SITPRO welcomed the new international guidelines for Authorised Economic Operator (AEO) status adopted yesterday by the World Customs Organisation at its Annual Council, but warned that there will be major challenges ahead for both traders and Customs services considering the implementation of AEO programmes as they seek to weigh the costs against the benefits.
As part of the heightened interest of governments around the world in raising the level of security at the border following the terrorist incidents of recent years, Customs administrations have been developing procedures for authorising traders who meet prescribed security requirements so that they may benefit from fast-track release and/or clearance of goods. Two examples are the US C-TPAT system and the European Commission’s draft security implementing provisions under the EU Customs Code Regulation 648/2005.
Responding to the potential proliferation of different national requirements, which would multiply the compliance costs for interested businesses and thus act as a disincentive to traders thinking of applying, the World Customs Organisation has been developing what they are calling ‘baseline guidelines’ for the implementation of AEO programmes. These guidelines will support the WCO Framework of Standards to Secure and Facilitate Global Trade (the SAFE Framework), adopted in 2005, which incorporates the AEO concept.
Recognising the need to engage with traders in the development of these guidelines, the WCO formed a Private Sector Consultative Group (PSCG) of 30 invited businesses and organisations from around the world. SITPRO, the UK’s trade facilitation agency, has been an active member of the Group.
The Group’s statement at the WCO Council said: “ The Private Sector Consultative Group fully supports the WCO in establishing a set of global standards to secure and facilitate international trade. This should allow for mutual recognition, which is one of the real benefits sought by the trade. The Group is pleased that many of its recommendations have been incorporated in the latest draft – specifically, the definition of an AEO; implementation measures; single window; the voluntary nature of the programme; and the use of third party validators. However, the Group is concerned that to consider the guidelines in the document as ‘baseline guidelines’ to be supplemented by national AEO programmes creates concerns about transparency, consistency and harmonisation. It is essential that Customs administrations should not burden the international trade community with different sets of requirements.
“The benefits from becoming an AEO should act both as an incentive for investing in development of an AEO programme at the national level and as a reward for good performance once accepted into the programme. They must be additional to the normal facilities available to the trade in general. Companies must be able to identify and quantify the benefits to ensure that they outweigh the initial investment costs and on-going costs to support an AEO programme, something of particular importance to small and medium sized businesses.
“We recognise that the document containing the WCO’s standards for the implementation of AEO programmes is a living document. As such, we would expect to see improvements in the future as best practices are identified and introduced by customs administrations and the private sector.”
Supporting this statement Malcolm McKinnon, SITPRO’s Chief Executive, said at the WCO Council: “Facilitation of trade is SITPRO’s main priority. Security and facilitation must both be ensured but traders will not be convinced of the advantages of achieving AEO status if Customs requirements become too detailed and onerous and the benefits are outweighed by the costs. It is in Customs authorities’ interest too, faced with their own constraints and the need for optimum resource allocation, to encourage applications from traders for AEO status. Mutual recognition of AEO status should be a fundamental aim of the arrangements, and this can be best achieved on the basis of internationally agreed standards. The proliferation of differing national or regional requirements will frustrate this aim and cause problems for international trade. It is in no one’s interest to complicate matters.”
For further information contact SITPRO’s Head of Communications, Paul Hiscock, on 020 7215 8158 or paul.hiscock@sitpro.org.uk.
The WCO Framework of Standards to Secure and Facilitate Global Trade (the SAFE Framework) was adopted by the WCO Council in June 2005. It stemmed from a need identified by the World Customs Organisation to secure the movement of global trade in a way that does not impede but rather facilitates the movement of that trade. The SAFE Framework sets out the principles and standards for Customs administrations to follow that will enhance the security and facilitation of international trade. More details at www.wcoomd.org.
The Private Sector Consultative Group was formed by the WCO earlier this year to advise the High Level Strategic Group of WCO member Customs administrations on the impact on traders of the principles and standards for supply chain security being developed by the WCO. 30 member businesses and trade organisations have been invited by the WCO covering most corners of the world and a cross-section of business sectors with an interest in trade facilitation.
SITPRO News Release - 30 June 2006
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