RESTRICTED
WORLD TRADE G/PSI/WP/W/7/Rev.1
28October 1997
ORGANIZATION(97-4728)
Working Party onPreshipment Inspection
NATIONAL EXPERIENCE WITH THE AGREEMENT ONPRESHIPMENT INSPECTION
Revised Note bytheSecretariat
Revision
Asagreed bytheWorking Party, please findbelow therevised listofquestions, issues and
responses, where given, from thediscussions under thesecond agenda itemoftheWorking Party's
meetings of13Juneand24September 1997.
_______________
I. QUESTIONS RAISED INCONNECTION WITH NATIONAL SUBMISSIONS
Note: Under thisheading, questions asked bydelegations onthenational submissions byother
delegations arelisted.
1. Questions raised regarding thesubmission byGhana atthe13Junemeeting
(a) Does thelastsentence ofparagraph 7ofthewritten submission imply thatthe
obligations contained inthePSIAgreement arenotaccepted international
obligations?
(b) Does thegovernment ofGhana useprice information provided toPSIcompanies
forthepurpose ofpurchasing goods, andifthatisthecase, toreceive thebest
price possible?
Response from Ghana given atthe24September meeting
Price verification, aspartofitsnational PSIprogram, ensured thattransaction prices were
notsetbeyond reasonable levels andshould notbeconstrued tobethesameascustoms valuation where
national customs authorities laiddown procedures fordetermining thevalue ofgoods forcustoms
purposes. There wasalways thepossibility thatthetransaction pricecould bedubious; thisunderlaid
suchconcepts asdumping, anti-dumping andcountervailing measures. Ontheother hand, national
obligations under theCustoms Valuation Agreement should berecognized andnotbesubjected toany
interpretations intheWorking Party.
2. Questions raised regarding Philippines 'submission from 13Junemeeting
(a) Aretheservices ofPSIcompanies contracted inorder tomeet revenue collection
targets (required byinternational financial institutions)?G/PSI/WP/W/7/Rev.1
Page2
(b) How does thepractice ofhaving arepresentative ofthePSIentity inappeals
procedures oncustoms valuation matters relate tothestatement thatPSIentities
arenotinvolved incustoms revenue collection?
(c) Isthere anymechanism forpunishment orpenalties incaseconfidential business
information isdisclosed byofficials from PSIcompanies?
(d) Oftheonaverage 160cases aweek thatarebrought before theAppeals Committee,
what portion isinitiated byexporters andwhat portion isinitiated byimporters?
3. Questions raised regarding thesubmission from Peru
(a) IsthePSIsystem inPeruexclusively funded through contributions fromimporters?
(b) Provide more information about thesystematic procedure forverifying inspection
certificates andabout thekinds ofprocedures thatthisentails.
(c) Provide more information withregard toclauses within thecontracts referring
tonational mediation services, andtheroleoftheMultisectoral Sub-Commission
insuchmediation.
(d) IsthenationalmediationserviceidenticalwiththeMultisectoralSub-Commission?
Response from Perugiven atthe24September meeting
InPeru, importers contracted directly withthePSIcompanies andpaidafeeof1percent
oftheFOBvalue ofthemerchandise inspected.
Theassigned FOBcustoms value together withtheCRF must beconsidered inthecustoms
declaration. Thisserved asabasis forthecalculation forduties. There maybeaphysical check by
customs; inreality 15percentofthetotalgoods werechecked. During thephysical check ofgoods,
thecustoms authority maymake comments astothevalue, quantity andtariff classification ofthe
inspected goods, andmaymake corrections onanyofthese elements. Insuchcases, thePSIcompany
could befined foranyoffence. Inaddition, there wasasubsequent random control ofimporters by
thecustoms, prompted byintelligence, accounting audits, denunciations byforeign trade operators,
etc.Responsibility fortheevaluation andcontrol ofdiscrepancies arising fromcustoms control rested
withtheInspection Companies Control Division oftheNational Customs Inspectorate. Theformer
wasaspecialized unitresponsible fortheevaluation ofPSIcompanies, andhadthepower toapply
thecorresponding sanctions asaconsequence ofdiscrepancy proceedings following aruleapproved
inJanuary 1997. Discrepancies regarding value were themost representative, amounting toabout
30percentofthetotal. ThePeruvian customs retained therighttodetermine thecustoms value, tariff
classification andquantity ofthegoods, either during theconcurrent control (physical inspection of
thegoods) orduring thesubsequent control (four years ofrandom controls) ofthegoods. Thework
ofthePSIcompanies wastechnical, sincethefinalwordremained inthehands ofthenational authorities.
