and one or more Vice-Chairmen.  The Chairman and 
Vice-Chairmen shall each hold office for a period of one year.  The retiring 
Chairman and Vice-Chairmen are eligible for re-election.  A Chairman or 
Vice-Chairman who ceases to represent a member of the Technical Committee 
shall automatically lose his mandate. 

15.   If the Chairman is absent from any meeting or part thereof, a 
Vice-Chairman shall preside.  In that event, the latter shall have the same 
powers and duties as the Chairman. 

16.   The Chairman of the meeting shall participate in the proceedings of 
the Technical Committee as such and not as the representative of a member of 
the Technical Committee. 

17.   In addition to exercising the powers conferred upon him elsewhere by 
these rules, the Chairman shall declare the opening and closing of each 
meeting, direct the discussion, accord the right to speak, and, pursuant to 
these rules, have control of the proceedings.  The Chairman may also call a 
speaker to order if his remarks are not relevant. 

18.   During discussion of any matter a delegation may raise a point of 
order.  In this event, the Chairman shall immediately state his 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 officers of the Secretariat designated by 
him, shall perform the secretarial work of meetings of the Technical 
Committee. 

Quorum and Voting 

20.   Representatives of a simple majority of the members of the Technical 
Committee shall constitute a quorum. 

21.   Each member of the Technical Committee shall have one vote.  A 
decision of the Technical Committee shall be taken by a majority comprising 
at least two thirds of the members present.  Regardless of the outcome of 
the vote on a particular matter, the Technical 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 of 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 of the matter and indicating the views of the members.

Languages and Records 

22.   The official languages of the Technical Committee shall be English, 
French and Spanish.  Speeches or statements made in any of these three 
languages shall be immediately translated into the other official 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 official 
documents of the Technical Committee. Memoranda and correspondence for the 
consideration of the Technical Committee must be presented in one of the 
official languages. 

23.   The Technical Committee shall draw up a report of all its sessions 
and, if the Chairman considers it necessary, minutes or summary records of 
its meetings.  The Chairman or his designee shall report on the work of the 
Technical Committee at each meeting of the Committee and at each meeting of 
the CCC. 



                                ANNEX III

1.    The five-year delay in the application of the provisions of the 
Agreement by developing country Members provided for in paragraph 1 of 
Article 20 may, in practice, be insufficient for certain developing country 
Members.  In such cases a developing country Member may request before the 
end of the period referred to in paragraph 1 of Article 20 an extension of 
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 of 
officially 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 of the 
sequential order at the request of the importer provided for in Article 4 of 
the Agreement may give rise to real difficulties for them may wish to make a 
reservation to Article 4 in the following terms: 

      "The Government of ............. reserves the right to provide that 
      the relevant provision of Article 4 of the Agreement shall apply only 
      when the customs authorities agree to the request to reverse the order 
      of Articles 5 and 6." 

      If developing countries make such a reservation, the Members shall 
consent to it under Article 21 of the Agreement.

4.    Developing countries may wish to make a reservation with respect to 
paragraph 2 of Article 5 of the Agreement in the following terms: 

      "The Government of ............ reserves the right to provide that 
      paragraph 2 of Article 5 of the Agreement shall be applied in 
      accordance with the provisions of 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 of the Agreement.

5.    Certain developing country Members have expressed concern that there 
may be problems in the implementation of Article 1 of 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 of this 
question shall be made, at the request of such Members, with a view to 
finding appropriate solutions.

6.    Article 17 recognizes that in applying the Agreement, customs 
administrations may need to make enquiries concerning the truth or accuracy 
of 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 of value 
declared or presented to customs in connection with a determination of 
customs value are complete and correct.  Members, subject to their national 
laws and procedures, have the right to expect the full co-operation of 
importers in these enquiries.

7.    The price actually paid or payable includes all payments actually made 
or to be made as a condition of sale of the imported goods, by the buyer to 
the seller, or by the buyer to a third party to satisfy an obligation of the 
seller. 