WORLD TRADE  
ORGANIZATION  G/PSI/IE/R/2 
14 November 2006 
 (06-5492) 
Agreement on Preshipment Inspection 
Independent Entity  
 
 
 
INDEPENDENT REVIEW PROCEDURE 
(PSI/IE/2006/1) 
 
Decision of the Panel  
 
 
I. INTRODUCTION 
1. This decision has been taken pursuant to Article 4 of the Agreement on Preshipment 
Inspection and in accordance with the other texts governing the operation of the Independent Entity1, 
in connection with the request for an independe nt review submitted on 22 September 2006 by the 
company Alcatel CIT (hereinafter "Alcatel CIT"),  whose head office is at 7-9 avenue Morane-
Saulnier, BP 57, F-78141 Velizy, relating to a dispute between it and the Société Générale de 
Surveillance – SGS Holding France (hereinafter "S GS"), whose head office is at 191, avenue 
Aristide-Briand, F-94237 Cachan Cedex. 
2. The Panel entrusted with taking this decision (hereinafter the "Panel") was established in 
accordance with paragraph 5.1 of the Rules of Pr ocedure for the Operation of Independent Reviews 
under Article 4 of the WTO Agreement on Preshipment  Inspection.  It was composed as follows:   
 - Mr Pierre Begle, member proposed by th e SGS from the list of experts nominated by 
the International Federation of Inspection Agencies (IFIA)2; 
 
 - Mr Jean Marie Salva, member proposed by Alcatel CIT from the list of experts 
nominated by the Internationa l Chamber of Commerce (ICC); 
  - Mrs Laurence Boisson de Chazournes, Chai rperson appointed by the Administrator of 
the Independent Entity. 
 
3. The facts and the parties' arguments, as well as the stages of the procedure relevant to an 
understanding of the Panel's decision, are summa rized in sections II and III of this report, 
respectively.  The admissibility of the request is addressed in section IV.  The Panel's findings are set 
out in section V and its decision in section VI. 
                                                     
 
1 See document WT/L/125/Rev.1. 
2 See document G/PSI/IE/1/Rev.1. G/PSI/IE/R/2 
Page 2  
 
  II. SUMMARY OF THE RELEVANT FACTS AND MAIN ARGUMENTS OF THE 
PARTIES
3 
4. As part of the expansion of its GSM networ k in Mauritania, in June 2004 the company 
Mauritel Mobiles (hereinafter "Mauritel Mobiles") issu ed an international invitation to tender for the 
supply, installation and commissioning of equipmen t for the radio component (BSS) of its mobile 
telephony network. 
5. Mauritel Mobiles accepted the Alcatel CIT bid.  A framework contract covering the three 
stages of installation (Phase 1 in 2004, Phase 2 in 2005 and Phase 3 in 2006) was signed on 13 December 2004. 
6. When the material exported for the purpose of  carrying out Phase 3 was inspected, the SGS, 
under a mandate from Mauritania to conduct preshipme nt inspection activities and to give technical 
opinions on the customs value, issued verification certificate No. FR/006049/MR01 corresponding to Alcatel CIT invoice No. 4008018941.  Following a co mmunication from Alcatel CIT, the SGS issued 
an amendment to the verification certificate, in which it corrected the name of the seller and the 
amount of the invoice.  However, the SGS did not  agree to change the technical opinion on the 
customs value of the goods, as contained in the verification certificate.  In particular, Alcatel CIT 
having argued that the price of services should not be included in the customs value of the goods, the 
SGS refused to exclude certain services covered by the framework contract from the customs value. 
7. At the conclusion of the appeal procedure in itiated by Alcatel CIT pursuant to Article 2, 
paragraph 21, of the Agreement on Preshipment Insp ection, the SGS still asserted that the adjustments 
made were warranted by technical  considerations arising from the application of the WTO Agreement 
on Customs Valuation. 
8. This is the SGS position which Alcatel CIT is contesting before the Panel. 
III. SUMMARY OF THE PROCEDURE BEFORE THE PANEL 
9. The request from Alcatel CIT for an independe nt review was received by the Independent 
Entity on 28 September 2006.  The Independent Entit y found the request admissible and forwarded it, 
with the attached documents, to the SGS, which transmitted its re ply on 10 October 2006. 
10. After having received the submissions from the parties and the advance deposits to cover the 
costs of the procedure
4, the Independent Entity appointed the Panel.5 
11. After starting to examine the case, the Pane l sent written questions to the parties on 
16 October 2006.  Replies from the parties were  received on 19 October 2006.  By e-mail of 
16 October 2006, the Panel also requested the parti es' agreement to an extension until 31 October of 
the proposed time-limit for issuing its decision.   The two parties expressed their agreement. 
12. The Panel confidentially informed the parties of its decision on 31 October 2006.  The non-
confidential version was made  public on 13 November 2006. 
                                                      
