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I. General back to top
1. Preshipment inspection (PSI) companies have long served
private-sector buyers and sellers to ensure that the quantity and
quality of goods to be traded conform to sales contract specifications.
Government-contracted, comprehensive PSI service arose first in the
1960s. Government contracts with PSI companies have consisted of foreign
exchange contracts (where the government’s objective is to prevent
capital flight through over-invoicing) and/or customs contracts (where
the objective is to prevent loss of customs revenue as a result of
undervaluation or misclassification of the goods). PSI companies may
also verify product origin, compile statistics, and provide technical
assistance.
2. The PSI Agreement, negotiated in the Uruguay Round, applies to all
government-mandated PSI activities carried out on the territory of
Members (in the country of export, prior to exportation). Article 2 of
the Agreement regulates user Members (those who contract for PSI
services) and Article 3 applies to exporter Members. Article 4 provides
for an independent entity to settle disputes between exporters and PSI
companies. This entity was duly established in 1996, and has settled two
such disputes.
3. The PSI Agreement did not create any administering body. Since
1999, the PSI Agreement has been monitored by the Committee on Customs
Valuation, which has maintained a standing agenda item on PSI. Two
reviews of the PSI Agreement have been conducted, by a Working Party on
Preshipment Inspection in 1996–99, and by the Committee on Customs
Valuation in 2006.
4. The final report on the first review noted in 1999 that:
“The objectives of government-mandated Preshipment Inspection (PSI)
programmes have evolved since the early 1960s. Initially they were used
almost exclusively to address exchange control concerns, but in more
recent years, as trade has become liberalized and exchange controls have
been removed, the emphasis of PSI programmes has shifted towards revenue
collection. Primarily PSI aims to detect false invoicing, and ensure
governments receive the correct revenue. … All Members have accepted
that recourse to PSI is a transitional measure to be used only until
their national customs authorities are in the position to carry out
these tasks on their own.”(1)
5. Since 1999, the Secretariat has issued periodic lists of countries
with PSI programmes. As of March 1999, 35 countries had PSI programmes,(2)
but a June 2010 Secretariat Note reported “a marked reduction in
traditional PSI programmes with considerable growth in more modern
programmes that are less intrusive for exporters”, noting that as of
June 2010, 12 countries had PSI programmes for revenue protection, and
16 others had customs support services including destination inspection
and/or selective PSI.(3)
II. Preamble back to top
A. Text of the Preamble
Members,
Noting that Ministers on 20 September 1986 agreed that the
Uruguay Round of Multilateral Trade Negotiations shall aim to “bring
about further liberalization and expansion of world trade”, “strengthen
the role of GATT” and “increase the responsiveness of the GATT
system to the evolving international economic environment”;
Noting that a number of developing country Members have recourse
to preshipment inspection;
Recognizing the need of developing countries to do so for as long
and in so far as it is necessary to verify the quality, quantity or
price of imported goods;
Mindful that such programmes must be carried out without giving
rise to unnecessary delays or unequal treatment;
Noting that this inspection is by definition carried out on the
territory of exporter Members;
Recognizing the need to establish an agreed international
framework of rights and obligations of both user Members and exporter
Members;
Recognizing that the principles and obligations of GATT 1994
apply to those activities of preshipment inspection entities that are
mandated by governments that are Members of the WTO;
Recognizing that it is desirable to provide transparency of the
operation of preshipment inspection entities and of laws and regulations
relating to preshipment inspection;
Desiring to provide for the speedy, effective and equitable
resolution of disputes between exporters and preshipment inspection
entities arising under this Agreement;
Hereby agree as follows:
B. Interpretation and Application of the Preamble
No jurisprudence or decision of a competent WTO body.
III. Article 1
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A. Text of Article 1
Article 1: Coverage — Definitions
1. This Agreement shall apply to all preshipment inspection
activities carried out on the territory of Members, whether such
activities are contracted or mandated by the government, or any
government body, of a Member.
2. The term “user
Member” means a Member of which the government
or any government body contracts for or mandates the use of preshipment
inspection activities.
3.
Preshipment inspection activities are all activities relating to
the verification of the quality, the quantity, the price, including
currency exchange rate and financial terms, and/or the customs
classification of goods to be exported to the territory of the user
Member.
4. The term “preshipment inspection
entity” is any entity
contracted or mandated by a Member to carry out preshipment inspection
activities.(1)
(footnote original)
1 It is understood that this provision
does not obligate Members to allow government entities of other Members
to conduct preshipment inspection activities on their territory.
