Authorized Economic Operator
Encyclopedia
The growth of global trade
and increasing security threats to the international movement of goods have forced Customs
administrations to shift their focus more and more to securing the international trade flow and away from the traditional task of collecting customs duties The World Customs Organisation (WCO) recognising these developments drafted the WCO Framework of Standards to Secure and Facilitate global trade (SAFE)http://www.wcoomd.org/files/1.%20Public%20files/PDFandDocuments/Capacity%20Building/Framework_of_standards_brochure_eng.pdf. In the framework, several standards are included that can assist Customs administrations in meeting these new challenges. Developing an Authorised Economic Operator programme is a core part of SAFE.
An AEO is defined as:
“a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with WCO or equivalent supply chain
security standards. Authorised Economic Operators include inter alia manufacturers, importers, exporters, brokers, carriers
, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses and distributors”
SAFE is based on four core elements:
The essence of the AEO-concept can be found in the Customs-to-Business partnerships. Operators can be accredited by Customs as AEOs when they prove to have high quality internal processes that will prevent goods in international transport to be tampered with. I.e.:
As a result, customs will trust the operator and perform less or no inspections on goods imported or exported by or via the AEO. This benefits the mover of the goods as goods are available more quickly, which means lower transport costs. Customs benefits as scarce inspection capacity can be targeted better at cargo of unknown and potentially unsafe operators.
At present, AEO or similar programmes have been introduced in:
Although all these programmes find their roots in the SAFE framework of standards, the approaches differ. E.g. the USA only allows importers to participate in C-TPAT where as the European AEO programme is open to all operators in the supply chain.
The European AEO programme differs from the other programmes as that it has a wider scope, as it encompasses customs simplified procedures next to security and with that relates to compliance with all customs legislation, including customs duties.
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
and increasing security threats to the international movement of goods have forced Customs
Customs
Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods including animals, transports, personal effects and hazardous items in and out of a country...
administrations to shift their focus more and more to securing the international trade flow and away from the traditional task of collecting customs duties The World Customs Organisation (WCO) recognising these developments drafted the WCO Framework of Standards to Secure and Facilitate global trade (SAFE)http://www.wcoomd.org/files/1.%20Public%20files/PDFandDocuments/Capacity%20Building/Framework_of_standards_brochure_eng.pdf. In the framework, several standards are included that can assist Customs administrations in meeting these new challenges. Developing an Authorised Economic Operator programme is a core part of SAFE.
An AEO is defined as:
“a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with WCO or equivalent supply chain
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...
security standards. Authorised Economic Operators include inter alia manufacturers, importers, exporters, brokers, carriers
Common carrier
A common carrier in common-law countries is a person or company that transports goods or people for any person or company and that is responsible for any possible loss of the goods during transport...
, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses and distributors”
The WCO Framework of Standards to Secure and Facilitate Global Trade
The AEO concept is one of the main building blocks within the WCO SAFE Framework of Standards (SAFE). The latter is part of the future international Customs model set out to support secure trade. SAFE sets out a range of standards to guide international Customs Administrations towards a harmonised approach based on Customs to Customs cooperation and Customs to Business partnership.SAFE is based on four core elements:
- harmonization of the advance electronic cargo information
- each country that joins SAFE commits to employing a consistent risk managementRisk managementRisk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
approach to address security threats - on request of the Customs administration of the receiving nation, the customs administration of the sending nation will perform an outbound inspection of high-risk containers and cargo.
- definition of benefits that Customs will provide to businesses that meet minimal supply chain security standards and best practices.
The essence of the AEO-concept can be found in the Customs-to-Business partnerships. Operators can be accredited by Customs as AEOs when they prove to have high quality internal processes that will prevent goods in international transport to be tampered with. I.e.:
- Ensure the integrity of the information, i.e. what is said to be in a containerContainerizationContainerization is a system of freight transport based on a range of steel intermodal containers...
, really is in the container and nothing else, more, or less; - Ensure the integrity of its employees, that they will not put goods in the container that should not be there; and
- Secure access to its premises, to prevent unauthorised persons to put goods in the container.
As a result, customs will trust the operator and perform less or no inspections on goods imported or exported by or via the AEO. This benefits the mover of the goods as goods are available more quickly, which means lower transport costs. Customs benefits as scarce inspection capacity can be targeted better at cargo of unknown and potentially unsafe operators.
Different AEO programmes
Most members of WCO have acceded to the SAFE framework and it can be expected that in the next few years, the majority of customs administrations will introduce AEO-programmes.At present, AEO or similar programmes have been introduced in:
- The United StatesUnited StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
, under the name of C-TPAT (Customs-Trade Partnership against Terrorism)http://www.cbp.gov/xp/cgov/import/commercial_enforcement/ctpat/ - The member states of the European UnionEuropean UnionThe European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
http://ec.europa.eu/taxation_customs/customs/policy_issues/customs_security/index_en.htm#auth_eco#auth_eco, e.g. the UK http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageImport_ShowContent&propertyType=document&id=HMCE_PROD1_028236, Sweden http://www.tullverket.se/en/startpage/keywordsaz/az/authorisedeconomicoperatoraeo.4.2337793011afcaba766800010.html and the Netherlands http://www.douane.nl/zakelijk/aeo/en - APEChttp://www.apec.org
- New ZealandNew ZealandNew Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
, under the name of Secure Export Scheme (SES)http://www.customs.govt.nz/NR/exeres/CCD6BD23-0793-4B43-AF9A-2B56458F0B20,frameless.htm?NRMODE=Published - SingaporeSingaporeSingapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, under the name of Secure Trade Partnership (STP)http://www.customs.gov.sg/leftNav/trad/Supply+Chain+Security.htm
Although all these programmes find their roots in the SAFE framework of standards, the approaches differ. E.g. the USA only allows importers to participate in C-TPAT where as the European AEO programme is open to all operators in the supply chain.
The European AEO programme differs from the other programmes as that it has a wider scope, as it encompasses customs simplified procedures next to security and with that relates to compliance with all customs legislation, including customs duties.
Mutual recognition
The importance of coordinated, similar, programmes lies in the fact that the ultimate goal is to get all national programmes mutually recognized, meaning that AEO accreditions have the same value everywhere. As a result secure supply chains can be established, as all parts of the chain from origin (place of stuffing of the container) to destination (place of unpacking of the container) are deemed to be safe, albeit under different AEO programmes. This would greatly facilitate global trade. By July 2008 the United States http://www.customs.govt.nz/exporters/NZ+US+Mutual+Recognition+Arrangement.htm, had signed mutual recognition agreements with New Zealand, Canada http://www.cbsa-asfc.gc.ca/security-securite/pip-pep/menu-eng.html and Jordan. Several other countries and trade blocks are starting their negotiations about it, e.g. the US and the European Union http://ec.europa.eu/taxation_customs/resources/documents/customs/policy_issues/customs_security/TOR_MR_en.pdfExternal links
- Give your transborder supply chain a strategic lift http://web.mit.edu/scresponse/repository/Rice_Spayd_SCS_Transborder_SC.pdf
- European Customs Information Portal (ECIP)
- Expert Business Intelligence for AEO