RESTRICTEDWORLD TRADE
ORGANIZATIONG/PSI/WP/M/6
3 July 1998
(98-2636)
Working Party on Preshipment Inspection
MINUTES OF THE MEETING OF 12 JUNE 1998
Chairman:  Mr. Edward Brown (United Kingdom)
The agenda proposed for the meeting, cont ained in WTO/AIR/852/Re v.1, was adopted as
follows:
Page
1. Exchange of views on the programme of work............................................................ 1
(a) Communication from Switze rland (G/PSI/WP/W/16) ................................... 1
(b) Communication from the Unite d States (G/ PSI/WP/W/17)........................... 3
(c) Technical assistance activitie s (paragraph 9 of G/L/214)............................... 8
(d) Any other issu es (G/L/214).............................................................................. 9
2. Other bus iness ............................................................................................................... 10
_________________
1. Exchange of views on the programme of work
1.1 The Chairman recalled that the Working Party had had an interesting and informative informal
session earlier in the day.  The presentations from representatives of IFIA, ICC, and WCO may have
answered some of Members' questions, but may have ra ised others.  He wished to continue discussion of
these questions as well as other issues at this meeting.
(a) Communication from Switzerland
1.2 The Chairman recalled that the delegation of Switzerland had tabled its communication at the
first meeting of the Committee in March.  It was subsequently circulated in G/PSI/WP/W/16 and
contained a proposal for a draft model contract to  be used to establish agreement between a PSI
company and a user Member.  The representative from Switzerland had introduced the communication
at the first meeting of the Working Party as a model which could help increase the efficiency of
preshipment inspection activities and meet some c oncerns of Members.  The representative had noted
that it had been prepared in close consultation with all the interested groups in the Swiss private sector,
in accordance with the Working Party's recommendations  in G/L/214, and that it attempted to ensure the
respect of contractual freedom.G/PSI/WP/M/6
Page 2
1.3 The representative from the United States found the Swiss communication useful in addressing
an issue dealt with last year, namely that the Ag reement created obligations for both exporter Members
and user Members yet the execution of PSI activities was undertaken by private entities.  The Swiss
ideas could have merit in creating an interface between the obligations of the Agreement and the
activities of PSI entities.  His delegation's communication posed some questions on the Swiss proposalregarding the type of monitoring and enforcement m echanism that might be available to ensure that PSI
entities would fully implement the terms of a model agreement, and whether there might be some role
for technical assistance in this area.  His delegation could envisage a model agreement forming an
integral part of contracts between user Members and PSI entities, if considered useful.  He assumed that
there would not be any rights for exporters and impor ters as a result of such a model agreement forming
a part of a contract.  If they were to include th e model agreement in a contract, what would be user
Members' willingness to use their judicial m echanisms to enforce the specific provisions?
1.4 The representative of the European Communities said he would provide detailed comments on
the communication in due course.  However, his de legation emphasised that such a model agreement
needed to offer an added value.  For example, in  the Agreement, there was no reference to importers.
Some points might be identified that could be insert ed in the model agreement to provide this added
value.  Also, it would be important to ensure  that the model agreement would not raise any
incompatibility with the Agreement.   Otherwise, serious interpretation and enforcement problems might
arise.  He added that serious reflection was needed  on the manner of enforcing this model agreement as
it would be an agreement between a user Member and a private entity.  The nature of the model
agreement would have to be determined;  for hi s delegation it was difficult to imagine how this
agreement could be binding.
1.5 The representative of the Philippines was heartened by the earlier comments that this was not
meant to be a binding agreement because her delegation was concerned about this point.  Her
Government believed that if it, as a user Member , was bound by this agreement, its freedom would be
limited to enter into a type of contract fit for its  purposes.  As a non-binding agreement, it had more
appeal to her authorities as something that might addr ess the concerns raised by exporters.  In case the
Working Party agreed on the model agreement, it should also not be applied retroactively.  Her
Government had just renewed its contract with a PSI  entity so this potential agreement would not apply
to this contract.   She finally noted that a lot of the provisions of the model agreement were already in
the PSI Agreement and so she also wondered about its added value.
