Pre-shipment inspection

Pre-shipment inspection – activities of a specialized private company to verify the details of shipping consignments by agreement with the Government.

The details may include: price, quality and quantity of goods ordered. In most cases, the procedure is used by developing countries with the purpose to provide national financial interests, such as the prevention of capital flight, commercial fraud, tax and customs duties evasion.

Pre-shipment inspection is the process of checking the prices of goods per unit, as well as inspection and reporting of quality and quantity of goods before they are sent to the country of importation. Pre-shipment inspection may help to control over- or underestimation of the amounts in the invoices, incorrect classification of goods, evasion of import customs duties. Other benefits of pre-shipment inspection may include monitoring of the country of origin, verification of compliance with national legislation, consumer protection.

Pre-shipment inspection service can provide the necessary information which is not available to customs authorities of small countries. In other words, pre-shipment inspection can be considered as the delegation of certain customs authorities functions. Based on the different purposes of the customs reforming, simplification of customs procedures is an important issue for the efficiency and growth. Because of the potential long-term benefits of reforms, governments should focus on institutional reforms and effective implementation of customs modernization programs, and do not consider pre-shipment inspection services as a substitute for such reforms.

Regulation in the frame of WTO

Under the WTO matters related to pre-shipment inspection are regulated by WTO Agreement on pre-shipment inspection (hereafter WTO Agreement). WTO Agreement admits that rules and obligations stated in General Agreement on Tariffs and Trade 1994 year GATT The WTO Agreement admits that the principles and commitments stated in the General Agreement on Tariffs and Trade 1994, are also applicable to pre-shipment inspection agencies (specialized private companies), designated by the State. The obligations are imposed on countries that use pre-shipment inspection, and include the following principles: non-discrimination, transparency, protection of commercial information, avoiding of goods output undue delays. Obligations of the country exporting goods to the country that uses pre-shipment inspection include: non-discriminatory application of national legislation, prior publication of laws and regulations and provision of technical assistance, if necessary.

In addition, the WTO Agreement establishes an independent procedure for meeting complaints. Administration of these procedures is carried out by the International Federation Inspections Agency presenting inspection agencies (specialized private companies), and the International Chamber of Commerce, representing the interests of exporters. The purpose of these organizations is the settlement of disputes between exporters and inspection agencies.

Today, the pre-shipment inspection system is not used on the territory of Kazakhstan. From 1995 to 1997, pre-shipment inspection of goods was carried out by «Societe Generale de Surveillance SA» company, which is one of the leaders in this field. Pre-shipment Inspection Scheme in the Republic of Kazakhstan covered all imports, except for goods imported from CIS countries, goods with value less than $3,000; strategic goods, dual use items and printed goods.

Thus, under the WTO the processes associated with the use of pre-shipment inspection are regulated. However, Kazakhstan to date does not apply pre-shipment inspection. In case of application, the Republic of Kazakhstan, after joining the WTO, must comply with the terms and principles established in the WTO Agreement.