Exercise 1

Seller S, in country of export X, enters into a contract for the sale of household
appliances with importer A, in country of import I, at a unit price of CU5.75. S also
contracts with manufacturer M, also established in country X, to manufacture the
goods. Manufacturer M, on behalf of S, ships goods to A in country I. The selling
price from M to S, is 5 u.m. the unit.

In this case, could the transaction between S and A constitute an effective

international transfer of goods and therefore be considered as a sale for export to
the country of importation?
Could it be accepted as a basis for valuation under Article 1 of the Agreement?

Yes, because a transfer is made, i.e. the household appliances in exchange for
payment of the merchandise, which is considered as a sale for export to the
country of importation, therefore it is accepted as a basis for valuation.

Exercise 2

Buyer B, in country of importation I, buys goods from seller S in the same country I.
The goods are stored in country X by S, who also arranges for their shipment and
export from country X, and B imports the goods into country I.

Does the transaction between buyer B and seller S constitute a sale for export to
the country of importation? Could it serve as a basis for the valuation of goods
according to article 1, taking into account the place where seller S is established?

Yes, since it is not necessary for the sale to be made in a country of precise
exportation, just by taking the merchandise out of the customs territory, we understand
that it has been exported. So if it can serve as a basis for the valuation of goods
according to article 1.
Exercise 3

A firm in the city of Bogota contracts with a foreign company for the purchase of
4,000 metric tons of an ore, at a price of US$30 per ton FOB Peruvian port,
guaranteeing for this price a minimum richness of the ore, which must be verified
by the importer through analysis prior to shipment, as a condition imposed by the
seller. However, for reasons of negotiation, the seller bears 50% of the costs of
sample extraction and analysis by a third party. The cost of sample extraction and
analysis is 4,800 nuevos soles.
Currency exchange: 1 dollar = 2.20 nuevos soles.

Are the costs of sampling and analysis part of the customs value? Why?

Yes, because the sample extraction and analysis adjustments are related to the
minerals to be imported and also because it is a condition of sale.

What is the value to be

adjusted?
The adjustment value is the value assumed by the purchaser, i.e. the cost of
sampling and analysis, which corresponds to 50% of the total costs.

Conversion
Sample extraction and 4,800 soles 4,800soles / 2.20soles
analysis costs $2.181,82 Dollars
1 dollar = 2.20 soles

therefore
$2.181,82 *50%= $1.090,91

For what concept is the adjustment made?

By the first method "transaction value" since the adjustment is part of the total
payment paid for the goods as a condition of sale.

Exercise 4

The exporter Argos S.A. located in Bolivia, enters into a purchase and sale agreement
with the importer Roa Ltda. from Venezuela for the supply in partial deliveries of 9,000
tons of copper at a unit price of US 250/Ton. FCA El Alto. However, the purchase
agreement provides for a price revision if all shipments are made within a period of
more than one (1) year.
The price of copper is determined on a fixed scale based on the quantity of goods sold
as follows:
 CUMULATIVE QUANTITY DISCOUNTS
1 to 500 Ton no discount
501 to 3,000 Ton 5%.
3,001 to 6,000 Ton 7% 3,001 to 6,000 Ton
More than 6,000 tons. 9%

The purchase agreement provides for 3 staggered shipments of 3,000 tons each with
their respective invoices.
The first shipment was made on May 12, 2005 and was nationalized at a base price of
US 250/Ton verified and accepted by customs to determine the customs value.
The second shipment was made on March 2, 2006 at a price of US 237.50/Ton, also
verified and accepted by customs as the basis for valuation.
The last shipment was made on May 24, 2006; due to the fact that the one (1) year term
established in the purchase and sale agreement was exceeded, the price was readjusted
to US 300/Ton; however, the following discounts were granted:

1)9%
2) Additional 5% to consider the rebate that was not granted to the first shipment of
May 12, 2005.

Consequently, a price of US 259.35 per ton is invoiced.

What value should be taken into account as the basis for determining the customs
value of the last shipment?
Shipping
1) 12 May 2005 $250,00 /Ton Discount
2) March 2, 2006 $237,50 /Ton 300*9%= $ 27,00
3) May 24, 2006 $259,35 /Ton

Price Merchandise $300,00

(-) discount $27,00
$273,00

Reply
The discount to be taken into account is 9% and not 5%, since according to Article 10
of Resolution 1684, discounts or rebates will be accepted as long as it is not a
retroactive discount granted for goods imported prior to that to which the discount or
rebate is being applied, corresponding to transactions independent of the merchandise
being valued.The discount to be taken into account is 9% and not 5%, since according
to Art. 10 of Resolution 1684, discounts or rebates will be accepted as long as it is not
a retroactive discount granted for goods imported prior to the one to which the
discount or rebate is being applied, corresponding to transactions independent from
that of the merchandise being valued. Therefore, the value to be taken as the basis for
determining the customs value is $273.00.
Exercise 5

Manufacturer F in importing country I has the opportunity to sell electrical equipment

in country E, provided that an equivalent value of goods produced in country E is
purchased and exported from this country. After an agreement has been concluded
between F and X, a plywood trader in country I, X imports into country I a certain
quantity of plywood from country E, and F exports electrical equipment invoiced at
CU100,000. to country E.

