Pre-shipment Inspection

A pre-shipment inspection is an inspection carried out at the place of origin (the place of shipment) to verify the type, quality, price and customs National government authorities that control imports, inspect imports, and collect duties levied on both imports and exports valuation of goods to be exported. Pre-shipment inspections are required whenever the government of the importing country mandates them.
These foreign governments often believe that pre-shipment inspections are necessary to:

• Ensure that the price charged by the exporter The person or company that sells or arranges to transport goods out of a country. 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

Although the importer is usually responsible for arranging for the pre-shipment inspection, the exporter must 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 re-exported to a nearby country where an inspection can take place prior to a second attempt to import To bring goods into a country whose origin is in another country. The importer is usually the buyer or their agent. 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 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 Situation that occurs when documents presented by the seller, in an effort to be paid under a letter of credit, do not conform to the terms of the letter of credit. letter of credit A financing instrument issued by a bank in favor of an exporter that substitutes the bank's creditworthiness for that of the importer. , do not conform to the terms of the letter of credit. letter of credi A financing instrument A right to the payment of mone A medium of exchange; coined or stamped currency. y such as agency notes, commercial pape The unsecured promissory notes of large, financially sound corporations. r, T-Bills, certificates of deposit (CD's), banker's acceptances and repurchase agreements. issued by a bank in favor of an exporter that substitutes the bank's creditworthiness for that of the importer. t, do not conform to the terms of the letter of credit . 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.

The following countries currently require 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

Edited by Michael Dennis. Mr. Dennis is an instructor for CMA Business Credit Arises from a sale of goods by a manufacturer, distribution or service company to another company when payment is made at a later date. Services and the author of "Credit and Collection Handbook" available at www.aspenpublishers.com