THE COUNCIL OF THE EUROPEAN UNION;

Having regard to the Treaty establishing the European Community, and in particular Article 113 thereof,

Having regard to the proposal from the Commission,

Whereas a number of developing countries have recourse to so-called pre-shipment inspection programmes in order to ensure a proper distribution of limited foreign currency resources to importers and in order to combat such practices as over- and under-invoicing and fraud; whereas these developing countries have charged private companies with this task, which includes a check on quality, as well as price of the goods intended for export to the territory of these countries;

Whereas the Community recognizes the right of the developing countries to have recourse to pre-shipment inspection; whereas, however, pre-shipment inspection can give rise to abusive interference in the price freely agreed between parties to a contract and to other practices which form unnecessary obstacles to trade; whereas, therefore, efforts should be made through cooperation and technical assistance to reduce the need for pre-shipment inspection;

Whereas the Uruguay Round Final Act, signed on 15 April 1994 in Marakesh (Morocco), establishes an Agreement on pre-shipment inspection between members of the World Trade Organization (‘WTO Agreement’); whereas this Agreement has been approved and needs to be put into effect for the Community;

Whereas Community legislation provides exporters with additional assurance that pre-shipment inspection activities are indeed carried out according to the provisions of the WTO Agreement and thus do not constitute a barrier to trade;

Whereas, to this end, pre-shipment inspection activities carried out in the Community should be made subject to certain conditions;

Whereas, in view of the maintenance of uniform principles of export policy of the Community it is necessary that the activities of pre-shipment inspection entities be regulated along uniform lines;

Whereas there is good reason to simplify procedures as much as possible, in particular with respect to the review of prices; whereas exemptions, however, are not provided by the WTO Agreement and such exemption can thus be applied only with the agreement of the pre-shipment inspection entities;

Whereas a quick and effective procedure for the settlement of disputes between exporters and pre-shipment inspection entities should be instituted; whereas such a procedure is provided by the WTO Agreement;

Whereas disputes concerning non-compliance with conditions or non-observance of procedures by pre-shipment inspection entities should be settled with the third countries making use of such entities in accordance with the relevant Community and WTO procedures;

Whereas Article 3 (3) of the WTO Agreement provides for technical assistance to third countries,

HAS ADOPTED THIS REGULATION: