Customs use of inspection companiesBackground & Way Forward

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Evolution of inspection services• 1960s : PSI developed (mainly for exchange

control)• 1980s : Used for strengthening Customs controls;

particularly in developing countries, including verification of Customs values and classification

• 1995 : WTO Agreement on PSI … sets out standards, e.g. obligation to follow principles of WTO Valuation Agreement

• 2000s : Transition to destination inspection activities; broader scope, incl. scanners, single window activities.

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Trend

1980s 1990s 2000s 20140

5

10

15

20

25

30

35

40

45

Countries with inspection contracts

Countries with inspection con-tracts

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Current position

•Several countries considering termination•Niamey Declaration

▫ Agreement by DGs in West & Central Africa Region

•WTO Agreement on Trade Facilitation– Article 10.5 Pre-shipment Inspection :

▫ 5.1. Members shall not require the use of pre-shipment inspections in relation to tariff classification and customs valuation.

▫ 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

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Way forward for Customs administrations

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Effective control infrastructure for Customs valuation, classification and origin

•Take broader view of risk management : ▫ Develop importer profiles (assess compliance)▫ Analyse statistical trends (import/export)▫ Trader segmentation (size and compliance)

•Implement compliance-based post-clearance audit

•Advance rulings for classification, origin and valuation

•Effective/commensurate penalties

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Benefits

•Less reliance on valuation databases

•Better targeting = effective revenue collection + reduced port interventions/physical exams

•Compatibility with WTO Agreement on Trade Facilitation

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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

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What can WCO provide?•Revenue Package programme provides

access to all tools and instruments•New materials in 2012 focus on practical

aspects•Phase 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