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,

Having regard to the opinion of the European Parliament1,

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: