Following from the early 'noughties' developments relating to security and the WCO SAFE Framework, the European Union responded with the Authorised Economic Operator (AEO) certification process. This is now moving 'centre stage'; are you prepared or engaged?

AEO certifies that businesses involved in the international trade supply chain are compliant with EU customs legislation. AEO is essentially the European Union's response to the recognised need to secure the international supply chain, primarily after the events of 9/11. AEO also now links in with Mutual Recognition Agreements (MRA) of similar systems of other countries such as the C-TPAT scheme in the US and AEO operating in Japan.

Certified status empowers businesses to be recognised by both trading partners and Customs authorities in all EU member states as trustworthy and compliant. Any business regardless of size can apply for AEO status provided that they are actively involved in the international supply chain. This includes businesses such as logistics operators, freight forwarders, carriers and customs agents.

There are three types of the AEO status and certification

• Customs Simplifications status (AEOC)
  
  This essentially assists companies in the simplification of customs transactions. From a regulatory perspective there is a focus on Fiscal Security, Customs Compliance, Solvency and kept Records. While there is nothing in this that a competent operator would not already be doing, it should be noted that the embedding of AEO within the forthcoming EU Union Customs Code (for further detail, see the related TT Talk article 'The [European] Union Customs Code') will result in a shift of emphasis to a self-assessment model.
  
  
• Security and Safety status (AEOS)
  
  In addition to the AEOC status, AEOS certified businesses are required maintain a distinction in their records between EU and non-EU goods. The AEOS status is a requisite for a mutual recognition amongst other trading regions, such as Japan and the US. It is likely that Mutual Recognition Agreements will in the coming years be made with Canada and China, amongst others. There are assured to be material benefits in terms of the frequency and risk of inspections in certain regions. It is considered that under AEOS status the risk of inspection is diminished by up to five times. The theoretical goal here is the creation of a fully secured global supply chain with the added incentive of fewer interventions and more efficient cross-border movements for compliant operators.
  
  
• Customs Simplifications/Security and Safety status (currently AEOF)
  
  This third status, which will in future be referred to as AEOC+S, is a combination of both the Customs Simplifications and Security and Safety provisions.

From May 2016 there will be additional criteria for regulatory purposes, that of competence or a professional qualification. Competence will be measured against individuals employed by the operator, with training records and a minimum period of three years' experience being defined. This criterion is not applicable to the AEOS status. Also being introduced in May 2016 will be the addition of compliance against all taxes that form part of an applicant's economic activities and will be applicable to all types of AEO.

The current immediate benefits of achieving and maintaining AEO status as a business are stated as being:

• faster clearance at the frontier
• priority treatment at the frontier
• easier access to customs authorisations
• reduced data requirements.

Additional perceived future benefits on the introduction of the UCC will include access to guarantee reductions or waivers, access to centralised clearance and self-assessment.

AEO status is not and will not be a mandatory requirement for businesses. However, where a business currently holds a customs authorisation for an Economic Procedure, such as Customs Warehousing, Inward Processing or Temporary Storage, it should be noted that the UCC will require it either to hold AEO status or meet the AEO customs simplification criteria in order to maintain the authorisation.

The decision to apply and then maintain status is very much a commercial one, the operational and financial benefits of which must be assessed on a business by business basis. National customs authorities within the EU are able to provide further details to assist businesses both evaluate the AEO scheme, its benefits and the application processes.

Click here for an example link for the UK.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club