1.6 The representative of Hong Kong, China noted that the model agreement had taken into account
many of the recommendations contained in the 1997 report of the Working Party (G/L/214).  His
delegation also believed that by repeating many of the provisions of the PSI Agreement, the model
agreement effectively extended, in a contractually bi nding manner, the obligations of the PSI Agreement
to PSI companies which otherwise would not be bound by these obligations.  The contractual relation
established would be between the user Government and the PSI entity concerned.  As such, the
enforcement of the model agreement would be a ma tter for these two parties, never for exporters nor
their governments.  He added that the draft agreem ent contained separate provisions, namely Articles
9.4 and 9.5, for complaints and appeals to the PSI entities.  This two-tier structure, though not
necessarily inconsistent, did not seem to be envisaged in Article 2.21 of the PSI Agreement.  He askedSwitzerland to elaborate on these provisions.  Finall y, discussions and any adoption of such agreement
should not effect the rights and obligations of WTO Members with respect to the PSI Agreement.
1.7 The representative of Switzerland recalled that her delegation had first mentioned the model
agreement in July 1997 and, at that time, it had stat ed its view that such an agreement should not be
binding nor that it could not be modified according to specific circumstances of user Members.  Even
though it might be changed depending on specific cases, her delegation still believed that it might add
value in including provisions that were in the Agreement now and that actually only applied to user
Members.  On monitoring and enforcement, her dele gation believed that this always laid with the userG/PSI/WP/M/6
Page 3
Members so a specific mechanism was not needed.  She agreed with Hong Kong that the two-tier
approach was not foreseen in the Agreement, and that the model agreement should be in conformity
with the PSI Agreement.  The model agreement mi ght add some specificity, but it would be up to PSI
entities and user Members to agree on it.
1.8 The Chairman considered that it might be useful  for the Working Party to reflect on what it was
trying to get out of a model agreement.  While many delegations were concerned that the agreement not
be binding, there was little point in having an agre ement that would not be useful.  Any resulting text
would have to be useful to current and future user  Members.  One objective of the Working Party's work
was to learn from mistakes that had been made so  that other Members that may want to use PSI don't
make the same mistakes.  Thus, there was no desire to change the Agreement nor to add anything to it,
but there were certain topics in the Working Party' s programme of work that could go into the model
agreement as and when appropriate, and Members c ould pick and choose which provisions they would
wish to use in the model agreement.  A model agreement could be seen by Members considering using
PSI as a suggestion of how to implement the PSI Agreement.
1.9 The representative of Australia stated that  her delegation found the Swiss communication very
useful and would like to pursue the ideas in it.  He r delegation had always viewed this type of model
agreement as being a tool to help deal with the p eculiar nature of the PSI Agreement, whereby those that
had obligations under the Agreement were not the imme diate bodies that were going to be implementing
its provisions.  Her delegation saw the idea of a draft model contract as providing the link that was not in
the Agreement between who was actually going to be carrying out the PSI activities and who wasresponsible under the WTO Agreement.  To the extent that there were already many items in the draft
model agreement that were in the Agreement, this wa s intentional as it was meant to be an enforcement
tool for their obligations under the Agreement.   The enforcement of the contract was left in the hands of
the user Members.  Finally, regarding the independe nt review and appeal procedures under paragraph 9
of the Swiss proposal, while what was in the Agreement was slightly different, her delegationconsidered the Swiss proposal a useful way of form alising the PSI companies' existing obligations to
entertain complaints and appeals from traders within  their existing structures.  Her delegation found it
useful in view of some of the pr oblems traders have had in the past.
1.10 The Chairman noted that he had asked IFIA to consider whether there would be virtue in the
idea of sending, for cases where there was a written comp laint, a copy of the letter to IFIA so that other
Members of IFIA could act as a watchdog on the entire a ssociation.  IFIA said they would look into this.
1.11 The representative of the European Communities suggested making two specific drafting
changes to the Swiss text to allay some of the concer ns expressed.  The first was to add the sentence, 'in
case of conflict between the provisions of the model agreement and the PSI Agreement, the provisions
of the PSI Agreement always would prevail'.  Th e second suggestion was to add the sentence, 'the
provisions of the model agreement in no way affect  the sovereignty of Member states and the freedom
of contract'.
1.12 The Chairman noted that the Working Party wa s reaching the end of its education stage and
would have to begin drafting its report soon.  He ur ged Members to reflect on the Swiss proposal for the
September meeting as meetings after that would fo cus on drafting the report.  The Working Party took
note of the statements made.