B. Interpretation and Application of Article 1
No jurisprudence or decision of a competent WTO body.
IV. Article 2
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A. Text of Article 2
Article 2: Obligations of User Members
Non-discrimination
1.
User Members shall ensure that preshipment inspection activities
are carried out in a non-discriminatory manner, and that the procedures
and criteria employed in the conduct of these activities are objective
and are applied on an equal basis to all exporters affected by such
activities. They shall ensure uniform performance of inspection by all
the inspectors of the preshipment inspection entities contracted or
mandated by them.
Governmental Requirements
2. User Members shall ensure that in the course of preshipment
inspection activities relating to their laws, regulations and
requirements, the provisions of paragraph 4 of Article III of GATT 1994
are respected to the extent that these are relevant.
Site of Inspection
3. User Members shall ensure that all preshipment inspection
activities, including the issuance of a Clean Report of Findings or a
note of non-issuance, are performed in the customs territory from which
the goods are exported or, if the inspection cannot be carried out in
that customs territory given the complex nature of the products
involved, or if both parties agree, in the customs territory in which
the goods are manufactured.
Standards
4. User Members shall ensure that quantity and quality inspections
are performed in accordance with the standards defined by the seller and
the buyer in the purchase agreement and that, in the absence of such
standards, relevant international standards(2) apply.
(footnote original) 2 An international standard is a
standard adopted by a governmental or non-governmental body whose
membership is open to all Members, one of whose recognized activities is
in the field of standardization.
Transparency
5.
User Members shall ensure that preshipment inspection activities
are conducted in a transparent manner.
6.
User Members shall ensure that, when initially contacted by
exporters, preshipment inspection entities provide to the exporters a
list of all the information which is necessary for the exporters to
comply with inspection requirements. The preshipment inspection entities
shall provide the actual information when so requested by exporters.
This information shall include a reference to the laws and regulations
of user Members relating to preshipment inspection activities, and shall
also include the procedures and criteria used for inspection and for
price and currency exchange-rate verification purposes, the exporters‘
rights vis-à-vis the inspection entities, and the appeals procedures
set up under paragraph 21. Additional procedural requirements or changes
in existing procedures shall not be applied to a shipment unless the
exporter concerned is informed of these changes at the time the
inspection date is arranged. However, in emergency situations of the
types addressed by Articles XX and
XXI of GATT 1994, such additional
requirements or changes may be applied to a shipment before the exporter
has been informed. This assistance shall not, however, relieve exporters
from their obligations in respect of compliance with the import
regulations of the user Members.
7.
User Members shall ensure that the information referred to in
paragraph 6 is made available to exporters in a convenient manner, and
that the preshipment inspection offices maintained by preshipment
inspection entities serve as information points where this information
is available.
8.
User Members shall publish promptly all applicable laws and
regulations relating to preshipment inspection activities in such a
manner as to enable other governments and traders to become acquainted
with them.
Protection of Confidential Business Information
9.
User Members shall ensure that preshipment inspection entities
treat all information received in the course of the preshipment
inspection as business confidential to the extent that such information
is not already published, generally available to third parties, or
otherwise in the public domain. User Members shall ensure that
preshipment inspection entities maintain procedures to this end.
10. User Members shall provide information to Members on request on
the measures they are taking to give effect to paragraph
9. The
provisions of this paragraph shall not require any Member to disclose
confidential information the disclosure of which would jeopardize the
effectiveness of the preshipment inspection programmes or would
prejudice the legitimate commercial interest of particular enterprises,
public or private.
11. User Members shall ensure that preshipment inspection entities do
not divulge confidential business information to any third party, except
that preshipment inspection entities may share this information with the
government entities that have contracted or mandated them. User Members
shall ensure that confidential business information which they receive
from preshipment inspection entities contracted or mandated by them is
adequately safeguarded. Preshipment inspection entities shall share
confidential business information with the governments contracting or
mandating them only to the extent that such information is customarily
required for letters of credit or other forms of payment or for customs,
import licensing or exchange control purposes.
12.
