WCO Adopts AEO Guidelines (Similar to C-TPAT) (Part III - Conditions and Requirements for Customs and AEOs)

(The WCO's SAFE Framework provides for an AEO system that offers benefits for businesses that meet minimal supply chain security standards and best practices. CBP officials have previously compared AEOs to Customs-Trade Partnership Against Terrorism (C-TPAT) participants and industry sources have stated that AEO requirements are similar to those of C-TPAT.)

This is Part III, the final part of a multi-part series of summaries on the AEO guidelines and focuses on some of the conditions and requirements for AEOs.

(See ITT's Online Archives or 08/28/06 and 08/29/06 news, 06082805 and 06082915, for Parts I & II of BP summary of the AEO Guidelines.)

Highlights of Conditions and Requirements for AEO Operators

The WCO's AEO Guidelines contain information on certain standards, practices and procedures that members of the trade business community aspiring to AEO status are expected to adopt into routine usage, based on risk assessment and AEO business models. In addition, the guidelines contain information on conditions and requirements for Customs administrations. The following are highlights of the conditions and requirements for AEO operators:

AEOs must be financially viable. The WCO's guidelines state that financial viability of the AEO is an important indicator of an ability to maintain and improve upon measures to secure the supply chain. This element requires that the AEO have a good financial standing which is sufficient to fulfill its commitments with due regard to the characteristics of the type of business activity.

AEOs must establish/bolster measures to ensure cargo integrity and security. According to the AEO Guidelines, Customs administrations and AEOs shall establish and/or bolster measures to ensure that the integrity of cargo is maintained and that access controls are at the highest appropriate level, as well as establishing routine procedures that contribute to the security of cargo.

With regard to AEOs, this element requires that AEOs: (1) develop and maintain a security policy manual or other tangible guidance by making relevant reference to the security-related guidelines issued by the WCO which contain detailed guidelines on procedures to be followed to preserve the integrity of cargo while in its custody; (2) ensure that it and/or its business partners employ the use of seals that meet or exceed the then-existing ISO Standard; (3) verify the identity of the carrier collecting or delivering cargo and transport conveyances where existing business processes permit and, in the case of there being no such authority, take action to promptly achieve such mandate, (4) etc.

AEOs must have demonstrated compliance with Customs requirements. WCO states that Customs administrations shall take into account the demonstrated compliance history of a prospective AEO when considering the request for AEO status. This element requires that the AEO: (1) not have committed, over a period determined by the national AEO program, an infringement/offence as defined in national legislation, which would preclude designation as an AEO; (2) if established for less than the period mentioned in (1), be judged on the basis of available records and information during the application process, and (3) or its designee have a demonstrated record of compliance within the same time period, mentioned in (1).

AEOs must ensure transport conveyance security (to extent/scope of its authority/responsibility). WCO states that Customs administrations and AEOs shall jointly work toward the establishment of effective control regimes, where not already provided for by other national or international regulatory mandate, to ensure that transport conveyances are capable of being effectively secured and maintained.

This element requires that the AEO: (1) ensure, to the extent and scope of its authority and responsibility, that all transport conveyances used for the transportation of cargo within its supply chain are capable of being effectively secured, (2) require operators as specifically detailed in national AEO programs, to report any actual or suspicious incident to designated security department staff of both the AEO and Customs administration(s) for further investigation, as well as to maintain records of these reports, which should be available to Customs administration(s), as legal and necessary, and (3) etc.

WCO's Guidelines also include conditions and requirements for Customs administrations and AEOs in the following areas: satisfactory system for management of commercial records; consultation, co-operation and communication; education, training and awareness; information exchange, access and confidentiality; premises security; personnel security; trading partner security; crisis management and incident recovery; and measurement, analyses and improvement.

WCO AEO guidelines available athttp://www.wcoomd.org/ie/En/Topics_Issues/FacilitationCustomsProcedures/AEO%20Guidelines.pdf.

WCO Resolution on SAFE Framework (dated June 2006) available athttp://www.wcoomd.org/ie/En/Topics_Issues/FacilitationCustomsProcedures/Resolution%20E%20June%202006.pdf.

WCO SAFE Framework (dated June 2005) available athttp://www.wcoomd.org/ie/En/Press/Cadre%20de%20normes%20GB_Version%20Juin%202005.pdf.

List of WCO Member States intending to implement SAFE Framework (dated 06/29/06) available athttp://www.wcoomd.org/ie/En/Topics_Issues/FacilitationCustomsProcedures/WCO%20TABLE%20Intention%20to%20implement%20the%20FOS-%20EN-FR.pdf.

BP Note

During the August 3, 2006 meeting of the Departmental Advisory Committee on Commercial Operations of the Bureau of Customs and Border Protection (COAC), members discussed the new AEO guidelines and expressed some concern regarding two of the AEO conditions and requirements - financial viability and the demonstrated compliance with customs requirements. During the discussion of the AEO guidelines, COAC members noted that those two issues require some clarification.