PRESS/84
1December 1997
WORKING PARTY ADOPTS RECOMMENDATIONS ON
PRESHIPMENT INSPECTION
TheWorking Party onPreshipment Inspection (PSI) adopted today, 1December, asetof
recommendations aimed atenhancing theimplementation oftheWTO PSIAgreement. These
recommendations, which willbeforwarded totheWTO General Council, aretheresults ofayear-long
review oftheAgreement.
Members agreed toextend thelifeoftheWorking Party foranother yeartoexchange views
onaCode ofConduct/Practice ofPSIentities, astandard inspection format, selective examination
ofshipments, auditing ofPSIentities, thepromotion ofcompetition among PSIentities, feestructures
forPSIentities, andtheusetousermembers ofbuilding price databases.
TheWorking Party alsoagreed todiscuss nextyeartechnical assistance activities inareas such
astariffandcustoms administration reforms, simplification ofmodernization ofsystems andprocedures,
andthedevelopment ofanadequate legal, administrative andphysical infrastructure.
Thefollowing aretheWorking Party'srecommendations forimmediate action:
(1) Priceverification byPSIentities forcustoms purposes shallbelimited toprovisions oftechnical
advice tofacilitate thedetermination ofcustoms value bytheuserMember. Inthisregard, theultimate
responsibility forcustoms valuation andrevenue collection restswithuserMembers. Allactivities of
PSIentities should bemonitored byuserMembers whoshould beencouraged toreflect thisinnational
legislation oradministrative regulations.
Inorder toensure compliance withtherequirements ofArticles 2.5to2.8ontransparency, Article
2.1onnon-discrimination andArticle 2.20onprice verification, auserMember should require PSI
entities to:
(i)make publicly available asingle setofprice verification criteria; and
(ii)inform exporters andimporters oftheapplicable valuation methodology.
Price verification criteria should include thecustoms valuation methodology, asspecified inuser
Members 'national legislation oradministrative regulations, usedwhen providing technical advice on
customs valuation. Inthisregard, userMembers should encourage PSIentities toutilize electronic
means forpurposes ofproviding required information toexporters andimporters.
97-5285 MORE PRESS/84
Page2/3
UserMembers shallensure thatrequests forinformation donotgobeyond Articles 2.12and2.20of
theAgreementonPreshipmentInspection.Reciprocally,exporterMembersshouldinformuserMembers
when theybecome aware thatPSIentities 'requests forinformation gobeyond these Articles.
Inconformity withArticle 2.21, auserMember shallensure thatthePSIentity, when responding to
adispute onprice verification, provides adetailed written explanation within 10daysofreceipt of
thecomplaint, setting forth thebasis ofitsopinion ofvalue byreference tothespecific applicable
elements oftheprice verification criteria.
(2) Inaccordance withArticle 3.3,exporter members should ensure thattheirtechnical assistance
activities aredesigned toaddress thespecific needs ofuseMembers inimplementing theterms and
objectives oftheAgreement.
(3) UserMembers should ensure thatPSIentities areencouraged toestablish localfocal points
incountries where theydonothavephysical, on-site representation. Theestablishment ofwebsites
byIFIAandbyPSIentities withon-line services would enhance efficiency ofPSIoperations insuch
areas asprocedures, methods, inspection criteria, responses toinquiries, anddissemination ofother
usable, essential information byimporters andexporters. Inaddition toproviding hardcopies, PSI
entities should beencouraged tocommunicate Clean Reports ofFindings (CRFs) toimporters and
exporters through electronic means.
(4) AllMembers shall notify their lawsandregulations, inaccordance withArticle 5ofthe
Agreement, aswellasanychanges thereto. Insubmitting thesenotifications, Members should endeavour
toprovide additional descriptive information onhowtheyareimplementing theAgreement.
(5) Infurtherance ofArticles 2.9-2.13, userMembers shallensure thatcontracts withPSIentities
ornational implementing legislation oradministrative regulations specify procedures tobeundertaken
bysuchentities tolimittheconfidential business information theyseekfromexporters tothatprovided
forunder theAgreement andtoensure thatanysuchinformation obtained byPSIentities isnotused
foranyother purpose thanPSIactivities fortheuserMembers, asdefined inArticle 1.3.Anybreach
oftheruleofconfidentiality bythePSIentity isanaction thatmaybebrought against thePSIentity
intheappropriate judicial oradministrative forum oftheuserMember.
(6) UserMembers shallensure thatcontracts withPSIentities ornational implementing legislation
oradministrative regulations provide forfeestructures thatdonotcreate incentives forpotential conflicts
ofinterest inanywaythatmaybeinconsistent withtheobjectives oftheAgreement. Additionally,
contractswithPSIentitiesornationalimplementinglegislationoradministrativeregulationsshallspecify
thatPSIentities should notinspect transactions involving products inwhich aPSIentity oritsrelated
company mayhaveacommercial interest.
(7) UserMembers shallensure thatPSIentities issueCRFs toimporters andexporters immediately
onreceipt ofthefinaldocuments andcompletion ofinspection. Asforeseen inArticle 2.16, innocase
must theissuance ofaCRFexceed 5working daysafteraninspection, Intheevent thataCRFhas
notbeenissued, theuserMember shallensure thatthePSIentity issues adetailed written explanation
specifying thereasons fornon-issuance.
MOREPRESS/84
Page4
NOTE TOEDITORS:
Preshipment inspection isthepractice ofemploying specialized private companies tocheck shipment
details —essentially price, quantity andquality —ofgoods ordered overseas. Used bygovernments of
developing countries, thepurpose istosafeguard national financial interests (prevention ofcapital flight
andcommercial fraud aswellascustoms dutyevasion, forinstance) andtocompensate forinadequacies
inadministrative infrastructures.
TheWTO ’sPSIagreement recognizes thatGATT 1994 principles andobligations apply to
theactivities ofpreshipment inspection agencies mandated bygovernments. Theobligations placed
onPSI-user governments include non-discrimination, transparency, protection ofconfidential business
information, avoidance ofunreasonable delay, theuseofspecific guidelines forconducting price
verification andtheavoidance ofconflicts ofinterest bythePSIagencies. Theobligations ofexporting
members towards PSIusers include non-discrimination intheapplication ofdomestic laws and
regulations, prompt publication ofsuchlawsandregulations andtheprovision oftechnical assistance
where requested.
Under theagreement, anindependent review procedure hadbeenestablished —theIndependent
Entity —involving thePSIagencies, exporters andtheWTO Secretariat toresolve disputes between
anexporter andaPSIagency.
TheWorkingPartyonPSIwasestablishedbytheGeneralCouncilinNovember1996to"conduct
areview provided forunder Article 6oftheAgreement onPreshipment Inspection andtoreport to
theGeneral Council through theCouncil forTrade inGoods inDecember 1997". TheWorking Party
ischaired byMr.Chiedu Osakwe (Nigeria).
Thirty-four WTO members usePSIservices. Thesixmembers thatpresented theirnational
experiences withPSIusetotheWorking Party--Colombia, Côted'Ivoire, Ghana, Kenya thePhilippines
andPeru--expressed satisfaction withtheoperation ofthePSIAgreement.
Anumber ofexporting members, including theUnited States, Australia, NewZealand and
theEuropean Communities, raised concerns onPSIusewithrespect tothefollowing issues: price
verification,confidentialityofbusinessinformation,non-discriminatoryapplicationofinspectioncriteria,
transparency, delays, on-site representation ofPSIentities, andoperation oftheIndependent Entity.
END