Pre-Shipment Inspection: Time to move on?

1. Pre-Shipment Inspection:Time to move on? Andrew Allan 21.08.2014

2. Welcome! Today is an opportunity to discuss the issue ending Pre-Shipment Inspection requirements for goods being imported into Mozambique. We hope all present will contribute in a positive manner, and that all leave with a clearer idea of how to progress this issue.

3. What is PSI? The WTO defines Pre-Shipment Inspection as: Pre-shipment 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. What is the purpose of PSI? What do you understand the purpose to be? • Value? • Classification? • Quality?

5. Stated purpose of PSI in Mozambique? “The scope of the INTERTEK program includes physical inspection in the country of exporter to establish compliance with the order specification and assessment of price, customs classification and import duties payable.” (From Intertek ‘Guidelines for Importers’ June 2014) What does this mean: • Order specification and assessment of price? • Customs classification? • Import duties payable

6. The “Positive List” • Intertek applies PSI based on the ‘Positive List’ which by - Ordem de Servicao 25 – DGA – 2013 • The Positive list covers a variety of products over 10 chapters of the HS Tariff: • Chapter 2 - 02.07.12; 02.07.14; 02.07.25; 02.07.27; 02.07.33; 02.07.36. – Frozen meat and edible parts of poultry of position 01.05 • Chapter 11 - 11.02 – Flour • Chapter 15 - 15.07; 15.08; 15.11; 15.12; 15.13; 15.15 – Cooking Oil • Chapter 25 - 25.23 – Cement • Chapters 28 & 29 - Chemical products • Chapter 30 - Pharmaceutical products under HS codes: 30.01;30.02; 30.03; 30.04; 30.05 and 30.06 • Chapter 36 - 36.05 – Matches • Chapter 40 - 40.11; 40.12 – New tyres and used tyres • Chapter 87 - Vehicles - 87.01to 87.05, 87.11

7. Other Government Agencies and PSI • The current Positive List suggests that value and classification are not the main reason behind some of the selected goods • Are existing licensing procedures sufficient to control some types of imports? • When inspections are done for ‘quality’, what does that mean? • What standards are applied in Mozambique on imported goods? • Are agencies able to conduct these checks themselves after importation?

8. Why change? Around the world, countries are moving away from PSI, and its ‘sister’ Destination Inspection Services. Why? As administrations develop and mature, the need for such services diminishes, authorities are able to determine the necessary facts for themselves.

9. PSI has been in Mozambique since 1998 – 16 years. In that time, Mozambique has seen significant changes and developments in the area of trade, and customs has had significant support from international sources to aid its development. Do Mozambique customs still need PSI support, or has it become an unnecessary technical barrier to trade? Do other agencies need PSI as it currently exists?

10. What is a Conformity Assessment Program? A government may contract (through INNOQ) with a company such as Intertek, to ensure selected goods meet International Standards (or National Standards if they differ). Goods are tested and a ‘Certificate of Conformity’ issued prior to export, this helps reduce the risk of substandard products entering the market. • Reduces the risk of unsafe products entering the market • Helps domestic manufacturers by preventing poor quality/ sub-standard goods being ‘dumped’ on the market

11. WTO WTO BALI Trade Facilitation Agreement of December 2013, Pre Shipment Inspection related guideline Article 10 Formalities connected with importation and exportation and transit. 5. Pre-shipment inspection The new agreement bans the use of pre-shipment inspections where this procedure is used to determine tariff classification and customs valuation. Other types of pre-shipment inspection will, however, remain permitted although Member States are encouraged not to extend the practice.

12. What do Trade think? • The additional costs • Why are some commodities under PSI and not others • Non-tariff barrier to trade • Does PSI benefit some traders • ??

13. Transition What is needed to move away from PSI? • A Plan with a realistic timeframe • To be developed by a steering committee of relevant border agencies • Tasks to be delegated to specific managers with defined deadline • Political support • Identify a ‘Champion’ to press the transition forward at ministerial level • Focused training/ capacity development • Identify specific areas of weakness e.g. valuation, classification, Risk Management/ assessment and prioritize these areas

14. Adoption of Risk Management by all border agencies as a priority • Work together, with customs as the coordinator, for agency risks to be addressed under the Risk Management module of MCNet

15. Risk Management

16. Increase in agencies included under the Single Window MCNet • Specific tools to assist in the valuation of high risk goods • E.g. Development of a vehicle valuation database • Trade compliance <=> trade facilitation • Compliant trade must be rewarded with increased facilitation • Non compliant trade should be subject to meaningful penalties and increased levels of scrutiny. • Does the current penalty system work?

18. Obrigado!