WORLD TRADE
ORGANIZATIONG/VAL/N/1/CYP/2
24 July 1998
(98-3722)
Committee on Customs Valuation Original:  English
NOTIFICATIONS UNDER ARTICLE 22.2 OF THE AGREEMENT
ON IMPLEMENTATION OF ARTICLE VII OF THE GENERAL
AGREEMENT ON TARIFFS AND TRADE 1994
Republic of Cyprus
The following communication, dated 27 May 1998, has been received from the Permanent
Mission of the Republic of Cyprus.
_______________
The Permanent Mission of Cyprus at Geneva has the honour to forward herewith the above
notification.  In accordance with Article 22.2 of the above Agreement, Cyprus hereby acknowledges
the implementation of the Agreement on Implementation of Article VII of the General Agreement on
Tariffs and Trade 1994.
This Agreement being part of the Final Act Embodying the Results of the Uruguay Round of
Multilateral Trade Negotiations was published in the Official Gazette of the Republic of Cyprus,
2986, as Law No. 16(III), in Part III, and was put in force on 30th June 1995.  It is attached.  The
previous Law of 1989 containing the Agreement on Implementation of Article VII of the General
Agreement on Tariffs and Trade 1979 was automatically superseded.  The official publication of Law
No. 16(III) includes both English and Greek text.
The expenses laid down in Article 8.2 of the Agreement form part of the Customs value under
the provision of Article 159.2 of the Customs and Excise Law 1967 as amended by Law 98/89.
The rate of conversion of foreign currency according to Article 159.3 of Customs and Excise
Law 82/67 as amended by Law No. 98/89 is the one in fo rce at the time of presentation of an entry for
clearance for home use.
As regards customs value declaration procedure two new forms were issued since the
Implementation of Article VII of the Agreement in Cyprus on 23 June 1989.  Form C5A is to be
completed by the importer when Article 1 of the Agreement is applicable.  Details have to be given
regarding the expenses referred to in Article 8 of the Agreement and the relation if any between thesupplier and importer according to Article 15.4 of the Agreement.  Form C5B is to be completed
when Article 1 of the Agreement is not applicable and the Customs value is to be determined under
Articles 2 to 7 of the Agreement.  The above two forms need not be submitted if the CIF value of
imported goods is less than C£1.000 (approximately 1.720 ECU) or the rate of duty is less than
5 per cent ad valorem .  These forms have not been received by the Permanent Mission yet;  they will
be notified as soon as possible.G/VAL/N/1/CYP/2
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AGREEMENT ON IMPLEMENTATION OF ARTICLE VII
OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994
GENERAL INTRODUCTORY COMMENTARY
1. The primary basis for customs value under this Agreement is "transaction value" as defined in
Article 1.  Article 1 is to be read to gether 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 buye r to the seller in the form of specified goods or
services rather than in the form of money.  Artic les 2 through 7 provide methods of determining the
customs value whenever it cannot be determined under the provisions of Article 1.
2. Where the customs value cannot be determined under the provisions of Article 1 there should
normally be a process of consultation between the customs administration and importer with a view to
arriving at a basis of value under the provisions of Ar ticle 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 th e 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 exch anged, 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 th e imported goods or of identical or similar imported
goods.  Under paragraph 1 of Article 5 the customs value is determined on the basis of the price at
which the goods are sold in the condition as imported to an unrelated buyer in the country of
importation.  The importer also has the right to have goods which are further processed after importation
valued under the provisions of Article 5 if the importe r so requests.  Under Article 6 the customs value is
determined on the basis of the computed value.  Both these methods present certain difficulties and
because of this the importer is given the right, under the provisions of Article 4, to choose the order of
application of the two methods.
4. Article 7 sets out how to determine the customs value in cases where it cannot be determined
under the provisions of any of the preceding Articles.
Members,
Having regard  to the Multilateral Trade Negotiations;
Desiring  to further the objectives of GATT 1994 and to secure additional benefits for the
international trade of developing countries;
Recognizing  the importance of the provisions of Article VII of GATT 1994 and desiring to
elaborate rules for their application in order to provide greater uniformity and certainty in their
implementation;
Recognizing  the need for a fair, uniform and neutral system for the valuation of goods for
customs purposes that precludes the use of arbitrary or fictitious customs values;
Recognizing  that the basis for valuation of goods for customs purposes should, to the greatest
extent possible, be the transaction value of the goods being valued;G/VAL/N/1/CYP/2
Page 3
Recognizing  that customs value should be based on simple and equitable criteria consistent with
commercial practices and that valuation procedures s hould 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 th e 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 dis position 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 so me condition or consideration for which a value
cannot be determined with resp ect to the goods being valued;
(c) that no part of the proceeds of any subseque nt resale, disposal or use of the goods by
the buyer will accrue directly or indirectly to the seller, unless an appropriate
adjustment can be made in accordance with the provisions of Article 8;  and
(d) that the buyer and seller are not related, or where the buyer and seller are related, that
the transaction value is acceptable for customs purposes under the provisions of
paragraph 2.
