Authorised Economic Operations (AEO) – What Is It?
As a part of the EU Customs code modernisation, customs authorities need to look at more efficient ways to allocate resources using risk based techniques and placing increased reliance on the processes in place within trusted shippers. Since 2007, customs in the EU have developed an Authorised Economic Operations (AEO) certification. This applies to companies that demonstrate a strong track record of customs compliance, processes and systems in order to ensure adequate customs controls, financial solvency as well as physical and security standards.
What are the benefits of AEO certification?
Companies with this certification are treated as lower risk by customs. This results in benefits such as a lower rate of compliance inspections, as well as simplified import and export documentation requirements.
- Reduction in the number of control checks by customs
- Fewer customs related supply chain delays
- Eliminate the need for a separate financial guarantee for bonded operations
- Being viewed in the marketplace as a trusted shipper. Contributing to international cargo safety and security
- International recognition of AEO status by customs in key markets including US, China, Japan and India
What are the different types of AEO?
EU customs have provided options to limit the scope of the AEO certification to customs practices only (AEOC) or to product safety and security (AEOS), in addition to a full scope certification (AEOF).
Depending on the scope of your operations, it may be appropriate to consider AEOC or AEOF. These deal with subsets of the processes required for the full certification, but the associated benefits of AEO are also restricted based on that scope.
FITAC has a highly experienced compliance team that has guided dozens of companies across Ireland through AEO certification.
- Advice on suitability (or otherwise) of AEO.
- Training in-house or through public courses.
- Gap analysis and readiness assessment.
- Process development and training
- Managed application, ensuring company understanding of responsibilities.
- Targeted post-certification support to maintain compliance.
AEO and BREXIT
Interest in AEO has increased significantly over the last 12 months in the context of BREXIT. While there is no certainty about post BREXIT customs arrangements, most scenarios involve shipments between the EU and the UK becoming third country shipments which will be the subject of customs inspection.
There is no planned priority lane for AEO shipments. Authorities will however need to increase their reliance on shipper profiles in managing risk across increased third country shipment volumes.
There have been references through the negotiations to the possible future role of ‘trusted trader’ programs like AEO in providing the basis for streamlined customs reporting in the future.
With the lack of certainty about the future, many companies see AEO certification as a ‘no regret’ action, one that they can take to prepare their business for an environment with increased customs related activity.
Customs authorities in one of the EU states manages the certification process, which is then recognised across the union by all other member states. It involves a multi stage process over approximately six months, during which the customs authorities need to satisfy themselves on the customs track record, the nature of customs and security controls in place, as well as the financial health of the applicant.
Where to start?
The process starts with a detailed self-assessment by the applicant describing the nature of the business and its’ financials and key personnel, as well as outlining all of the relevant process controls as part of a formal application.