World Customs Organization

The following attributes typify an AEO in terms of its partnership with Customs:

• Demonstrated compliance with Customs requirements → specified for the AEO and taken into account when Customs considers the qualifications of an AEO applicant.
• A sound system for management of commercial records → recognises the importance of maintaining accurate commercial records by an AEO and their ready availability to Customs.
• Financial viability → recognises the critical role to be filled by good financial standing in allowing an AEO to fulfil its commitments under the SAFE.
• Consultation, co-operation, and communication → Establish measures for both Customs and the AEO aimed at fostering mutually beneficial working relationships.
• Education, training, and awareness → recognise the importance of reinforcing in employees (both Customs and the AEO) the necessity of learning proper procedures and dealing with anomalous situations.
• Information exchange, access and confidentiality → Provisions to secure information and prevent its misuse or unauthorised alteration.
• Cargo security → Seeks to maintain cargo integrity and access controls at the highest levels.
• Conveyance security → Encourages Customs and the AEO to work together to secure and maintain transport conveyances.
• Premises security → Requirements to implement programmes, secure buildings, and control and monitor perimeters.
• Personnel security → The introduction of elements for both Customs and the AEO regarding recruitment, security checks, and personnel procedures.
• Trading partner security → Encourages the AEO to conclude contractual provisions with partners in the Supply chain to bolster their level of security commitment.
• Crisis management and incident recovery → Encourage advance contingency planning for recovery from adverse incidents.
• Measurement, analysis, and improvement → Seek to foster consistency, security integrity, and the identification of security system requirements.

The WCO ESA RPSG feverishly encourages our members to join their respective AEO (and other related C-2-B) programmes.

The original idea behind AEOs was creating a risk-based separation of trade flows through border posts. The novelty would result in trade flows that are more compliant, secure, predictable, and less resource-intensive to manage. This idea was revolutionary since most legislation is written to guarantee neutral competition and equal treatment. Notably, the idea was not to introduce alternative legislation and policies for compliant traders but to develop an alternative way of ensuring compliance with legislation, policies, rules, and regulations. If an operator invests in meeting the requirements and thus proves to have a low risk of errors, that operator can also be given a different control programme to manage and monitor its low risk over time and maintain its status as low-risk[1].

Globally, countries and their Customs administrations are currently at different stages of implementing their individually designed C-2-B programmes, which meet their strategic intent and alignment with their international obligations. Some countries (such as the US and New Zealand) prioritise security-based authorisation. In contrast, other countries (such as those in the EU) prioritise safety and security alongside compliance and access to simplifications.

According to the WCO AEO Compendium[2] 2019 edition, the current status of global AEO is as follows:

The AEO holds several benefits for traders and Customs alike, and will primarily be dependent on the respective trading environment of each country. Nonetheless, a set of core benefits will be realised irrespective of the origin of the programme. The following section outlines the background of realised benefits of AEO from some programmes, starting with the proposed benefits outlined by the WCO.

i. WCO Benefits

WCO SAFE lists a total of 62 potential benefits, which fall under the following sub-sections:

• Expedited cargo release, reduce transit times and lower storage costs
• Facilitated post-release processes
• Special measures for trade disruption or elevated threat levels
• Participation in new trade facilitation programmes/initiatives
• Benefits about OGAs
• Benefit about MRAs
• Access to information of value to AEO
• Other indirect benefits not listed here

ii. EU AEO Benefits

The EU AEO involves a multi-layered risk-based C-2-B approach that acts to efficiently target and mitigate high-risk consignments while expediting low-risk consignments through the EU AEO programme at the same time. The following benefits are realised through the EU AEO:

• Easier access to Customs simplifications
• Fewer physical and document-based controls
  • Both safety/security and compliance
• Prior notification for physical control, i.e. safety and security
• Prior notice for Customs control, i.e. other Customs legislation
• Priority treatment
• Possibility to request a place for Customs control
• Indirect benefits
• Improved relations with Customs/OGAs
• Fewer delays
• Lower inspection costs
• Improved customer service
• MRAs with third countries

iii. C-TPAT Benefits

Responding to the 9/11 terror attacks and supporting improved risk management as part of the US Homeland Security initiative, Customs and Border Protection (CBP) implemented a voluntary Customs-to-Business programme called the Customs-Trade Partnership Against Terrorism (C-TPAT). Unlike other global accreditation programmes, C-TPAT’s principal certification in maintaining standards of security provision for their supply chain resides solely with the US importer and intermediaries. In return, importers receive improved facilitation at borders and include the following benefits:

