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US firms unhappy with export inspections

The White House is moving closer to staking out a position on a nagging trade problem for exporters - the private preshipment inspection of merchandise shipped to third-world countries to make sure price and quality is in line with world market conditions. In an effort to cut customs fraud and capital flight, 25 developing countries last year required exporters to have their goods checked in advance in order to get paid.

The International Trade Commission (ITC), an independent government agency, issued a report Monday on the effect of preshipment inspection programs on trade. It said the majority of US exporters had negative views about such inspection services because of delays in shipping, confidentiality questions, and added cost. The ITC found that 70 percent of US exporters who responded to a confidential survey had strong objections to the programs, while only 19 percent commented favorably about them.

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The report now goes to US trade representative Clayton Yeutter, who requested the study to determine the scope of the problem. Mr. Yeutter, who may still bring a trade action on the issue, will send the report out to the business community for comment at the same time as an interagency group uses the document to help it formulate a position on the problem.

The White House needs to formulate a strategy because there is an amendment on preshipment inspection in the trade bill which will be put together by congressional conferees this fall. The legislation prohibits inspection firms from providing specific price information to importers so they can use the inspection firms for price comparison shopping. It also prohibits ``extensive or intrusive'' inspections, which cause delays.

Ron Gerdes, a lawyer in Washington with the firm of Sandler & Travis representing four south Florida exporters, said the report confirms the allegations made by exporters this past fall when they initiated a trade action on the issue.

A large segment of preshipment inspections are done by a Swiss company, SGS Control Services, Inc. In a statement, Robert Burgess, president of SGS government programs division, said the report showed why preshipment inspection was necessary. However, Mr. Burgess also complained that many of the statistics were outdated or incorrect.

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