Commonwealth Trade and Enterprise Paper

2310-1369 (online)
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The papers in this series report the results of studies on issues pertaining to trade and industrial policy and enterprise development in Commonwealth member countries.
Preshipment Inspection

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Preshipment Inspection

Past Experiences and Future Directions You do not have access to this content

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Commonwealth Secretariat
01 Jan 2001
9781848597020 (PDF)

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Over 40 developing countries use the services of preshipment inspection companies for verification of prices prior to exporting. The objective in using these companies is to assist customs administrations in the detection of under or overvaluation. Analysts are divided, however, on the desirability of using these services. This study presents the results of a seminar arranged by the Commonwealth Secretariat in cooperation with the Secretariat of the World Trade Organization, which provided an opportunity for the free exchange of views on using preshipment inspection services. The book describes the experience of developing countries, examines the differing viewpoints and offers suggestions as to how developing countries can maximise returns from using preshipment inspection services.
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  • Foreword

    The governments of over thirty five developing countries use today the service of preshipment inspection companies (PSI) for prior verification in the exporting countries of prices of goods to be imported. Many of these countries fall in the category of least-developed countries.

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  • Expand / Collapse Hide / Show all Abstracts Report on the discussions in the Technical Seminar on Preshipment Inspection

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    • Report on the discussions in the Technical Seminar on Preshipment Inspection

      The report reflect the views expressed by resource persons and country participants both in the formal and informal meetings held during the seminar.

    • Conclusions and Recommendations

      It was noted that the use of services of these companies was a matter of choice for the governments. They were being at present utilised by over thirty five developing countries. A large number of these countries were least-developed countries.

    • Overview of the main points made by resource persons and country participants

      The substantive discussions in the seminar commenced with the explanation by the representative of the WTO of the main features of the Agreement on Preshipment Inspection (PSI) and of the Agreement on Customs Valuation. This was followed by the description of the procedures followed for verification of prices and for physical inspection of goods by the PSI companies in the exporting countries, by the representative of the IFIA and a presentation by the representative of the WCO on the relationship of the Agreement on Customs and the Agreement on Preshipment Inspection.

    • Independent Review Entity

      The seminar noted that IRE constituted an important departure from the basic principles on which the dispute settlement procedures of the WTO were based. While under the dispute settlement procedures, complaints could be brought to WTO only by member governments and private parties were not allowed to make complaints, under the provisions of the PSI Agreement, complaints could be made to the IRE both by exporting enterprises and the PSI companies. The disputes brought by private parties were to be settled by a panel consisting of three experts, one each to be nominated by IFIA (representing interests of PSI companies), ICC (representing interests of exporting enterprises) and the WTO.

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  • Expand / Collapse Hide / Show all Abstracts Papers contributed by resource persons from international and other organisations

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    • Valuation of Goods for Customs Purposes Inspection

      Tariffs or customs duties as they are also called, could be levied on ad-valorem basis (e.g. 20 per cent of the value of imported goods) or as specific duties (e.g. US$ 2 per kilogram or litre). With a few exceptions, most countries levy duties on ad-valorem basis. As the incidence of duties collected on ad-valorem basis depends on the value of the goods, the methods used by customs in arriving at dutiable value, where the price declared by the importer is not accepted, could make a significant difference in the total amount of duty which the importer has to pay.

    • Agreement on Preshipment Inspection

      Since about the second half of the last century importers have used the services of independent inspection companies to certify the quality and quantity of products they want to import. These inspections, which are conducted in most cases prior to shipment and in the country of exportation, assure the importer that the goods conform to the technical specifications and the quality standards laid down in the contract and that the quantities exported are correct. The services of such inspection companies are utilised not only by private business firms, but also by state-owned enterprises and government departments.

    • Relationship of the Agreement on Preshipment Inspection with the Agreement on Customs Valuation

      This paper examines the relationship between the Agreement on PSI and the WTO Customs Valuation Agreement. This subject is of particular interest as many WTO Members utilise the services of PSI entities to perform functions associated with Customs valuation. As we approach the expiration of period for delay in application for in Article 20 of the Valuation Agreement, these Members will need to ensure that they develop and adopt Customs and PSI practices and procedures that ensure fulfill their obligations under all of the WTO Agreements and which meet their respective fiscal, economic and trade objectives.

    • The Use and Usefullness of PSI Services

      This brief note updates basic industry information and explores a few of the issues raised in the exhaustive study by Patrick Low, Preshipment Inspection Services (1995). In particular, the note reviews available evidence regarding the effectiveness of pre-shipment inspection (PSI) services.

    • Usefulness of PSI Services in enabling user countries to improve revenue collection and in dealing with customs-related corruption

      This paper briefly examines the reasons governments choose to use PSI as well as the impact of PSI from the Customs perspective. It concludes by suggesting a way forward to reduce the need for use of PSI by governments.

    • Are PSI Services Useful in Improving Revenue Collection and Promoting Customs Integrity?

      Preshipment inspection (PSI) companies operate in more than 30 countries, especially in Africa, providing mainly valuation verification of imports. Developing countries have often resorted to PSIs as a readily available vehicle to help boost customs revenue and combat corruption in customs administration. In a number of these countries, the Fiscal Affairs Department (FAD) of the IMF has provided technical assistance in the areas of tariff policy and customs administration, and has therefore had the opportunity to form some preliminary views on the appropriateness and effectiveness of PSI programs.

    • Price Verification and Quality Verification in Preshipment Inspection Programmes

      The International Federation of Inspection Agencies (IFIA) was founded in 1982 with its registered office/secretariat in London.

    • Papers presented by participating officials from countries using PSI services and other countries
    • Annexes
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