3 This summary is intentionally limited to the only facts and arguments deemed necessary for an 
understanding of the Panel's decision. 
4 Each party made an advance deposit of CHF 17,500, in accordance with paragraph 6.1 of the Rules of 
Procedure for the Operation of Independent Reviews under Article 4 of the WTO Agreement on Preshipment 
Inspection. 
5 At the request of the Administrator of the Independent Entity, the parties agreed that the Panel should 
have the same Chairperson as in the previous case bro ught by Alcatel CIT against the SGS in connection with 
the same export contract to Mauritania.  G/PSI/IE/R/2 
 Page 3 
 
 
  IV. ADMISSIBILITY OF THE REQUEST FOR REVIEW AND JURISDICTION OF THE 
PANEL 
A. ADMISSIBILITY RATIONAE TEMPORIS  
13. The Panel notes that one of the main require ments for the admissibility of a request for 
independent review is that the verification certifi cate should not pre-date the request for review by 
more than 90 days.  The Panel notes that, give n that the verification certificate was dated 
29 June 2006 and the request for independent review was s ubmitted on 22 September 2006, the 
Independent Entity f ound that the request for independent re view in this case had been submitted by 
Alcatel CIT within the time-limits provided for in paragraph 2.3 of the Rules of Procedure for the 
Operation of Independent Reviews under Artic le 4 of the WTO Agreement on Preshipment 
Inspection. 
B. OBJECTION TO ADMISSIBILITY RAISED BY THE SGS 
14. The Panel notes that the SGS contests the admi ssibility of this request by Alcatel CIT. 
15. The SGS contends that Alcatel CIT had already,  on 21 September 2005, lodged a request with 
the Independent Entity concerning the same contract  with the company Mauritel Mobiles, in which 
Alcatel CIT put forward arguments, repeated in its new request, for the exclusion of the customs value 
of all the services it had invoiced under the said contract.  The SGS points out that the Panel's decision PSI/IE/2005/1 indicated that the SGS would accep t "the values defined contractually between 
Alcatel CIT and Mauritel Mobiles".  The SGS notes that Alcatel CIT has never disputed and does not dispute the fact that the SGS complied with decision PSI/IE/2005/1. 
16. The Panel notes that the two parties agree on the use of the transaction value for determining 
the customs value.  However, the problem raised by Alcatel CIT in this request, unlike in the first 
case, is not whether it is possible to apply the price indicated in the contract, which included 
substantial discounts granted at the time of conclu sion of the contract, but whether or not certain 
services invoiced separately should be included in the transaction value. 
17. Moreover, in the case that gave rise to the firs t decision, the Panel had examined the discounts  
disputed in the verification certificate issued by the SGS at the time, and had rendered its decision on 
the basis of that certificate.  In the present request, the Panel has before it a new verification certificate (No. FR-006049/MR 01). 
18. The Panel notes that, pursuant to Article 4(f) of the Agreement on Preshipment Inspection, 
the role of the independent entity is to establish whet her, in the course of the inspection in dispute, the 
parties to the dispute have complied with the pr ovisions of the Agreement.  The Panel sees the 
verification certificate as the result of an inspection.  Consequently, an independent review is directly 
linked to a verification certificate, and not to a contract in general. 
19. The Panel therefore rejects the objection to admissibility raised by the SGS. 
C. J
URISDICTION OF THE PANEL  
20. This case is concerned with the question whethe r the value of certain services invoiced by 
Alcatel CIT in connection with the export of goods should be included in the customs value of those 
goods.  Alcatel CIT argues that the SGS violated Arti cle 2, paragraph 20(b) and (c) of the Agreement 
on Preshipment Inspection. G/PSI/IE/R/2 
Page 4  
 