2. (a) In determining whether the transaction value is acceptable for the purposes of
paragraph 1, the fact that the buyer and the seller are related within the meaning ofArticle 15 shall not in itself be grounds for regarding the transaction value as
unacceptable.  In such case the circumstan ces 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 gr ounds for considering that the relationship
influenced the price, it shall communicate its grounds to the importer and the importer
shall be given a reasonable opportunity to respond.  If the importer so requests, the
communication of the grounds shall be in writing.G/VAL/N/1/CYP/2
Page 4
(b) In a sale between related persons, the transaction value shall be accepted and the goods
valued in accordance with the provisions of paragraph 1 whenever the importer
demonstrates that such value closely approxi mates to one of the following occurring at
or about the same time:
(i) the transaction value in sales to unrelated buyers of identical or similar goods
for export to the same country of importation;
(ii) the customs value of identical or similar goods as determined under the
provisions of Article 5;
(iii) the customs value of identical or similar goods as determined under the
provisions of Article 6;
In applying the foregoing tests, due account shall be taken of demonstrated differences
in commercial levels, quantity levels, the elements enumerated in Article 8 and costs
incurred by the seller in sales in which the seller and the buyer are not related that arenot incurred by the seller in sales in which the seller and the buyer are related.
(c) The tests set forth in paragraph 2(b) are to  be used at the initiative of the importer and
only for comparison purposes.  Substitute values may not be established under the
provisions of paragraph 2(b).
Article 2
1. (a) If the customs value of the imported goods cannot be determined under the provisions
of Article 1, the customs value shall be the tr ansaction 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 va lue 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 differ ent commercial level and/or in different
quantities, adjusted to take account of diff erences 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 adjust ment 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 iden tical goods in question arising from differences in
distances and modes of transport.
3. If, in applying this Article, more than one tr ansaction value of identical goods is found, the
lowest such value shall be used to determ ine the customs value of the imported goods.G/VAL/N/1/CYP/2
Page 5
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 co mmercial 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 sim ilar goods in question arising from differences in
distances and modes of transport.
3. If, in applying this Article, more than one tran saction 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 goodsunder 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 insu rance and associated costs incurred within
the country of importation;
(iii) where appropriate, the costs and charges referred to in paragraph 2 of Article 8;
andG/VAL/N/1/CYP/2
Page 6
(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 pa ragraph 1(a), be based on the unit price at
which the imported goods or identical or si milar imported goods are sold in the country
of importation in the condition as imported at  the earliest date after the importation of
the goods being valued but before the expiration of 90 days after such importation.
2. If neither the imported goods nor identical nor similar imported goods are sold in the country of
importation in the condition as imported, then, if th e importer so requests, the customs value shall be
based on the unit price at which the imported goods, after further processing, are sold in the greatest
aggregate quantity to persons in the country of importation who are not related to the persons from
whom they buy such goods, due allowance being made for the value added by such processing and the
deductions provided for in paragraph 1(a).
Article 6
1. The customs value of imported goods under the provisions of this Article shall be based on a
computed value.  Computed value shall consist of the sum of:
(a) the cost or value of materials and fa brication 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 ot her 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 th e agreement of the producer and provided they give
sufficient advance notice to the government of the c ountry in question and the latter does not object to
the investigation.
Article 7
1. If the customs value of the imported goods cannot be determined under the provisions of
Articles 1 through 6, inclusive, the customs value sh all be determined using reasonable means consistent
with the principles and general provisions of th is Agreement and of Article VII of GATT 1994 and on
the basis of data available in the country of importation.
2. No customs value shall be determined under the provisions of this Article on the basis of:
(a) the selling price in the country of im portation of goods produced in such country;G/VAL/N/1/CYP/2
Page 7
(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 c ountry other than the country of importation;
(f) minimum customs values;  or
(g) arbitrary or fictitious values.
3. If the importer so requests, the importer sha ll 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 trea ted 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;G/VAL/N/1/CYP/2
Page 8
(d) the value of any part of the proceeds of an y 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 pr ovide 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 importe d goods to the port or place of importation;
(b) loading, unloading and handling charges asso ciated 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 actual ly paid or payable in determining the customs
value except as provided in this Article.
