Agreement Establishing the World Trade Organization
(Continued)
Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994
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 the producer's 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 the
producer's general expenses are high, the producer's profit and general
expenses taken together may nevertheless be consistent with that usually
reflected in sales 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 a low profit on sales of the imported goods because of particular
commercial circumstances, the producer's actual profit figures should be
taken into account provided that the producer has valid commercial reasons
to justify them and the producer's pricing policy reflects usual pricing
policies in the branch 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 through 6 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 "90 days" requirement
could be administered flexibly.
Note to Article 8
Paragraph 1(a)(i)
The term "buying commissions" means fees paid by an importer
to the importer's agent for the service of representing the importer 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 the importer 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 the importer, 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, the importer may request that the value be apportioned over the
entire anticipated production where contracts or firm commitments exist
for that production. The method 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 the producer 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 the importer chose to
exercise the 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 Article 15, the term "persons" includes
a 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 to ensuring,
at the technical level, 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 CCC Secretariat.
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 referred to in this Annex as
a "member of the Technical Committee". Representatives of members
of the Technical Committee may be assisted by advisers. The WTO Secretariat
may also attend such meetings with observer status.
6. Members of the CCC which are not Members of the WTO 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 (referred to in this Annex as "the
Secretary-General") may invite representatives of governments which
are neither Members of the WTO 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 30 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 30 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 the Chairman's 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. The mandate of
a Chairman or Vice-Chairman who no longer represents a member of the Technical
Committee shall terminate automatically.
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 other powers conferred upon the Chairman
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 the speaker's 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 a ruling. If
this ruling is challenged, the Chairman shall submit it to the meeting
for decision and it shall stand unless overruled.
19. The Secretary-General, or officers of the CCC Secretariat designated
by the Secretary-General, 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 a designee of the Chairman 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 countries may have 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 cooperation 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.
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