  21. The Panel notes that Article 1, paragraph 3, of the Agreement on Preshipment Inspection 
provides that preshipment inspection includes price verification activities.  Article 2, paragraph 20, 
refers to the methods to be app lied by preshipment inspection entities in conducting price verification.  
The Panel notes in this connection that footnote 4 to Article 2, paragraph 20, re fers to the obligations 
of WTO Members with respect to customs valuation: 
 "The obligations of user Members with r espect to the services of preshipment inspection 
entities in connection with customs valuation shall be the obligations which they have 
accepted in GATT 1994 and the other Multilateral Trade Agreements included in Annex 1A 
of the WTO Agreement." 
22. It is therefore for the preshipment inspection en tities to conform to the relevant provisions of 
the Agreement on Implementation of Article VII of  the GATT 1994 (hereinafter the "Agreement on 
Customs Valuation") when they conduct price verification on behalf of a WTO Member. 
23. Mauritania, as a WTO Member since 31 May 199 5, benefited from special and differential 
treatment (Article 20 of the Agreement on Customs Valuation), which enabled it to delay application 
of the provisions of the Agreement on Customs Va luation for a period not exceeding five years from 
the date of entry into force of the WTO Agreement.   In a decision of 6 June 2000, the Committee on 
Customs Valuation approved a two-year extension of  this period.  Since 31 May 2002, Mauritania has 
been under an obligation to apply the provisions of  the Agreement on Customs Valuation.  The SGS, 
as an agent of the Mauritanian authorities and by virtue  of footnote 4 to Article 2, paragraph 20, of the 
Agreement on Preshipment Inspection, is also under an obligation to comply with the WTO 
Agreement on Customs Valuation. 
24. The Panel therefore considers that it has jurisd iction over the question raised by Alcatel CIT 
in its request. 
D. 
CONCLUSION  
25. Furthermore, the two parties deposited the am ounts required in accordance with the advance 
deposit tariff published by the Independent Entity intended to cover the cost of the Panel's 
examination of the request.  The Panel therefore found that the request for an independent review 
made by Alcatel CIT on 22 September 2006 was admissible. 
V. FINDINGS OF THE PANEL 
A. RELEVANT PROVISIONS  
1. Provisions of the Agreement on Customs Valuation 
26. In the light of the facts and the arguments exch anged by the parties, the Panel considers that 
the relevant provisions of the Agreement on Custom s Valuation for the settlement of this case are 
Article 1, paragraph 3(a) of the interpretative note to Article 1, and paragraph 7 of Annex III to the 
Agreement. 
27. Article 1, paragraph 1 provides as follows: 
"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 ... ".  G/PSI/IE/R/2 
 Page 5 
 
