Trust and logistics for Authorized Economic Operator

https://dailyasianage.com/news/131691/trust-and-logistics-for-authorized--economicoperator EDEN BUILDING TO STOCK EXCHANGE Published: 22 July 2018

Trust and logistics for Authorized Economic Operator M S Siddiqui An Authorized Economic Operator (AEO) status is a standard issued by a Customs Administration that a stakeholder in the supply chain has met certain criteria in relation to management systems, compliance with customs rules, ongoing solvency, is competent and is safe and secure.

The stakeholders include: manufacturers, exporters, freight forwarders, warehouse keepers or other storage facility operators, customs agents or representatives, carriers, importers etc.

The consignment of international trade will pass through different ports of loading, transshipment and port of destination without physical verification. It facilitates the customs simplifications, prior notification, fewer physical checks, priority treatment if selected for customs control, choice of location for customs control, as well as the many indirect benefits.

The concept of end-to-end supply chain security means security measures are implemented from the first point until the last point in the supply chain. One of the requirements for AEO certification is that the operator meets certain security standards, including the screening of employees.

The WTO TFA makes provision for 'Authorized Operators' who meet a set of criteria, which may include appropriate record of compliance with Customs and other related regulations, a system of managing records for necessary internal control, financial solvency and supply chain security.

The security and safety standards in relation to business partners shall be considered to be appropriate if the parties and their country have implemented measures allowing a clear identification of his business partners in order to secure international supply chain.

AEOs should declare that the supplies are produced, stored, prepared and loaded in secure business premises and secure loading and shipping areas. Those are protected against unauthorized interference during production, storage, preparation, loading and transport. Their reliable staffs are employed for the production, storage, preparation, loading and transport of these goods.

AEOs can only be held responsible for their part of the supply chain, for the goods which are under their custody and for the facilities they operate. However, they are also dependent on the security standards of their business partners in order to ensure the security of the goods in their custody.

WCO has some very clear guidelines for governments that are seeking to establish AEO programs, as well as minimum standards for economic operators wishing to become certified under a national program.

The Agreement on Trade Facilitation of WTO includes "provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues."

Such traders may be regarded as 'trusted', in having a track record of full compliance that supports the assumption that they will continue to comply with border requirements, and that they therefore constitute a low risk.

WCO adopted in June 2005 the SAFE Framework of Standards to Secure and Facilitate Global Trade ('the SAFE Framework of Standards'). Its purpose was to support changes to the world trade regime and the growth in the end-to-end management of goods moving across borders. Guidelines on AEO conditions and requirements have been a key element in these international standards.

The WCO's SAFE Framework sets out six standards and technical specifications for implementation and co-operation between customs department of different countries and Customs-to-Business. Which include: 1. Partnership - AEOs in the supply chain will complete a self-assessment to measure their existing security standards and best practices to ensure there are adequate safeguard measures in place.

2. Security - AEOs will incorporate pre-determined security best practices into their business practices.

3. Authorization - The Customs administration and representatives from the traders' community will design a validation process that incentivizes operators to gain AEO status. 4. Technology - All users will maintain cargo and container integrity through the use of modern technology.

5. Communication - Customs administrations will keep the Customs-Business partnership program up to date to promote supply chain security best practices. 6. Facilitation - Customs administrations will work together with AEOs to maximize security and the facilitation of the international supply chain.

AEO program allow the AEO to take part in supply chain from one destination to other destination with integrated cross-border simplified procedure, where only one simplified declaration with minimum information would be required for both export and import purposes. There will be no customs or security inspection at the port of loading and port of destination.

AEOs must fulfill the criteria of compliance, record keeping, solvency and professional qualifications and standards of competence. The criteria for granting AEO status are contained in Article 39 of European Council Regulation (EU) No 952/2013.

These include: (1) an appropriate record of compliance with customs legislation and taxation rules, (2) a satisfactory system of managing commercial , and where appropriate, transport records, which allows appropriate customs controls, (3) proven financial solvency, (d) practical standards of competence or professional qualifications directly related to the activity carried out, (e) appropriate security and safety standards.

AEO must have appropriate security and safety standards to protect the international supply chain. These should include: (a) physical integrity and access controls, (b) logistical processes and, if appropriate, the handling of specific types of goods, (c) personnel and identification of business partners.

AEO means trust on individual international trader who enjoys recognition of custom authority of other countries. The mutual trust factor facilitate move from bilateral to multilateral or global mutual recognition because mutual recognition necessitates that all parties have the same level of trust in each other's programs, controls, audits and authorization procedure.

Authorized Economic Operator (AEO) is one step of trade facilitation with recognizing each other business houses. In the global context, Bangladesh requires secured trade partnership, trade facilitation, and seamless movement of goods, mutual recognition and international best practices. The need to ensure a necessary level of data protection has already been touched upon under the features of mutual recognition.

A divergent approach to data protection can certainly be a stumbling block for countries/administrations seeking to agree mutual recognition. In particular, the attitude towards integrity of Customs and other officials will have an impact as well.

If the approach to integrity is different, the necessary trust between parties will not exist. However, through negotiations between parties that might initially have had a slightly different view as regards controls, sealing or legal issues, the understanding on both sides might enable administrations to develop a more common approach and thus lead to a common understanding.

Another biggest challenge of mutual recognition is to develop equivalent measures and identical legislation and rule. The requirement of developing equivalent measures must lead to equivalent control and security levels for specific risks, specific threats, geographical and geopolitical aspects as well as specific interests will be taken into consideration.

So far, a total of 69 AEO programs have been established across 79 countries and there are 16 programs in the development stage. As of May 2016, a total of 40 bilateral MRAs had been concluded with an additional 30 in the negotiation process. Considering the importance, European Union passed The Delegated Act underlining the minimum requirement for AEO in Europe.

South Asia region is center of mistrust. We don't trust each other. There may be historical reason of such mistrust in the society, in the country and even in the region. In contrast, the most inter-dependent profession is business. Business is profession banking upon mutual trust and respect of each other's.

This profession also depends upon trust of other stakeholders to flourish.

The traditional transaction of old Dhaka market has similar trust. Businessmen trust each other and flourish their business. Unfortunately, other stakeholders have no trust and confidence on business community. Bangladesh will take long time for internal preparation with appropriate logistics and open mind to believe each other.

The writer is a legal economist. Email: mssiddiqui2035@gmail.com