User Members shall ensure that preshipment inspection entities do
not request exporters to provide information regarding:
(a) manufacturing data related to patented, licensed or undisclosed
processes, or to processes for which a patent is pending;
(b) unpublished technical data other than data necessary to demonstrate
compliance with technical regulations or standards;
(c) internal pricing, including manufacturing costs;
(d) profit levels;
(e) the terms of contracts between exporters and their suppliers unless
it is not otherwise possible for the entity to conduct the inspection in
question. In such cases, the entity shall only request the information
necessary for this purpose.
13. The information referred to in
paragraph 12, which preshipment
inspection entities shall not otherwise request, may be released
voluntarily by the exporter to illustrate a specific case.
Conflicts of Interest
14. User Members shall ensure that preshipment inspection entities,
bearing in mind also the provisions on protection of confidential
business information in paragraphs 9 through 13, maintain procedures to
avoid conflicts of interest:
(a) between preshipment inspection entities and any related entities
of the preshipment inspection entities in question, including any
entities in which the latter have a financial or commercial interest or
any entities which have a financial interest in the preshipment
inspection entities in question, and whose shipments the preshipment
inspection entities are to inspect;
(b) between preshipment inspection entities and any other entities,
including other entities subject to preshipment inspection, with the
exception of the government entities contracting or mandating the
inspections;
(c) with divisions of preshipment inspection entities engaged in
activities other than those required to carry out the inspection
process.
Delays
15. User Members shall ensure that preshipment inspection entities
avoid unreasonable delays in inspection of shipments. User Members shall
ensure that, once a preshipment inspection entity and an exporter agree
on an inspection date, the preshipment inspection entity conducts the
inspection on that date unless it is rescheduled on a mutually agreed
basis between the exporter and the preshipment inspection entity, or the
preshipment inspection entity is prevented from doing so by the exporter
or by force majeure.(3)
(footnote original) 3 It is understood that, for the
purposes of this Agreement, “force majeure” shall mean “irresistible
compulsion or coercion, unforeseeable course of events excusing from
fulfilment of contract”.
16. User Members shall ensure that, following receipt of the final
documents and completion of the inspection, preshipment inspection
entities, within five working days, either issue a Clean Report of
Findings or provide a detailed written explanation specifying the
reasons for non-issuance. User Members shall ensure that, in the latter
case, preshipment inspection entities give exporters the opportunity to
present their views in writing and, if exporters so request, arrange for
re-inspection at the earliest mutually convenient date.
17. User Members shall ensure that, whenever so requested by the
exporters, preshipment inspection entities undertake, prior to the date
of physical inspection, a preliminary verification of price and, where
applicable, of currency exchange rate, on the basis of the contract
between exporter and importer, the pro forma invoice and, where
applicable, the application for import authorization. User Members shall
ensure that a price or currency exchange rate that has been accepted by
a preshipment inspection entity on the basis of such preliminary
verification is not withdrawn, providing the goods conform to the import
documentation and/or import licence. They shall ensure that, after a
preliminary verification has taken place, preshipment inspection
entities immediately inform exporters in writing either of their
acceptance or of their detailed reasons for non-acceptance of the price
and/or currency exchange rate.
18. User Members shall ensure that, in order to avoid delays in
payment, preshipment inspection entities send to exporters or to
designated representatives of the exporters a Clean Report of Findings
as expeditiously as possible.
19. User Members shall ensure that, in the event of a clerical error
in the Clean Report of Findings, preshipment inspection entities correct
the error and forward the corrected information to the appropriate
parties as expeditiously as possible.
Price Verification
20. User Members shall ensure that, in order to prevent over- and
under-invoicing and fraud, preshipment inspection entities conduct price
verification(4) according to the following guidelines:
(footnote original)
4 The obligations of user Members with
respect to the services of preshipment inspection entities in connection
with customs valuation shall be the obligations which they have accepted
in GATT 1994 and the other Multilateral Trade Agreements included in
Annex 1A of the WTO Agreement.