 
  28. The Panel notes that the two parties agree on th e use of the transaction value as the method of 
assessing the customs value of the goods concerned.  
29. As regards possible adjustments on the basis of Article 8, the Panel notes Alcatel CIT's 
argument that Article 8(b)(iv) does not apply to the pre-installation engineering works and studies 
inasmuch as these services, which were performed in Egypt and Mauritania, were provided by the 
seller.6  The Panel also notes that the SGS does not rely on the provisions of Article 8 of the 
Agreement on Customs Valuation to justify the incl usion of services in the verification certificate at 
issue.  The SGS nevertheless considers that the inap plicability of that Article does not in itself justify 
the exclusion from the transaction value of the services rendered by Alcatel CIT.7  
30. In the light of the facts communicated to it,  the Panel shares the parties' opinion that 
Article 8(b)(iv) of the Agreement on Customs Valu ation is not applicable in this case.  Indeed, 
Article 8(b)(iv) concerns services supplied directly or indirectly by the buyer free of charge or at 
reduced cost.  While not ruling out the possibility th at Mauritel Mobiles provided such services in the 
form of "inputs"8, the Panel notes that the SGS, in basing the value of the services concerned on the 
figures supplied by Alcatel CIT in the Bill of Qu antities (hereinafter "BOQ") concerning Phase 3 of 
the contract with the company Mauritel Mobiles,  did not seek to include services provided by the 
latter in the verification certificate at issue. 
31. Paragraph 3(a) of the interpretative note to Article 1 provides as follows: 
"The customs value shall not includ e 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;"
9 
32. In this connection, the Panel observes that th e services in question were invoiced by Alcatel 
CIT separately from the imported goods.  It also notes that the value of  these services, calculated by 
the SGS on the basis of the Bill of Quantities (BOQ) produced by Alcatel CIT, was subsequently 
applied to the verification certificate at issue, be fore being allocated product by product for customs 
valuation purposes.   
33. Further, the Panel notes that the SGS acknowle dges that the services rendered in Mauritania 
after importation of the goods in question should be excluded from the customs value.10  
                                                      
6 Letter of 20 September 2006, from the law firm TAJ to the SGS, page 5. 
7 Reply from the SGS to the IE, dated 10 October 2006, second page.  In paragraph 8 of the English 
text attached to the reply, the SGS adds: 
"Article 8 takes account of costs undertaken by the buyer and the results of that expenditure.  
In this contract the buyer has not supplied any materials or intellectual property to the seller 
for incorporation into the imported goods.  Therefore the determination of the customs value 
falls totally to Article 1 and the price actually paid or payable." 
8 Liability matrix, framework c ontract DSS 060/MM/DG/DR/SAL. 
9 Emphasis added. 
10 Reply by the SGS to the Independent Entity, dated 10 October 2006, second page. G/PSI/IE/R/2 
Page 6  
 
  34. Paragraph 7 of Annex III provides as follows: 
"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".
11 
35. The Panel notes the arguments of the SGS to the effect that the export in question is covered 
by a contract signed following a bidding procedure involving a complete programme.  It also takes 
note of Alcatel CIT's argument contending that there is no direct link between certain services and the 
goods exported.12 
2. Commentary by the Technical Committee on Customs Valuation and Case Studies 
36. The Panel notes that the SGS also referred to  Commentary 9.1 and Case Study No.1.1 by the 
Technical Committee on Customs Valuation.  
37. The Panel, after examining these texts for guida nce on the interpretation of the Agreement on 
Customs Valuation, considered that Case Study No .1.1 could assist it in resolving this case.  In 
particular, it appears from paragraph 7 of that st udy that the amount payable for engineering and 
development services required for the construction of a plant should be added to the selling price, and 
this could apply to certain servi ces provided in the framework of the contract between Alcatel CIT 
and Mauritel Mobiles.   
38. The SGS also relies on Commentary 9.1 to suppor t its assertion that paragraph 3(a) of the 
interpretative note to Article 1 covers only physical activities and not services. 
39. The Panel does not share this view.  Even if th e example given in Commentary 9.1 relates to a 
physical activity (laying of concre te foundations), paragra ph 3(a) of the interpretative note to Article 1 
also refers to "charges for [...] maintenance or techni cal assistance".  It is not apparent from the text of 
the Commentary or the text of the interpre tative note that services are excluded a priori. 
40. On the other hand, the Panel notes that para graph 5 of Commentary 9.1 dwells on the 
meaning to be assigned to the word "importati on".  In fact, the Commentary points out that 
"importation" is defined in the Glossary of Inte rnational Customs Terms as the act of bringing or 
causing any goods to be brought into a Customs territory.  Paragraph 6 of Commentary 9.1 
recommends some flexibility in the interpretation of the terms "undertaken after importation" in 
paragraph 3(a) of the interpretative note to Article  1, so as to include activities undertaken in the 
country of importation.  This flexibility makes it possible to exclude from the transaction value activities undertaken prior to importation, provided that  they form part of the installation of imported 
goods and were undertaken in the country of importation.   
41. However, the Panel considers that Commentary 9. 1 is not intended to apply to all activities 
"undertaken after importation" of the goods.  It is no t of the view that this reference to the expression 
"undertaken after importation" rules out the possib ility, in certain circumstances, of the services 
concerned being rendered from the country of e xportation or in other countries, inasmuch as 
paragraph 3(a) of the interpretative note to Article  1 does not expressly limit its scope of application 
to activities that took place exclusively in the country of importation. 
42. The Panel also considers that Case Study 7.1, Application of the price actually paid or 
payable,  also provides relevant information. 
                                                     
