News | What do you know about Pre-Shipment Inspections ? (PSI)

Pre-shipment inspection (PSI) is a vital element of trading with some countries. It provides an importing country with an objective third-party report about goods and materials before shipment. This topic shows which countries require PSI and what the compliance requirements are for exporters.

Pre-shipment inspection (PSI) provides an objective third-party opinion about goods and materials before shipment.

Once it covered only quality, quantity and export market price in order to safeguard the client countries’ foreign exchange reserves. Then, programmes were expanded to include verification of the import eligibility of the goods (ie compliance with regulations) and, subsequently, verification of the value and classification of the goods for customs purposes. Thereafter, a growing number of clients also requested that specific checks be made to certify that imported goods met relevant safety standards and health and labelling regulations.

How Pre-shipment Inspection Operates

The PSI can be undertaken when the shipment is 80% complete giving an opportunity for corrective action before completion and shipment. The inspection will examine functionality, performance, durability, appearance and dimensions.

The importer is required to notify the local PSI office in the country of origin that it wishes to bring in a shipment, and the agency employees will inspect the shipment with the goal of either verifying its contents against the importer’s invoice or, in the case of discrepancies, adjusting the value of the goods on the invoice.

The steps are:

• inspection visit on-site, although there may be a requirement for off-site testing of chemicals or other products
• quantity verification
• random selection to detect defects (to ensure these are within the acceptable number of defects)
• quality checks
• checking the product conforms with the required specification
• function and safety checks (such as electrical safety, labelling, etc)
• report writing.

Once the PSI company is satisfied with any changes made to the invoice, it seals the shipment and a “Clean Report of Findings” (CRF) is sent to the country of destination ahead of the shipment.

The CRF specifies the value and categorisation of the goods as determined by the PSI office. It is then sent to Customs at the point of destination and sometimes to the destination country’s Ministry of Finance as well.

The Reason for Pre-shipment Inspection

In principle the inspection is intended to independently:

• check the quantity and quality of goods being exported
• examine the products for defects
• ensure the goods meet the safety requirements of the importing country
• produce a report for import and billing purposes.

PSIs were introduced in the early 1990s to improve international standards, and the WTO Agreement on Pre-Shipment Inspections requires PSIs to not impede trade. The principles of the Agreement are:

• non-discrimination
• transparency
• business confidentiality
• avoiding delays
• price verification and compared to identical or similar goods.

Agencies that undertake PSIs have an appeals procedure.

The Importer’s Responsibilities

Importers must follow a set series of procedures.

After an order has been confirmed, they have to establish an official notification document with a government body such as Customs. This may be known as an Import Declaration Form (IDF), Import Advice Note (IAN) or another name such as Solicitud de Inspección Pre-embarque (SIP), but the function is the same.

The document may be required for Customs purposes or related to payment, but it will always act as the possible trigger for a requirement for PSI, which is normally determined by:

• the value of the order
• the type of goods involved.

If PSI is requested, the importer must send a copy of the document to a PSI liaison office for that country together with a copy of the order reference document (usually a pro forma invoice or an official order). This will give details of the:

• type of goods ordered
• overseas supplier
• quantities
• unit prices
• estimated freight charge
• terms of payment.

After the documentation and the order reference document have been presented to a PSI liaison office, the staff there will enter the data into a computer and transmit details through electronic data transfer (EDT) into a central computer within the UK.

When that is received, the administration department will validate the name and address of the exporter against existing records. New exporters will be given a fresh record. The computer will then give each new inspection order a unique Internal Control Number (ICN) and thereafter produce a worksheet known as a Request for Information (RFI).

The Exporter’s Responsibilities

Once the procedure outlined under The Importer’s Responsibilities is complete, the Request for Information will be sent to the exporter on the same day. Once it is received, it is important that it is completed in full and returned at the earliest opportunity to enable the PSI organisation to plan the inspection “to suit the exporter and achieve the appropriate deadlines with the minimum disruption”.

There is no charge to the exporter and copies of the inspection report and verification of the final invoice are provided free. (All fees are paid in the importing country.)

Country by Country

The following are the agencies contracted by each of the named countries to carry out PSI on their behalf.

See Further Information for their contact details.

Checking Whether Your Consignment Needs Pre-shipment Inspection

Not all countries require PSI and it is important to check from the outset whether it is needed. Apart from referring to the list under Country by Country, this is most easily done by taking guidance from buyers or agents.

It should be noted that any PSI contracts listed reflect the position as at the time of updating this page. The situation can sometimes change quickly and subscribers should check with a company that it still carries out PSI for any specific country.

Complaints Procedure

If for any reason anyone involved in the chain of pre-shipment inspection is not satisfied with any aspect of the work carried out by a PSI organisation, there is recourse to the International Federation of Inspection Agencies (IFIA).

The IFIA Code of Practice stipulates the obligations of members in carrying out all pre-shipment inspection activities. It is based on the WTO Agreement on Pre-shipment Inspection and subsequent recommendations, as well as on the WTO Agreement on Customs Valuation.

International Federation of Inspection Agencies (IFIA) http://www.ifia-federation.orgIFIA (now the TIC Council) is the trade association for more than 50 of the world’s leading inspection agencies and other organisations that provide inspection, testing and certification services internationally.