(a) preshipment inspection entities shall only reject a contract
price agreed between an exporter and an importer if they can demonstrate
that their findings of an unsatisfactory price are based on a
verification process which is in conformity with the criteria set out in
subparagraphs (b) through (e);
(b) the preshipment inspection entity shall base its price comparison
for the verification of the export price on the price(s) of identical or
similar goods offered for export from the same country of exportation at
or about the same time, under competitive and comparable conditions of
sale, in conformity with customary commercial practices and net of any
applicable standard discounts. Such comparison shall be based on the
following:
(i) only prices providing a valid basis of comparison shall be used,
taking into account the relevant economic factors pertaining to the
country of importation and a country or countries used for price
comparison;
(ii) the preshipment inspection entity shall not rely upon the price
of goods offered for export to different countries of importation to
arbitrarily impose the lowest price upon the shipment;
(iii) the preshipment inspection entity shall take into account the
specific elements listed in subparagraph (c);
(iv) at any stage in the process described above, the preshipment
inspection entity shall provide the exporter with an opportunity to
explain the price;
(c) when conducting price verification, preshipment inspection
entities shall make appropriate allowances for the terms of the sales
contract and generally applicable adjusting factors pertaining to the
transaction; these factors shall include but not be limited to the
commercial level and quantity of the sale, delivery periods and
conditions, price escalation clauses, quality specifications, special
design features, special shipping or packing specifications, order size,
spot sales, seasonal influences, licence or other intellectual property
fees, and services rendered as part of the contract if these are not
customarily invoiced separately; they shall also include certain
elements relating to the exporter‘s price, such as the contractual
relationship between the exporter and importer;
(d) the verification of transportation charges shall relate only to
the agreed price of the mode of transport in the country of exportation
as indicated in the sales contract;
(e) the following shall not be used for price verification purposes:
(i) the selling price in the country of importation of goods produced
in such country;
(ii) the price of goods for export from a country other than the
country of exportation;
(iii) the cost of production;
(iv) arbitrary or fictitious prices or values.
Appeals Procedures
21. User Members shall ensure that preshipment inspection entities
establish procedures to receive, consider and render decisions
concerning grievances raised by exporters, and that information
concerning such procedures is made available to exporters in accordance
with the provisions of paragraphs 6 and 7. User Members shall ensure
that the procedures are developed and maintained in accordance with the
following guidelines:
(a) preshipment inspection entities shall designate one or more
officials who shall be available during normal business hours in each
city or port in which they maintain a preshipment inspection
administrative office to receive, consider and render decisions on
exporters‘ appeals or grievances;
(b) exporters shall provide in writing to the designated official(s) the
facts concerning the specific transaction in question, the nature of the
grievance and a suggested solution;
(c) the designated official(s) shall afford sympathetic consideration to
exporters‘ grievances and shall render a decision as soon as possible
after receipt of the documentation referred to in subparagraph
(b).
Derogation
22. By derogation to the provisions of Article 2, user Members shall
provide that, with the exception of part shipments, shipments whose
value is less than a minimum value applicable to such shipments as
defined by the user Member shall not be inspected, except in exceptional
circumstances. This minimum value shall form part of the information
furnished to exporters under the provisions of paragraph
6.
B. Interpretation
and Application of Article 2
1. Uniform Application of PSI
6. The final report on the first review of the PSI Agreement in 1999
included a proposal for a model contract between governments and PSI
companies, and noted that the Working Party that conducted the review
“broadly supported the aim of the contract on the understanding that
it was of a non-binding nature, and that in no way could it affect the
rights and obligations of Members under the Agreement. … the Working
Party accepted that governments, in drawing up their own contracts,
would also ensure compatibility with the PSI Agreement.”(4)
2. Transparency
7. The Recommendations for immediate action in the PSI Working Party’s
first report in 1997 included:
“User Members should ensure that PSI entities are encouraged to
establish local focal points in countries where they do not have
physical, on-site representation. The establishment of websites by IFIA
and by PSI entities with on-line services would enhance efficiency of
PSI operations in such areas as procedures, methods, inspection
criteria, responses to inquiries, and dissemination of other usable,
essential information by importers and exporters. In addition to
providing hard copies, PSI entities should be encouraged to communicate
Clean Reports of Findings (CRFs) to importers and exporters through
electronic means.”(5)
3. Protection of Confidential Business Information
8. The Recommendations for immediate action in the PSI Working Party’s
first report in 1997 also included:
“In furtherance of Articles 2.9–2.13, user Members shall ensure
that contracts with PSI entities or national implementing legislation or
administrative regulations specify procedures to be undertaken by such