 
11 Emphasis added. 
12 Response of Alcatel CIT to question 11 from the Panel.  G/PSI/IE/R/2 
 Page 7 
 
 
  43. This Case Study concerns the purchase by the im porter of a highly specialized and technically 
advanced machine, for which the seller devised a training course to initiate buyers into how it 
operates. 
44. The study distinguishes between two situations: 
(a) In one, payment for the course is owed only if the buyer participated in it, and it is for 
the buyer to decide whether he needs the c ourse in order to use the machine.  Under 
this scenario, the Case Study indicates that  payment for the course is not a condition 
of sale, as it is possible to purchase the m achine without paying for the course.  The 
sale contract then comprises two separable el ements, namely the supply of a good and 
the organization of a course; 
(b) in the other, payment for the course is expressly required by the sales contract and 
must be made even if the buyer does not atte nd.  In this case, payment for the course 
is a condition of sale, as it is not possible to buy the machine without paying for the course, even if the price of the cour se is the subject of a separate invoice. 
45. The Panel considers that the question whethe r payment for all or some of the services 
concerned was a condition of sale for the imported goods must be assessed objectively.  What is 
important, therefore, is not whether certain services could have been rendered by an enterprise other 
than Alcatel CIT but whether, in  the instant case, the provision of each category of services was a 
condition of the sale.  In order to evaluate this point, the Panel will rely on the information submitted 
by the parties, more particularly the framework contract between Alcatel CIT and Mauritel Mobiles and the supplementary agreements thereto.
13 
B. CRITERIA APPLIED BY THE PANEL  
46. On the basis of the foregoing, the Panel decided to apply the following criteria for the purpose 
of determining whether a particular service should be included in the transaction value in the present 
case:  
(a) First, the service concerned must be a service rendered by the seller , inasmuch as 
Article 8 is not applicable in this case; 
(b) pursuant to paragraph 3(a) of the interpretative note to Article 1, the service must 
have been provided prior to the importation of the goods;  and 
(c) payment for the service must be a condition of  sale of the goods in the circumstances 
of the case. 
47. For its assessment of the services concerned in the light of the three above-mentioned criteria, 
the Panel relied primarily on the contract conclude d between Alcatel CIT and Mauritel Mobiles, as 
well as the supplementary agreements thereto.  Where the text of the contract did not provide sufficiently precise information, the Panel used elemen ts forming part of the context of the contract or 
of its implementation (for example, schedule attached  by Alcatel CIT to the BSS framework contract). 
                                                     
 
13 BSS framework contract:  Supply and installation of equipment, 060/MM/DG/DR/SAL, hereinafter 
the "BSS framework contract". G/PSI/IE/R/2 
Page 8  
 
