Authorised Economic Operators (AEO)
A Customs Approval to Enhance Supply Chain Security.
Throughout the world, customs authorities are raising their game to protect individuals and businesses from the threat of international terrorism. The World Customs Organisation (WCO) has developed a Framework of Standards to secure and facilitate global trade and most countries have expressed their intention to implement the framework which includes the authorisation of economic operators who comply with certain supply chain security standards. The US has developed CTPAT – the Customs Trade Partnership Against Terrorism. EC businesses involved in international supply chains can now apply for Authorised Economic Operator (AEO) status.
Why should a trader become an AEO?
AEO status is, in effect, a kite-mark for a business. It shows business partners that the trader is trusted by the authorities to meet a certain level of compliance with customs legislation, that it has the appropriate record keeping standings and financial solvency, and that it maintains appropriate security and safety standards. It will enable a business to trade more effectively and more efficiently with other businesses in the international supply chain. It will also ensure that other AEOs will want its business rather than risk trading with a non-authorised company.
What does authorisation involve?
There are three types of AEO status:
- Customs Simplifications;
- Security and Safety;
- Customs Simplifications/Security and Safely.
For most traders, we would only recommend the full Customs Simplifications/Security and Safety Certificate. This includes approval of management and record keeping systems, compliance with health and safety requirements, and evidencing financial prudence. It means that the project spans across business units. It means that procedures must be documented and evidenced. It means that a security assessment must be made of a business. Only then should an application be submitted to HM Revenue & Customs which will arrange to audit the business before granting the approval.
What are the benefits of applying?
Apart from the business kudos and the potential for trading with other AEOs, consignments may be fast tracked through Customs controls and an AEO will have less frequent checks and audits by Customs. An approved trader will also have improved security in its supply chain and, therefore, suppliers and customers will have more confidence in that business. The EU is seeking mutual recognition from US Customs and Border Protection for AEO and CTPAT so it will become especially important for those trading with the USA.