• Reduced CBP examinations
• Front of line inspections
• Possible exemption from stratified exams
• Shorter wait times at border
• Assignment of Supply Chain Security Specialist
• Access to Free and Secure Trade lanes at the border
• Access to CTPAT web-based portal system and library of training material
• Possibility of enjoying MRA’s benefits
• Eligibility for OGA’s programmes
• Business resumption priority (natural disaster, pandemic, etc.)
• Importer Self-Assessment Programme
• Priority consideration at CBP’s Centres of Excellence

iv. EAC AEO Benefits

The EAC has launched a regional AEO programme with all five members (Burundi, Kenya, Rwanda, Tanzania and Uganda) as participants. The following benefits are realised:

• Recognition as a low-risk company
• Faster clearance procedure with Customs
• Automatic passing of declaration
• No physical examination –except random or risk-based
• ECTS requirement waiver –where applicable
• Expedited payment of refunds
• Reduced Customs security
• Priority to participate in Customs initiatives
• Guaranteed renewal of Customs license
• Priority treatment in cargo clearance chain
• Waiver of movement bond
• Self-management of bonded warehouse

Here are some examples of the current best practices in terms of AEO globally:

United States

In response to the 9/11 terror attacks and supporting improved risk management as part of the US Homeland Security initiative, CBP implemented a voluntary C-2-B programme called the Customs-Trade Partnership Against Terrorism (C-TPAT). C-TPAT works with over 11,605 US companies in an attempt to secure the movement of over 12 million 20-Foot-Equivalent Units (TEUs) in goods, accounting for over 52% of US imports in value terms[1].

European Union

Based on the C-2-B partnership the WCO introduced, EU customs administrations offer AEO status as a certified standard authorisation, recognising reliable entities that are legally established in the EU, that have an Economic Operator Registration and an Identification (EORI) number and are actively involved in customs operations and international trade. The EU AEO database identifies anyone holding AEO status. Based on Article 39 of the Union Customs Code (UCC), the EU programme allows companies to apply for three types of AEO status: Customs simplification (AEOC), security and safety (AEOS), and a combined status.

China

China launched its AEO programme on 1 April 2008 and granted more than 35,000 ‘General Certified Enterprises (GCE)’ accreditations by the end of 2016[2]. A further C-2-B initiative, called the AEO Joint Incentive (AJI) programme, was launched in October 2018. Under the existing AEO programme, companies that have met predetermined standards have been further certified by China Customs as Advanced Certified Enterprises (ACE) who as such are entitled to enjoy as many as 49 additional facilitation measures. At the time, ACEs comprised about 3,000 enterprises, accounting for nearly a third of China’s total import and export volumes[3].

New Zealand

On the forefront of PT development, New Zealand Customs introduced the Secure Exports Scheme (SES), a voluntary arrangement between exporters and New Zealand Customs, designed to protect the exporters’ international supply chain against tampering, sabotage, smuggling, and other transnational crime[4]. The SES ensures that goods exported are packaged securely and conveyed to the place of shipment without interference. The scheme is voluntary and open to all exporters. Partners commit in writing to have measures in place to protect their goods from the point of packing containers to delivery at the point of an export shipment. This written commitment is set out in an approval document supported by a self-prepared security plan. The security plan must detail the company’s written and verifiable policies, processes, and procedures to meet various security criteria in terms of documents, access controls, personnel, education and training, and OGA requirements[5].

A total of eight countries in Africa are fully AEO operational. A further 12 countries in Africa have some type of Customs compliance programme in place. Several AEO (and other Customs compliance programmes) are currently in the making. The following figure indicates the status of various programmes throughout Africa.