Article 9
1. Where the conversion of currency is necessary fo r the determination of the customs value, the
rate of exchange to be used shall be that duly pub lished by the competent authorities of the country of
importation concerned and shall reflect as effectivel y 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 th at 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 importe r 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 legi slation of each Member shall provide for the right
of appeal without penalty to a judicial authority.
3. Notice of the decision on appeal shall be given to the appellant and the reasons for such decision
shall be provided in writing.   The appellant shall also be informed of any rights of further appeal.G/VAL/N/1/CYP/2
Page 9
Article 12
Laws, regulations, judicial decisions and admini strative rulings of general application giving
effect to this Agreement shall be published in c onformity with Article X of GATT 1994 by the country
of importation concerned.
Article 13
If, in the course of determining the customs value of imported goods, it becomes necessary to
delay the final determination of such customs value,  the importer of the goods shall nevertheless be able
to withdraw them from customs if, where so required, the importer provides sufficient guarantee in the
form of a surety, a deposit or some other appropr iate 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 respec tive notes.  Annexes II and
III also form an integral part of this Agreement.
Article 15
1. In this Agreement:
(a) "customs value of imported goods" means the value of goods for the purposes of
levying ad valorem duties of customs on imported goods;
(b) "country of importation" means country or  customs territory of importation;  and
(c) "produced" includes grown, manufactured and mined.
2. In this Agreement:
(a) "identical goods" means goods which are the same in all respects, including physical
characteristics, quality and reputation.  Mi nor differences in appearance would not
preclude goods otherwise conforming to the definition from being regarded as identical;
(b) "similar goods" means goods which, although not alike in all respects, have like
characteristics and like component materials which enable them to perform the same
functions and to be commercially interchangeable.  The quality of the goods, their
reputation and the existence of a trademark are among the factors to be considered in
determining whether goods are similar;
(c) the terms "identical goods" and "similar goods" do not include, as the case may be,
goods which incorporate or reflect engineer ing, 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;G/VAL/N/1/CYP/2
Page 10
(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, c ontrols 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 indi rectly controlled by a third person;
(g) together they directly or indirectly control a third person;  or
(h) they are members of the same family.
5. Persons who are associated in business with one  another in that one is the sole agent, sole
distributor or sole concessionaire, however described, of the other shall be deemed to be related for the
purposes of this Agreement if they fall within the criteria of paragraph 4.
Article 16
Upon written request, the importer shall have the right to an explanation in writing from the
customs administration of the country of importati on as to how the customs value of the importer’s
goods was determined.
Article 17
Nothing in this Agreement shall be construed as restricting or calling into question the rights of
customs administrations to satisfy themselves as to the truth or accuracy of any statement, document or
declaration presented for customs valuation purposes.G/VAL/N/1/CYP/2
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PART II
ADMINISTRATION, CONSULTATIONS AND DISPUTE SETTLEMENT
Article 18
Institutions
1. There is hereby established a Committee on Cust oms Valuation (referred to in this Agreement
as "the Committee") composed of representatives fro m each of the Members.  The Committee shall elect
its own Chairman and shall normally meet once a year , or as is otherwise envisaged by the relevant
provisions of this Agreement, for the purpose of  affording Members the opportunity to consult on
matters relating to the administration of the customs valuation system by any Member as it might affect
the operation of this Agreement or the furtherance of its objectives and carrying out such other
responsibilities as may be assigned to it by the Members.  The WTO Secretariat shall act as the
secretariat to the Committee.
2. There shall be established a Technical Committee on Customs Valuation (referred to in this
Agreement as "the Technical Committee") under th e auspices of the Customs Co-operation Council
(referred to in this Agreement as "the CCC"), which shall carry out the responsibilities described in
Annex II to this Agreement and shall operate in accordance with the rules of procedure contained
therein.
Article 19Consultation s and Dispute Settlement
1. Except as otherwise provided herein, the Dispute Settlement Understanding is applicable to
consultations and the settlement of disputes under this Agreement.
2. If any Member considers that any benefit accr uing to it, directly or indirectly, under this
Agreement is being nullified or impaired, or that th e achievement of any objective of this Agreement is
being impeded, as a result of the actions of another Me mber 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 sy mpathetic 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 Agre ement may request the Technical Committee to carry out
an examination of any questions re quiring technical consideration.  The panel shall determine the terms
of reference of the Technical Committee for the partic ular 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 Committ ee is unable to reach consensus on a matter referred
to it pursuant to this paragraph, the panel should a fford the parties to the dispute an opportunity to
present their views on the matter to the panel.