(b) Communication from the United States
1.13    The Chairman recalled that the United States had submitted this communication to the
Working Party at the informal meeting of the Working Party on 20 April 1998.  It was subsequently
circulated in G/PSI/WP/W/17 and c ontained a number of questions a nd points of discussion on each of
the issues contained in G/L/214 and which constituted the Working Party's work programme.G/PSI/WP/M/6
Page 4
1.14 The United States stated that this communication was an attempt by his delegation to  reflect on
the issues in the work programme.  The communica tion posed questions on each of the issues which, it
was hoped, would encourage a true exchange of views.  He would be willing to present his delegation's
views on each issue, however, he also wished to hear others' views.
1.15 The representative of the European Communities considered that it would be most useful to
have input from user Members on many of these ques tions.  However, his delegation had some points to
make.  Regarding a standard inspection format, hi s delegation believed that its usefulness should be
explored although it should be noted that such format s could not be standardized completely.  At the
informal meeting, the Working Part y was told that inspections were usually product-related, therefore,
to what extent would a fully sta ndardized inspection format be workable?  The second point concerned
the selective examination of shipments.  It was tr ue that a selective examination of shipments could
speed up the exporting process and could contribute towards avoiding excessive delays and bureaucratic
burdens.  At the same time, serious thought would have to be given to the criteria that would be used to
avoid any discrimination and to promote full tran sparency.  Regarding auditing PSI entities, his
delegation did not know much about this subject.  Some basic questions would need to be answered
such as the independence of auditors, the scope of audits to be undertaken, and the protection of
confidentiality which should not be undermined by auditing.  His delegation considered that competition
among PSI entities should be welcomed by user Members and the Working Party should reflect on
practical means of improving competition.  One useful idea would be to enhance information
concerning PSI entities available to user Members so that they always would make an informed choice.
He reiterated his delegation's strong reservation on pr actices based on flat fee rates. The fees charged
should be proportionate to the services rendered whic h would help avoid conflicts of interest.  His
delegation also had reservations against the building of price databases which would have to be studied
very carefully.  It entailed the danger of leading to  fictitious prices, undermining the market structure
and complicating, instead of simplifying, exporting practices.
1.16 The Chairman noted that at the informal meeting today, IFIA had said they would be happy to
look into the question of standard inspection format s, but was not sure what the Working Party meant
by this phrase.  IFIA had asked whether this would deal with formats for the request for information
that was sent from the PSI entity to the exporter, or  did it mean actually standardizing the inspection
format itself.  The latter could vary from product to product and could be difficult to standardize.  The
former could cover cases when exporters could choose among various PSI entities and the requestform for information could be standardized.  He asked delegations to reflect on what they meant by
this concept.
1.17 The representative of Australia stated that her delegation was still examining the US
communication.  On the issue of standard inspection formats, her delegation would need to reflect on
the Chairman's comments and what would be workable and useful for Members.  Her delegation had
an open mind about IFIA's and ICC's involvement in developing this concept and had a preference for
any standard inspection format to be contractual rather than the other options listed in the US
communication.  Regarding fee structures, her delegation would prefer that fees be charged on the
basis of services provided rather than ad valorem  rates.  For example, this could mean a fee negotiated
and agreed between the user Member and the PSI entity at the time of the signing of the contract that
would reflect an estimate of the value of the resource s and time.  Flexibility would have to be built in
as it would be an estimate.  The Working Party could examine the mechanics of this at a later time.
1.18 The representative of Colombia recalled that, last year, the Working Party had evaluated the
functioning of the PSI Agreement and, as part of this evaluation, Members had drawn up a report on
the functioning of the Agreement in their respective administrations.  While not considering it
appropriate to change the PSI Agreement itself, the report included recommendations which Members
were to implement on a discretionary basis.  Due to this report, and to the insistence of exporterG/PSI/WP/M/6
Page 5
Members, the mandate of the Working Party was extended by a year and a work programme was
drawn up in which it was planned to develop certain specific instruments based on the diagnosis to be
made on the functioning of the Agreement in Members' administrations.  In this respect, his
delegation was open to studying the specific proposals made on issues in the work programme, which
he added, was comprised mainly of the concerns of exporter Members.