entities to limit the confidential business information they seek from
exporters to that provided for under the Agreement and to ensure that
any such information obtained by PSI entities is not used for any other
purpose than PSI activities for the user Members, as defined in Article
1.3. Any breach of the rule of confidentiality by the PSI entity is an
action that may be brought against the PSI entity in the appropriate
judicial or administrative forum of the user Member.”(6)
9. In the Working Party’s final report, in connection with a
discussion on the use of price databases by customs administrations as
part of risk management and assessment, the Working Party noted that “Where
relevant, confidential business information in such databases should be
protected.”(7)
4. Delays
10. The Recommendations for immediate action in the PSI Working Party’s
first report in 1997 also included:
“User Members shall ensure that PSI entities issue CRFs to
importers and exporters immediately on receipt of the final documents
and completion of inspection. As foreseen in Article
2.16, in no case
must the issuance of a CRF exceed 5 working days after an inspection. In
the event that a CRF has not been issued, the user Member shall ensure
that the PSI entity issues a detailed written explanation specifying the
reasons for non-issuance.”(8)
5. Conflicts of Interest
11. The Recommendations for immediate action in the PSI Working Party’s
first report in 1997 also included:
“User Members shall ensure that contracts with PSI entities or
national implementing legislation or administrative regulations provide
for fee structures that do not create incentives for potential conflicts
of interest in any way that may be inconsistent with the objectives of
the Agreement. Additionally, contracts with PSI entities or national
implementing legislation or administrative regulations shall specify
that PSI entities should not inspect transactions involving products in
which a PSI entity or its related company may have a commercial
interest.”(9)
6. Price Verification; Relationship between PSI and Customs Valuation
12. The Recommendations for immediate action in the PSI Working Party’s
first report in 1997 also included:
“Price verification by PSI entities for customs purposes shall be
limited to provision of technical advice to facilitate the determination
of customs value by the user Member. In this regard, the ultimate
responsibility for customs valuation and revenue collection rests with
user Members. All activities of PSI entities should be monitored by user
Members who should be encouraged to reflect this in national legislation
or administrative regulations.
In order to ensure compliance with the requirements of
Articles 2.5
to 2.8 on transparency, Article 2.1 on nondiscrimination and
Article
2.20 on price verification, a user Member should require PSI entities
to:
(i) make publicly available a single set of price verification
criteria; and
(ii) inform exporters and importers of the applicable valuation
methodology.
Price verification criteria should include the customs valuation
methodology, as specified in user Members’ national legislation or
administrative regulations, used when providing technical advice on
customs valuation. In this regard, user Members should encourage PSI
entities to utilize electronic means for purposes of providing required
information to exporters and importers.
User Members shall ensure that requests for information do not go
beyond Articles 2.12 and 2.20 of the Agreement on Preshipment
Inspection. Reciprocally, exporter Members should inform user Members
when they become aware that PSI entities‘ requests for information go
beyond these Articles.
In conformity with Article
2.21, a user Member shall ensure that the
PSI entity, when responding to a dispute on price verification, provides
a detailed written explanation within 10 days of receipt of the
complaint, setting forth the basis of its opinion of value by reference
to the specific applicable elements of the price verification criteria.”(10)
13. In the Working Party’s final report, in connection with a
discussion on the use of price databases by customs administrations as
part of risk management and assessment:
“The Working Party agreed that price databases must not be used to
determine minimum prices, or applied in a way that is inconsistent with
the Agreement on Implementation of Article VII of the GATT 1994
(commonly referred to as the Agreement on Customs Valuation) and in
particular the provision contained in Article 7.1 thereof.”(11)
14. In 2006, a panel conducting an Independent Review Procedure under
Article 4 of the PSI Agreement considered a dispute concerning whether
the value of certain services invoiced by an exporter in connection with
the export of goods should be included in the customs value of those
goods. The panel noted:
“Since 31 May 2002, Mauritania has been under an obligation to
apply the provisions of the Agreement on Customs Valuation. The SGS [a
preshipment inspection company], as an agent of the Mauritanian
authorities and by virtue of footnote 4 to Article 2, paragraph
20, of
the Agreement on Preshipment Inspection, is also under an obligation to
comply with the WTO Agreement on Customs Valuation.” (12)
15. The Independent Entity panel in that case interpreted the
Agreement on Customs Valuation and applied it to the facts at issue.
V. Article 3
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A. Text of Article 3
Article 3: Obligations of Exporter Members
Non-discrimination
1. Exporter Members shall ensure that their laws and regulations
relating to preshipment inspection activities are applied in a
non-discriminatory manner.
Transparency
2. Exporter Members shall publish promptly all applicable laws and
regulations relating to preshipment inspection activities in such a
manner as to enable other governments and traders to become acquainted
with them.