5. Confidential information prov ided to the panel shall not be disclosed without formal
authorization from the person, body or  authority providing such inform ation.  Where such information is
requested from the panel but release of such information by the panel is not authorized, a non-G/VAL/N/1/CYP/2
Page 12
confidential summary of this information, authoriz ed 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 th e Agreement on Implementation of Article VII of
the General Agreement on Tariffs and Trade done  on 12 April 1979 may delay application of the
provisions of this Agreement for a period not exceed ing five years from the date of entry into force of
the WTO Agreement for such Members.  Developing  country Members who choose to delay application
of this Agreement shall notify the Di rector-General of the WTO accordingly.
2. In addition to paragraph 1, developing c ountry Members not party to the Agreement on
Implementation of Article VII of the General Agreement on Tariffs and Trade done on 12 April 1979
may delay application of paragraph 2(b)(iii) of Article 1 and Article 6 for a period not exceeding three
years following their application of all other prov isions of this Agreemen t.  Developing country
Members that choose to delay application of the provisions specified in this paragraph shall notify theDirector-General of the WTO accordingly.
3. Developed country Members shall furnish, on mutually agreed terms, technical assistance to
developing country Members that so request.  On this basis developed country Members shall draw up
programmes of technical assistance which may include, inter alia, training of personnel, assistance in
preparing implementation measures, access to source s of information regarding customs valuation
methodology, and advice on the application of the provisions of this Agreement.
PART IVFINAL 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, regu lations 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.G/VAL/N/1/CYP/2
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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 th e period covered by such reviews.
Article 24
Secretariat
This Agreement shall be serviced by the WTO Secretariat except in regard to those
responsibilities specifically assigned to the Tech nical Committee, which will be serviced by the CCC
Secretariat.
ANNEX IINTERPRETATIVE NOTES
General Note
Sequential Application of Valuation Methods1. Articles 1 through 7 define how the customs value of imported goods is to be determined under
the provisions of this Agreement.  The methods of valuation are set out in a sequential order of
application.  The primary method for customs valuati on is defined in Article 1 and imported goods are
to be valued in accordance with the provisions of th is 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 unde r the provisions of Articles 1 through 6 it is
to be determined under the provisions of Article 7.G/VAL/N/1/CYP/2
Page 14
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 andobligations should be recorded as assets and liabilitie s, which changes in assets and liabilities should be
recorded, how the assets and liabilities and change s in them should be measured, what information
should be disclosed and how it should be disclosed, a nd 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 cust oms administration of each Member shall utilize
information prepared in a manner consistent wi th generally accepted accounting principles in the
country which is appropriate for the Article in ques tion.  For example, the determination of usual profit
and general expenses under the provisions of Arti cle 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 theprovisions of Article 6 would be carried out utiliz ing information prepared in a manner consistent with
generally accepted accounting principles of the count ry of production.  As a further example, the
determination of an element provided for in paragra ph 1(b)(ii) of Article 8 undertaken in the country of
importation would be carried out utilizing informa tion in a manner consistent with the generally
accepted accounting principles of that country.
Note to Article 1
Price Actually Paid or Payable1. The price actually paid or payable is the total payment made or to be made by the buyer to or
for the benefit of the seller for the imported goods.  The payment need not necessarily take the form of a
transfer of money.  Payment may be made by way of letters of credit or negotiable instruments.
Payment may be made directly or indirectly.  An  example of an indirect payment would be the
settlement by the buyer, whether in whole or  in part, of a debt owed by the seller.
2. Activities undertaken by the buyer on the buyer's own account, other than those for which an
adjustment is provided in Article 8, are not consider ed to be an indirect payment to the seller, even
though they might be regarded as of benefit to the se ller.  The costs of such activities shall not, therefore,
be added to the price actually paid or payable in determining the customs value.
3. The customs value shall not include the following  charges or costs, provided that they are
distinguished from the price actually paid or payable for the imported goods:
(a) charges for construction, erection, assembly, maintenance or technical assistance,
undertaken after importation on imported goods such as industrial plant, machinery or
equipment;
(b) the cost of transport after importation;(c) duties and taxes of the country of importation.
4. The price actually paid or payable refers to th e 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.G/VAL/N/1/CYP/2
Page 15
Paragraph 1(a)(iii )
Among restrictions which would not render a pr ice actually paid or payable unacceptable are
restrictions which do not substantially affect the va lue of the goods.  An example of such restrictions
would be the case where a seller requires a buyer of au tomobiles not to sell or exhibit them prior to a
fixed date which represents the beginning of a model year.
