Pre-Shipment Inspection

A pre-shipment inspection is carried out at the place of origin (the place of shipment) to verify the type, quality, price and customs valuation of goods being exported.  It is a valuable tool for the buyer since it is a way to verify the quality of goods before they are shipped.  Pre-shipment inspections are required whenever the government of the importing country requires them. These foreign governments often believe that pre-shipment inspections are necessary to:

• Ensure that the price charged by the exporter reflects the true value of the goods,
• Prevent substandard goods from being imported into their country,
• To reduce the chances that an importer will avoid having to pay customs duties on the full value of the product being imported by misrepresenting the value of the goods being shipped.

Although the importer is usually responsible for arranging for the pre-shipment inspection, the exporter must willing and able make the goods available for inspection in the country of origin. If the goods should reach the border of the importing country without inspection, they usually have to be returned or sent to a nearby country where an inspection can take place prior to a second attempt to import the merchandise in question.

Pre-shipment inspections are often performed by contracted private organizations. In certain cases, only one entity or company is sanctioned to carry out inspections for a specific country. In some countries, the importer pays the cost; in other countries the government absorbs the costs.  The PSO process can take several forms.  At its most basic, the company contracted to inspect will simply confirm the amount of goods and the adequacy of the packaging.  Another form of inspection involves an examination of the quality of the goods intended for export.   The third and most comprehensive PSI involves verfiying that the goods comply with a third party standard of quality before authorizing shipment. 

The U.S. Department of Agriculture provides inspection services when certificates are required to clear imported agricultural and food products through overseas customs. Sanitary and phyto-sanitary certificates for animal, plant, and food products can be used for international trade purposes.

If a disagreement arises on the findings of the pre-shipment inspection, the discrepancy should be discussed with the inspection company. If exporting to a World Trade Organization (WTO) member country, the WTO Agreement on Pre-shipment Inspection is used to define the responsibilities of the exporter and the conduct of the inspection company. The WTO Agreement requires the inspection company to appoint an appeals official and comply with the WTO Agreement guidelines when carrying out their pre-shipment inspection services for signatory countries.

At the time this essay was written, the following countries required or request pre-shipment inspections for all imported products, although some do not require inspection for low-value shipments:

Angola, Argentina, Bangladesh, Benin, Bolivia, Burkina Faso, Burundi, Cambodia, Cameroon, Central African Republic, Colombia, Comoros, Republic of Congo, Democratic Republic of Congo, Djibouti, Ecuador, Equatorial Guinea, Ethiopia, Ghana, Guinea, Ivory Coast, India, Indonesia, Kenya, Liberia, Madagascar, Malawi, Mali, Mauritania, Mexico, Mozambique, Niger, Nigeria, Paraguay, Peru, Philippines, Rwanda, Senegal, Sierra Leone, Somalia, Suriname, Tanzania, Togo, Uganda, Uzbekistan, Zambia, and Zimbabwe.

Please note that this list will almost certainly be different when this essay is published.

Edited by Michael C. Dennis. Mr. Dennis is the author of "Credit and Collection Handbook" and is a business consultant. He can be reached by email at mcdennis13@yahoo.com