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 businesses (referred to as economic operators by the EU) who comply with certain supply chain security standards. EU businesses involved in international supply chains can apply for AEO status.
AEO approval is, in effect, a kite-mark for a business. It shows business partners that the trader is trusted by the authorities to meet a high level of compliance with customs legislation, that it has the appropriate record keeping standards and financial solvency, and that it maintains appropriate security and safety standards. It should enable a business to trade more effectively and more efficiently with other businesses in the international supply chain. It should also ensure that other AEOs will want its business rather than risk trading with a non-authorised company.
In the EU, there are two types of AEO approval, AEOC and AEOS.
AEOC (customs simplifications) provides the benefits of faster approval of customs simplifications and approvals as well as a waiver of financial guarantees for actual or potential customs debts and a reduction in the security required for actual customs debts.
AEOS (safety and security) is the full approval of supply chain security and approved businesses should receive fewer customs checks and hence benefit from speedier customs clearance. 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 has agreed mutual recognition with the systems operated by other countries, such as the US and China, so it should provide benefits for trade with those countries.
AEOC involves a check on management and record keeping systems, compliance with customs rules, financial solvency and evidencing standards of competence.
AEOS involves evidencing full supply chain security measures including controls on personnel and access to premises.
An AEO authorisation project spans across business units and procedures must be documented and evidenced. Only then should an application be submitted to HMRC which will thoroughly audit the business before granting an approval.