1.19 His delegation thought it would be interesting to have a standard inspection format, and was
ready to look into its specifics.  It had a positive view of the development of this mechanism, which
could be perfected in the Working Party.  His delegation could also work along the recommendations
for future work that were included in the report and was particularly interested in the issues of
technical assistance and price databases.  His Government considered that using price databases to
make comparisons with prices declared by  importers and to justify doubts that the customs authoritiescould have about a price expressed by an importer, would be a very useful tool in order to quantify the
value which would allow the release of the good to the importer.  Price databases could also be
extremely useful in determining the customs valu e in conformity with Article 7 of the Customs
Valuation Agreement, that was when the custom s value could not be determined on the basis of
Article 1 through 6 of the Agreement.  Article 7 said that such value would be determined accordingto reasonable criteria which were compatible with the principles and the general provisions of the
Agreement and Article 7 of GATT 1994, on the basis of data available in the importing country.  As
the representative of IFIA had said at the informal meeting, price databases could also be useful as
references for the valuation in accordance with Article 2 of the Agreement, the transaction value of
identical goods, or with Article 3, the transaction of similar goods.  For his customs authorities, aprice database would include reference prices and not minimum prices.  So, if it was understood that
price databases constituted reference prices and not minimum prices, the Working Party could do
away with the concern that such a price databa se could distort the customs valuation and would
therefore be against the principles of the Customs Valuation Agreement.  His delegation considered a
price database with market prices, not minimum prices, as a source of information to expeditecustoms valuation work.  Nevertheless, the importer always had the right to show that the price
declared was the true price paid.
1.20 The representative of the Philippines stated that her Government was looking into many of
the questions posed in the United States communication.  Preliminarily, her delegation had great
reservations on the issue of auditing.  As a user of PSI, she noted the intense scrutiny that the PSI
entity was undergoing each time its contract was up for renewal.  There were some parts of herGovernment in favour of getting rid of PSI and some in favor of keeping it.  This was why her
Government was against requiring an independent audit;  no less than the legislative branch of her
Government was auditing the PSI entity and from this experience in the Philippines, it was clear that
it was not an easy task.  On promotion of competition, she noted that one user Member was seeking to
promote competition by signing multiple contracts.  Her Government wondered whether this wassomething that exporters would be in favor of, and whether it was more efficient to have multiple
contracts.  Her Government considered that it might be more confusing.  In the Philippines, although
there was no competition, there was a basis on which the fee structure was being set.  She asked
exporters to reflect on this point.
1.21 The representative of the European Communities stated that, according to Article 7 of the
Customs Valuation Agreement, among the means allowed to identify price for customs purposes was
data bases available in the country of importation.  However, his delegation considered that any
measures that might be used to allow the identification of the price had to be strictly consistent with
the principles and general provisions of the GATT 1994 and the relevant agreements.  This was alsoincluded in Article 7 of the Agreement.  In this regard, a basic principle that would have to respected
was that every effort had to be made to avoid arbitrary or fictitious prices.  This was explicitly stated
in the Customs Valuation Agreement, in the PSI Ag reement, as well as in Article VII of the GATT
1994.  To the extent that these price databases might lead to fictitious prices, his delegation believedG/PSI/WP/M/6
Page 6
that they should be resisted.  Nothing, of course, would prevent the importing country from using
price references if they so wished provided that they stuck to the principle of avoiding fictitious
prices.
1.22 The representative of Hong Kong, China believ ed that the Working Party should consider the
cost effect of engaging an auditor and the level of PSI activities to which the audit should be directed.
On the latter, exporters might be concerned about whether they would be subject to repeated
inspections when the PSI entity was being audited.  On fee structures, his delegation agreed that input
from user Members would be helpful to better understand this issue, especially from those user
Members that were adopting structures involving a li nkage between fees and the verified value of the
goods.  They should be given opportunities to explain how they addressed the question of conflict of
interest under such arrangements.