Paragraph 1(b )
1. If the sale or price is subject to some c ondition 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 depende nt upon the price or prices at which the buyer
of the imported goods sells other goods to the seller of the imported goods;
(c) the price is established on the basis of a form of payment extraneous to the imported
goods, such as where the imported goods are semi-finished goods which have been
provided by the seller on condition that the sell er will receive a specified quantity of the
finished goods.
2. However, conditions or considerations relatin g to the production or marketing of the imported
goods shall not result in rejection of the transaction va lue.  For example, the fact that the buyer furnishes
the seller with engineering and plans undertaken in the country of importation shall not result in
rejection of the transaction value for the purposes of  Article 1.  Likewise, if the buyer undertakes on the
buyer’s own account, even though by agreement with the seller, activities relating to the marketing of
the imported goods, the value of these activities is not part of the customs value nor shall such activities
result in rejection of the transaction value.
Paragraph 2
1. Paragraphs 2(a) and 2(b) provide different means of establishing the acceptability of a
transaction value.
2. Paragraph 2(a) provides that where the buyer and the seller are related, the circumstances
surrounding the sale shall be examined and the tran saction 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 acceptabi lity 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 alr eady 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 releva nt 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 whethe r the relationship influenced the price.  Where itG/VAL/N/1/CYP/2
Page 16
can be shown that the buyer and seller, although re lated under the provisions of Article 15, buy from and
sell to each other as if they were not related, this would demonstrate that the price had not been
influenced by the relationship.  As an example of this, if the price had been settled in a manner
consistent with the normal pricing practices of the industry in question or with the way the seller settles
prices for sales to buyers who are not related to the seller, this would demonstrate that the price had not
been influenced by the relationship.  As a further exam ple, where it is shown that the price is adequate to
ensure recovery of all costs plus a profit which is re presentative 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 pr ice 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 prev iously 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 te rm "unrelated buyers" mean s buyers who are not related
to the seller in any particular case.
Paragraph 2(b )
A number of factors must be taken into consid eration in determining whether one value "closely
approximates" to another value.  These factors incl ude 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 ma y 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 caseinvolving another type of goods might be acceptabl e 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 substan tially 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.G/VAL/N/1/CYP/2
Page 17
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 va lue of identical imported goods means a customs
value, adjusted as provided for in paragraphs 1(b) and 2, which has already been accepted underArticle 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 r easonableness and accuracy of the adjustments, e.g.
valid price lists containing prices referring to differe nt 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 substan tially 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, 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 differe nt 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 importedG/VAL/N/1/CYP/2
Page 18
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 commerci al 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 salesTotal quantity
sold at each price
1-10 units 100 10 sales of 5 units
 5 sales of 3 units65
11-25 units 95  5 sales of 11 units 55
over 25 units 90  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.G/VAL/N/1/CYP/2
Page 19
(a)   Sales
Sale quantity Unit price
40 units 100
30 units 90
15 units 100
50 units 95
25 units 10535 units 90
 5 units 100
(b) Totals
Total quantity sold Unit 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 theproduction 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 the importer's 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 behalfof 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 informationG/VAL/N/1/CYP/2
Page 20
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.  Onthe 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 coun try 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 thegoods 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 beensupplied 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 orG/VAL/N/1/CYP/2
Page 21
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 partic ular 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 pricingpolicy 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 reflectedin 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 ofthe 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.G/VAL/N/1/CYP/2
Page 22
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;  similarimported 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 elementsshould 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 wasproduced 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 beapportioned 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.G/VAL/N/1/CYP/2
Page 23
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 adde d, 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 asto 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, anappropriate adjustment could be made under the prov isions 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.G/VAL/N/1/CYP/2
Page 24
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 theprovisions 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 thisroyalty 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 IITECHNICAL COMMITTEE ON CUSTOMS VALUATIONG/VAL/N/1/CYP/2
Page 25
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.
General3. 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 ofthe 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 inthis 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 ofG/VAL/N/1/CYP/2
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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 Meetings9. 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 inby a simple majority of the members of the Technical Committee or, in cases requiring urgent
attention, at the request of the Chairman.   Notw ithstanding 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 openingdate of each session of the Technical Committee.
Agenda12. A provisional agenda for each session shall be drawn up by the Secretary-General and
circulated to the members of the Technical Committ ee 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 theG/VAL/N/1/CYP/2
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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 tothe 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, theTechnical 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 theTechnical 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 Committeeand 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 thedeveloping 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.G/VAL/N/1/CYP/2
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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 theretowhether 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 theseenquiries.
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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