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Preshipment Inspection (PSI)

PreShipment Inspection (PSI)

A Necessary Tool for Mozambican Customs? Or an obstacle to trade?

Preshipment inspection is the practice of employing specialized private companies (or “independent entities”) to check shipment details — essentially price, quantity and quality — of goods ordered overseas. Used by governments of developing countries, the purpose is to safeguard national financial interests (preventing capital flight, commercial fraud, and customs duty evasion, for instance) and to compensate for inadequacies in administrative infrastructures

The PSI process was put in place in Mozambique in the early 1990s to ensure customs revenue was not foregone due to a weak and inefficient customs force. Over a decade later and after numerous technical assistance activities with customs (e.g., through the DFID funded Crown Agents capacity building program), many believe Mozambican customs has build the necessary capacity to adequately inspect imports.

In Mozambique, regulations require PSI for a limited “positive list” of imports. The list includes certain types of cloth, used clothing, automobiles, arms, as well as some new items such as chickens. In this respect, it is appropriate to include PSI in the time to import estimates, as it adds time and costs to importers. Still, only 16 percent of total imports into Mozambique were subject to PSI, and just 8 percent for imports other than cars in 2006.

The TIP and SPEED project have assisted in better understanding the PSI process and it's implications on Mozambique's Doing Business Ranking, especially with regard to Time to Trade. You can find additional details from the links below.

WTO Agreement on Preshipment Inspection

The Preshipment Inspection Agreement recognizes that GATT principles and obligations apply to the activities of preshipment inspection agencies mandated by governments. The obligations placed on governments which use preshipment inspections include non-discrimination, transparency, protection of confidential business information, avoiding unreasonable delay, the use of specific guidelines for conducting price verification and avoiding conflicts of interest by the inspection agencies. The obligations of exporting members towards countries using preshipment inspection include non-discrimination in the application of domestic laws and regulations, prompt publication of those laws and regulations and the provision of technical assistance where requested.

The agreement establishes an independent review procedure. This is administered jointly by the International Federation of Inspection Agencies (IFIA), representing inspection agencies, and the International Chamber of Commerce (ICC), representing exporters. Its purpose is to resolve disputes between an exporter and an inspection agency.

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