1.23 The representative of Switzerland noted that IFIA had expressed its support for the concept of
selective physical inspections on a controlled basis provided that they complied with the PSI
Agreement requiring PSI activities in a transparent manner and on an equal basis for all exporters.  As
stated in the US paper, selective examination was already a reality.  As such the PSI Agreement didnot prohibit it.  It was up to user Members to introduce this concept in their contracts with PSI
entities.  It would be useful to hear from user Members what criteria they had used, what were the
results and the problems.  As far as the discriminatory nature of selectively inspecting shipments, it
seemed that the criteria used, especially the objectivity, might be the key factor.  She added that the
PSI Agreement did not prevent user Members from us ing independent auditors.  Here again it would
be useful to have input from user Members.  It should be very clear that the responsibility of the full
implementation of  the Agreement was with user Members who should monitor PSI entities.  The
presence of external auditors should not change th is legal reality.  Furthermore, auditing activities,
mandated by foreign government authorities, would be  considered illegal in Switzerland as they were
not specifically foreseen in the PSI Agreement.  Finally, it was essential that the confidentiality of
information be preserved in accordance with the provisions of the Agreement.  Given the unclear
legal implications of auditing, her delegation considered that this idea should not be pursued.  She
concluded that promotion of competition was beneficial and useful, but as such it could not be
imposed neither on user Members nor on PSI entities.  It was difficult to accept the view expressed by
some that the absence of competition led to non-tran sparent, arbitrary, and discriminatory treatment of
exporters and importers.  It would be useful to he ar from user Members who were using such systems
what the benefits had been.  Had the number of complaints increased or decreased as result ofmultiplying PSI entities?  For what reasons had these user Members decided to introduce such
systems?
1.24 The representative of the United States stated that his delegation's communication was not
meant to prejudice the discussion but to encourage an exchange of views.  He expressed his
delegation's views on these issues.  The issue of the Code of Conduct/Practice for PSI entities related
to the Swiss proposal to which he had already responded.  Standard inspection formats could be a
useful idea to the extent that different PSI entities used different formats creating confusion for
exporters.  His delegation had an open mind on this issue.  Selective examination of shipments was a
priority for his delegation.  It was an important issue which should be addressed by the WorkingParty.  The trend among customs authorities was to engage in risk assessment and to only examine
those shipments that were considered to be high risk.  The IFIA representative had noted, however,
that it had concerns related to non-discrimination.  He believed that this was not an issue.  It was clear
that customs authorities, who had obligations with an even higher rigor that PSI entities in this area,
were already using this.  He did not think there was any question as to whether their activities werenon-discriminatory and transparent.  He, therefore, did not see this as an obstacle to PSI entities using
this technique.  He was aware of two user Members whose contracts with PSI entities provided for
selective examination.  His delegation would be very interested in hearing about their experience.G/PSI/WP/M/6
Page 7
1.25 On auditing of PSI entities, his delegation was interested in looking at whether  there would
be use to user Members in engaging the services of auditors.  He noted the concern expressed by the
Philippines.  However, he considered that this issue warranted further discussion.  On promotion of
competition, he noted the point made that in an ologopolist market true competition was questionable.
He did not think that there would be a proliferati on of PSI entities and the Working Party's ability to
promote competition would be somewhat limited.  However, he noted that at least one user Member
had engaged multiple contracts and he would be interested in hearing about their experience.  While it
may be confusing, there could be overriding benefits in exporters having the potential choice among
PSI entities.  In this regard, he emphasized that using the terms exporter Members and user Members
was confusing because, in fact, user Members were at the same time exporter Members and had
interests in the issues as well.  On fee structures , he shared the views of the EU that fees should be
strictly related to the services rendered and that there could be implications with respect to Article
VIII of GATT 1994.  Regarding price databases, he appreciated the statement by Colombia and noted
his reference to Article VII of the Customs Valuat ion Agreement.  Nevertheless, his delegation shared
the concerns of the EU and noted that under Article I of the Customs Valuation Agreement, it would
not appear to be legitimate to reject the transaction value on the basis of price databases, at least solely
on this basis.  Finally, technical assistance in this area should not be oriented towards encouragingMembers to engage the services of PSI entities, but instead should assist them in making the transition
away from PSI and taking up these responsibilities themselves.  This meant effective customs reform
and his delegation believed that there was a relationship with the discussions on technical assistance
in the Customs Valuation Agreement.  Surely there would have to be more focused technical
assistance to allow user Members to reform and modernize their customs administrations.
1.26 The representative of Japan stated that his delegation also had a strong interest in the
relationship between price databases and the Customs Valuation Agreement.1.27 The representative of the Philippines noted the point made by the United States that user
Members were also exporter Members.  However, she still considered that it would be useful to have
input from exporter Members on what would be the added value of signing multiple contracts.  She
suggested a question for discussion:  what was the experience of those exporter Members where an
importer user Member had signed multiple contracts for PSI services to be provided?  In this way, the
Working Party could have the views of the user Members and the exporter Members.
