RESTRICTED
WORLD TRADE G/PSI/WP/W/1
19February 1997
ORGANIZATION(97-0665)
Working Party onPreshipment Inspection
Background Note bytheSecretariat
1. Article 6oftheAgreement onPreshipment Inspection reads:
"Attheendofthesecond yearfrom thedateofentry intoforce oftheWTO Agreement and
every three years thereafter, theMinisterial Conference shall review theprovisions,
implementation andoperation ofthisAgreement, taking intoaccount theobjectives thereof
andexperience gained initsoperation. Asaresult ofsuchreview, theMinisterial Conference
mayamend theprovisions oftheAgreement."
2. Atitsmeeting on7,8and13November 1996, theGeneral Council agreed toestablish aworking
party under theCouncil forTrade inGoods toconduct thereview provided forunder Article 6ofthe
Agreement, withthefollowing terms ofreference:
"ToconductthereviewprovidedforunderArticle6oftheAgreementonPreshipmentInspection
andtoreport totheGeneral Council through theCouncil forTrade inGoods inDecember
1997."
3. TheAgreement onPreshipment Inspection came intoforceinJanuary 1995forthose countries
whichratifiedtheAgreementestablishingtheWTO.TheAgreementappliestoallpreshipmentinspection
activities carried outontheterritory ofWTO Members, whether suchactivities arecontracted or
mandatedbytheGovernment,oranygovernmentbody,ofaMember.MostprovisionsoftheAgreement
containobligationsforuserMembers(Governmentswhichemploytheservicesofpreshipmentinspection
companies) whoareexpected toensure fulfilment oftheobligations through their contractual
arrangements withtheinspection agencies. TheAgreement contains three obligations forexporting
Members -non-discrimination intheapplication ofdomestic lawsandregulations; publication ofall
lawsandregulations relating toPSIactivities; andprovision oftechnical assistance upon request to
further theobjectives oftheAgreement.
4. Article 5oftheAgreement provides fornotification oflawsandregulations bywhich Members
puttheAgreement intoforce aswellasofanyother lawsandregulations relating toPSI. Asof1
February 1997, 46Members havenotified. Ofthese, fourhavenotified lawsand/or regulations putting
theAgreement intoforce; 17havenotified other lawsand/or regulations relating toPSI;and25have
notified thattheyhavenolawsand/or regulations onPSI.
5. Article 4oftheAgreement provides forindependent review procedures toresolve disputes
between exporters andpreshipment inspection agencies; thisArticle callsfortheestablishment ofan
Independent Entity (IE)towhich anexporter orPSIentity could referanycomplaint ofanexporter
which hasnotbeensettled through thenormal appeals process. TheIEwasestablished through a
Decision bytheWTO General Council on13December 1995asasubsidiary bodyoftheCouncil for
Trade inGoods (WT/L/125/Rev.1). AsArticle 4provides thattheIEshallbeconstituted jointly by
anorganization representing exporters andanorganization representing preshipment inspection entities,
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theGeneral Council decided thattheformer would berepresented bytheInternational Chamber of
Commerce (ICC) andthelatter bytheInternational Federation ofInspection Agencies (IFIA); the
IEisadministered bytheWTO Secretariat. InitsDecision, theGeneral Council adopted theAgreement
between theWTO, theICCandtheIFIAestablishing theIE(Annex I),theStructure andFunctions
oftheIndependent Entity (Annex II);theRules ofProcedures fortheIE(Annex III); andagreed
thatamoratorium ontheacceptance ofreview applications would beputinplace untilconfirmation
from ICCandIFIA thatalladministrative andprocedural requirements necessary tooperationalize
theIEwerecompleted. InApril 1996 confirmation wasreceived andtheIEbecame operational on
1May1996(G/PSI/IE/2). AListofExperts toserve aspanelists forthereviews wasalsocirculated
toMembers, affiliates andcontacts around theworld (G/PSI/IE/1).
6. TheIEprocedures involve theestablishment ofapanel ofexperts (from anagreed list)which
musttakeadecision within eight working daysoftherequest forthereview. Thepanel decision is
binding upon thePSIentities andtheexporters. According toArticle 4oftheAgreement:
"theobject ofthereview shallbetoestablish whether, inthecourse oftheinspection indispute,
theparties tothedispute havecomplied withtheprovisions ofthisAgreement. Theprocedures
shallbeexpeditious andprovide theopportunity forbothparties topresent theirviews inperson
orwriting."
TheIndependent Review Procedures tobeconducted bytheIEareunprecedented inWTO terms because
bothpartiestothedisputeareprivateentities.Thus,governmentsareonlyobligedundertheIndependent
Review Procedures oftheAgreement totake"such reasonable measures asmaybeavailable tothem"
toensure fulfilment oftheprovisions andobjectives.
7. Asof17February 1997, norequests forreviews under theIEhavebeenreceived.