Technical Assistance
3. Exporter Members shall offer to provide to user Members, if
requested, technical assistance directed towards the achievement of the
objectives of this Agreement on mutually agreed terms. (5)
(footnote original) 5 It is understood that such technical
assistance may be given on a bilateral, plurilateral or multilateral basis.
B. Interpretation and Application of Article 3
16. In its first report (2 December 1997), the PSI Working Party
considered that “In accordance with Article
3.3, exporter members
should ensure that their technical assistance activities are designed to
address the specific needs of user Members in implementing the terms and
objectives of the Agreement”. It further considered 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.” (13)
VI. Article 4
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A. Text of Article 4
Article 4: Independent Review Procedures
Members shall encourage preshipment inspection entities and exporters
mutually to resolve their disputes. However, two working days after
submission of the grievance in accordance with the provisions of
paragraph 21 of Article 2, either party may refer the dispute to
independent review. Members shall take such reasonable measures as may
be available to them to ensure that the following procedures are
established and maintained to this end:
(a) these procedures shall be administered by an independent entity
constituted jointly by an organization representing preshipment
inspection entities and an organization representing exporters for the
purposes of this Agreement;
(b) the independent entity referred to in
subparagraph (a) shall
establish a list of experts as follows:
(i) a section of members nominated by an organization representing
preshipment inspection entities;
(ii) a section of members nominated by an organization representing
exporters;
(iii) a section of independent trade experts, nominated by the
independent entity referred to in subparagraph
(a).
The geographical distribution of the experts on this list shall be
such as to enable any disputes raised under these procedures to be dealt
with expeditiously. This list shall be drawn up within two months of the
entry into force of the WTO Agreement and shall be updated annually. The
list shall be publicly available. It shall be notified to the
Secretariat and circulated to all Members;
(c) an exporter or preshipment inspection entity wishing to raise a
dispute shall contact the independent entity referred to in subparagraph
(a) and request the formation of a panel. The independent entity shall
be responsible for establishing a panel. This panel shall consist of
three members. The members of the panel shall be chosen so as to avoid
unnecessary costs and delays. The first member shall be chosen from
section (i) of the above list by the preshipment inspection entity
concerned, provided that this member is not affiliated to that entity.
The second member shall be chosen from section (ii) of the above list by
the exporter concerned, provided that this member is not affiliated to
that exporter. The third member shall be chosen from section (iii) of
the above list by the independent entity referred to in subparagraph
(a). No objections shall be made to any independent trade expert drawn
from section (iii) of the above list;
(d) the independent trade expert drawn from section (iii) of the
above list shall serve as the chairman of the panel. The independent
trade expert shall take the necessary decisions to ensure an expeditious
settlement of the dispute by the panel, for instance, whether the facts
of the case require the panellists to meet and, if so, where such a
meeting shall take place, taking into account the site of the inspection
in question;
(e) if the parties to the dispute so agree, one independent trade
expert could be selected from section (iii) of the above list by the
independent entity referred to in subparagraph (a) to review the dispute
in question. This expert shall take the necessary decisions to ensure an
expeditious settlement of the dispute, for instance taking into account
the site of the inspection in question;
(f) the object of the review shall be to establish whether, in the
course of the inspection in dispute, the parties to the dispute have
complied with the provisions of this Agreement. The procedures shall be
expeditious and provide the opportunity for both parties to present
their views in person or in writing;
(g) decisions by a three-member panel shall be taken by majority
vote. The decision on the dispute shall be rendered within eight working
days of the request for independent review and be communicated to the
parties to the dispute. This time-limit could be extended upon agreement
by the parties to the dispute. The panel or independent trade expert
shall apportion the costs, based on the merits of the case;
(h) the decision of the panel shall be binding upon the preshipment
inspection entity and the exporter which are parties to the dispute.