  C. A
PPLICATION OF THE CRITERIA DEVELOPED BY THE PANEL TO THE CASE UNDER 
CONSIDERATION  
1. Introduction 
48. In its review of the services concerned, the Panel decided as far as possible to follow the 
classification used in the BSS framework contract.  It will therefore examine seriatim the question of 
inclusion in the transaction value. 
(a) Of project management services; 
(b) of radio network planning services; 
(c) of installation and commissioning services;  and 
(d) of radio network optimization services. 
2. Project management 
49. Project management services are not defined in the BSS framework contract.  However, 
Alcatel CIT provides a relatively detailed description thereof in the letter of 20 September 2006 from the law firm TAJ to the SGS.  From its reading of this description, the Panel finds that the services in 
question were provided from the commencement of th e contract and throughout its implementation, 
that is not only before, but also after importation.
14  They were also provided in the country of 
exportation and the country of importation, and even in third countries.  Furthermore, the Panel notes 
that, in the light of the description furnished by the law firm TAJ and the criteria defined above, it is 
difficult to determine precisely the share of these services in the transaction value. 
50. This state of affairs was apparently recognized  by the Parties since the SGS, probably in 
agreement with Alcatel CIT, included only 50 per ce nt of the value of these services in the transaction 
value appearing in the verification certificate at issue. 
51. The Panel cannot pronounce on the question whether it is true that 50 per cent of the price of 
the relevant project management services was allocated.  It notes, however, that such an allocation signifies recognition by the SGS that the price of certain project management services was not included in the transaction value.  It also notes that  the SGS is prepared to examine any evidence that 
Alcatel CIT could provide in support of a different system of allocation.
15 
52. In the circumstances, the Panel finds that, unless Alcatel CIT can prove at this stage that a 
different system of allocation should apply, an allocation of 50 per cent of the price of project 
management services to the transaction value is a reasonable solution. 
3. Radio network planning 
53. According to the BSS framework contract, ne twork planning comprises initial network design 
(IND), radio network planning (RNP), radio arch itecture and frequency planning (FP).  The Panel 
considers that the descriptions of these activities in  the BSS framework contract, and their position in 
the schedule attached to the BSS framework contr act, show that they are pre-installation activities 
which precede the importation of the goods. 
                                                      
14 This point was confirmed by Alcatel CIT in its response to question 10 from the Panel. 
15 Letter of 4 April 2006 from the SGS to the law firm TAJ, page 3.  G/PSI/IE/R/2 
 Page 9 
 
 
  54. In this connection, the Panel observes that the export operation concerned is governed by a 
contract concluded in the wake of a competitive bidding procedure initiated by Mauritel Mobiles.  
This contract covers both th e supply of equipment and soft ware, on the one hand, and the 
performance of services, on the other, in a ratio of roughly two thirds to one  third (in value terms). 
55. The Panel recalls that paragraph 7 of Anne x III to the Agreement on Customs Valuation 
provides that "[t]he 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".  The Panel also notes that paragraph 7(a) of Case Study No.1.1 specifies th at the transaction value must be calculated by 
addition of the price of the engin eering and development services re quired for the construction of the 
plant.  According to the Case Study, this additiona l amount forms part of the total price paid or 
payable under the contract. 
56. The Panel considers that the network planning services are comparable to the engineering and 
development services mentioned in Case  Study No. 1.1 in that they en able the products to be properly 
installed and adapted to the conditions of the c ountry of importation.  The Panel notes in this 
connection that Alcatel CIT acknowledges that these services are necessary "for state of the art 
service/network quality".
16 
57. The Panel notes that Alcatel CIT, in response to one of its questions, argues that radio 
network planning (RNP) is not finalized prior to importation.  Alcatel CIT contends that "generally speaking, some of the sites are defined prior to on-si te delivery of the equipmen t in order to gain time, 
and the remainder are defined once the equipment h as been delivered to the operator's warehouse."  
The Panel notes that Alcatel CIT contents itsel f with a general observa tion, without producing 
evidence that it actually acted in this way in this case, whereas the schedule attached by Alcatel CIT 
to the BSS framework contract places network planni ng activities in advance of installation and even 
in advance of customs clearance of the goods.  Ev en assuming that radio network planning (RNP) was 
conducted after delivery of the goods concerned, th e Panel observes that the BSS framework contract 
gives the following description of RNP: 
"This operation is conducted thro ugh fine tuning of the parame ters initially defined during the 
IND phase according to the exact positions of the sites." 
 The Panel understands that the RNP compone nt conducted "once the equipment has been 
delivered to the operator's warehouse" consists in "f ine tuning" of the parameters initially determined 
(following the IND phase), which depends on the proportion completed before delivery of the 
equipment.  The Panel considers, therefore, that  the RNP component conducted after delivery of the 
equipment does not fall into the services categories covered by paragraph 3(a)  of the interpretative 
note to Article 1, since in fact it involves "finishing touches". 
58. The Panel finds, therefore, that the price of  the network planning services, in the case under 
consideration, should be included in th e calculation of the transaction value. 
                                                     
