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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:
Article 1: Coverage — Definitions back to top
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)
Article 2: Obligations of User Members back to top
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.
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)
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:
(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.
Article 3: Obligations of Exporter Members back to top
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)
Article
4: Independent Review Procedures back to top
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 panelists 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.
Article
5: Notification back to top
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.
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.
Article
7: Consultation back to top
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.
Article
8: Dispute Settlement back to top
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.
Article
9: Final Provisions back to top
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.
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