1.28 The representative of Argentina stated that the experience of his Government was very recent.
It was only six months since it be gan its PSI programme.  However, he would transmit the discussions
of the Working Party to his capital in order to secure information on any  results of the experience as
soon as possible.  The reason behind his Governme nt's particular PSI programme was basically to
promote competition.  In the Argentinian programme, the exporter had the possibility of selecting
among six PSI companies that had been qualified through a process of public competition.  In thisway, it was believed that the exporter would have the chance to select the enterprise with which it felt
most comfortable and which it considered was the best.  His Government thought that the promotion
of competition was positive and saw no obstacles in it.  In the initial experience, he was not aware of
any resulting confusion.  In response to a question from the Chairman, he stated that the companies
were not divided by any particular product sector, all companies offer services for all products.  Headded that, in his experience, enterprises could be better monitored and controlled if there were many
in number.
1.29 The representative of Peru stated that her Government was reviewing the two
communications presented.  Her country also had a PSI programme which utilised several PSI
companies and its experience was positive.  Users of the programme were importers who also paid the
fees for the inspection, which was an ad valorem  percentage.  The fact that there was more than one
PSI entity competing stopped the fees from being too high and maintained them closer to reality.  If
one entity's fees were too high, an importer could go to another entity whose fees were lower.G/PSI/WP/M/6
Page 8
1.30 The representative of Korea recalled that his delegation had initially proposed the issue of
promotion of competition to the Working Party last year which, in fact, had come from Korean
exporters' opinions.  When an exporting company had a problem, such as being asked to provide
information or delays, if it had the possibility of choosing another PSI company, the problem could besolved.  So, changing PSI entities could be a solution.  He did not have information on the specific
experience, but he would ask his capital to send him more information for a future meeting.
1.31 The Working Party took note of the statements ma de.  It was agreed that the Secretariat would
prepare a synthesis document of the views presented on the issues in the work programme.
(c) Technical assistance activities
1.32 The Chairman recalled that the report of the Working Party in G/L/214 called on the Working
Party to conduct "an assessment of technical assistance activities, in accordance with Article 3 of the
Agreement, and draw upon the assessment of technical assistance activities under consideration in the
Committee on Customs Valuation and the integrated framework for trade-related technical assistanceendorsed by the WTO High-level Meeting for Least developed Countries".  It further added that
"technical assistance activities, which should be administered on a request basis, could include areas
such as tariff and customs administration reforms;  simplification and modernization of systems and
procedures;  and the development of an adequate legal, administrative, and physical infrastructure".
1.33 He added that it was clear from the presentations made in the informal meeting that a
considerable amount of technical assistance was on-going in may of the areas covered by PSI
activities.  It also appeared that many of these areas would fall under the subject-matter of trade
facilitation, and some of which, for example customs procedures and reform, were not covered by the
activities of the WTO.  In areas that were covered by the WTO, such as customs valuation, technicalbarriers to trade, and rules of origin, the WTO appeared to be conducting a significant amount of
technical assistance.  However, this assistance was geared toward the effective functioning of the
respective Agreements, and not towards enabling a country to carry out the necessary work in these
areas on its own and thus phase out its PSI contract, a presumably important aim of technical
assistance in the area of PSI.  He asked if, when speaking of technical assistance in the context of PSI,
did the Working Party mean to speak about technical assistance only to ensure effective functioning
of the PSI Agreement?  Article 3 of the Agreement said "exporter Members shall offer to provide touser Members, if requested, technical assistance directed towards, the achievement of the objectives
of this Agreement on mutually agreed terms".  Th is appeared to allow a broader interpretation than
only ensuring the effective functioning of the Agreement.  Article 3 further contained a footnote
which said that such assistance could be on a bilateral, plurilateral, or multilateral basis.
1.34 He asked for Members' views on this sub-item.  In particular, he was interested to hear from
Members whether they considered that the present technical assistance activities in the areas covered
by PSI and which were already covered by the WTO were sufficient, or whether they considered that
further bilateral or regional activities, specifically  oriented towards strengthening the capacity of user
Members to phase out the use of PSI services, was something that the Working Party could discuss.