Regarding theclauses within thecontracts referring tonational mediation services, andthe
roleofthemultisectoral subcommission insuchmediation, national legislation, inaccordance with
theAgreement, established thatthecontract between theimporter andthePSIcompany mustinclude
aclause under which importers maysubmit disputes forsettlement through thenational arbitration
procedures. Thislegislation alsoestablished amultisectoral commission withrepresentatives oftheG/PSI/WP/W/7/Rev.1
Page3
Ministries ofEconomy andFinance which presided, arepresentative oftheConfederation ofPrivate
Enterprises andarepresentative ofthePSIcompanies. Thissubcommission considered complaints
concerning thenon-performance byPSIcompanies oftheircontractual obligations withrespect to
importers.Thechairmanhadacastingvote.TheNationalCustomsInspectorateoftheNationalCustoms
Administration acted asthetechnical secretariat forthesubcommission. Thework consisted inhearing
complaints byimporters andmaking thecorresponding recommendations. Theprocedure established
beganwithanimporter'scomplaintagainstaPSIcompanyconcerningnon-performanceofitscontractual
obligations. Forthesubcommission tohearanappeal, importers must demonstrate thattheyhad
previously sought asettlement withthePSIcompanies, andsubmit allsupporting information and
documentation. Thesubcommissions would thenmake theappropriate recommendations oneach
individual case. Ifitwasdetermined thatthePSIcompany wasresponsible, itwould havetopayto
theimporter anamount toamaximum oftentimes thefeecharged forthetransaction. Since its
establishmentinApril1995,lessthantenappealshavebeenheard.Thesubcommissionwasnotinvolved
inarbitrationbetweenthePSIcompaniesandimporters,inwhichthetwopartiesdesignatedthearbitrator
theyconsidered appropriate forthesettlement oftheirdispute. Accordingly, arbitration wasaprocedure
inwhich customs didnotintervene, andwassubject totheprovision oftheLawonArbitration.
4. Questions raised regarding thesubmission byColombia
(a) ArePSIentities operating inColombia involved inanti-dumping andsafeguard
investigations?
(b) How isthePSIsystem inColombia funded?
(c) Ofthe26percentofgoods inspected in1996, what wastheproportion between
mandatory andvoluntary PSI?
Response from Colombia given orally atthe13Junemeeting
Anti-dumping orsafeguard investigations were conducted bythecompetent authorities in
Colombia, andinformation onthegoods subjected toanti-dumping orsafeguard measures wasmade
available tothePSIcompanies. Onfinancing, importers paidforthefinancing andthataceiling of
1percentofthevalue ofthegoods inquestion wasset.In1996, goods subject toinspection, i.e.
those subject tomandatory inspection, were26percentofoverall imports. Obviously thefigure could
varydepending onimport levels ofthegoods inquestion.
Response given orally atthe24September meeting
PSIcompanies were innowayinvolved inanti-dumping andsafeguard investigations.
II. BASKET OFPENDING ISSUES
Note: Theheading "Basket ofPending Issues" includes items raised inthediscussion ofnational
submissions forwhich atleastonedelegation stated thatitwould supply further information.
1. Pending issues inconnection withthesubmission bythePhilippines from 13Junemeeting
(a) Donon-US exports receive faster treatment byPSIcompanies andmore favourable
treatment regarding price verification thanexports from theUnited States?G/PSI/WP/W/7/Rev.1
Page4
(b) Purpose ofthe"Technical Committee", asmentioned inthelastparagraph ofthe
background section ofthesubmission bythePhilippines. HowdoestheTechnical
Committee operate, andwhat areitsformal procedures?
Response from thePhilippines given atthe24September meeting
Non-USexportsdidnotreceivefastertreatmentbyPSIcompaniesnormorefavourabletreatment
regarding priceverification thanexports fromtheUS:Because herdelegation tookthisquestion very
seriously, itwished theUStoprovide concrete cases sothattheirauthorities could takeappropriate
measures.
Thepurpose oftheTechnical Committee mentioned inherdelegation 'ssubmission, wasto
ensure compliance bythePSIcompany withtheterms ofitscontract withtheGovernment ofPhilippines.
Itwascomprised ofrepresentatives from theBureau ofCustoms, theCentral Bank, theDepartment
ofTrade andIndustry, theDepartment ofFinance, theTariff Commission andtheBureau ofImport
Services andoversaw theimplementation ofallaspects ofthePSIcontract, except inmatters related
toissuance ofClean Reports ofFindings (CRF). Ontheprocedure, aconcerned party which could
beeither animporter, animporter association, atrade body oranygovernment body, which hada
problem withtheoperation oftheterms ofthecontract would berequired towrite totheUndersecretary
ofFinance(asChairmanoftheTechnicalCommittee).TheChairmanwouldthenconvenetheCommittee
todiscuss theproblem raised andsolutions would berecommended totheSecretary ofFinance and
theMonetary Board oftheCental Bank forfinalapproval andimplementation