 
16 Response of Alcatel CIT to question 11 from the Panel. G/PSI/IE/R/2 
Page 10  
 
  4. Installation – commissioning 
(i) Preliminary remarks 
59. The Panel notes that the services identified as having been rendered in Mauritania were 
excluded by the SGS insofar as they satisfied the re quirements of paragraph 3(a), of the interpretative 
note to Article 1.
17 
60. The Panel nevertheless deemed it necessary to re turn to this question inasmuch as Alcatel CIT 
stresses the need to exclude servi ces rendered after export, regardless of the place where they were 
rendered18, and inasmuch as the SGS relies on Commentary 9.1 in order to include in the transaction 
value the goods installations services not provided in Mauritania.19 
(ii) In Mauritania 
61. On the basis of its examination of the relevant  provisions, including in particular paragraph 3 
of the interpretative note to Article 1 and Commentary 9.120, the Panel is of the opinion that the 
services rendered by Alcatel CIT in Mauritania  that fall within the scope of paragraph 3 of the 
interpretative note to Article 1, insofar as they were provided after importation of the goods or 
constitute an element of the installation of the im ported goods concerned by th e verification certificate 
at issue – that is, even if these services were pr ovided before importation – should not be included in 
the transaction value of the goods covered by the verification certificate at issue. 
(iii) Outside Mauritania 
62. The Panel is of the opinion that the services rendered by Alcatel CIT outside Mauritania in 
connection with the installation of the goods covered by the verification certificate at issue and which fall within the scope of paragraph 3 of the interp retative note to Article 1, insofar as they were 
provided after importation of the goods  concerned by the verification certificate at issue, should not 
be included in the transaction value of the goo ds covered by the aforementioned verification 
certificate. 
63. The Panel does not share the opinion of the SGS that any interpretation which seeks to 
include services rendered outside the country of impor tation would result in a broadening of the scope 
of paragraph 3(a) of the interpretative note to Ar ticle 1.  The Panel understands that the services 
rendered outside the country of importation (deplo yment in France) concern technical support for 
installation of the goods in Mauritania as well as supe rvision of network performance in Mauritania.  
With reference to the case under consideration, the Panel considers that Commentary 9.1 relates only 
to activities undertaken in the country of importati on.  Apart from the reasons already mentioned in 
paragraph 41 above, the Panel not es that paragraph 1 of Commentary 9.1 confirms this view: 
"This commentary relates to the treatmen t applicable to the cost of activities 
undertaken in the country of importation in the context of Article 1 and the interpretative note thereto". 
64. Insofar as these activities were undertaken at the time of installation of the imported goods, 
that is after importation of the goods, these services are covered by paragraph 3( a) of the interpretative 
note to Article 1 and should therefore be excluded from the transaction value. 
                                                     
 
17 Letter of 4 April 2006 to the law firm TAJ. 
18 Letter of 20 September 2006 from the law firm TAJ to the SGS. 
19 SGS response of 10 October 2006, paragraph 21. 
20 See section V.A above.  G/PSI/IE/R/2 
 Page 11 
 