B. Interpretation and Application of Article 4
17. A 1994 Secretariat Note on implementation of
Article 4 of the PSI
Agreement records that the negotiators of the PSI Agreement agreed that
for the time being, the two organizations referred to in Article 4(a)
would be the International Federation of Inspection Agencies (IFIA),
representing preshipment inspection entities, and the International
Chamber of Commerce (ICC), representing exporters, and that these
organizations agreed in 1994 to jointly constitute the Independent
Entity (IE). (14)
18. In order to ensure that the IE, including its panels, benefits
from immunities for the independent exercise of its functions (in
particular, protection against legal suit by the parties to a review or
by third parties), it was decided that the IE would be established as a
subsidiary body of the Council for Trade in Goods, that the IE would be
located in Geneva and staffed by WTO Secretariat staff, that IE
panellists would be WTO officials for this purpose, and that there would
be an agreement between the WTO, the ICC and IFIA confirming the
respective roles of each and defining their functions. (15) Accordingly,
in its meeting of 13 and 15 December 1995, the General Council adopted a
Decision establishing the IE as a subsidiary body of the Council for
Trade in Goods.(16) The annexes to this Decision included an Agreement
between the WTO, the ICC and the IFIA by which the ICC and the IFIA
agreed to establish the IE, and entrusted the WTO with the task of
setting it up and determining its rules of procedure (Annex I); agreed
provisions on the structure and functions of the IE, including its
management and operational procedures (Annex II); and the rules of
procedure for the operation of independent reviews under Article 4 of
the PSI Agreement (Annex III).
19. On 26 March 1996, the Independent Entity announced that it would
commence operations as from 1 May 1996. On 28 March 1996, the IE issued
the list of experts for panels provided for in Article
4(b).(17) The IE
has submitted reports to the Council for Trade in Goods on an annual
basis.(18)
20. In 1999, the final report of the PSI Working Party noted that
exporters had been reluctant to use the IE; the ICC suggested that this
could be because the Agreement had reduced sources of disputes between
inspection agencies and exporters, or because of exporters’ reluctance
to confront the PSI companies, or because of the cost of IE proceedings.
IFIA suggested that PSI companies and exporters had settled problems
between them.(19)
21. The first two independent review procedures took place in 2005
and 2006. Both were brought by Alcatel CIT against the Société
Générale de Surveillance — SGS Holding France (“SGS”),
concerning preshipment review conducted by SGS in connection with a
tender for mobile telephony equipment in Mauritania. The 2005 review
procedure concluded in 31 days, with an amicable settlement between the
parties.(20) The 2006 review procedure, based on a separate verification
certificate issued by SGS, concerned Alcatel’s claim that the price of
certain services should not be included in the customs value of the
goods concerned. The panel interpreted the Agreement on Customs
Valuation, and applied these rules to the facts at issue; it completed
its proceedings in 39 days.(21) In both instances, the costs of the
procedure were divided between the parties.
VII. Article 5
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A. Text of Article 5
Article 5: Notification
Members shall submit to the Secretariat copies of the laws and
regulations by which they put this Agreement into force, as well as
copies of any other laws and regulations relating to preshipment
inspection, when the WTO Agreement enters into force with respect to the
Member concerned. No changes in the laws and regulations relating to
preshipment inspection shall be enforced before such changes have been
officially published. They shall be notified to the Secretariat
immediately after their publication. The Secretariat shall inform the
Members of the availability of this information.
B. Interpretation and Application of Article 5
22. Laws, regulations and amendments thereto that are notified under
Article 5 are circulated in the G/PSI/N series. In its first report, the
PSI Working Party recommended that when Members notify their laws and
regulations, they “should endeavour to provide additional descriptive
information on how they are implementing the Agreement”.(22)
VIII. Article 6
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A. Text of Article 6
Article 6: Review
At the end of the second year from the date of entry into force of
the WTO Agreement and every three years thereafter, the Ministerial
Conference shall review the provisions, implementation and operation of
this Agreement, taking into account the objectives thereof and
experience gained in its operation. As a result of such review, the
Ministerial Conference may amend the provisions of the Agreement.
B. Interpretation and Application of Article 6
23. At its meeting of 7, 8 and 13 November 1996, the General Council
established a working party under the Council for Trade in Goods to
conduct the review provided for under Article 6 of the PSI
Agreement.(23) The terms of reference of the PSI Working Party were as
follows:
“[T]o conduct the review provided for under
Article 6 of the
Agreement on Preshipment Inspection and to report to the General Council
through the Council for Trade in Goods in December 1997”.(24)
24. The PSI Working Party issued three reports(25), all of which were
approved by the General Council.(26)
25. At its December 1997 meeting the General Council agreed to extend
the Working Party on Preshipment Inspection for one year for the
purposes described in paragraph 8 of Section B of the report in
G/L/214.(27) In December 1998, the General Council agreed to further
extend the Working Party until 31 March 1999.(28) The Working Party
concluded its final Article 6 review of the Agreement on Preshipment
Inspection at its meeting held on 12 March 1999.(29)
26. The second review of the PSI Agreement took place at the 6
October 2006 meeting of the Committee on Customs Valuation, and the
statements made are recorded in the meeting minutes.(30)
IX. Article 7
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A. Text of Article 7
Article 7: Consultation
Members shall consult with other Members upon request with respect to
any matter affecting the operation of this Agreement. In such cases, the
provisions of Article XXII of GATT
1994, as elaborated and applied by
the Dispute Settlement Understanding, are applicable to this Agreement.