The invoice presented for the import of the plywood also indicates a value of
CU100,000; however, no monetary payment is made between X and the seller in

Exercise 6
An importer of motor vehicles in commercial quantities in your country receives a new
shipment.
The importer's commercial documentation indicates that an agreement has been made
between the buyer and seller that a special wax will be applied to the vehicles prior to
export to protect them from seawater spray and iodized air.
The cost of these services is invoiced separately and not in the same commercial invoice
corresponding to imported motor vehicles.
How should the wax in question be treated for customs value determination
purposes?
The sale of the vehicles consisted of an agreement between the parties which was that a
special wax should be applied on the vehicles and therefore they are part of the
determination of the customs value. So an adjustment should be made, i.e. the invoice
value plus the cost of the wax service.
Exercise 7
An importer in your country regularly buys men's and women's designer clothing from
Europe, especially Italy.
Once a year, the importer's representatives travel to Italy to negotiate new agreements
with the local manufacturer/exporter. All details related to design and commercial issues
are defined at that time and the contract is negotiated and signed.
The importer and exporter decide to maintain the commercial arrangement authorizing
deferred payment for 180 days. This arrangement is reflected in an indication on the
invoice referring to an interest of 5.5% (generally) included in the invoice price of the
goods.
The importer places orders with the exporter as it receives local domestic orders during
specific short periods throughout the year.
How should the interest element be treated for customs value determination
purposes?
According to Resolution 1684, interest included in the commercial invoice, accrued
under a financing agreement, entered into by the buyer and related to the purchase of the
imported goods, provided that the circumstances foreseen in Decision 3.1 of the WTO
Valuation Committee are met.
That is to say, the interest must be distinguished from the value of the goods, there must
be a written financing contract, the values must also be correct and finally the interest
must be usual to the commercialization in which the Libor rate will be used as a
reference rate where the interest must be within the margin, that is to say (+/- 3 points).
Therefore, if any of these circumstances is missing, the amount imputed to interest will
be considered to be part of the transaction value.

Exercise 8
A diplomatic official is importing a 2005 Mercedes Benz automobile to Ecuador at the
end of his mission in Argentina.
The car was purchased on February 1, 2005 in Germany at a price of US $60,000
according to the commercial invoice.
The diplomatic official had his car in use in Buenos Aires for one (1) year and at the end
of that year he sent it to Ecuador.
The car was presented to customs for nationalization on March 2, 2006, a date on which
the price on the international market for the same type of car is, according to specialized
magazines, US $80,000.
What is the base value for determining the customs value?
The base value is $60,000 as this is the price actually paid or payable.
Is it possible to apply the Transaction Value Method? Explain.
Yes, because the price you give us is shown on the commercial invoice.

Exercise 9
How would you treat the following transaction for customs value determination
purposes?
I would treat them as advance payments since the exporter informed that it would only
send the invoice to the importer if the latter paid the 700 u.m. owed by the exporter to
company C.
According to Resolution 1684, in the case of advance payments or when there are
payments foreseen or supported in two or more commercial invoices or contracts
inherent to the sale and purchase of the merchandise subject to valuation, all payments
shall be part of the price actually paid or payable and must be declared.

Exercise 10
A publishing house in the city of Valencia, Venezuela, has imported on July 1, 2005,
from an exporter in Canada, a shipment of newsprint at the invoiced price of US$ 823
per 500-meter roll, for consumption in the company's own activities.
At the time of nationalization, upon physical examination of the merchandise, it was
found that 60% of the total imported quantity of paper was deteriorated due to humidity.
Can the Transaction Value Method be applied after the actual condition of the
imported goods is known?
If the first method can be applied, since the merchandise has been the subject of
international negotiation resulting in a sale; furthermore, whether or not the importer
accepts the merchandise should determine the price actually paid or payable, for which
reason the percentage of undamaged merchandise of the total merchandise purchased
should be verified, since the percentage that is in good condition will be valued
according to one of the other methods specified in the Agreement.The percentage of
undamaged goods out of the total goods purchased should be verified, since the
percentage that is in good condition will be valued according to one of the other
methods specified in the Agreement.
Explain the reasons for your answer. What will be the procedure to follow?
Shipment: July 1, 2005
Newsprint $823
Moisture deterioration 60%
Good condition 40%

$823*0,40= $ 329.2 (Price to be paid)