 
  5. Radio network optimization 
65. Alcatel CIT argues that radio network optimiza tion is undertaken after installation of the 
equipment.21  The SGS takes no position on the optim ization services as such.  It relies on the 
categories set out in the Bill of Quantities (BOQ) of the BSS framework contract, in which "Radio 
Network Optimisation" is included in th e "pre-installation activities" category. 
66. Under the BSS framework contract, network op timization is conducted jointly by Mauritel 
Mobiles (measurements and meter reading) and Alcatel CIT (backstage analysis).  However, 100 per cent of the services are performed in Mauritania.   In the schedule annexed to the BSS framework 
contract, optimization is always the last entr y, after "site acceptance and commissioning" and 
"equipment installation". 
67. The Panel concludes that network optimization is therefore conducted af ter importation of the 
goods.  Moreover, Supplementary Agreement No. 3 to the BSS framework contract, which entered 
into force on 9 October 2006
22, contains a new Bill of Quantities (BOQ) in which radio optimization 
services appear as a separate category.  The Panel co nsiders that these services constitute maintenance 
or technical assistance services within the meaning of  paragraph 3(a) of the interpretative note to 
Article 1. 
68. In the light of the foregoing, the Panel finds that  the price of network optimization, insofar as 
this service takes place after importation of the go ods concerned, should not be included in the 
transaction value. 
VI. DECISION OF THE PANEL 
69. The Panel therefore decides, in the case under consideration , that: 
(a) 50 per cent of the price of the project management services should be included in the 
transaction value, unless Alcatel CIT can show, to the satisfaction of the SGS, that this figure should be lower; 
(b) 100 per cent of the price of network planning services should be included in the 
transaction value; 
(c) the price of installation and commissioning services should be excluded from the 
transaction value;  and 
(d) the price of network optimization services should be excluded from the transaction 
value. 
70. In order to arrive at these findings, the Pa nel relied mainly on its examination of the BSS 
framework contract and the supplementary agreements  placed at its disposal.  In so doing, however, 
the Panel also interpreted the relevant provisions an d identified criteria for possible application by the 
parties if the reality turned out to be different from the terms of the BSS framework contract or the 
supplementary agreements communicated to the Pa nel.  For this reason, the Panel deemed it 
appropriate to specify the factual circumstances on which it bases its findings.  There is nothing to 
prevent the parties from reaching agreement on a different  system of allocation if this is justified by 
the facts.  For example, the reason for including 100 per cent of the price of planning services in the 
transaction value is based in particular on the fact that the information available to the Panel shows 
                                                     
 
21 Response of Alcatel CIT to question 10 from the Panel. 
22 Response of Alcatel CIT to question 7 from the Panel. G/PSI/IE/R/2 
Page 12  
 
  that these services were rendered before importation.  If the reality turned out to be different and if the 
parties so agreed, the provisions on which the Panel has relied would admit of a different allocation of 
the services concerned in the transaction value. 
71. This decision applies solely to the goods cove red by the verification certificate disputed by 
Alcatel CIT, to the exclusion of any other.  It does not therefore concern verification certificates that 
have not been the subject of internal appeal or a ppeal to the Independent Entity within the prescribed 
time-limits.  Nor can it apply if the goods concer ned have already been cleared through customs. 
72. This decision is taken in accordance with the relevant provisions of the WTO Agreements on 
Preshipment Inspection and on Implementation of Ar ticle VII of the Genera l Agreement on Tariffs 
and Trade 1994.  
73. The Panel reminds the Parties that, pursuant to Article 4, paragraph(h) of the WTO 
Agreement on Preshipment Inspection, this decision is binding on the preshipment inspection entity 
and the exporter which are parties to the dispute. 
74. Inasmuch as neither of the parties has made a fully convincing case, the Panel decides, 
pursuant to paragraph 10.5 of the Rules of Proce dure for the Operation of Independent Reviews under 
Article 4 of the WTO Agreement on Preshipment Inspec tion, that the cost of the procedure should be 
shared equally between the parties.  The same  method will apply to the refund of any balance 
remaining after deduction of the I ndependent Entity's costs in connec tion with the present procedure. 
Done at Geneva on 31 October 2006. 
Laurence Boisson de Chazournes 
Chairperson 
 
Pierre Begle        Jean-Marie Salva    
__________