1.35 The representative of the European Communities stated that his delegation was willing to
examine this issue in a structured way under certain conditions.  The Working Party would need to
have an integrated, global assessment of on-going technical assistance problems.  The Working Party
shouldn't engage itself in the issue without having a clear picture of who was doing what, bilaterallyas well as multilaterally.  In addition, specific requests for assistance were needed, as foreseen in
Article 3 of the Agreement.  Further, specific programs were needed which were aimed at the
objectives of the PSI Agreement and eventually of customs reform.  Coordination was also needed
with other organizations and Members so that duplication of assistance was avoided and that a moreG/PSI/WP/M/6
Page 9
focused and targeted effort was made.  With these conditions and given the EU priorities and
capabilities, his delegation was willing to examine this issue.
1.36 The representative of the Philippines stated that her Government was receiving quite a bit of
technical assistance bilaterally, plurilaterally and even multilaterally.  This assistance was geared
towards reform of customs practices and there were already tangible results.  Among them was the
ASYCUDA program of UNCTAD which had contributed towards a great improvement in the release
time of goods in customs.  Whether this assistance would enable the Philippines to phase out the PSI
programme was not something that she could answer at present.  However, since by the year 2000
many developing countries were obliged to shift to the transaction value of the WTO Customs
Valuation Agreement, that might be the time when PSI activities would have to be phased out.
1.37 The representative of the European Communities considered that it would be useful for the
Secretariat to produce a document indicating on-going technical assistance programs so that the
Working Party could have a more global picture.
1.38 The representative of Switzerland also considered that it would be useful to begin this work
with a fact-finding exercise with user Members, exporters and PSI entities to know more about the
technical assistance that was already provided and requested.  Her delegation believed that there was a
a clear relationship between this subject and the exercise going on in the Committee on Customs
Valuation in terms of building up of customs infrastructures and capacities.  The life of the Working
Party was limited in time and, therefore, her delegation was not sure that it could launch a process atthis time that would go beyond a fact-finding exercise .  Such a process could also be duplicative.  Her
delegation therefore believed that Members should endeavour to take the PSI dimension in the work
of the Customs Valuation Committee.
1.39 The Chairman stated that such a document requested by the European Communities had
already been produced for the Customs Valuation Committee.  However, he would discuss with the
Chairman of the Committee on Customs Valuation on the possibility of including this work in its
deliberations on technical assistance.  The Working Party took note of the statements made.
(d) Any other issues
1.40 The Chairman noted that this item had generally  been covered in the previous discussions.  He
added that some of these issues had arisen in the in formal meeting earlier in th e day.  For example, the
question of what was meant by a standard inspect ion format and what would be desirable by the
Working Party in this area had been raised.  He pr oposed that the next formal meeting of the Working
Party be preceded by an informal meeting.  At this informal meeting, answers to some of these questions
could be provided to IFIA and, in turn, IFIA coul d provide some responses to the questions that the
Working Party had posed on, for example, the appeals process.  In addition, the ICC will have received
by then the responses to the survey they are c onducting on PSI which could provide deeper insight into
some of the issues.  He also suggested invitin g UNCTAD to the meeting given that the ASYCUDA
programme had been mentioned.  UNCTAD could perh aps inform the Working Party of what module or
model could actually deal with selectivity.  Finally, he suggested inviting a representative of a companythat was involved in auditing.  As he understood, th ere were four Members currently using auditing and
he considered that this would provide further insight into this issue.  This was not meant to endorse the
idea of auditing, it was only part of the education process.
1.41 The representative of Mexico asked if this  company involved in auditing was a private
company.
1.42 The Chairman said that it was a private company as only private companies conducted auditing.G/PSI/WP/M/6
Page 10
1.43 The Working Party agreed with the Chairm an's proposals regarding its next meeting.
2. Other business
2.1 The next meeting of the Working Party will be  held on 24 September.  An informal meeting
will be held in the morning and the formal meeting will follow in the afternoon.  Another meeting will
be held on 11 November.
2.2 The representative of the Philippines requested that scheduling of future meetings take into
account other meetings being held on the same day so as to avoid conflicts.
2.3 The Chairman confirmed that, although meetings  were scheduled well in advance, he would do
his best to avoid any potential conflicts.
__________