Representatives from the World Customs Organization, the African Development Bank, African Union Commission, International Monetary Fund, West African Economic and Monetary Union, World Bank, and the World Trade Organization (as observer) met at WCO Headquarters in Brussels, Belgium on 6 and 7 March 2014 to discuss the topic of preshipment inspection (PSI) and destination inspection (DI) companies.
At the meeting it was observed that:
- International trade is an essential driver to promote development and economic competitiveness that alleviates poverty;
- Customs administrations perform a wide range of important fiscal, economic and social functions, including the facilitation of legitimate trade, collection of revenue and protection of society from illicit trade;
- A number of Governments have entered into inspection services contracts with PSI and DI companies to undertake core Customs functions, including the determination of Customs duties and taxes payable on imported goods, risk management and examination of goods moved across international borders;
- An increasing number of countries have successfully taken ownership of these core functions with no adverse effect on revenue following termination of contracts;
- In some instances, these contracts have been costly to governments and detrimental to the realization of Customs knowledge and skills in such areas as Customs valuation and classification and their objectives were not achieved;
- The WCO has developed a comprehensive set of instruments and tools to support national Customs administrations with their reform and modernization programmes; and
- Although some of these activities are currently regulated by the Agreement on Preshipment Inspection of the World Trade Organization, Article 10.5 of the Agreement on Trade Facilitation that was agreed in December 2013 provides that Members shall not require the use of preshipment inspections in relation to tariff classification and Customs valuation and encourages Members not to introduce or apply new requirements regarding their use.
At the meeting it was recommended that:
1) Governments:
- Provide political will, support and resources to Customs administrations to assume responsibility for the core Customs functions of determining Customs duties and taxes payable, risk management and examination of goods. These functions are distinct from contracts for support services such as those related to information technology infrastructure and the procurement and maintenance of non-intrusive inspection equipment where Customs does not have the capacity to undertake these support services in the short-term;
- Where exceptional circumstances dictate the entry into, or extension of, contracts, fully involve Customs administrations in contract design, negotiations and decision-making;
- Ensure that such contracts are short-term, transparent, cost-effective, procured in an open, competitive and transparent manner commensurate with the applicable laws of the country and that fees are commensurate with services provided; and
- Further ensure that such contracts provide at least for (i) the measurement of agreed results and objectives; (ii) governance arrangements and responsibilities; (iii) appropriate compliance with obligations, in line with international and regional commitments; and (iv)the transfer of appropriate skills, knowledge and technology to Customs as a key objective.
2) Customs administrations:
- Engage national policymakers and take ownership of the Customs functions covered by preshipment and destination inspection contracts;
- Demonstrate leadership and commit to reform and modernization to assume responsibility for functions covered by these contracts by developing comprehensive strategies and implementation plans;
- Commit to good governance and to combat corruption by effectively implementing integrity promotion programmes;
- Coordinate support provided by development partners and donor organizations transparently and efficiently; and
- Enhance communication and partnerships with stakeholders, including neighbouring Customs administrations, to better articulate Customs efforts on modernization and trade facilitation.
3) International and regional organizations as well as development partners:
- Provide advice consistent with the recommended principles to Governments with regard to inspection companies, including the exceptional cases or situations where there may be a need in the short to medium term for contracts;
- Engage with each other in a more structured manner to coordinate and harmonize as far as possible their policies and instruments on Customs reform and modernization and capacity building programmes; and
- Coordinate their efforts and initiatives to advise and support Customs Administrations to successfully manage their reform and modernization programmes and in particular the core Customs functions.