Exercise 11
Coopal S.A. imports 100 tons of fishmeal from Peru. Flour is invoiced at an FOB
Callao price of US $300 per ton.
According to customs records, it is known that the export value of Peruvian flour is US
600 per ton.
Responding to a request for information from Customs, the importer explains that he
has only paid US 300/Ton. The manufacturer has decreased the price by 50% to
compensate for a previous importation of flour for which the importer had paid US 600,
but subsequently alterations were discovered in approximately half of the merchandise.
What is the base value for determining the customs value?
The base value to determine the customs value is $600 since it is the export value of the
Peruvian flour.
Would there be room for an adjustment? Explain.
If an adjustment should be made to the $300 per ton because the manufacturer applied a
discount to compensate for a previous import.
Exercise 12
A toothpaste manufacturer has imported 3 tons of sodium carbonate for the production
of a new type of toothpaste. The import price is US 230.50 per ton FOB port of
shipment.
The merchandise can only be used as raw material for the production of toothpaste and
cannot be marketed in the country after its importation; furthermore, its circulation is
restricted to a transit authorized by Customs (according to the legislation of each
country) and to a single consignee, which is the producing company that imports
it.Furthermore, its circulation is restricted to a transit authorized by Customs (according
to the legislation of each country) and to a single consignee, which is the producing
company that imports it.
On the other hand, the importation requires a prior permit and approval from... (Agency
that controls narcotics).
Is it appropriate to apply the "Transaction Value" Method?
According to Article 1 of the WTO Valuation Agreement, the customs value of
imported goods shall be the transaction value, provided that there are no restrictions on
the transfer or use of the goods by the buyer, other than those imposed or required by
law or by the authorities of the importing country.The customs value of imported goods
shall be the transaction value, provided that there are no restrictions on the buyer's
disposal or use of the goods, other than those imposed or required by law or by the
authorities of the country of importation.
Therefore, whether the "Transaction Value" method can be applied depends on the
legislation of each country.

Quantity of pasta 3 Ton

$
Pasta Price 230,50 C/Ton

$230,50*3= $691,50 (Price of the goods)

Exercise 13
What elements of this transaction should be taken into account to determine the
customs value?
The $15,000 must be taken into account because even though an advance payment has
been made, it is still part of the price actually paid or payable.
Exercise 14
How would you treat this transaction for customs value determination purposes?
It should be determined if the interest imposed complies with the conditions, i.e. the
interest must be distinguished from the value of the goods, there must be a written
financing contract, in addition the values must be correct and lastly the interest must be
usual to the commercialization rate in which the Libor rate will be used as a reference
rate.Finally, the interest rate must be usual to the commercialization rate in which the
Libor rate will be used as a reference rate where the interest rate must be within the
margin (+/- 3 points).
Therefore, if these conditions are met, the customs value would be $15,000, which does
not include interest, whereas, if any of these circumstances is missing, the amount
imputed to interest will be considered to be part of the transaction value, this being the
value of the $15,600.
Exercise 15
Toys S.A. of the importing country buys Niko brand children's tape recorders from a
Mexican seller on a regular basis. Each year Toys acquires about 18% of the vendor's
total production. For 2006, the seller proposes to the buyer that if he purchases 50% of
the total production for the year, he will grant a 35% discount.
Toys has accepted the seller's proposal and as a result, the unit price of the recorder of
US 20, at which it had been buying according to previous imports, is reduced to US 13,
for which they have signed a new purchase contract containing the new conditions of
the negotiation.
At the time of nationalization, the customs authority finds that there is another importer
who also brings the same recorders from the same Mexican seller, but with whom there
is no such agreement and therefore does not buy regularly, the import price being US
23.
What will be the base value for determining the customs value?
Is the application of the "Transaction Value Method" appropriate?
What should be the procedure to follow?
The base value to determine the customs value is $13 because there is an agreement
between the importer and the exporter which consists in applying a discount of 35% for
the acquisition of 50% of the total production of the year of the seller where a purchase
and sale contract was signed where the new conditions of the negotiation appear.The
base value to determine the customs value is $13 due to the fact that there is an
agreement between the importer and the exporter which consists in applying a discount
of 35% for the acquisition of 50% of the total production of the year of the seller where
the purchase and sale contract was signed where the new conditions of the negotiation
appear, therefore the first method of transaction value can be applied.

Exercise 16
Importer I receives a shipment of televisions with an invoice price of CU10,000.
However, the invoice mentions a credit of CU1,000, which makes the final invoice price
CU9,000. The importer informs the customs service that the credit was granted because
10 of the televisions that were part of the previous shipment were defective. The seller
has granted credit on the current shipment to offset losses.
Can this credit be applied to the current shipment under appraisal?
It cannot be applied due to discounts that are cumulative from a previous shipment, in
any case what should be done is an adjustment.
Exercise 17

What elements of this transaction should be taken into account to determine the
customs value?
The price of the merchandise, which is $15,000, should be taken into account.
Exercise 18

What elements of this transaction should be taken into account to determine the
customs value?
The value of $13,500 should be taken into account since it is noted that a 10% discount
was applied to the merchandise.

Data
$15.000,0
Price of the merchandise 0
Discount 10%
 $15.000,0
Price of the merchandise 0
Discount $1.500,00
$13.500,0
0