Customs use of inspection companies Background & Way Forward

Evolution of inspection services 1960s1960s : PSI developed (mainly for exchange control) 1980s1980s : Used for strengthening Customs controls; particularly in developing countries, including verification of Customs values and classification 1995 : WTO Agreement on PSI1995 : WTO Agreement on PSI … sets out standards, e.g. obligation to follow principles of WTO Valuation Agreement 2000s :2000s : Transition to destination inspection activities; broader scope, incl. scanners, single window activities. 2

Trend 3

Current position Several countries considering terminationSeveral countries considering termination Niamey DeclarationNiamey Declaration ▫Agreement by DGs in West & Central Africa Region WTO Agreement on Trade FacilitationWTO Agreement on Trade Facilitation –Article 10.5 Pre-shipment Inspection : ▫5.1. ▫5.1. Members shall not require the use of pre-shipment inspections in relation to tariff classification and customs valuation. ▫5.2. ▫5.2. Without prejudice to the rights of Members to use other types of pre-shipment inspection not covered by paragraph 5.1, Members are encouraged not to introduce or apply new requirements regarding their use 4

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Effective control infrastructure for Customs valuation, classification and origin risk managementTake broader view of risk management : ▫Develop importer profiles (assess compliance) ▫Analyse statistical trends (import/export) ▫Trader segmentation (size and compliance) post-clearance auditImplement compliance-based post-clearance audit Advance rulingsAdvance rulings for classification, origin and valuation penaltiesEffective/commensurate penalties 6

Benefits Less reliance on valuation databases Better targeting = effective revenue collection + reduced port interventions/physical exams Compatibility with WTO Agreement on Trade Facilitation 7

Needs Plan, plan, plan! Staff training/re-training ▫Not just theory skills and knowledge ▫Specialist skills (e.g. accounting, IT, audit) ▫Need to change way of thinking Communication channels with business ▫Work with informal sector, encourage formalisation of procedures ▫Appropriate IT support Continued integrity programmes 8

What can WCO provide? Revenue PackageRevenue Package programme provides access to all tools and instruments New materials in 2012 focus on practical aspects Phase IIPhase II in development. By June 2015 : ▫New diagnostic tools for valuation, origin and PCA ▫Guidance for countries terminating contracts ▫Good practices for :  Informal trade challenges  Identifying/tackling revenue risks & gap  Origin irregularities Further capacity building/technical assistance 9