B. Interpretation and Application of Article 7
27. As of 30 September 2011, no consultations have been requested
under Article 7 of the PSI Agreement.
X. Article 8
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A. Text of Article 8
Article 8: Dispute Settlement
Any disputes among Members regarding the operation of this Agreement
shall be subject to the provisions of Article XXIII of GATT
1994, as
elaborated and applied by the Dispute Settlement Understanding.
B. Interpretation and Application of Article 8
28. As of 30 September 3011, no complaints have been brought under
Article 8 of the PSI Agreement.
XI. Article 9
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A. Text of Article 9
Article 9: Final Provisions
1. Members shall take the necessary measures for the implementation
of the present Agreement.
2. Members shall ensure that their laws and regulations shall not be
contrary to the provisions of this Agreement.
B. Interpretation and Application of Article 9
29. Since 1999, the Secretariat has issued periodic lists of
countries with PSI programmes, based on information supplied by IFIA.(31)
Also since 1999, implementation of the PSI Agreement has been a standing
agenda item in the Committee on Customs Valuation; the Secretariat
background document for each annual review of the implementation and
operation of the Agreement on Customs Valuation notes the discussion of
PSI issues during the preceding year.(32)
Footnotes:
1. G/L/300, paras. 5, 7. back to text
2. G/L/300, para. 6. back to text
3. G/L/300, Annex A;
G/VAL/W/63/Rev.13 (17 June 2010). back to text
4. G/L/300,
para. 11. back to text
5. G/L/214, adopted on 10 December 1997, section B, para. 3. back to text
6. G/L/214, section B, para. 5. back to text
7. G/L/300,
para. 18. back to text
8. G/L/214, section B, para. 7. back to text
9. G/L/214, section B, para. 6. back to text
10. G/L/214, section B, para. 1. back to text
11. G/L/300,
para. 19. back to text
12. G/PSI/IE/R/2, para. 23. back to text
13. G/L/214, section B, paras. 2 and 9. back to text
14. PC/IPL/W/8, “Implementation of Article 4 of the Agreement on
Preshipment Inspection — Background Note by the Secretariat”, 4
October 1994; see also PC/IPL/M/4 and G/C/M/1, para. 3.3. back to text
15.
G/PSI/W/1, “Legal Status of the Independent Entity under Article
4 of the Agreement on Preshipment Inspection”, 20 July 1995. back to text
16. WT/GC/M/9, section 1(f). back to text
17. G/PSI/IE/1 (updated once, on 26 April 1997,
G/PSI/IE/1/Rev.1). back to text
18. Reports of the Independent Entity: G/L/120,
208,
269,
330,
410,
489,
757,
802,
841,
864,
908 and
945. back to text
19. G/L/300,
para. 9. back to text
20. G/PSI/IE/R/1, “Independent Review Procedure
(PSI/IE/2005/1)
— Decision of the Panel”, 2 November 2005. back to text
21. G/PSI/IE/R/2, “Independent Review Procedure (PSI/IE/2006/1)
— Decision of the Panel”, 14 November 2006. See also in the chapter on
the Agreement on Customs Valuation. back to text
22. G/L/214,
para. XXX back to text
23. WT/GC/M/16, section 3. back to text
24. WT/GC/M/16, section 3. The terms of reference can be also found in
WT/L/196. back to text
25. The reports can be found in G/L/214,
G/L/273 and G/L/300. back to text
26. See WT/GC/M/25, item 8;
WT/GC/M/32, item 13;
WT/GC/M/40/Add.3,
item 5. back to text
27. WT/GC/M/25. back to text
28. WT/GC/M/32. back to text
29. The final report was circulated in document G/L/300. back to text
30. G/L/809;
G/VAL/M/42. back to text
31. G/L/300, Annex A; subsequent lists issued in
G/VAL/W/63 and
revisions, most recently G/VAL/W/63/Rev.13 (17 June 2010). back to text
32. See, e.g., G/VAL/W/196, 18 October 2010. back to text
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