European Community's AEO Program was Formally Implemented on January 1, 2008
On January 1, 2008, the European Community formally implemented its Authorized Economic Operator program. AEOs are economic operators who, by virtue of satisfying certain criteria, are considered to be reliable in their customs related operations throughout the EC and are therefore entitled to certain benefits.
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According to the United Kingdom's HM Revenue and Customs office (HMRC), the introduction of AEO status is the EC's response to the need to secure international supply chains, to the introduction of the U.S.' Customs-Trade Partnership Against Terrorism (C-TPAT) program, and to the development of the Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework) in the World Customs Organization (WCO).
Manufacturers, Exporters, Etc. Carrying out Customs Activities in EC May Apply
EC and HMRC documents state that anyone established in the EC1 involved in the international supply chain, and who carries out customs related activities in the EC can, apply for AEO status irrespective of the size of their business. This includes manufacturers, exporters, freight forwarders, warehouse keepers, customs agents, carriers, and importers.
Certificates to be issued after 70/120 day EC consultation. During the initial two year transitional period starting January 1, 2008, EC Member States have 70 calendar days from the date an AEO application is referred to them by an issuing Member State to respond (for applications involving customs operations solely within the issuing Member State) and 120 days to respond (for applications involving customs operations in other Member States). (HMRC notes that applicants should allow at least 90-120 days for applications to be considered and points out that certain countries, like the U.K., began accepting applications prior to January 1, 2008.)
Three Types of AEO Certificates
There are three types of AEO certificates, as follows:
Customs simplification AEO: issued to any business who fulfils the criteria of customs compliance, appropriate record-keeping standards and financial solvency;
Security and safety AEO: issued to any business who fulfils the criteria of customs compliance, appropriate record-keeping standards, financial solvency, and maintains appropriate security and safety standards; and
Customs simplification/security and safety AEO: issued to any business who fulfils the criteria for both the customs simplification AEO and security and safety AEO.
AEO Certificates Have Different Associated Benefits
The customs simplifications AEO certificate and the security and safety AEO certificate have distinct benefits, while the customs simplification/security and safety AEO certificate combines the benefits of both.
Customs simplification AEO benefits. According to EC documents, holders of a customs simplification AEO will be entitled to:
easier admittance to certain customs simplifications;
fewer physical and document-based controls;
priority treatment if selected for control;
possibility to request a specific place for such control.
(HMRC also notes the following possible benefits that may apply when the Modernized Customs Code2 is agreed upon and implemented (expected in 2010): guarantee waivers, centralized clearance where more than one EC Member State is involved, the ability to apply for a single EC authorization to use simplified declaration procedures across the EC, etc.)
Security and safety AEO benefits. According to EC and HMRC documents, holders of a security and safety AEO certificate will be benefit from certain facilitations of customs controls at the entry and exit of goods into/out of the customs territory of the EC such as (partial list):
a lower risk score used to determine the frequency of physical and documentary customs checks;
shipments may be fast-tracked through customs controls and if selected for examination, will receive priority over non AEOs;
when the requirement to make pre-arrival/pre-departure summary declarations is introduced in July 2009, AEOs will be able to omit certain data elements from the declaration;
potential for future reciprocal arrangements and mutual recognition with countries outside the EC (e.g. with the U.S. and C-TPAT).
1Established in the EC is defined as: (i) in the case of a 'natural person', any person who is normally resident there; or (ii) in the case of a 'legal person', any person that has its registered office, central headquarters, or permanent business establishment in the EC.
2The Modernized Customs Code is an EC effort to streamline customs procedures and processes and adapt rules towards common standards for information technology systems.
(See ITT's Online Archives or 12/27/07 news, 07122799 1, for BP summary of the U.S. and European Union's (EU's) hope to conclude a C-TPAT/AEO mutual recognition agreement by mid-2009.
See ITT's Online Archives or 11/27/07 news, 07112705, for BP summary of U.S. Customs and Border Protection (CBP) officials' comments regarding AEO/C-TPAT mutual recognition.
See ITT's Online Archives or 10/16/07 news, 07101620, for BP summary of the WCO's incorporation of AEO provisions into its SAFE Framework document.
See ITT's Online Archives or 05/29/07 news, 07052999 6, for BP summary of the EU's issuance of regulations requiring all members to have AEO programs by January 1, 2008.)
HMRC AEO Reference Notice (Notice 117, dated July 2007) available at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_PROD1_027618&propertyType=documentP12_572
EC's "Authorized Economic Operators: Guidelines" (TAXUD/2006/1450, dated June 29, 2007) available at http://ec.europa.eu/taxation_customs/resources/documents/customs/policy_issues/customs_security/AEO_guidelines_en.pdf